Synopsis: Refex Industries is transforming into a focused ash & coal handling player, supported by a Rs 1,500 crore order pipeline, rising thermal power demand and stricter environmental regulations. With management claiming market leadership, growing profitability, expanding volumes and exposure to an estimated Rs 75,000 crore opportunity, the company is targeting long-term growth.
In recent years, Refex Industries has seen tremendous change. From being involved mainly in refrigerant gases and power trading, the company has restructured itself into focusing on those industries that have potential for scaling, high margins and long-term execution clarity. As it stands today, the Ash & Coal Handling business now makes up the core of Refex Industries, while wind energy is seen as the emerging growth area.
The mobility business, on the other hand, is moving towards becoming an independent entity in the near future due to a demerger. FY26 was a crucial year for Refex Industries in terms of their business transformation strategy, as the company posted solid profit growth despite moderating revenues due to the restructuring of their business portfolio. The story behind this is the company’s Ash & Coal Handling business, which management sees as having a tremendous opportunity in the long run.
Considering the company is already leading in the industry, operating in more than 30 thermal power plants and looking at market share expansion, it leaves one wondering if Refex is able to capture a bigger slice of the estimated Rs 75,000 crore market opportunity.
With a market cap of 4,300 crore, the shares of Refex Industries Ltd are trading at 314 and are trading at a PE of 18 compared to their industry’s PE of 40. The shares have given a return of almost 1,000% in the last 5 years.
Ash & Coal Handling Has Become Refex’s Core Growth Engine
This was reinforced by management on several occasions: ash & coal handling continues to be the key driver of growth for the firm. In recent years, Refex has consciously made an effort to move away from low-margin trading activities and into services that require both profitability and operational competence, rather than just being dependent on size.
In FY26, the segment has once again shown good performance in all the major projects undertaken, backed by technology, efficient operations, and improved capabilities.
According to management, there is growing demand for complete ash logistics, material handling, and compliance-related services within the thermal power ecosystem of India. As regulatory pressures increase, thermal power plants are looking for firms that can provide efficient and effective ash management services.
ARs 1,500 Crore Order Book Provides Strong Visibility
Perhaps one of the most telling signs of the demand for the business would be its current order pipeline. Management revealed that the order pipeline for the Ash & Coal Handling segment was almost Rs 1,500 crore, giving very strong visibility for revenues in the medium term.
The business has added several orders in the current quarter and even managed to secure some long-term orders, which would ensure continued visibility for its earnings in the future as well.
Management seems to have high confidence in sustaining its momentum of growth in fiscal 2027, stating that the business would likely be able to deliver growth broadly in line with that seen in fiscal 2026.
While the current order pipeline is expected to drive the growth of the company going forward, any discussions about additional opportunities should help it grow further as well. Unlike many cyclicals which are dependent on commodity prices, Refex has order pipelines based on service-based operations of its customers.
Growth Continues Despite Portfolio Restructuring
On first inspection, the revenue figures from FY26 may seem to point to slowing growth at Refex. But according to management, the distortion is due to the fact that Refex has discontinued its refrigerant gas trading and power trading operations.
In this context, management noted that even excluding such discontinued operations, Ash & Coal Handling saw revenue growth of about 28% in FY26. But more significantly, the profit margins have been much higher this time. Standalone EBITDA grew by 68% to Rs 350 crore, while the EBITDA margin went up to 17.2%.
Profit after taxes reached Rs 247 crore, with margins crossing the 12% mark. According to management, the reasons behind the improvement are an emphasis on quality revenues, cost efficiencies, technologically driven execution, and contributions from service businesses. The discontinuation of trading businesses has not only helped Refex improve margins but also made the revenue streams more predictable and sustainable.
Thermal Power Growth Continues To Support The Industry
The second point about the investment case involves the firm’s assurance that thermal power will be important and will stay that way for decades to come. Despite the rapid advancement being made in renewables, Refex feels that there will still be an immense need for thermal power in India.
The company mentioned that India is building thermal power capacity and is planning on implementing another 50 gigawatt capacity within the coming four to five years. The rising electricity demand from various sectors like industries, households, and infrastructure will result in increased coal use.
As stated by the management team, the current level of coal consumption in India is around 800 million tonnes per year and is increasing day by day. Since the ash content of Indian coal is much higher compared to imported coal, any increased use of coal implies higher ash requirements.
Environmental Compliance Is Becoming Increasingly Important
Environmental regulations have emerged as yet another major demand generator, apart from electricity generation. It was noted by management time and again that there was increasing regulatory pressure on thermal power stations to achieve better levels of environmental compliance.
Issues related to ash disposal and recycling are becoming more important as well, which presents scope for niche service providers. Refex feels that the industry is evolving from mere transportation agreements into an ecosystem that includes logistics, ash handling, environmental management, and technology-driven ash recycling.
With increasingly strict regulatory standards, thermal power stations may find it more economical to outsource such functions to specialists who can execute such projects all across the country. Such trends would provide Refex greater scope to diversify into more profitable areas and generate more revenue per customer relationship.
Scale And Technology May Create A Competitive Advantage
One of the major sources of management’s confidence lies in the scale that it has built over the past few years. As per the chairman, Refex presently operates around 40 thermal power stations located in different states.
Management is of the view that the company is the market leader in the space, followed by another firm that is roughly only one-fourth its size. Although fragmentation continues to remain a key feature of the industry, Refex sees considerable value in operating scale.
Coordinating and managing ash and coal logistics across multiple power stations, states, and logistics chains requires considerable experience and capability. The company has built logistics technology in-house, which helps it to manage its operations across locations. This technology, which is not available off the shelf but was custom-built by the company itself, has been instrumental in creating a significant barrier to entry for any new firm.
Capacity Expansion And Volume Growth Remain Key Priorities
Goals of the company are also seen in the operational plans for the business. Refex currently operates at a level of roughly 68,000 – 70,000 tonnes per day and aims to increase the daily tonnage to 90,000 – 95,000 tonnes per day incrementally.
The management mentioned that there are no major infrastructural limitations to growth, and therefore the growth will be mainly based on execution and ramping up of current projects. Volume growth is expected with each new project coming online.
It was also made clear that the company can grow in ways other than simply handling large volumes of ash and coal. Possible future growth paths include taking care of ash silos, performing other functions in thermal power plants, and developing closer customer relations.
Can Refex Capture A Larger Share Of The Rs 75,000 Crore Market?
An investor noted during the earnings call that there was an estimated addressable market of roughly Rs 75,000 crore for the industry. With the amount of revenues generated by Refex currently, it suggests that the company is only scratching the surface of the total addressable market potential.
Management did not refute this rough estimate but rather spoke about how their goal was to increase market share through time. As previously discussed, Refex’ vision is to further consolidate their leadership position, continue widening the gap between themselves and their competitors and explore adjacent services within the thermal power space.
Management explained that in the next five years, the aim is not to remain the biggest but to dominate the space so much that others lag behind significantly in size. Though market share targets have not been set formally, it seems like management’s vision is to achieve a respectable market share.
With the rise in coal usage, thermal power capacity growth, higher environmental regulations and improved execution capacity, management felt that there was still significant upside for Refex. The ability of Refex to realise this market potential will come down to their execution ability, service diversification and scalability across the country’s thermal power industry.
The Road Ahead
Refex’s transition from a refrigerant gas and power trading company to a service-orientated infrastructure company is starting to bear fruit. The Ash & Coal Handling division is proving to be the key growth driver for the company, aided by an impressive order pipeline of Rs 1,500 crores, increasing regulatory demands, and continued thermal power growth.
The management’s optimism about the industry is based on their conviction that thermal power will continue to play a vital role in India’s power generation strategy over the coming years. With scale, proprietary technology, and a fragmented competition scenario, Refex is confident that they have all it takes to increase their footprint in the industry.
While the company is establishing its renewables platform through the wind energy division and creating value through its mobility demerger initiative, the immediate growth driver is the Ash & Coal Handling division. Assuming that the Rs 75,000 crore addressable market keeps growing with India’s power needs, it may prove to be a key growth driver for Refex over the coming years.
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