1. At a Glance – The ‘Fireproof’ Company That Catches Fire Financially
Nilachal Refractories Ltd, incorporated in 1977, sounds like a classic old-school industrial company that should have aged like whisky. Instead, it aged like milk left near a blast furnace. As of Jan 23, the stock trades at ₹33.8, giving it a market cap of ₹68.8 Cr, which is somehow still positive despite the company reporting PAT of -₹24.4 Cr (TTM) on sales of just ₹1.46 Cr. Yes, you read that right — losses are nearly 17x revenue.
The latest Q3 FY26 (Dec 2025) numbers show ₹0.45 Cr in sales and ₹3.53 Cr loss, with an OPM of -795%. ROCE has collapsed to -77.8%, book value is negative ₹14.2, and net worth has officially gone underground. Debt stands at ₹42 Cr, while operating cash flow is consistently allergic to positivity.
In the last 3 months, the stock is down ~16.6%, in 1 year it’s down ~29%, yet promoter holding remains frozen at 70.6%, like nothing is happening. Is this deep value? Or deep trouble wrapped in refractory bricks? Let’s dig, helmet on.
2. Introduction – 1977 Called, It Wants Its Business Model Back
Nilachal Refractories operates in a sector that is critical to steel, aluminium, and high-temperature industrial processes. Refractories are not optional — if you run a furnace without them, congratulations, you’ve invented molten chaos.
And yet, despite being in a “necessary” industry, Nilachal has managed a rare feat: nearly five decades of existence with chronic financial anemia. Revenues have shrunk over time, losses have piled up, and auditors have been waving red flags so aggressively that they might qualify for the Olympics.
The company has faced recurring losses, negative net worth, qualified audit opinions, impairment losses exceeding ₹19 Cr, unpaid preference share
premiums, and frequent CFO and auditor resignations. This is not a turnaround story yet — it’s a case study.
So the big question: is Nilachal a forgotten industrial asset waiting for revival, or a textbook example of capital misallocation? Keep reading — the numbers do not lie, but they do roast.
3. Business Model – WTF Do They Even Do?
Nilachal manufactures refractory products — materials that can survive extreme heat without melting, cracking, or crying.
Product Buckets
- Bricks & Shapes: Fireclay, Alumina, High Alumina, Mullite, Tar-impregnated bricks
- Monolithics: Dense castables, low cement castables, gunning mixes, ramming masses, shotcreting materials
End-Use Industries
- Steel: Torpedo ladles, EAFs, tundish, reheating furnaces
- Aluminium: Calcining kilns, anode baking furnaces, electrolytic pots
Manufacturing capacity stands at 28,000 TPA in Dhenkanal, Odisha. On paper, this is respectable. In reality, utilisation seems closer to “museum exhibit” than factory.
Here’s the fun part:
In FY22, only ~55% of revenue came from actual refractory products, while ~43% came from scrap sales. When scrap becomes a major revenue stream, the core business is clearly on life support.
Ask yourself: is this a refractory company selling scrap, or a scrap dealer occasionally selling refractories?
4. Financials Overview – Numbers That Need
