HLEGLAS - HLE Glascoat

📊 NSE: HLEGLAS 🏢 Engineering 📅 Last Updated: 12/14/2025 7:46

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 grew 48.8% YoY to INR 351 Cr. Segmental growth for H1 FY26: Filtration, Drying and Other Equipment grew 88.5% (INR 137 Cr in Q2); Glass Lined Equipment grew 8.9% YoY to INR 157 Cr; Heat Transfer Equipment grew 124.8% YoY to INR 56 Cr.

Geographic Revenue Split

Not disclosed in available documents, though the company recently expanded into Germany via HLE Surface Technologies GmbH and Omerastore GmbH.

Profitability Margins

Q2 FY26 PAT margin was 4.0% (INR 14 Cr), down from 6.1% in Q2 FY25. H1 FY26 PAT margin improved to 5.0% (INR 32 Cr) from 4.3% YoY. Margins were impacted by higher material costs and initial losses in the German business.

EBITDA Margin

Q2 FY26 EBITDA margin was 11.4% (INR 40 Cr), a decline from 15.1% in Q2 FY25. H1 FY26 EBITDA margin stood at 12.6% (INR 80 Cr) compared to 12.8% in H1 FY25, reflecting a 35.3% growth in absolute EBITDA.

Capital Expenditure

Maintenance Capex is expected to be INR 10-15 Cr per annum. No major new capex programs are planned for the foreseeable future as the company focuses on debt reduction.

Credit Rating & Borrowing

ICRA maintains the rating with an interest coverage ratio of 3.0 times in 9M FY25 (down from 8.0 times in FY22) and a DSCR of 1.2 times in FY24.

⚙️ Operational Drivers

Raw Materials

Steel is the primary raw material. Profitability is vulnerable to metal price volatility, though the company uses a back-to-back procurement strategy to hedge costs.

Capacity Expansion

Current capacity not specified in MT; however, the company recently integrated Kinam Engineering (70% stake) and acquired HLE Surface Technologies GmbH and Omerastore GmbH (effective August 2025) to expand its product and service footprint.

Raw Material Costs

Raw material costs impacted Q2 FY26 margins due to high-value orders accepted at competitive prices in previous quarters. The company procures steel immediately upon receipt of firm orders to mitigate price fluctuation risks.

Manufacturing Efficiency

The company is focused on building volumes to an optimal level to achieve healthy double-digit EBIT margins, particularly in the newly acquired German businesses.

📈 Strategic Growth

Expected Growth Rate

37.10%

Growth Strategy

Growth is driven by a 'one-stop partner' model for process equipment, the integration of Kinam Engineering for heat transfer products, and the acquisition of Thaletec and Omeras in Germany to capture international market share and high-margin service business.

Products & Services

Filtration equipment, Drying equipment, Glass Lined Equipment (GLE), Heat Transfer Equipment, and specialized surface technologies.

Brand Portfolio

HLE Glascoat, Kinam, Thaletec, Omerastore.

New Products/Services

Integration of Kinam's heat transfer equipment and Omeras' storage solutions; expected to contribute to higher consolidated margins as volumes scale.

Market Expansion

Expansion into the European market through the acquisition of HLE Surface Technologies GmbH and Omerastore GmbH in Germany.

Strategic Alliances

70% ownership in Kinam Engineering; acquisition of HLE Surface Technologies GmbH and Omerastore GmbH.

🌍 External Factors

Industry Trends

The industry is shifting toward integrated process solution providers. HLEGLAS is positioning itself as a 'one-stop partner' to capture a larger share of client wallet across filtration, drying, and glass-lining needs.

Competitive Landscape

Faces competition from established global and domestic players in the glass-lined and filtration equipment segments, which puts pressure on margins.

Competitive Moat

Moat is built on specialized glass-lining technology and a diversified product portfolio. The 'one-stop partner' model creates high switching costs for pharma clients who require integrated, high-precision equipment.

Macro Economic Sensitivity

Highly sensitive to the capex cycles of the Pharmaceutical (47% of revenue) and Specialty Chemical (32% of revenue) industries.

Consumer Behavior

Pharma and chemical clients are increasingly seeking vendors with end-to-end engineering capabilities and global service footprints.

Geopolitical Risks

Exposure to European economic stability and regulatory trends following the acquisition of German manufacturing assets.

⚖️ Regulatory & Governance

Industry Regulations

Operations must comply with stringent manufacturing standards for pharmaceutical-grade equipment and environmental norms for chemical process machinery.

Environmental Compliance

The company is focused on understanding and managing ESG risks as part of its updated risk management framework.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material prices (Steel) and the successful turnaround/integration of the newly acquired German businesses which currently incur initial losses.