MEGATHERM - Megatherm

📊 NSE: MEGATHERM 🏢 Engineering 📅 Last Updated: 12/14/2025 9:47

💰 Financial Performance

Revenue Growth by Segment

The steel segment is currently experiencing a growth rate of 6-7%, with potential to reach 9% as government infrastructure projects accelerate. Overall revenue grew 15% in FY24 to INR 306.83 Cr and 4% in FY25 to INR 320.51 Cr. H1 FY26 revenue was approximately INR 159 Cr.

Geographic Revenue Split

The gap between domestic and export revenue for induction products is narrowing. The company is aggressively targeting the US market through its Cyprium JV to increase export contribution.

Profitability Margins

Operating margins are expected to remain stable at 10-11% over the medium term. The company reported a healthy Return on Capital Employed (ROCE) of 20-25%.

EBITDA Margin

Operating margins (EBITDA equivalent) are targeted at 10-11%, supported by backward integration and the ability to pass on raw material price volatility to consumers.

Capital Expenditure

The company added capacity that now supports a revenue potential of INR 450 Cr to INR 550 Cr. It benefits from the MCIP subsidy, which provides 20% of CapEx as a central government incentive.

Credit Rating & Borrowing

Ratings were upgraded to CRISIL BBB/Stable/CRISIL A3+ in December 2023 and reaffirmed in March 2025. The capital structure is robust with a gearing ratio of 0.23 times as of March 31, 2025.

⚙️ Operational Drivers

Raw Materials

Steel and copper are primary raw materials for induction furnaces and transformers. Specific percentage of total cost for each is not disclosed.

Capacity Expansion

Current installed capacity is sufficient to achieve a revenue target of INR 450-550 Cr. The company aims for a long-term target of INR 1,000 Cr revenue.

Raw Material Costs

Raw material costs are susceptible to volatility; however, the company maintains a better ability to pass these costs to consumers, maintaining margins around 10-11%.

Manufacturing Efficiency

Manufacturing efficiency is driven by in-house technology and a reference-based sales model that accelerates growth once initial equipment is sold in a new country.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth will be achieved through the Cyprium JV in the US (50% profit share), heavy investments in global trade fairs to become an alternative to Inductotherm, and expansion into the domestic transformer segment. The company leverages its in-house technology to maintain a competitive edge.

Products & Services

Induction furnaces for steel making, foundry, forging, heating, and hardening equipment, as well as transformers.

Brand Portfolio

Megatherm

New Products/Services

Transformers in the domestic segment and induction products in the export market are identified as high-growth generators.

Market Expansion

Targeting the US market through the conversion of the Cyprium JV from an LLC to an Inc. to facilitate smoother fund transfers and 50/50 profit sharing.

Market Share & Ranking

The company competes directly with Electrotherm and Inductotherm, particularly in the induction furnace for steel making segment.

Strategic Alliances

Joint Venture with Cyprium (USA) for manufacturing in India and selling at US market prices.

🌍 External Factors

Industry Trends

India is becoming a global hub for induction products. The industry is seeing a narrowing gap between domestic and export demand for capital goods.

Competitive Landscape

Key competitors include Electrotherm and Inductotherm. Megatherm competes by offering in-house technology and targeting specific segments like steel making furnaces.

Competitive Moat

The moat is built on in-house technology and established relationships with major industrial clients like Tata Motors and Shyam Metalics, which provide high switching costs and reference-based growth.

Macro Economic Sensitivity

Revenue is sensitive to government infrastructure spending; a lack of budgeted infra spending can keep growth at 6% vs a potential 9%.

Geopolitical Risks

Fund transfer issues with the US LLC led to a structural change into an Inc. to ensure operational continuity.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to Ministry of Electronics (Central Government) guidelines for CapEx subsidies.

Taxation Policy Impact

The company benefits from the MCIP (Ministry of Electronics) subsidy of 20% on CapEx. It is not affected by the West Bengal government's revocation of industrial incentives as it did not factor them into calculations.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is associated with the time taken for initial approvals and creating references in new export markets, which can slow initial growth phases.