PENIND - Pennar Industrie

📊 NSE: PENIND 🏢 Steel - Medium / Small 📅 Last Updated: 12/14/2025 10:57

💰 Financial Performance

Revenue Growth by Segment

Overall revenue for Q2 FY26 rose 22.04% to INR 919.6 Cr. The Pre-Engineered Buildings (PEB) division, which accounts for ~45% of revenue, delivered 30% sales growth. Diversified engineering segments grew at 10-12% YoY. The US subsidiary, Ascent, also reported strong double-digit revenue growth.

Geographic Revenue Split

The US market is a significant contributor through subsidiaries Ascent and Telco, with Ascent holding an order backlog of USD 51 million. European markets, specifically Germany, are being proactively expanded, though currently ~2% of revenue is impacted by US sanctions. India remains the primary market with a PEB order book of INR 880 Cr.

Profitability Margins

Q2 FY26 PAT grew 20.13% to INR 32.28 Cr. Q2 FY25 PAT margins were 3.56%, slightly muted due to a shift toward higher-margin businesses. The company targets a terminal velocity PBT margin of 7.5% within the next three years and a floor of 20% for annual PAT growth.

EBITDA Margin

PBILDT margin improved to 9.73% in FY25, up 94 bps from 8.79% in FY24. This improvement is driven by a higher contribution from the PEBS division and higher-margin products. Management expects margins to gradually reach 10-11% through scale effects and operating leverage.

Credit Rating & Borrowing

The company is rated by CARE Ratings/CareEdge. Interest costs are approximately 3.xx% of revenue, with a target to maintain them at 3%. Total annual interest drag is approximately INR 150 Cr, primarily from non-cash instruments and LCEs.

⚙️ Operational Drivers

Raw Materials

Steel coils and sheets are the primary raw materials for PEB and engineering products. Labor costs are a significant operational driver; a labor shortage in Q2 FY26 impacted margins by 30-40 basis points.

Capacity Expansion

The company is focusing on improved capacity utilization in the PEB division to drive Q3 FY26 growth. The India PEB order book is expected to cross INR 1,000 Cr in the coming months.

Raw Material Costs

Gross margins were off by 2% in Q2 FY26 due to one-off labor cost increases and supply constraints. Procurement strategies focus on rationalizing fixed costs over a larger revenue base to improve operating leverage.

Manufacturing Efficiency

Efficiency is driven by scale effects; as revenue increases, fixed costs are rationalized. The PEB division is positioned for a strong Q3 FY26 backed by improved capacity utilization.

📈 Strategic Growth

Expected Growth Rate

20%

Growth Strategy

Growth is driven by five key levers: Body in White (automotive), Engineering Services, Boilers, Process Equipment, and Pre-Engineered Buildings (PEB). The strategy involves increasing market share in these large addressable markets and expanding the US footprint through the acquisition of Telco and the growth of Ascent.

Products & Services

Pre-engineered buildings (PEB), Boilers, Process Equipment, Body in White (automotive components), and Engineering Services.

Brand Portfolio

PEBS (India), Ascent (US), and Telco (US).

Market Expansion

Proactive expansion into the German and broader European markets to diversify revenue and mitigate geopolitical risks.

Market Share & Ranking

The company currently has a low market share in its five key growth sectors, which it views as an opportunity for automatic revenue and profit growth as it scales.

🌍 External Factors

Industry Trends

The PEB industry is seeing competitors achieve double-digit margins. Pennar is positioning itself to close a ~300 bps margin gap through scale and higher-margin product mixes.

Competitive Landscape

Key competitors in the PEB segment are currently outperforming Pennar in operating margins by roughly 300 basis points.

Competitive Moat

Moat is built on diversified engineering capabilities and scale in the PEB segment. Sustainability is driven by a large order backlog (INR 880 Cr in India, USD 51M in US) and long-standing relationships with blue-chip clients.

Consumer Behavior

Not applicable as the business is B2B engineering and infrastructure focused.

Geopolitical Risks

US sanctions impact approximately 2% of revenue, prompting a strategic shift toward domestic and European markets.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to US trade sanctions affecting 2% of revenue and standard manufacturing/pollution norms for engineering plants like Raebareli.