💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue for Q2 FY26 grew 112.4% YoY to INR 218.9 Cr. Growth was broad-based across FACTS, HVDC, and high-voltage power quality segments. Mehru revenue was INR 78 Cr for the quarter, while Endoks revenue was INR 73 Cr. Standalone parent revenue for H1 FY26 was INR 92 Cr.

Geographic Revenue Split

Not explicitly disclosed as a percentage, but management highlighted strong international demand, particularly in Europe, as a key driver for the 112% YoY revenue growth in Q2 FY26.

Profitability Margins

Gross Profit Margin for Q2 FY26 was 40.1%, down from 44.3% YoY. PAT Margin stood at 16.1% for Q2 FY26 compared to 13.0% in Q2 FY25. H1 FY26 PAT Margin was 17.5%, down from 27.4% YoY due to higher tax and operational costs.

EBITDA Margin

Consolidated EBITDA Margin for Q2 FY26 was 24.0% (including other income), up from 17.8% in Q2 FY25. Core operational EBITDA margin was reported at 22.5%. Mehru's operational margins improved significantly to 12% in Q2 FY26 from 8.2% in previous periods.

Capital Expenditure

Standalone Property, Plant and Equipment (PPE) increased from INR 20.58 Cr in FY24 to INR 34.85 Cr in FY25. The company is currently building new facilities that will provide more than 9x the current capacity to support aggressive growth guidance.

Credit Rating & Borrowing

Finance costs for Q2 FY26 were INR 2.2 Cr, a 120% increase from INR 1.0 Cr in Q2 FY25, reflecting increased borrowing to fund capacity expansion. Specific credit ratings and interest rate percentages were not disclosed.

⚙️ Operational Drivers

Raw Materials

Key raw materials include HVDC magnet wires, insulators, and bushings. COGS for Q2 FY26 was INR 131.1 Cr, representing approximately 60% of total revenue.

Import Sources

HVDC magnet wires are sourced from India, but domestic capacity is fully booked for the next year. Insulators and bushings are sourced from global markets where supply remains tight.

Capacity Expansion

The company is expanding capacity by more than 9x current levels through new facilities. This expansion is supported by the addition of 140-150 people in the last quarter for training and ramp-up.

Raw Material Costs

COGS increased 128% YoY to INR 131.1 Cr in Q2 FY26, outpacing revenue growth. Procurement strategies include backward integration to reduce reliance on external supply chains and mitigate global shortages.

Manufacturing Efficiency

Mehru's margin improvement to 12% was driven by higher capacity utilization and improved product mix. The company is training 150 new staff to ensure efficiency at the new 9x capacity facilities.

📈 Strategic Growth

Expected Growth Rate

126%

Growth Strategy

Growth will be achieved through a 9x capacity expansion, backward integration to stabilize margins, and expansion into new product lines like GIS instrument transformers and surge capacitors. The company is targeting the global energy transition wave and grid modernization investments.

Products & Services

Manufacturing and supply of high-voltage electrical equipment including transformers, rectifiers, HVDC components, FACTS, GIS (Gas Insulated Switchgear), and surge capacitors.

Brand Portfolio

Quality Power, Mehru, Endoks, and Sukrut (consolidation in progress).

New Products/Services

New product launches include surge capacitors for GIS and GIS instrument transformers, with the latter expected to commercialize by Q2 FY27 after testing and qualification.

Market Expansion

Targeting larger international markets like Europe through dedicated business development personnel to interact directly with utilities.

Strategic Alliances

The company has signed a collaboration for GIS product development and is in the process of consolidating Sukrut into its financial results.

🌍 External Factors

Industry Trends

The industry is seeing a multi-year opportunity cycle driven by renewable energy integration and grid modernization. Demand is shifting toward HVDC and FACTS technologies to support the global energy transition.

Competitive Landscape

The company competes in the high-voltage electrical equipment market against global players, focusing on FACTS, HVDC, and GIS segments.

Competitive Moat

Moat is built on technology depth in high-voltage equipment, a massive 9x capacity expansion that provides scale, and backward integration that protects margins from supply chain volatility.

Macro Economic Sensitivity

The company's outlook is tied to India's projected GDP growth of 6.3% to 6.8% for FY 2025-26 and the global energy transition wave.

Consumer Behavior

Global utilities are shifting demand toward equipment that supports renewable energy integration and grid stability.

Geopolitical Risks

Trade barriers such as the BIS license requirement for magnet wire imports act as a bottleneck for the HVDC segment.

⚖️ Regulatory & Governance

Industry Regulations

Operations are heavily affected by BIS (Bureau of Indian Standards) licensing requirements for HVDC magnet wires and compliance with Ind AS 115 for revenue recognition on long-term contracts.

Environmental Compliance

The company spent INR 0.35 Cr on Corporate Social Responsibility (CSR) in FY25.

Taxation Policy Impact

Tax expenses for Q2 FY26 were INR 9.1 Cr on a PBT of INR 44.3 Cr, representing an effective tax rate of approximately 20.5%.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the supply of critical inputs (magnet wires, insulators) which could impact the ability to meet the INR 700-800 Cr revenue guidance.

Geographic Concentration Risk

Not disclosed, though management mentioned a 'broad-based' growth across segments and strong international demand.

Third Party Dependencies

High dependency on external suppliers for insulators and bushings, which are currently in tight global supply.

Technology Obsolescence Risk

The company is mitigating technology risk by investing in GIS and HVDC technologies, which are the current industry standards for grid modernization.

Credit & Counterparty Risk

The company noted that most high-voltage substations are owned by large utilities, which generally carry lower credit risk but impose strict penalties for late delivery.