💰 Financial Performance

Revenue Growth by Segment

The Engineering Products division recorded a 1.9x YoY growth in FY25 compared to FY24. In H1 FY26, the Engineering segment contributed 47% of revenue while Textiles contributed 53%. Overall revenue for Q2 FY26 grew by 49.8% YoY to INR 245.4 Crores, and H1 FY26 revenue surged 68.9% YoY to INR 493.5 Crores.

Geographic Revenue Split

As of H1 FY26, the revenue split is 84% Domestic and 16% Exports. The company maintains an international presence in the USA, Middle East (including Egypt), and Europe, aiming to diversify revenue and reduce reliance on the Indian domestic market.

Profitability Margins

Gross Profit Margin improved to 29.7% in FY25 from 18.4% in FY24. PAT Margin significantly improved to 7.34% in FY25 (INR 54.7 Cr) from 3.24% in FY24. In H1 FY26, PAT margin further expanded to 8.5% (INR 42.0 Cr), a 167 bps increase YoY, driven by the shift toward high-margin EPC and engineering manufacturing.

EBITDA Margin

EBITDA margin stood at 12.4% in H1 FY26, representing a 455 bps YoY expansion from 7.9% in H1 FY25. Q2 FY26 EBITDA margin was 13.5% (INR 33.2 Cr). This growth is attributed to operational efficiencies and a prudent focus on margin-accretive engineering and EPC segments.

Capital Expenditure

The company is undertaking a massive greenfield expansion at Vasai to increase capacity 6x from 18,000 MTPA to 105,000 MTPA by Q4 FY26. Additionally, a total capex outlay of INR 1,633 Crores is planned for unrelated diversifications into a 120MW Solar IPP and a guns/ammunition manufacturing unit.

Credit Rating & Borrowing

CARE Ratings reaffirmed the long-term rating at 'CARE BBB-' but revised the outlook from 'Stable' to 'Negative' in October 2025. This revision reflects risks from aggressive debt-funded capex. Finance costs rose 93.1% YoY to INR 11.6 Cr in H1 FY26 due to increased borrowing for expansion.

⚙️ Operational Drivers

Raw Materials

Key raw materials include steel (for ERW pipes, fasteners, and hangers) and textile yarn. Steel represents a significant portion of the cost of goods sold, which stood at INR 361.1 Cr (73% of revenue) in H1 FY26.

Import Sources

Raw materials are sourced domestically within India for the engineering and textile segments, while the company leverages its presence in the Middle East and USA for market-specific requirements.

Key Suppliers

Not specifically named in the documents, but the company maintains long-term relationships with various suppliers to support its 18,000 MTPA production capacity.

Capacity Expansion

Current manufacturing capacity is 18,000 MTPA. The company is expanding this by 6x to reach 105,000 MTPA, with commercial production expected to commence in H1 FY26/Q4 FY26 to meet the growing order book of INR 1,525 Cr.

Raw Material Costs

Cost of Goods Sold (COGS) was INR 522.2 Cr in FY25. COGS as a percentage of revenue decreased from 81.6% in H1 FY25 to 73.2% in H1 FY26, indicating better procurement strategies and higher value-add in the EPC segment.

Manufacturing Efficiency

Efficiency is driven by forward and backward integration in the engineering segment. The shift to high-margin ERW pipe manufacturing is expected to improve PBILDT margins post-commissioning of the new facility.

Logistics & Distribution

Distribution is handled through domestic channels (84% of revenue) and international shipping to the USA and Middle East. Export-import policies and logistics uncertainties are cited as primary threats to trade stability.

📈 Strategic Growth

Expected Growth Rate

63.36%

Growth Strategy

Growth will be achieved through a 6x capacity expansion to 105,000 MTPA, foraying into high-margin sectors like Defence (guns and ammunition) and Solar IPP (120MW), and executing a robust EPC order book of INR 967.59 Cr. The company is also targeting new sectors like port construction and data centers with a potential order value exceeding INR 700 Cr.

Products & Services

Specialized metal products including Pipe Support Systems, Fasteners, Anchors, HVAC systems, ERW Pipes, and textile yarn. Services include EPC contracting for civil, MEP, and irrigation infrastructure.

Brand Portfolio

Tembo

New Products/Services

New launches include ERW pipes (commissioned July 2025) and specialized Defence products. The company signed an MoU for a defence manufacturing unit in Maharashtra, expected to contribute significantly to future high-margin revenue.

Market Expansion

Expansion into the Gulf Cooperation Council (GCC) countries, USA, and Europe through a 75:25 strategic partnership with MASAH Specialized Construction Co.

Market Share & Ranking

Not disclosed in available documents, but the company is a prominent player in the pipe support and fastener industry with UL and FM approvals.

Strategic Alliances

Strategic partnership with MASAH Specialized Construction Co. (75:25) and an agency agreement with TAM Capital. It also operates JVs like Tembo PES JV and Tembo Global Infra Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward localized manufacturing under 'Atmanirbhar Bharat'. Tembo is positioning itself by diversifying from pure trading (76% of FY24 revenue) to manufacturing and high-value EPC (39% manufacturing in FY25).

Competitive Landscape

Operates in a competitive landscape for yarn trading and industrial products, but differentiates through specialized engineering certifications and integrated manufacturing.

Competitive Moat

The moat is built on international quality certifications (UL and FM Approvals from USA) and a 6x capacity expansion. These certifications act as entry barriers and allow the company to win prestigious international clients.

Macro Economic Sensitivity

Highly sensitive to government infrastructure spending and 'Make in India' initiatives, which drive demand for the company's irrigation and EPC services.

Consumer Behavior

Increased demand for sustainable infrastructure and renewable energy has prompted the company's entry into the Solar IPP sector.

Geopolitical Risks

Trade uncertainties and changes in export-import policies in the USA and Middle East could affect the 16% export revenue stream.

⚖️ Regulatory & Governance

Industry Regulations

Products must comply with ISO 9001:2015, UL (Underwriter’s Laboratory Inc., USA), and FM Approval (USA) standards for fire sprinkler and pipe support installations.

Environmental Compliance

Not specifically disclosed in INR, but the company is entering the Solar IPP segment (120MW) to align with green energy trends.

Taxation Policy Impact

The effective tax rate for FY25 was approximately 28.2% (INR 21.5 Cr tax on INR 76.2 Cr EBT).

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful execution of the INR 1,633 Cr unrelated greenfield capex in Solar and Defence. Failure or delay could impact liquidity, as reflected in the 'Negative' credit outlook.

Geographic Concentration Risk

84% of revenue is concentrated in the Indian domestic market, making the company vulnerable to local economic downturns.

Third Party Dependencies

The EPC business currently relies on procuring pipes from other manufacturers, though this dependency will reduce once the internal ERW pipe facility stabilizes.

Technology Obsolescence Risk

The company is mitigating technology risks by investing in new manufacturing units for ERW pipes and Zinc Flake Dies to maintain a competitive edge.

Credit & Counterparty Risk

EPC project receivables include a cash retention component. However, the company uses LC-backed trade receivables (90-180 days) to mitigate counterparty default risks.