WALCHANNAG - Walchan. Inds.

📊 NSE: WALCHANNAG 🏢 Engineering 📅 Last Updated: 12/14/2025 15:14

💰 Financial Performance

Revenue Growth by Segment

Total revenue for H1 FY26 was INR 109.03 Cr, a 38.3% decline from INR 176.88 Cr in H1 FY25. On a sequential basis, Q2 FY26 revenue of INR 55.42 Cr grew 2.7% over Q1 FY26. The Heavy Engineering segment showed a sequential growth of 9.0% in Q2 FY26, while the 'Others' segment grew 8.1%. The Foundry business saw a significant decline due to a lockout, generating minimal revenue.

Geographic Revenue Split

Not specifically disclosed in available documents, though the company maintains a global presence with its registered office in Mumbai, Maharashtra.

Profitability Margins

The company reported a PBT loss of INR 22.29 Cr in H1 FY26 compared to a loss of INR 16.88 Cr in H1 FY25. Net profitability is constrained by high interest costs and cost over-runs on specific orders like TNEB. Operating margins are impacted by the intensive working capital cycle and high fixed costs during periods of labor unrest.

EBITDA Margin

EBITDA margin for Q2 FY26 was 1.1% (INR 0.61 Cr) compared to 4.0% (INR 2.17 Cr) in Q1 FY26. H1 FY26 EBITDA margin stood at 2.5% (INR 2.78 Cr), a sharp decline from 6.2% (INR 10.94 Cr) in H1 FY25 due to reduced scale and loss-making segments.

Capital Expenditure

The company utilized a portion of its INR 216.00 Cr preferential issue proceeds for capex and debt prepayment. Specific planned capex includes enhancing capacity for nuclear orders and DNA business segments.

Credit Rating & Borrowing

The long-term rating is 'ACUITE BB' with the outlook revised from 'Stable' to 'Negative' as of May 2025. Short-term rating is 'ACUITE A4+'. The revision reflects a turnaround delay and weak debt protection metrics, with an Interest Coverage Ratio of -0.72x and DSCR of -0.49x in FY25.

⚙️ Operational Drivers

Raw Materials

Specialized steel, alloys, and components for nuclear and aerospace projects represent the primary material costs. Raw material delays from suppliers specifically impacted nuclear project execution in FY25.

Import Sources

Not specifically disclosed, though the company operates in high-tech manufacturing requiring specialized global and domestic sourcing.

Key Suppliers

Not disclosed by name; however, the company noted delays in raw material supply for nuclear projects from specific third-party vendors.

Capacity Expansion

Current focus is on expanding capacity for the DNA (Defence, Nuclear, Aerospace) business. The company is transitioning away from EPC to specialized OEM manufacturing to improve margins.

Raw Material Costs

Raw material costs are a significant portion of the project-based revenue. Delays in procurement and quality inspections for nuclear projects led to a decline in FY25 operating income to INR 259.18 Cr from INR 311.38 Cr in FY24.

Manufacturing Efficiency

Efficiency was severely hampered by a lockout from April 12, 2025, to November 24, 2025, and a previous 43-day strike in FY24 which cost approximately INR 30 Cr in revenue.

Logistics & Distribution

Not specifically disclosed as a percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

15-20%

Growth Strategy

The company aims to achieve growth by focusing on the 'DNA' (Defence, Nuclear, Aerospace) sectors, targeting a healthy order book of INR 150-200 Cr in H2 FY26. Strategy includes leveraging its 116-year legacy to secure high-precision manufacturing orders for government missions and utilizing INR 216 Cr from preferential issues to deleverage and fund execution.

Products & Services

Critical equipment for Nuclear Power Plants, Aerospace components (Chandrayaan I & II), Akash Missiles, Industrial Gears, Centrifugals, Castings, and Gauges.

Brand Portfolio

Walchandnagar Industries Limited (WIL).

New Products/Services

Increased focus on specialized OEM business for Nuclear and Defence sectors, expected to be the primary driver of the positive EBITDA trajectory.

Market Expansion

Expanding presence in the strategic DNAM (Defence, Nuclear, Aerospace, Missiles) sectors to align with India's self-reliance goals.

Market Share & Ranking

Not disclosed as a specific percentage, but recognized as a key player in India's strategic heavy engineering and aerospace sectors.

Strategic Alliances

Not specifically disclosed in the provided documents.

🌍 External Factors

Industry Trends

The heavy engineering industry is shifting toward high-tech strategic manufacturing. WIL is positioning itself by exiting low-margin EPC and focusing on the growing DNA (Defence, Nuclear, Aerospace) market which offers better long-term visibility.

Competitive Landscape

Competes with other large-scale heavy engineering firms in India, though its niche in nuclear and aerospace precision manufacturing limits the number of direct competitors.

Competitive Moat

The moat is built on a 116-year operational legacy and specialized technical capabilities required for space and nuclear missions (e.g., Chandrayaan). These high entry barriers and long-standing government relationships provide a durable competitive advantage.

Macro Economic Sensitivity

Highly sensitive to government fiscal policy and defense spending. Inflationary pressures on raw materials and labor costs impact project profitability.

Consumer Behavior

Not applicable as the company is B2B/B2G focused.

Geopolitical Risks

Beneficiary of 'Atmanirbhar Bharat' (self-reliance) initiatives in defense and nuclear sectors, which mitigates risks from global trade barriers.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to stringent quality inspections and standards for nuclear and defense manufacturing. Compliance with SEBI (LODR) and (ICDR) regulations is monitored by ICRA.

Environmental Compliance

The company is ISO 9001:2015 certified and implements energy conservation measures like air compressor element replacement.

Taxation Policy Impact

Not specifically disclosed.

Legal Contingencies

A penalty of INR 21.25 Lakhs imposed by SEBI in 2015 regarding promoter entity share purchases is currently pending in the Supreme Court. A provision of INR 4.00 Cr was created for the settlement of Walchandnagar Union Agreements.

⚠️ Risk Analysis

Key Uncertainties

Labor relations remain a key risk, with past strikes and lockouts causing multi-crore revenue losses. Execution delays in long-lead nuclear projects due to supplier issues also pose a risk to the turnaround strategy.