Financial Performance Highlights

Q2 FY27 Performance:

  • Revenue from operations: ₹501 crores, representing 32.7% YoY growth
  • Volume growth: 24.8% YoY
  • Realization growth: 6.3% YoY to ₹267 per kg
  • Gross profit: ₹305 crores (33.8% YoY growth), with gross margin at 60.8% (expanding 52 bps YoY)
  • EBITDA: ₹153 crores (32.2% YoY growth), with EBITDA margin at 30.6%
  • PAT: ₹98 crores (32.8% YoY growth), with PAT margin at 19.5%

H1 FY27 Performance:

  • Revenue: ₹950 crores, representing 29.9% YoY growth
  • Volume growth: 24% YoY
  • Realization growth: 4.8% YoY to ₹260 per kg
  • Gross profit: ₹577 crores (33.5% YoY growth), with gross margin at 60.8% (expanding 161 bps YoY)
  • EBITDA: ₹294 crores (35.5% YoY growth), with EBITDA margin at 30.9% (expanding 127 bps YoY)
  • PAT: ₹189 crores (35.8% YoY growth), with PAT margin at 19.9% (expanding 86 bps YoY)

Segmental Performance (H1 FY27)

  • Commercial Vehicles: 33% of total revenue (vs 37% in H1 FY26), high-teen growth driven by domestic market performing in line with MHCV production growth
  • Farm Equipment: 30% of total revenue (vs 34% in H1 FY26), over 20% growth with domestic high-teen growth outperforming tractor market
  • Industrial: 16% of total revenue (vs 13% in H1 FY26), well above 50% growth supported by strong traction in domestic and export markets
  • Off-highway: 12% of total revenue (vs 10% in H1 FY26), over 50% growth from both domestic and export markets
  • Passenger Vehicles: 9% of total revenue (vs 5% in H1 FY26), nearly 100% growth from domestic and export markets

Capacity and Utilization

  • Installed forging capacity: 1,58,000 metric tons
  • Installed machining capacity: 82,000 metric tons
  • H1 FY27 utilization: 60% in forging, 77% in machining
  • Machining contribution increased to 90% in H1 FY27 from 88% in H1 FY26

Capital Expenditure and Investments

Existing Capex (₹650 crores):

  • Ultra-heavy component manufacturing facility with 20 MW captive solar power plant
  • Expected completion and commissioning in Q4 FY2028
  • ₹300 crores already invested as of call date
  • Includes vertical upsetter line (₹150 crores) for farm equipment and wind applications
  • Heavy hammer line (₹300 crores) with fungible capacity for components from 300 kg to 3 tons
  • Machining lines (₹200 crores) dedicated for heavy engine/data center applications

New Approved Capex (₹500 crores):

  • Focus: 70% on machining facilities, 30% on forging (small press lines)
  • Phased implementation across FY2028 and FY2029
  • Funding: Combination of debt (₹300 crores sanctioned) and internal accruals
  • Capacity addition: 59,000 MT forging capacity and 34,000 MT machining capacity
  • Expected total capacity post-expansion: 2,17,000 tons forging and 1,16,000 tons machining

Order Book and Business Development

  • 50% of current order book from export sector
  • ₹95 crores of new orders secured in last quarter for Asian exports
  • Heavy Components Business:
  • ₹300 crores per annum order secured for data center applications with visibility until 2033
  • Additional ₹1,000 crores of orders in discussion
  • Target to close ₹500 crores of orders by FY27 end
  • Cold trials expected January-February 2027, hot trials by March 2027

4,000-ton Press Line Update

  • Commissioned for North American PV customer
  • ₹80-100 crores projected revenue from facility
  • Most sales on DAP basis, recognizing from Q3 FY27 onwards

Balance Sheet and Cash Flow

  • Strong financial position with total outside liability to net worth ratio at 0.21x
  • Net debt to equity: 0.08x
  • Cash and liquid reserves: approximately ₹350 crores
  • H1 FY27 operating cash flow: ₹124 crores (impacted by working capital investment)
  • ROCE: 19.6%, operational assets ROCE (excluding cash, CWIP, advances) above 25%
  • H1 FY27 capital expenditure: ₹378 crores

Guidance and Outlook

  • Full-year volume growth guidance maintained
  • Gross margin and EBITDA per kg expected to trend upwards
  • Full-year profitability margins expected similar to FY2026 levels
  • Solar power plant (33 MW) expected to contribute 1.5% to EBITDA from Q1 FY28
  • Power savings estimated at ₹30 crores annually once fully operational

Market Share and Competitive Position

  • Farm equipment market share increased from 42% to 46%
  • Strong positioning across all segments with capacity constraints in some areas

Conference Participants

Management:

  • Mr. Ashish Garg - Managing Director
  • Mr. Pankaj Kumar Goyal - Chief Financial Officer

Analysts:

  • Krisha Kansara - Boring AMC
  • Vivek Kumar - ICICI Securities
  • Sahil Sanghvi - Monarch Networth Capital
  • Mihir Vora - Equirus Securities
  • Joseph George - IIFL
  • Varinder Bansal - Omkara Capital
  • Aniket Mhatre - JM Financial
  • Jinesh Gandhi - Oaklane Capital
  • Arjun Khanna - Kotak Mutual Fund
  • Ronak Mehta - ICICI Securities