Financial Performance Highlights

Q2 FY27 Consolidated Engineering Business:

  • Revenue: INR428 crores (vs INR363 crores in Q2 FY26, +18% YoY; vs INR421 crores in Q1 FY27)
  • EBITDA: INR81.1 crores (vs INR63 crores in Q2 FY26; vs INR69.8 crores in Q1 FY27)
  • EBITDA margin showed consistent improvement

Solar Business Q2 FY27:

  • Revenue: INR11.9 crores
  • EBITDA: INR0.73 crores
  • Good order level due to PV sales relaxations from government up to December 2026

Working Capital:

  • Consolidated working capital: 135 days (vs 139 days in Q2 FY26; 116 days in Q1 FY27)

Segment Performance Q2 FY27:

  • Bushings revenue: ~INR42 crores (+26% QoQ)
  • Stampings revenue: ~INR23 crores (+19% QoQ)
  • LSB revenue: ~INR14 crores (+35% QoQ)
  • Japanese customer revenue: ~INR24 crores (+15% QoQ)

Capex:

  • Q2 FY27 capex: INR35.6 crores
  • H1 FY27 capex: ~INR73 crores
  • Total planned capex: INR220 crores over 18 months (INR110cr for Advantek expansion, INR100cr for China expansion)
  • Expected completion: June 2027 (accelerated from 18 to 12-15 months)
  • Maintenance capex: INR25-30 crores annually at consolidated level

Business Segment Updates

India Engineering Business (Harsha Engineers + Harsha Engineers Advantek):

  • Strong 24% YoY growth in Q2 FY27, 23% YoY growth in H1 FY27
  • Growth across all key verticals: Cages, Bushings, and Stampings
  • Export performance: H1 exports at ~INR280 crores (vs annual export of INR480 crores in FY26)

Cage Business:

  • Strong demand from industrial and automotive segments in India
  • Continued strong export demand from Europe, US, Japan
  • New resourcing outsourcing project: Commercial sales expected in Q3/Q4 FY27
  • Peak run rate potential: INR75 crores per year
  • Additional projects in pipeline: One small project (FY27-28), one larger project (FY28-29)
  • Large-sized Cages: Significant ramp-up expected in H2 FY27, targeting 20% annual growth
  • Japan customer growth: Expected 10-15% annual growth

Bushings Segment:

  • Targeting 30% growth in FY27 (from strong windmill gearbox demand)
  • New designs developed for customers
  • Long-term target: INR300 crores annual sales in 3-4 years

Stampings Segment:

  • Strong traction for specialized railway seal inserts, AC compressor components, automotive components
  • New product: Accumulator in AC air conditioning segment
  • Targeting 30% growth in FY27 (vs INR72 crores in FY26)
  • Long-term target: INR300 crores annual sales in 4 years
  • Aerospace/Defense opportunity: INR20-30 crores, relatively small in current portfolio

Romania Operations:

  • Strategy: Downsizing operations and reducing operating costs
  • Focus: Increasing finished Cage sales
  • Target: Arrest operating losses by end of FY27
  • Expected: Lower sales but positive profitability contribution in FY28
  • Current status: Evaluating detailed plan, more concrete announcement expected next quarter

China Operations:

  • Q2 performance: Soft sequentially but decent YoY growth
  • Expected: Reasonably strong performance for rest of year
  • Current EBITDA: Single digit, expected to improve
  • Moderate growth: 5-7% for current portfolio
  • Brownfield expansion: Steel Cages for industrial/auto sector, production expected Q3 FY28
  • Growth acceleration expected when new capacity comes online

Guidance and Outlook

Full Year FY27 Guidance:

  • India business: Mid-to-high teens growth
  • Consolidated: 10-12% growth
  • Note: Q3 typically soft due to international buyers' calendar year-end

Segment Targets:

  • Bushings: INR300 crores in 3-4 years
  • Stampings: INR300 crores in 4 years
  • Advantek revenue: INR140 crores+ in FY27
  • Solar business: INR150-200 crores range (cyclical, dependent on government norms)

Margin Outlook:

  • India level: ~22% EBITDA margin
  • Consolidated Engineering: 17-18% EBITDA margin
  • Subject to metal price movements and operational efficiency

Capital Structure and Debt

  • No incremental borrowings planned for FY28
  • Current debt level: Comfortable
  • Advantek capex loan: ~INR250 crores
  • Asset turnover: ~2x for productive assets (excluding immovables)

Operational Metrics

  • Volume growth: Targeting 12-15% globally
  • Price pass-through: ~4-5% of H1 growth attributed to material pass-through
  • Metal price impact: Ongoing challenge, partial pass-through completed

Q&A Highlights

  • Romania: Working toward operating profitability, detailed plan forthcoming
  • China: Single-digit growth expected until new capacity comes online
  • Market share: Confident in maintaining and enhancing share with bearing customers
  • Stamping growth: Acceleration possible, may reach targets earlier than expected
  • Subsidiary performance: Foreign subsidiaries combined loss of INR1.7 crores in Q2
  • Advantek: Expected profit positive in H2, full-year may still show minor negative
  • Interest+depreciation: Expected to reach ~INR10 crores quarterly at peak