Detailed Narrative
Strong Q2 FY26 Performance and Growth Outlook
Kilburn Engineering reported a robust Q2 FY26, with standalone topline growing 47% YoY to ₹114.79 crores and EBITDA increasing 48% YoY to ₹26.39 crores, resulting in a 22.99% EBITDA margin. On a consolidated basis, the company achieved a topline of ₹154 crores with an EBITDA margin of approximately 27%. Management expressed confidence in sustaining a 50% topline growth for FY26, targeting ₹650 crores, and an EBITDA margin of 26%. For the next 2-3 years, a CAGR growth of 25% and an EBITDA margin in the range of 23-25% are projected.
Robust Order Book and Inquiry Pipeline
The group concluded Q2 with an order backlog of ₹492 crores, and additionally secured orders/LOIs worth ₹129 crores from October 1st, bringing the total unexecuted order pipeline to ₹610 crores. The inquiry pipeline stands at a substantial ₹4,000 crores, with a historical conversion rate of 20-25% and a typical gestation period of 7-12 months. Key sectors driving this traction include chemical, fertilizers, nuclear, metal recovery, and food processing (for Monga Strayfield). ME Energy alone has an unexecuted order book of around ₹180 crores.
Strategic CapEx for Capacity Expansion
Kilburn Engineering has planned significant CapEx to support future growth. A brownfield expansion at Saravali, costing ₹25 crores, is expected to be completed by Q2 FY27 and will add an estimated ₹100 crores in revenue. Additionally, a CapEx of ₹10-15 crores is planned for ME Energy, commencing by the end of Q3 FY26, which is anticipated to generate an extra ₹75-100 crores in revenue. Further CapEx for Monga Strayfield is slated for FY27, with details to be announced.
Debt Management and Liquidity Position
While short-term borrowing increased from ₹27 crores to ₹40 crores, primarily due to an internal loan from subsidiary Monga Strayfield, the company's term debt has decreased, making it virtually net debt zero with healthy cash balances and fixed deposits. The current cost of debt is between 10.5% and 11%. Management indicated that the negative cash flow observed this quarter is a temporary effect of high physical dispatches towards quarter-end, with receivables expected to convert into cash in the coming months.
Focus on Exports and Technology Tie-ups
The company aims to significantly increase its export revenue share from the current 15% to 30-40%. This strategy is bolstered by technology tie-ups, such as with Komline Sanderson (US) and ongoing discussions with NARA (Japan), which enable Kilburn to market and manufacture advanced products for various geographies. These partnerships are expected to open new opportunities and leverage Kilburn's manufacturing expertise for international markets.
Tax Rate Normalization and Employee Costs
The company's tax incidence has increased to a nominal rate of 25-27% as carry-forward losses from previous years were fully utilized by September. This normalization means the company will now pay full tax on its profits. Employee benefit expenses are projected to grow at a CAGR of 15-18%, accounting for both existing employee increments (12-15%) and new onboarding (5-10%).