Shilchar Tech. — Q2 FY26 earnings call

Call held 18 Oct 2025

Management summary

Shilchar Technologies reported a strong Q2 FY26 with revenue growing 31% year-on-year to INR 171 crores and net profit up 40% to INR 46 crores, while maintaining EBITDA margins at 31%. The company announced a significant capacity expansion at Gavasad, adding 6,500 MVA by April 2027, fully funded by internal accruals. Despite uncertainties from new US tariffs, management expressed confidence in maintaining margins and achieving its FY26 sales target of INR 750 crores, driven by robust domestic demand from the power and renewable energy sectors.

Highlights

  • Revenue from operations grew 31% YoY to INR 171 crores in Q2 FY26.

  • Net profit increased 40% YoY to INR 46 crores in Q2 FY26.

  • EBITDA margins maintained at 31% in Q2 FY26, in line with Q2 FY25.

  • H1 FY26 saw 39% top-line growth and 54% bottom-line growth.

  • Announced Gavasad expansion to add 6,500 MVA capacity, increasing total to 14,000 MVA by April 2027, funded by INR 90 crores internal accruals.

Concerns

  • New US tariff measures implemented from August 27 introduced uncertainties for the export business.

Key financials

2 periods

Headline

  • Revenue from Operations
    ₹171 Cr
    YoY +31%
  • EBITDA Margin
    31%
  • Net Profit
    ₹46 Cr
    YoY +40%

H1

  • FY26 Top Line Growth
    —
    YoY +39%
  • FY26 Bottom Line Growth
    —
    YoY +54%

What they filed

Q1 FY27: revenue down 15.1%, net profit down 48.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue131 154 232 159 171 +31%170 +10%152 −34%135 −15%
EBITDA41 43 71 52 54 +32%52 +21%32 −55%22 −58%
Net profit33 35 55 41 46 +39%42 +20%28 −49%21 −49%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Total value

₹300 Cr

as of 2025-10-01 quantified

Execution

to be executed before this financial year

Composition

Mix 2 geographies
  • Domestic 58.3%
  • Export 41.7%

Share of order book by geography

Pipeline

other

Ongoing discussions with customers for new orders and expected more export orders for Q4.

Management is confident in achieving the FY26 sales target of INR 750 crores based on the current order book and ongoing discussions.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹90 Cr entirely through internal accruals
    • Gavasad expansion 3 project for capacity addition of 6,500 MVA (total 14,000 MVA by April 2027) to manufacture 220 kV class transformers. ₹90 Cr
    This expansion is funded entirely through internal accruals with a capital outlay of approximately INR90 crores, underscores our commitment to India's rapidly evolving power sector and our confidence in long-term growth strategy.
  • Liquidity Liquidity disclosed Capex is funded entirely through internal accruals, indicating sufficient internal liquidity.
    This expansion is funded entirely through internal accruals with a capital outlay of approximately INR90 crores

Guidance & targets

Revenue

  • Sales Revenue · FY26 · High confidence INR 750 crores
    Considering the first half sales, on hand orders of approximately INR300 crores plus and ongoing discussions with our customers for new orders, we are on track to achieve our target meeting sales of INR750 crores for year FY '25-26.

    — Mr. Aashay Shah

  • Sales Revenue · FY27 · Medium confidence INR 850 crores
    So I mean, this year, we are looking at INR750 crores. Next year, see, like I said, generally first two quarters are slow in the domestic market. So we will try to utilise that even more, and we will try to -- I mean, we'll target to reach INR850 crores next year, FY '27.

    — Mr. Aashay Shah

Capacity Utilization

  • Overall Capacity Utilization Capacity Utilization · FY26 · High confidence 90-95%
    So FY '26, we are expecting about 90% to 95% capacity utilization. And for Q2, it was about, again, 90% to 95%.

    — Mr. Aashay Shah

  • New 220 kV Class Facility Utilization Capacity Utilization · FY28 (first year of operation) · Medium confidence 60-70%
    And we'll be happy if we can, in the first year, achieve 60%, 70% capacity utilisation. Even in the new plant, we will be manufacturing inverter duty transformers, where our presence is already there.

    — Mr. Aashay Shah

Growth

  • Sales Growth Growth · FY27 · Medium confidence 10-20%
    So for FY '27, we will try to increase that capacity. So we'll be growing by about 10% - 20% or so for FY '27.

    — Mr. Aashay Shah

Revenue Potential

  • Revenue at Full Capacity (14,000 MVA) Revenue Potential · Post April 2027 · High confidence INR 1,400-1,500 crores
    So with the new expansion, we will be able to at full capacity, we'll be able to do a turnover of anywhere between INR1,400 crores to INR1,500 crores.

    — Mr. Aashay Shah

Margins

  • EBITDA Margins Margins · Next year or so · High confidence Maintain current levels
    So I mean, we don't see any issue. We'll be able to maintain the margins which we have and we've been doing so over the last two years, and all our customers, I mean, they have not placed any orders on hold or they have not cancelled any orders.

    — Mr. Aashay Shah

What to watch in Q3 FY26

Progress on Gavasad Expansion

Next quarter
Current Civil contractor and pre-engineered building orders placed, long lead items (winding machines) ordered.
Target Continued progress on civil work and machinery installation.

Why it matters

Timely execution of this INR 90 crore capex is crucial for the planned capacity addition of 6,500 MVA by April 2027 and future revenue growth.

So we have already started floating inquiries for machinery. We have already given the order for the civil contractor and the pre-engineered building as well. And before that is completed, all the machinery will be available with us.

Risks & concerns

  • Impact of US Tariffs on Export Business

    medium

    New 50% tariff measures on US imports from August 27, 2025, create uncertainty, but management expects to maintain business momentum as customers are willing to pay and competitors also face similar duties.

    Management acknowledged

  • Potential Overcapacity in Transformer Industry

    low

    Analyst raised concern about widespread capex announcements in the transformer sector leading to overcapacity, but management believes this will not be an issue for the next 3-4 years due to strong underlying demand.

    Analyst downplayed

  • Cyclicality of the Capital Goods Industry

    low

    Analyst questioned if the current uptick is merely a cyclical peak or a structural shift; management believes the industry is less cyclical now due to sustained government push for electrification, renewable energy, and data centers, projecting 5-6 years of strong demand.

    Analyst downplayed

Q&A highlights

7 direct
New Capacity Addition (220 kV class transformers) Direct
So we are going [Inaudible 0:05:51]. We will be able to manufacture 100 MVA, 220 kV class transformers.

Clarifies the specific product segment for the new 6,500 MVA capacity, indicating a move into higher voltage transformers and potential for new market penetration.

Asked by Sagar Dhawan

Impact of US Tariffs on Export Business Direct
The customers are ready to pay for it as of now because our competitors for these markets, they are in different countries, which also have tariffs.

Addresses concerns about the 50% US tariff, indicating that the company's competitive position is maintained due to similar tariffs on other suppliers and strong demand.

Asked by Jiten Parmar

Industry Cyclicality and Long-Term Growth Direct
So it's just that government is pushing really hard for 100% electrification in India. And they are, I mean, focusing a lot on renewable energy also... So because of that, we are seeing that in order to fulfil what the government is targeting, it will take at least five to 6 years.

Provides management's rationale for why the capital goods sector, specifically transformers, is expected to experience sustained growth for the next 5-6 years, mitigating traditional cyclicality concerns.

Asked by Abhi Jain

Capacity Utilization and Future Growth Direct
No, there will be some growth. So generally, what happens is in Q1 and Q2, there is always a slow movement. So for FY '27, we will try to increase that capacity. So we'll be growing by about 10% - 20% or so for FY '27.

Clarifies that despite high current capacity utilization, the company expects 10-20% growth in FY27, indicating confidence in managing demand and capacity.

Asked by Shrenik Mehta

NSE Listing Timeline Direct
So we'll be able to -- I mean, time line we have fixed it before the new year, we'll be listing in NSE. We are already working on it.

Provides a specific timeline for the company's planned NSE listing, a key event for investors.

Asked by Prasad

Quality and Premium Pricing Direct
So our product gives very little problem at site. In case there is any issue, our service team responds to them very quickly, so customer really appreciates that. And most of our customers, if you have seen, I mean, they are all repeat customers. They have been working with us over the last 10, 15 years.

Explains the company's competitive advantage and ability to command a premium, attributing it to product quality and strong customer service leading to repeat business.

Asked by Ashish Soni

Timing of Capacity Expansion Direct
No, I don't think so because, see, I mean, we this 100% capacity utilisation also came very fast. And we don't want to like -- we want sustainable growth. We don't want I mean, we have accrued a lot of surplus also. So we'll be using that. Maybe one year ago, we would have had to use -- I mean, had to take a loan or something as well.

Addresses the concern about potential delay in capacity expansion, with management asserting that the timing is appropriate for sustainable growth and leveraging internal accruals.

Asked by Suman Kumar

2 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

Shilchar Technologies delivered a robust Q2 FY26, with revenue from operations growing 31% year-on-year to INR 171 crores. The company's profitability metrics remained strong, with EBITDA margins at 31%, consistent with Q2 FY25 levels. Net profit for the quarter surged by an exceptional 40% year-on-year, reaching INR 46 crores. For the first half of FY26, the company reported a considerable 39% top-line growth and a 54% bottom-line growth, demonstrating strong operational efficiency.

Gavasad Expansion and Capacity Outlook

A significant milestone for the quarter was the announcement of the Gavasad expansion 3 project, which will add 6,500 MVA to the company's capacity, bringing the total to 14,000 MVA by April 2027. This INR 90 crore capital outlay is entirely funded through internal accruals. The new facility will enable the manufacturing of 100 MVA, 220 kV class transformers, with management targeting 60-70% capacity utilization in its first year (FY28).

Domestic Market Tailwinds

The domestic power and renewable energy sectors continue to provide substantial tailwinds. India commissioned approximately 21.7 gigawatts of solar capacity in H1 FY26, driving sustained order inflows. The company is primarily focused on special purpose transformers for solar and wind energy, and the new 220 kV class transformers will cater to the transmission segment, complementing its strong presence in distribution transformers.

Export Business and US Tariff Impact

The export business faces new US tariff measures (50% duty) implemented from August 27, introducing some uncertainties. However, management noted that underlying demand and customer engagements in the US remain strong, with customers willing to bear the full duty as competitors also face similar tariffs. The company aims to maintain a balanced export-to-domestic mix of 50% each, with Middle East and Africa being other key export markets.

Industry Cyclicality and Long-Term Growth Drivers

Management expressed confidence that the industry's traditional cyclicality is being mitigated by structural factors. They attribute this to the Indian government's aggressive push for 100% electrification and renewable energy, as well as the rising demand from data centers driven by artificial intelligence. These factors are expected to provide a sustained growth runway for the next 5-6 years.

Order Book and Sales Targets

Shilchar Technologies currently holds an order book of INR 300 crores, with INR 175 crores from domestic orders and INR 125 crores from exports. This order book is slated for execution before the end of FY26. Based on current orders and ongoing customer discussions, the company is on track to achieve its target sales of INR 750 crores for FY26, and further targets INR 850 crores for FY27, with capacity utilization expected to be 90-95% for FY26.

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