Sealmatic India — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

Sealmatic India reported a strong 23.44% revenue growth in H1 FY26, reaching Rs. 53.63 crores, driven by robust demand across various geographies. However, EBITDA margins saw a compression to 20% due to increased project activity and market penetration costs, including significant exhibition expenses. The company is making strategic investments in international expansion, notably through an Abu Dhabi JV expected to commence business in January 2026, and anticipates substantial replacement revenue from its API seal projects starting FY27.

Highlights

  • Revenue increased by 23.44% to Rs. 53.63 crores in H1 FY26 compared to Rs. 43.92 crores in H1 FY25.

  • Achieved a Profit Before Tax (PBT) of Rs. 8.67 crores, representing 15.70% of total revenue in H1 FY26.

  • Successfully secured orders for 492 API seals across GCC countries, with an estimated conservative replacement value of Rs. 25 crores starting April 2027.

  • The Abu Dhabi Joint Venture (JV) workshop is on track to be operational by December end 2025, with business commencing January 2026.

  • Maintained a strong export contribution of 56% to total sales in H1 FY26, reflecting robust international demand.

Concerns

  • EBITDA margin compressed to 20% in H1 FY26 from 23% in the previous period, attributed to higher project activity and increased market penetration expenditures.

  • The Abu Dhabi JV incurred an initial loss of Rs. 51.61 lakhs during its inception stage, with no revenue generated yet.

  • Management declined to disclose the monetary value of defense projects (BHEL, Mazagon Dock) and the current order book for the remaining financial year, citing confidentiality and price sensitivity.

Key financials

  1. Revenue ₹53.63 Cr +23.4%YoY
  2. EBITDA ₹10.84 Cr
  3. EBITDA Margin 20%
  4. PBT ₹8.67 Cr
  5. PBT % of Revenue 15.7%

What they filed

Q4 FY26: revenue up 44.1%, net profit up 33.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY23Q4 FY23Q2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue26 33 37 34 44 +69%57 +73%54 +46%49 +44%
EBITDA8 7 9 5 9 +13%14 +100%9 +0%6 +20%
Net profit5 6 7 3 6 +20%9 +50%6 −14%4 +33%
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

medium confidence

Composition

Mix 3 client types
  • OEMs (including projects, API & non-API) 52%
  • End User 7%
  • Distribution (Europe, USA, South America) 41%

Share of order book by client type

Pipeline

other

Expected new orders for 70-80 seals in the next 6 months.

The company has successfully supplied or has under execution/engineering 492 API seals across Abu Dhabi, Kuwait, Saudi Arabia, Oman, and Iraq over the last 2.5 years. These seals are expected to generate a conservative replacement revenue of Rs. 25 crores starting April 2027.

Source: Q&A

Capital allocation

high confidence
  • M&A SealTech JV (Abu Dhabi) Joint venture · Pending operationalization

    To meet ADNOC's precondition for a local service center and in-country value addition, and to leverage a local partner's understanding of culture and language.

    Incurred a loss of Rs. 51.61 lakhs in the inception stage (H1 FY26) with no revenue generated yet. Workshop expected to start in January 2026, with profitable business from ADNOC seals starting April 2027.

    So, I was going through the financial statements and somewhere it was written that you incurred a loss of Rs. 51.61 lakhs in the joint venture and the business started from the month of May. And there was no revenue on it. Can you a bit explain on that? ... For us to get approved by ADNOC, ADNOC has a stipulation. Like if you would be aware that in the Middle East, there is a strong drive being done by various kingdoms, which is called the in-country value addition. So, if I have to do business with ADNOC, this was a precondition. Otherwise, they wouldn't approve me as an approved vendor in their AVL. ... And we have done a joint venture with a company with whom we have been having a comfort zone for the last few years. And we know them well because they are entrenched in ADNOC and they do a reasonably good job. And we thought it fit that going all alone, it would be better to have a local partner who understands the culture, who understands the language. And that is why the JV has been done in Abu Dhabi.

Guidance & targets

Revenue

  • Replacement revenue from 492 API seals Revenue · starting April 2027 · Medium confidence Rs. 25 crores
    So, that business, that profitable business, which is about 175 seals that we have supplied to ADNOC, would start generating business in, I would say, to be conservative from April 2027. ... So, that would be amounting to be something like Rs. 25 crores that will start generating for us as and when they get commission, beginning FY '27.

    — Umar Balwa

Operations

  • Abu Dhabi JV workshop operationalization Operations · by December end 2025 · High confidence December end 2025
    The service center in Abu Dhabi shall be up and running by December end 2025.

    — Umar Balwa

  • Abu Dhabi JV business commencement Operations · beginning January 2026 · High confidence January 2026
    So, once our workshop is up and running, we will start our business beginning January 2026.

    — Umar Balwa

Order Inflow

  • Annual API seals addition Order Inflow · every year · Medium confidence 150-200 seals
    And every year, it is our endeavor to add at least 150 to 200 seals of API every year.

    — Umar Balwa

Capacity

  • Combined facility utilization Capacity · throughout the year · High confidence 75%
    At the moment, both combined would be something close to about 75%. ... And we do expect a 75% utilization throughout the year, right? Yes.

    — Umar Balwa

What to watch in Q3 FY26

SealTech JV workshop operationalization

next quarter
Current Expected by December end 2025
Target Operational by January 2026

Why it matters

Successful operationalization is a key milestone for the company's strategic expansion in the Middle East and future revenue generation.

The service center in Abu Dhabi shall be up and running by December end 2025.

Risks & concerns

  • EBITDA margin pressure

    medium

    Margin compression from 23% to 20% due to project activity requiring subsidization for market share and increased expenditure on market penetration (exhibitions).

    Management acknowledged

  • Long gestation period for project business

    medium

    Specialized projects, especially in marine applications, have long execution cycles (2-3 years), delaying revenue recognition and cash flow.

    Management acknowledged

  • Initial losses in new joint ventures

    low

    The Abu Dhabi JV incurred an initial loss of Rs. 51.61 lakhs during its inception phase before generating revenue, typical for startup operations.

    Management acknowledged

  • Lack of transparency on project values

    low

    Management declined to disclose monetary values for defense projects (BHEL, Mazagon Dock) and the current order book for the remaining FY, citing confidentiality and price sensitivity.

    Analyst deflected

Q&A highlights

4 direct, 3 evasive
Reasons for EBITDA margin decline in H1 FY26 Direct
Primarily because of the nature of the business, as it has been explained over many earnings calls than the more of project activity that we do. That is, we have to subsidize our sales to OEMS for gaining market shares with the end users. That is one. And secondly, also, increase in expenditure towards market penetration. As you would have noticed in my address that I mentioned that in the last six months' period, we have participated in six exhibitions. So, that is also a considerable cost towards such EBITDA decline.

Clarifies the factors contributing to the observed margin pressure, linking it to strategic investments for market share and penetration.

Asked by Shantanu Nakade

Timeline for SealTech JV business commencement Direct
The business in the joint venture again established in a workshop would start up and running by say December end. But the business of mechanical seals which would come from ADNOC would take time for the seals to get commissioned. The seals are under execution at the moment. The seals will be supplied via the pump OEM to ADNOC in Abu Dhabi, and the commissioning would only happen by end of, say, 2026, early 2027. So, that business, that profitable business, which is about 175 seals that we have supplied to ADNOC, would start generating business in, I would say, to be conservative from April 2027. But in the meanwhile, we are also in discussion with various EPCs to service mechanical seals. So, once our workshop is up and running, we will start our business beginning January 2026.

Provides a detailed timeline for the operationalization and revenue generation from the strategic Abu Dhabi JV, differentiating between workshop start and profitable business from specific projects.

Asked by Shantanu Nakade

Monetary realization of BHEL and Mazagon Dock projects Evasive
I will be very honest and frank with you, Mr. Dasani. We cannot share those figures. Those are confidential figures and we are bound by certain confidentiality.

Highlights the lack of transparency regarding the financial value of significant defense and power sector projects, which are typically long-drawn and critical for the company's future.

Asked by Rahil Dasani

Total order book number for H1 FY26 Evasive
I am saying, can you call out the order book number? What is the current order book and compare it with the end of H1 last year? It would be similar.

Management provided a qualitative answer ('similar') instead of a specific quantified figure for the overall order book, limiting visibility into future revenue conversion.

Asked by Chinmay Nema

Growth on replacement revenue Direct
As many things as you add, in the end user market will add to your end user business. Like today, we are talking 490 seals. Say, we assume and we expect that 60 seals more would be added in the six months. So, it would become, say, example 550. And every year, it is our endeavor to add at least 150 to 200 seals of API every year. So, that will all increase business and generate recurring business for the company.

Explains the strategy for growing recurring replacement revenue by continuously adding new API seals to the installed base.

Asked by Shantanu Nayak

Current order book for the remaining part of the financial year Evasive
The last question I have is, what is the current order book you have on hand, which you expect to execute for the remaining part of this financial year? It is a price-sensitive question. I will pass that question, yes.

Management declined to provide a quantified order book for the near-term, citing price sensitivity, which limits investor foresight into immediate revenue prospects.

Asked by Manoj Shetty

Utilization of the new Kaman facility Direct
At the moment, both combined would be something close to about 75%. It depends, Shantanu. It depends on the configuration of business that you are doing. The more project business you do, the more laborious, the more time-consuming, the more precarious it becomes. So, it depends what kind of business configuration is happening. If it is purely only mechanical seals which are non-API, I would say we can utilize 85%. If it is project business, which is slow moving, which requires a lot of engineering, would be 75%. So, safely, I would say 75%.

Provides insight into the current operational capacity utilization and how it varies based on the product mix, particularly the impact of complex project business.

Asked by Shantanu Nayak

2 min read 6 chapters

Detailed narrative

H1 FY26 Financial Performance Overview

Sealmatic India reported a robust financial performance for H1 FY26, with revenue reaching Rs. 53.63 crores, marking a significant 23.44% increase compared to Rs. 43.92 crores in H1 FY25. The company achieved an EBITDA of Rs. 10.84 crores, translating to an EBITDA margin of 20%. Profit Before Tax (PBT) stood at Rs. 8.67 crores, representing 15.70% of the total revenue, aligning with the profit percentage earned in March 2025.

Strategic Market Penetration and Exhibition Costs

The company actively pursued market penetration strategies, participating in six major exhibitions during the April-September 2025 period, including NEFTEGAZ Moscow, Oman Petroleum Show, and ROTIC Dubai. These efforts, while crucial for long-term engagement and customer acquisition, contributed to increased expenditure. Each exhibition cost approximately Rs. 35-40 lakhs, totaling Rs. 2-2.3 crores for all events, which impacted EBITDA margins.

Project Business and Long-Term Replacement Revenue

Sealmatic has successfully secured and is executing orders for 492 API seals across GCC countries (Abu Dhabi, Oman, Kuwait, Iraq). These critical API seals are expected to generate a conservative replacement revenue of Rs. 25 crores annually, commencing from April 2027, given the typical 35-year lifetime of such equipment. The company aims to add 150-200 API seals to its installed base every year to ensure continuous recurring business.

International Expansion and Abu Dhabi Joint Venture

The company is expanding its global footprint, particularly in the Middle East, Europe, Russia, and USA. A significant development is the Abu Dhabi Joint Venture (JV), established to meet ADNOC's precondition for a local service center and to align with in-country value addition mandates. While the JV incurred an initial loss of Rs. 51.61 lakhs in H1 FY26, its workshop is expected to be operational by December end 2025, with business commencing January 2026, and profitable revenue from ADNOC seals projected from April 2027.

EBITDA Margin Dynamics

EBITDA margins experienced pressure, declining to 20% in H1 FY26 from 23% in the previous period. This compression is primarily attributed to the nature of project activity, which often involves subsidizing OEMs to gain market share with end-users. Additionally, increased expenditure on market penetration activities, such as participating in multiple international exhibitions, contributed to the higher costs.

Operational Utilization and Business Configuration

The combined utilization of Sealmatic's facilities is currently around 75%, and the company expects to maintain this level throughout the year. Management noted that utilization can vary based on the business configuration; purely mechanical seals (non-API) could achieve 85% utilization, while project business, being more laborious and requiring extensive engineering, typically results in a 75% utilization rate.

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