Sealmatic India

Sealmatic India Limited reported a sales turnover of INR103 crores for FY26, marking a 2% year-on-year growth from INR101 crores in the previous fiscal year. Despite this growth, the company experienced margin pressure, with EBITDA for FY26 standing at INR18.38 crores, translating to an EBITDA margin of 17.36%, a decrease from 24% in the prior year. Profit before tax (PBT) for FY26 was INR14 crores, representing approximately 14% of total revenue.

The decline in EBITDA margin was attributed to strategic investments aimed at market penetration. The company spent approximately INR5 crores on participating in 14 international exhibitions during FY26. Additionally, INR8 crores was invested in supplying API seals below the cost of raw materials to establish a strong installed base and references with leading end-users. These investments are expected to yield long-term recurring aftermarket business, which boasts gross margins of around 80%.

Sealmatic secured orders for 916 critical API seals for projects in the Middle East (UAE, Saudi, Oman, Kuwait, Iraq), with 686 seals already supplied and 230 under execution. However, commissioning of these projects has been deferred by 6-9 months due to the volatile geopolitical situation in the Middle East. For the Mongol project, 118 seals have been supplied and 53 are under execution, with optimism for commissioning by year-end. In India, approximately 300 API seals are being installed at various IOCL and Talcher Fertilizers sites.

Inventory levels rose to INR62 crores, and operating cash flow remained negative in FY26. This was primarily due to delays in project execution caused by geopolitical factors and rare earth material injunctions from China, which necessitated stopping certain items to avoid challenges in fulfilling existing orders. Management anticipates operating cash flow to start improving in FY27, with FY28 being a better period to assess its positive turnaround.

For FY27, Sealmatic projects a 15% revenue growth and expects EBITDA margins to recover to 23-24%. This improvement is anticipated from reduced marketing expenses, with participation in international exhibitions cut from 14 to 5, saving INR3.5-4 crores. The company also plans to taper off subsidized API seal sales, focusing on adding approximately 300 new API seals in FY27. The recurring aftermarket business from the 700 seals supplied by FY27 is expected to commence from April 2027, contributing significantly to future profitability.

Sealmatic's revenue composition in FY26 showed 54.36% from exports and 45.64% from the domestic market, reflecting a balanced growth strategy. The company is actively expanding its global footprint with established service centers in India and the Middle East, and partnerships in Europe, USA, and South America. The Middle East remains a major focus due to high activity in oil and gas, while India is the second key market. The company also sees opportunities in Russia due to the exit of Western competitors.

The company is actively quoting for nuclear applications for the Kudankulam expansion in Tamil Nadu and liaising with BHEL and other global nuclear pump companies. In the defense sector, Sealmatic is working with the Ministry of Defense and Indian Navy on naval seals for submarines and indigenization of critical imported seals. While these sectors are slow-moving with long gestation periods (2-3 years for orders, 2 years for completion), management highlights the significant long-term potential and the company's unique ISO 19443 certification.