Detailed Narrative
H1 FY26 Financial Performance Overview
Abha Power and Steel Limited reported a revenue from operations of ₹34.56 crores for the first half of FY26. The company achieved an EBITDA of ₹3.57 crores, translating to an EBITDA margin of 10.3%. Profit after tax (PAT) stood at ₹2.03 crores, with a PAT margin of 5.9%. While gross margins remained stable, EBITDA was impacted by increased expenses.
Operational Highlights and Strategic Initiatives
The company's operations remained stable, with a focus on production efficiency and project execution. The 3 MW captive solar plant continued to contribute significantly by lowering energy costs and cushioning cost inflation. Strategic initiatives include ramping up production of a key OEM part for Indian Railways, which is now complete, and ongoing facility expansion.
Capacity Expansion and Modernization
Abha Power is actively pursuing facility expansion, utilizing IPO proceeds for modernization. The company has committed approximately ₹19 crores for CapEx in FY26, with an additional less than ₹5 crores from own funds, totaling around ₹24 crores. This investment is primarily aimed at upgrading the steel plant to improve its capacity utilization from the current 20-30% to above 80%, and also supporting SG Iron utilization to 95%, rather than adding new capacity.
Railway Segment Focus and RDSO Approval
The railway segment remains a major focus, contributing 70-80% of revenue directly or indirectly. The company is developing critical items for wagon building and permanent way. The RDSO approval process for new parts is underway, with accreditation expected to be complete by the January-March quarter. Revenues from these new approvals are anticipated to begin from the next financial year, albeit gradually.
Margin Pressure and One-time Expenses
EBITDA margins experienced a drop in H1 FY26 due to several factors. These include excess expenses for new project work, engaging consultants for expansion, increased travel costs, one-time📎 charges for the company's name change, an upgraded land lease agreement, and an electricity duty of ₹12-13 lakhs for the solar plant. Management expects these one-time📎 costs to subside, leading to margin improvement in subsequent periods.
Order Book and Future Outlook
The company maintained a healthy order book of over ₹20 crores, providing good near-term revenue visibility. Management expects H2 FY26 to see flattish or some growth, with major progress and growth anticipated in H1 FY27, driven by the new capacities and improved utilization. The long-term target is to achieve double-digit growth in both revenue and margins, with a potential turnover of over ₹300 crores at 100% capacity utilization.