Aeron Composites — Q2 FY26 earnings call

Call held 21 Nov 2025

Management summary

Aeron Composites reported steady growth in H1 FY26 with revenues of INR 116.7 crores and PAT of INR 7.2 crores, despite EBITDA margin compression to 7.5% due to operational shifts and US market challenges. The company successfully commissioned its new Mehsana facility and is strategically expanding into FRP rebar and carbon fiber products, targeting significant capacity and revenue growth in the coming years. Management expressed confidence in achieving 10% EBITDA margin for the full FY26, driven by improved efficiencies and new product lines.

Highlights

  • H1 FY26 Revenue from operations stood at INR 116.7 crores, showcasing steady growth.

  • PAT for H1 FY26 was INR 7.2 crores.

  • Commissioned new manufacturing facility in Mehsana (51,671 sq meters) by end of September 2025, expected to achieve full capacity of 22,000 metrics over next few quarters.

  • Strategic entry into FRP rebar segment with 5 lines targeted by FY26, with each machine having a capacity of ~300 metric tons/year and generating INR 5-7 crores revenue.

  • Planning entry into high-performance carbon fiber reinforced polymer (CFRP) products with an initial machinery investment of INR 8-10 crores.

Concerns

  • H1 FY26 EBITDA margin of 7.5% is below the full FY26 guidance of 10%, attributed to shifting operations to new premises and impact from the US market.

  • Trade receivables due for more than 6 months deteriorated from INR 1.9 crores in FY24 to INR 4 crores in FY25.

  • Export revenue was flat in H1 FY26 due to order delays and tariff negotiations in the US market.

Key financials

  1. Revenue from Operations ₹116.7 Cr
  2. EBITDA ₹8.7 Cr
  3. EBITDA Margin 7.5%
  4. PAT ₹7.2 Cr

What they filed

Q4 FY26: revenue down 12.7%, net profit down 80.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY24Q4 FY24Q2 FY25Q4 FY25Q2 FY26Q4 FY26
Revenue82 118 108 109 117 +43%103 −13%
EBITDA8 8 10 9 9 +13%8 +0%
Net profit5 5 7 7 7 +40%1 −80%
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.

Segment breakdown

  • Export Revenue
    55% Share of Total Revenue

Order book

high confidence

Total value

₹45 Cr

as of 2025-11-21 quantified

Execution

Assumed to be executed in FY26 itself.

The current order book of INR 45 crores is ongoing and expected to be executed within the current fiscal year.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹110 Cr Mix of term loan and IPO proceeds
    • New manufacturing facility in Mehsana (51,671 sq meters, 22,000 metrics capacity)
    • FRP rebar lines (5 lines + bend machines) ₹7.5 Cr
    • Carbon fiber project (machinery) ₹8 Cr
    • Carbon fiber project (machinery) ₹10 Cr
    First of all, our capex includes term loan also, not only the IPO proceedings. So whichever WIP is there, it is also from the debt too. So it is mix and match of debt and IPO proceedings. So till now, if we see September, we have INR56 crores, which is INR35 crores, March 2025. So CWIP getting done and it is gross block would be keep increasing according to total utilization of the IPO and debt. Okay. ... So overall, if we talk about our gross block in total with whole implementation, let's say total term loan plus our internal accruals would be INR33 crores, our gross block till '25, it was INR35 crores and INR53 crores of total of IPO proceedings. So overall, it would go around INR110 crores or INR120 crores total gross block after complete implementation. That is what we understand.
  • Debt Debt disclosed
    See, short term and long term, including which is the working capital and the long term. Long term, which is our debt for the term loans we have taken from the bank, which is for current buildings, which we have achieved right now for pultrusion and molded. And short terms will be around INR25 crores, which is plus minus according to the utilization of the working capital. ... Yes. Good evening, sir. You have cash in books and you have a debt. I think you have a debt of around INR46 crores and you have cash in the book like around INR40 crores.
  • Liquidity Cash ₹40 Cr Cash in books is primarily from IPO proceeds, which are being utilized according to its implementation of the particular IPO subjects.
    And the cash which we talk about, that is for IPO proceeding, which is getting utilized according to its implementation of the particular IPO subjects. ... Yes. Good evening, sir. You have cash in books and you have a debt. I think you have a debt of around INR46 crores and you have cash in the book like around INR40 crores.

Guidance & targets

Revenue

  • Year-on-year growth Revenue · minimum · High confidence 15%
    So, FY '27, probably, we have as we have already given some targets, like 15% year-on-year growth minimum. And CAGR, it was. So, we will be probably around 300 or around that line.

    — Ravi Patel

  • Total Revenue Revenue · FY27 · Medium confidence INR 300 crores

    — Ravi Patel

Margin

  • EBITDA Margin Margin · FY26 · High confidence 10%
    So, the 10% EBITDA margin guidance that we have, sir, can we expect to achieve this in H2 of this year? Yes, yes. We would be able to.

    — Ravi Patel

  • EBITDA Margin Margin · FY27 · Medium confidence better than FY26
    And, sir, can we expect a 12% EBITDA margin with the better utilization rates in FY '27 or that is higher or lower? We cannot comment, but yes, we will be improving much more according to the operational efficiency and the margin.

    — Ravi Patel

  • FRP Rebar Margins Margin · compared to existing business · High confidence 4% higher
    I think the margins are higher, at least by this is what our projected are, by 4% than our existing line of business, at least by 4%.

    — Ravi Patel

  • Carbon Fiber Margins Margin · High confidence higher than FRP Rebar
    Okay. But then I believe carbon fiber would be even higher than FRB, right? Yes, it will be higher than FRB.

    — Ravi Patel

Capacity

  • Capacity Utilization Capacity · by FY27 · High confidence 70%
    On the operational front, our focus remains on strengthening process efficiency and productivity. We are targeting over 70% utilization by FY27 as we implement automation, upgrade manufacturing system and drive-scale benefits across pultrusion molding and UV-cured FRP rods and rebar operations.

    — Ravi Patel

  • FRP Rebar Lines Capacity · by end of FY26 · High confidence 5 lines
    So, like you said, we have already we have reached a level where we have installed two machines, two lines and probably we will reach, we will get to five lines by the end of this year FY26 in the next remaining four to five months.

    — Jeet Gala

Product Development

  • Carbon Fiber Pilot Plant Product Development · FY27 · High confidence Operational
    Okay. And just one last question on this, like a clarification on carbon fiber. So it will be operational in FY '27, right? Yes. That would be pilot plant.

    — Ravi Patel

  • Carbon Fiber Full Operation Product Development · FY28 · Medium confidence Fully Operational
    Okay. So after all this approval, it will be fully operational in FY '28. Is that right? Yes, we guess so.

    — Athar Syed

What to watch in Q3 FY26

EBITDA Margin Improvement

H2 FY26
Current 7.5% (H1 FY26)
Target Towards 10% (FY26 target)

Why it matters

Verifying management's confidence in achieving full-year margin target after H1 underperformance due to operational shifts.

So, the 10% EBITDA margin guidance that we have, sir, can we expect to achieve this in H2 of this year? Yes, yes. We would be able to.

Risks & concerns

  • US Tariff Negotiations and Export Revenue Impact

    medium

    Flat export revenue in H1 FY26 due to order delays and ongoing tariff negotiations in the US market, prompting exploration of other international customers.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Prices of certain specialty chemicals have been volatile, impacting overall pricing scenario which has been flattish.

    Management acknowledged

  • Deterioration in Trade Receivables

    medium

    Trade receivables due for more than 6 months increased from INR 1.9 crores in FY24 to INR 4 crores in FY25, which management is actively working to improve in H2 FY26.

    Analyst acknowledged

Q&A highlights

8 direct
FRP Rebar Sales Run Rate and Revenue Potential Direct
So, each machine has a capacity of approximately 300 metric tons a year and that would generate approximately anywhere between, depends on the diameter, but it will generate probably around INR5 to INR6 crores. Between INR to INR7 crores, I would say, depends on the diameter per machine.

Provides specific financial projections for the new FRP rebar segment, indicating significant revenue potential per machine as the company scales to 5 lines.

Asked by Jeet Gala

Market Acceptance and Competitive Advantages of FRP Rebar Direct
So, market has been receptive with respect to FRP rebar. It's been almost just two years since the government has started promoting this product and started accepting this product. And the feedback from the market is also very positive. One is the price is lesser than TMT rebars. There are other benefits as well like it is one-fourth the weight of TMT rebar.

Highlights the strong market reception, government support, and key competitive advantages (cost, weight, installation speed) of FRP rebar over traditional steel, validating the company's strategic entry.

Asked by Jeet Gala

Carbon Fiber Project Investment and Applications Direct
So, on the carbon fiber side, probably our investment is going to be between INR8 crores to INR10 crores This is only machineries and then there are other ancillaries and all that. ... One is pultrusion process, out of which we will make carbon fiber planks for the windmill blades. The another product from carbon fiber pultrusion would be carbon fiber core rod for the transmission line, HTLS, they call it.

Details the initial capital outlay for the carbon fiber segment and outlines the specific high-value applications, indicating the company's focus on advanced materials with premium margins.

Asked by Jeet Gala

FRP Rebar Bending Limitations and Solutions Direct
So, first of all it is not compulsory to use FRP rebar bands. You can use metal bends along with FRP rebars. We do have capabilities to supply FRP rebar bends as well. And we are also scaling up that particular bend production capabilities along with our straight rebar lines.

Addresses a common concern about FRP rebar's ductility, clarifying that the company offers solutions (FRP bends, use of metal bends) that overcome this limitation, thus broadening its applicability in construction projects.

Asked by Pranav Jain

Achievability of 10% EBITDA Margin in H2 FY26 Direct
Yes, yes. We would be able to. This was just lowered down due to we have been shifting our pultrusion process from rented to the new premises. So, it affected our operational efficiency somewhat and the revenue also. Also, the US part somewhat was affected. So, ultimately, H2 would be much more better than the H1.

Management confirms confidence in achieving the full-year EBITDA margin target, providing reasons for the H1 underperformance and indicating expected improvements in H2 from operational efficiencies and reduced US market impact.

Asked by Madhur Rathi

Deterioration in Trade Receivables (>6 months) Direct
Mainly in this year, we are improving that. And in this H2 also, it would be improving. So we are surely on the improvisation stage right now.

Highlights a potential working capital concern, which management acknowledges and commits to improving in the second half, indicating a focus on cash flow management.

Asked by Moksh Ranka

Impact of US Tariffs on Export Revenue Direct
So, of course, if the tariff is, deal is finalized, of course, that would help India as a country. And of course, we as a part of India, it would help us as well. We are still delivering orders in USA. So, it's not 100% zero for us. ... Meanwhile, if the tariff, the deal does not get through, then we are, of course, we have already started to talk to outside US customers to improve their offtake from us, basically.

Explains the reason for flat export revenue and outlines management's strategy to mitigate risks from US tariff negotiations by continuing to serve the US and diversifying to other international customers.

Asked by Rishit Jhaveri

Rent Savings from New Mehsana Plant Direct
So we'll be saving a rent per month of approximately INR32 lakhs. With GST, it becomes INR36 lakhs. So that is per month basis. And then we are projecting that our efficiencies in terms of material handling and reducing the wastage will also improve. So that would add further margins.

Quantifies a direct cost saving from the new facility, which will contribute positively to margins and operational efficiency in the coming quarters.

Asked by Moksh Ranka

3 min read 7 chapters

Detailed narrative

H1 FY26 Financial Performance and Export Contribution

Aeron Composites reported a revenue from operations of INR 116.7 crores for H1 FY26. The company achieved an EBITDA of INR 8.7 crores, resulting in an EBITDA margin of 7.5%, and a PAT of INR 7.2 crores. Export revenue contributed 55% of the total revenue during the first half, underscoring the company's international presence, though export growth was flat due to US tariff negotiations.

Strategic Diversification into FRP Rebar Segment

The company has strategically entered the FRP rebar segment, with commercial sales beginning in March 2025. They currently have two operational lines and plan to scale to five lines by the end of FY26. Each FRP rebar machine has a capacity of approximately 300 metric tons per year and is expected to generate INR 5-7 crores in revenue annually. The market for FRP rebar is receptive, driven by its advantages over TMT rebars (lower price, lighter weight, faster installation) and government promotion.

Entry into Carbon Fiber Reinforced Polymer (CFRP) Products

Aeron Composites is preparing for its next strategic milestone: a foray into carbon fiber reinforced polymer (CFRP) products. This high-performance, high-margin segment targets sectors like wind energy, railways, and automotive. The company plans an initial machinery investment of INR 8-10 crores for this project, with the pilot plant expected to be operational in FY27 and full operations by FY28. The approval process for these specialized products is estimated to take 8-12 months.

Commissioning of New Mehsana Manufacturing Facility

A key development in H1 FY26 was the commissioning of a new manufacturing facility in Mehsana, spread across 51,671 square meters. The unit became operational at the end of September 2025 and is in a scale-up phase, with full capacity of 22,000 metrics expected over the next few quarters. This expansion is anticipated to significantly enhance production capabilities, improve efficiencies, and support growth across FRP products and the upcoming CFRP line. The new plant is also expected to generate rent savings of INR 32-36 lakhs per month.

Operational Efficiency and Sustainability Focus

The company's operational focus remains on strengthening process efficiency and productivity, targeting over 70% utilization by FY27. This will be achieved through automation, manufacturing system upgrades, and scale benefits across pultrusion, molding, UV-cured FRP rods, and rebar operations. Aeron also emphasizes sustainability through its 1.2-megawatt solar plant and by promoting FRP and CFRP as low-carbon, corrosion-free alternatives that reduce life-cycle costs for customers.

Debt and Liquidity Management

Aeron Composites maintains a healthy balance sheet with robust liquidity and a strong capital structure. The company has long-term debt of approximately INR 46 crores for term loans related to buildings and manufacturing processes, and short-term debt of around INR 25 crores. Cash in books, approximately INR 40 crores, is primarily from IPO proceeds and is being utilized for specific IPO objectives, not for debt repayment.

Trade Receivables and Export Market Challenges

The company noted a deterioration in trade receivables, with amounts due for more than 6 months increasing from INR 1.9 crores in FY24 to INR 4 crores in FY25. Management acknowledged this and stated efforts are underway to improve the situation in H2 FY26. Export revenue remained flat in H1 FY26, primarily due to order delays and ongoing tariff negotiations concerning the US market, though the company continues to deliver to the US and is exploring other markets.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Capital Goods earnings calls