AIA Engineering Limited — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

AIA Engineering reported a robust Q1 FY26, with revenue of ₹1,026 crores and PAT of ₹305 crores, driven by a favorable product mix, reduced freight, and lower raw material costs, resulting in a high EBITDA margin of 40.46%. Volumes remained flat year-on-year at 60,156 tons. While the company faces delays in its China and Ghana plant expansions, it is actively pursuing green energy initiatives and expects margins to normalize in the coming quarters. Management expressed confidence in returning to decent volume growth from FY27, despite a flat outlook for FY26.

Highlights

  • Revenue stood at ₹1,026 crores for Q1 FY26.

  • EBITDA reached ₹420.39 crores, with an EBITDA margin of 40.46%.

  • Profit After Tax (PAT) was ₹305 crores, up from ₹259 crores in Q1 FY25.

  • Total sales volume for the quarter was 60,156 tons, flat compared to Q1 FY25.

  • Net cash position was strong at ₹4,083 crores.

  • Brazil's antidumping duty was reduced from 6.5% to 2.9%, with the antidumping portion discontinued.

  • The company targets 55% of its power consumption from green sources this fiscal year.

Concerns

  • US Antidumping/Section 232 Tariffs

Key financials

  1. Revenue ₹1,026 Cr
  2. EBITDA ₹420.39 Cr
  3. EBITDA Margin 40.5%
  4. PAT ₹305 Cr +17.8%YoY
  5. Sales Volume 60,156 tons 0%YoY
  6. Realization ₹170/kg
  7. Other Operating Income ₹12.93 Cr
  8. Non-Operating Income ₹108 Cr
  9. Treasury Income ₹88 Cr +20.5%YoY
  10. Foreign Exchange Income ₹19 Cr

What they filed

Q1 FY27: revenue up 12.4%, net profit down 1.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,044 1,066 1,157 1,039 1,048 +0%1,067 +0%1,266 +9%1,168 +12%
EBITDA276 283 302 306 297 +8%290 +2%363 +20%308 +1%
Net profit256 259 285 305 277 +8%293 +13%393 +38%301 −1%
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

Share of Volume
59,000 tons Total
  • Mining 36,000 tons 61.0%
  • Non-Mining (Cement & Utilities) 23,000 tons 39.0%

Order book

medium confidence

Pipeline

other

Working with a large number of mining customers at an advanced stage of negotiation for conversion to high chrome solutions.

Management is bullish on conversion prospects from forged to high chrome solutions and expects significant conversion-related news in the coming quarter, with a focus on new contracts and assignments.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹100 Cr
    • Non-general maintenance, land, warehouse ₹50 Cr
    • Balance part of renewables ₹40 Cr
    So about INR100 crores spend in addition to anything that we spend on China and Ghana is a capital protection for this year. Lastly, one good news came this quarter was related to the Brazil sunset review where the department has reduced the CVD component.
  • Liquidity Cash ₹4,083 Cr Cash is being conserved due to optimism about tremendous growth potential and potential future opportunities, with a view to reducing it once growth endeavors stabilize.
    Our net cash stands at INR4,083 crores. Our investment plan for this year, we've spoken about plants in China and Ghana. Both those plants are in we are looking to acquire land, we are applied for all sorts of permissions.

Guidance & targets

Volume

  • Volume Growth Volume · FY26 · Medium confidence near flat situation
    this year, we feel that we might still end up the current fiscal year with a near flat situation.

    — Sanjay Majmudar

  • Volume Growth Range Volume · FY26 · Medium confidence between minus 5 and plus 15
    Overall this year as we look going forward with new contracts coming in later in the year, factoring all of that, it looks like it will be a flat year. And when you say flat, it will be between minus 5 and plus 15.

    — Sanjay Majmudar

  • Volume Growth Volume · next fiscal · High confidence decent level of volume growth
    we do expect to return back to a decent level of volume growth from the next fiscal.

    — Sanjay Majmudar

  • Mill Liner Sales Volume Volume · full year · High confidence 25,000 tons and 30,000 tons
    I don't think we will be crossing 30,000 tons. We will still be between 25,000 tons and 30,000 tons for the full year mill liners.

    — Kunal Shah

  • Mill Liner Capacity Utilization Volume · High confidence Less than 40%
    It is a little lower than around 40% to 50%. Less than 40%. Yes. Yes.

    — Kunal Shah

Capacity

  • Green Power Capacity Capacity · this fiscal year · High confidence 100 megawatt-plus

    From 38 megawatts today

    We are at about 38 megawatts as of date, and we are adding another 60-odd megawatt, taking it to about 100 megawatt-plus and when all of it gets commissioned in next in this fiscal year, almost 55% of our power will come from green sources, from renewable sources.

    — Kunal Shah

  • Mill Liner Capacity Capacity · High confidence 70,000 tons, 75,000 tons
    And capacity would be in addition in excess of 70,000 tons, 75,000 tons.

    — Kunal Shah

Margin

  • Green Power Share Margin · this fiscal year · High confidence 55%
    almost 55% of our power will come from green sources, from renewable sources.

    — Kunal Shah

  • Sustainable Operating Margin Margin · long term · High confidence 23%, 24%
    Now therefore, I would believe that on an operational margin this 29% or 30% cannot be read as a sustainable long term. Of course, we are talking of 23%, 24% as a minimum. I believe we want to stick to that as a very, very sustainable, it should be less than that.

    — Sanjay Majmudar

Cost

  • Power and Fuel Costs as % of Sales Cost · next two years · High confidence 6% to 6.5%

    From 7% today

    Yes. It should reduce further. It will reduce further. There will definitely be savings and you can take around 6% to 6.5%, you're right.

    — Sanjay Majmudar

What to watch in Q2 FY26

China/Ghana Plant Progress

next quarter or the quarter after that
Current Land acquisition and approvals ongoing, experiencing delays.
Target Specific timelines or significant progress updates on land acquisition and approvals.

Why it matters

These new plants are crucial for future growth and geographic diversification, and delays impact long-term capacity expansion plans.

end of next quarter or the quarter within the next 2 quarters, we'll share more updates on, because it's our first time going out sort of India, and we are learning the procedures for both planned acquisition as well as various preproduction approvals and both appear to be a little long drawn than what we had originally estimated.

Risks & concerns

  • US Antidumping/Section 232 Tariffs

    high

    Uncertainty on US accounts due to 50% duty under Section 232, which is seen as political, with ongoing customer discussions and hopes for BTA.

    Both acknowledged

  • China and Ghana Project Delays

    medium

    Land acquisition and pre-production approvals for new plants in China and Ghana are taking longer than originally estimated.

    Management acknowledged

  • Flat Volume Growth for FY26

    medium

    The company expects a 'near flat situation' for the current fiscal year, with volumes potentially ranging between -5% and +15%.

    Management acknowledged

Q&A highlights

4 direct, 1 evasive
Impact of 50% US tariffs on volumes Partial
Today also my clients, my customers are paying 50% sectoral plus 10% CVD and they're continuing mine. Obviously, the negotiations around the corner, will this continue and whether a part of it you will bear or not. So that is a continuous dialogue, which our salespeople are doing. And therefore, our supply as we see continue to go a little halting, but they continue. Nobody has said we will not continue.

Analyst questioned the potential volume impact of high US tariffs, and management indicated ongoing supply and negotiations despite customers bearing the cost.

Asked by Bhoomika Nair

Timeline for China and Ghana plant operations Partial
That's what I shared that our hope was to start with that initial land and approval this quarter, it looks like it's a little -- it's much longer drawn out than what we had imagined, right? It's our first time going in there, which is where it looks like we will I'll be able to share a plan, hopefully, next quarter or fair chance it goes to the quarter after that.

Management acknowledged significant delays in the new plant projects due to procedural complexities, pushing back expected updates.

Asked by Bhoomika Nair

Sustainability of high Q1 FY26 margins Direct
Now therefore, I would believe that on an operational margin this 29% or 30% cannot be read as a sustainable long term. Of course, we are talking of 23%, 24% as a minimum. I believe we want to stick to that as a very, very sustainable, it should be less than that.

Management clarified that the high Q1 margins were influenced by one-off factors and product mix, guiding towards a more normalized and sustainable range for future quarters.

Asked by Bhoomika Nair

Progress on Latin America and copper opportunities Partial
I think we are status quo there like Sanjay bhai was explaining the previous participant, our efforts are on. We are on it. We are making all efforts towards it. We remain excited and confident about it. We hope to get back to growth stage soon. There have been breakthroughs. We are hoping that, that culminates into something meaningful that we can speak about.

Analyst sought updates on a previously highlighted growth area, with management indicating ongoing efforts and breakthroughs but no concrete announcements yet.

Asked by Priyankar Biswas

Utilization of large cash balance and management succession plan Direct
No, Devaan bhai, I think there is some confusion here. Welcast never had a new buyback, it was a delisting attempt, which was not successful. And that was a very, very insignificant amount actually. So this cash has been conserved for quite some time, considering the fact that we are very, very optimistic about the tremendous growth potential that the business has.

Management explained the strategic rationale behind maintaining a high cash balance for future growth opportunities and confirmed an internal succession plan is under implementation.

Asked by Devaan Shah

Reason for sharp drop in Australia export volumes Evasive
My request is, let us take this off-line.

Management declined to publicly address a significant decline in export volumes to Australia, raising questions about the underlying reasons.

Asked by Bhavin

New mill liner business strategy and realization Direct
I think that's what has taken us time. I think, so if you -- Sanjay Bhai can speak more, but for today's Board meeting, for example, there was a 2-hour discussion just on the sharpness and the potential for the mill lining solution, right? How it's all coming together. And the solution is for us to sell liners and grinding media together. So that's the customer we are looking at.

Management detailed the integrated solution approach for mill liners and grinding media, explaining higher realizations for liners due to complexity but comparable margins.

Asked by Bhavin

Breakdown of new volume additions between new conversions and regain of old volumes Direct
when we are seeing growth, when we are talking about growth, it is all new conversions from forged to chrome. Now some volume that's gone away, it will come back. That is basic arithmetic between us and the competitor whatever the macro situation may be. We are not considering that when we're talking about growth coming back, all the growth figures that we want to hopefully share soon.

Management emphasized that future growth will primarily come from new conversions to high-chrome solutions, driven by unique offerings and successful trials, rather than just regaining lost volumes.

Asked by Amit Khetan

3 min read 8 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

AIA Engineering reported a strong Q1 FY26 with revenue of ₹1,026 crores and a realization of ₹170 per kilo. EBITDA stood at ₹420.39 crores, translating to an impressive EBITDA margin of 40.46%. Profit After Tax (PAT) for the quarter was ₹305 crores, a significant increase from ₹259 crores in Q1 FY25 and ₹285 crores in Q4 FY25. Sales volumes remained flat year-on-year at 60,156 tons, comprising 36,000 tons from mining and 23,000 tons from non-mining segments.

Margin Drivers and Normalization Outlook

The exceptionally high EBITDA margin of 40.46% was attributed to a favorable product mix, reduced freight costs, and lower raw material prices, alongside a contribution from non-operating income (₹108 crores, including ₹88 crores treasury income and ₹19 crores foreign exchange income). Management clarified that after adjusting for non-operating income, the operating margin was approximately 29-30%. They expect these margins to normalize over the next two quarters, guiding towards a sustainable operating margin of 23-24%, with a normal level around 27%.

Strategic Growth Initiatives: China & Ghana Plants

The company is actively pursuing its investment plans for new manufacturing plants in China and Ghana. However, management noted that the procedures for land acquisition and pre-production approvals have been 'a little long drawn' than initially estimated. They anticipate sharing more concrete updates on these projects within the next one to two quarters, acknowledging that the approval process for such international ventures can take up to 15 months.

Green Energy Transition and Cost Optimization

AIA Engineering is making significant strides in its green energy transition. Currently, 38 megawatts of power are sourced from renewables, with an additional 60-odd megawatts planned to be commissioned this fiscal year, bringing the total to over 100 megawatts. This initiative aims to achieve 55% of the company's power consumption from green sources by the end of FY26, which is also expected to further reduce power and fuel costs from the current 7% of sales to 6-6.5% over the next two years.

International Trade Dynamics: Brazil CVD & US Tariffs

A positive development was the reduction of Brazil's antidumping duty from 6.5% to 2.9%, with the antidumping portion being discontinued. However, uncertainty persists regarding US accounts, where a 50% duty under Section 232 (increased from 25% about a month ago) is being paid by customers. Management is in discussions with customers and hopes for a resolution, noting the situation has become more political than economic.

Volume Outlook and Conversion Strategy

For the current fiscal year (FY26), the company anticipates a 'near flat situation' in volumes, with a potential range of -5% to +15%. Despite this, management expressed strong confidence in returning to a 'decent level of volume growth' from the next fiscal year (FY27) onwards. This growth is expected to be driven by the conversion of mills from forged to AIA's high-chrome solutions, with significant conversion-related news anticipated in the coming quarter, supported by unique product offerings and successful trials.

Mill Liner Business Development

The mill liner business is progressing, though slower than initially expected. The company has moved some production from Odhav to the new mill liner plant, which is expected to achieve 25,000-30,000 tons in sales for the full year, utilizing less than 40% of its 75,000-ton capacity. While mill liners command higher realizations (₹180-₹400/kg) due to complex design and engineering, management stated that the margin percentage is largely comparable to grinding media.

Conservative Cash Management and Succession Planning

AIA Engineering maintains a strong net cash position of ₹4,083 crores. Management stated this cash is being conserved due to optimism about future growth potential and the possibility of unfolding opportunities, with plans to review cash reduction options once growth endeavors stabilize. Additionally, a proper succession plan for the management team is under implementation and is expected to be formally rolled out over the next 1 to 2 years, ensuring professional continuity.

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