AIA Engineering Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

AIA Engineering reported a steady Q2 FY26 performance, largely in line with the previous quarter, with strong EBITDA and PAT. A landmark order from Chile signifies a strategic breakthrough in the South American market for hi-chrome grinding media. The company is focusing on solution-based offerings to drive future volume growth, targeting a minimum of 30,000 tons additional annually from next year, while maintaining a conservative CAPEX outlook.

Highlights

  • Q2 FY26 Revenue stood at ₹1,029 crores.

  • Q2 FY26 EBITDA was ₹395 crores, resulting in an EBITDA margin of 38.38%.

  • Profit After Tax (PAT) for Q2 FY26 was ₹277 crores.

  • Total tonnage sold in Q2 FY26 was 63,000 tons, with H1 FY26 tonnage at 123,000 tons.

  • A significant 18-month order from Chile for 22,000-23,000 tons ($33 million) was secured, with annual sales expected to be 13,000-18,000 tons, marking a first breakthrough in South America for hi-chrome grinding media.

  • Management guided for a minimum of 30,000 tons additional annual volume growth from next year onwards.

  • FY26 CAPEX guidance remains at ₹180 crores, with an average annual CAPEX of ₹150 crores.

  • Current operating margins are elevated due to a favorable product mix, with a sustainable operating margin guidance of 20-22%.

Key financials

3 periods

Headline

  • Revenue
    ₹1,029 Cr
  • EBITDA
    ₹395 Cr
  • PAT
    ₹277 Cr
  • EBITDA Margin
    38.4%
  • Average Realization
    ₹163/kg

Q2

  • Tonnage Sold
    63,000 tons
  • Other Income
    ₹98 Cr

H1

  • Tonnage Sold
    1,23,000 tons
  • Other Income
    ₹116 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 Tonnage Sold (Q2)
62,000 tons Total
  • Mining 38,000 tons 61.3%
  • Non-Mining 24,000 tons 38.7%

Order book

high confidence

Total value

$33 Mn

as of 2025-09-30 quantified

Inflow this quarter

22,000 tons

Execution

Contract duration of 18 months, offtake to start from Q4 FY26.

Composition

  • Chile (South America) (geography) $33 Mn
  • Hi-chrome grinding media (product)

Pipeline

qualified rfp

Prospecting work at more than 10 mines, with potential for 200,000 to 250,000 tons.

The Chile order is a significant breakthrough and endorsement of the company's solution-based approach, with expectations for further milestones from ongoing trials.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹180 Cr
    • Investment in MPS subsidiary
    • Hybrid and renewable solar investment ₹30 Cr
    • New facilities in Ghana and China (in process of creation, not yet set up)
    This year, we have already guided for a CAPEX of over Rs. 180 crores. We have incurred about Rs. 40 odd crores. This includes, of course, investment in my new, I mean the subsidiary company MPS, plus my hybrid and renewable solar investment that I am planning to make about Rs. 30 crores in this year, plus some maintenance CAPEX, some general CAPEX, etc., plus some investment that we will be making in Ghana and China, that is the new facilities that we are in the process of creating. So, on an average, I think if you want to take an average annual CAPEX, currently, you may take a number of around Rs. 150 crores.
  • M&A MPS Acquisition · Closed

    Small design focused subsidiary company

    My subsidiaries are, except for MPS, which is a small design focused subsidiary company that we have recently acquired
  • Liquidity Liquidity disclosed Management stated the company is generating good cash.
    We are profit making. We are generating good cash.

Guidance & targets

Volume

  • Annual Volume Growth Volume · Next year onwards · Medium confidence Minimum 30,000 tons additional
    from next year onwards, at least 30,000 tons plus annual volume growth is what at the minimum level we are expecting or targeting, I would say.

    — Sanjay Majmudar

  • Chile Order Incremental Volume Volume · Next year · High confidence 12,000 to 15,000 tons
    Exactly. The new order that we got is correct.

    — Kunal Shah

Capex

  • Total CAPEX Capex · FY26 · High confidence ₹180 crores
    This year, we have already guided for a CAPEX of over Rs. 180 crores.

    — Kunal Shah

  • Average Annual CAPEX Capex · Currently · Medium confidence ₹150 crores
    on an average, I think if you want to take an average annual CAPEX, currently, you may take a number of around Rs. 150 crores.

    — Kunal Shah

Margin

  • Operating Margin Margin · Sustainable · High confidence 20% to 22%
    It continues to be at not even 24. It's 20% to 22% operating margin.

    — Kunal Shah

  • Gross Margin Margin · Generally · High confidence 38% to 39%
    See, our gross margins are around 38% to maybe 39% generally.

    — Sanjay Majmudar

What to watch in Q3 FY26

Volume Growth (30,000 tons additional)

Next year onwards (FY27)
Current Targeted from next year onwards (FY27)
Target Evidence of 30,000 tons+ annual growth in order inflows or sales

Why it matters

This is a key long-term volume growth target for the company, indicating future revenue potential.

from next year onwards, at least 30,000 tons plus annual volume growth is what at the minimum level we are expecting or targeting

Risks & concerns

  • Long conversion cycle for new customers

    medium

    Mining customers are conservative and it takes a long time (sometimes years) to convince them of the solution's benefits.

    Management acknowledged

  • Product mix impact on margins

    medium

    Current high margins are due to a favorable product mix; as grinding media volumes increase, average realization and margins may naturally change.

    Management acknowledged

  • Trade barriers and anti-dumping investigations

    low

    The company's new solution-based approach is designed to move away from issues related to anti-dumping and other trade barriers.

    Management mitigated

Q&A highlights

6 direct
Tangible evidence for hi-chrome conversion pipeline Direct
One Chile, very important customer, where the order size is 18 months is about 22,000 to 23,000 tons and about $33 million order. That is one straight evidence of a conversion, correct? More importantly, as I said, we have conducted successful trials in about 10 to 12 mines, including in India, very important mines...

Analyst sought proof of concept for the new strategy; management provided specific order details and trial progress.

Asked by Bala Subramania

Utilization of new capacity and future CAPEX plans Partial
So, first and foremost, you're right at current capacity utilization level around 55%-60%. Please understand it's a mix of various products... we are always a little ahead in terms of capacity creation. Because that process, even if it is a Brownfield project today, it takes 1.5 years.

Analyst inquired about capacity utilization and future investment, management explained the strategic need for buffer capacity and long project timelines.

Asked by Bala Subramania

Volume growth expectations for FY27 Partial
So, as I said in the beginning of the call, we believe that from next year onwards, at least 30,000 tons plus annual volume growth is what at the minimum level we are expecting or targeting, I would say. Given the new initiatives that we have taken over last 24 months, 12 to 24 months.

Analyst pressed for specific future volume guidance, management provided a minimum target but deferred more precise figures pending trial outcomes.

Asked by Raman Kerti

Status and utilization of overseas plants in Ghana and China Direct
There is, I think, I don't know where you got that information from. We only announced a plan and an intention to set up plants outside India... Till that time, our capacity continues to be in India.

Analyst sought clarity on international expansion; management clarified that these are only intentions and no plants are operational yet.

Asked by Raman Kerti

Sustainability of current high operating margins Direct
Our guidance is what we believe we should share with everyone and what we can defend. It continues to be at not even 24. It's 20% to 22% operating margin... as the product mix changes, this can change.

Analyst questioned the discrepancy between current margins and guidance; management attributed it to product mix and reiterated conservative long-term guidance.

Asked by Varun Jain

Challenges in hi-chrome grinding media conversion and market penetration Direct
These mines are extremely powerful, completely decentralized, localized, large operations. Nobody's interested if you go and say that, hey, I am going to save you a few hundred thousand dollars, etc., etc. So, then over the last 7-8 years, we have now made us a very, very formidable force by changing our solution to one, not only on cost saving, but saving on sizably increasing the throughput of the mines...

Analyst probed the difficulties in market conversion; management detailed the comprehensive solution approach and the long sales cycle with mining customers.

Asked by Deepan Shankar

Impact of competitor Molycop's acquisition on AIA's business Direct
Molycop is a predominantly forged player, and we are replacing forged with our solution... AIA is a solution company. They are selling an alloy-based product... So, to that extent, if a product company has gone through ownership changes, I am not sure how else would we respond to. But there is financial leverage, and that itself doesn't make us feel nervous.

Analyst asked about competitive landscape; management dismissed Molycop as a direct competitor due to different product/solution focus and business model.

Asked by Priyankar Biswas

Update on Welcast plant closure Direct
Welcast closure, we already made an announcement that it was not viable for Welcast to continue, given the fact that it was a very old plant. It was a very awkward location and for us to as a shareholder, major shareholder as a holding company to invest anything in Welcast was not making sense.

Analyst sought clarification on a past event; management provided a clear rationale for the plant's closure based on viability and location.

Asked by Devang Baid

3 min read 7 chapters

Detailed narrative

Q2 FY26 Financial Performance Overview

AIA Engineering reported a stable Q2 FY26, with total tonnage sold reaching 63,000 tons, contributing to a half-year total of 123,000 tons. Revenue for the quarter stood at ₹1,029 crores, generating an EBITDA of ₹395 crores, which translates to an EBITDA margin of 38.38%. Profit After Tax (PAT) for the quarter was ₹277 crores. The average realization per kilogram for the quarter was ₹163, indicating a consistent financial performance in line with the previous quarter.

Strategic Breakthrough with Chile Order

The company announced a significant 18-month contract from Chile, valued at $33 million, for 22,000-23,000 tons of hi-chrome grinding media. This order represents AIA Engineering's first major breakthrough in the South American market and for hi-chrome grinding media in that region. Annual sales from this contract are projected to range between 13,000-18,000 tons, with offtake expected to commence in Q4 FY26. This win validates the company's solution-based approach and its ability to secure large, strategic orders.

Focus on Solution-Based Offerings and Market Conversion

AIA Engineering is increasingly emphasizing a unique liner-driven solution that combines liners and grinding media, offering benefits beyond just cost savings, such as improved throughput and reduced power consumption. This approach aims to differentiate the company from competitors and address the challenges of converting conservative mining customers. Successful trials have been conducted in 10-12 mines, with final outcomes for larger mines expected in December and January-February, which could lead to further significant orders.

Volume Growth Outlook and Prospecting Pipeline

Management expressed confidence in achieving a minimum of 30,000 tons of additional annual volume growth from next year onwards, driven by new initiatives and the solution-based strategy. The company currently has a robust prospecting pipeline of 200,000-250,000 tons, indicating substantial future growth potential. This pipeline includes work at over 50 mining sites globally, with several in advanced stages of conversion.

Capacity and CAPEX Plans

The company's current blended capacity utilization stands at approximately 55-60%. For FY26, the CAPEX guidance remains at ₹180 crores, with around ₹40 crores already incurred. This includes investments in the MPS subsidiary and a ₹30 crore allocation for hybrid and renewable solar projects. Long-term, the average annual CAPEX is projected to be around ₹150 crores, supporting ongoing capacity creation and strategic initiatives, including planned, but not yet established, facilities in Ghana and China.

Margin Dynamics and Product Mix

The Q2 operating margin was noted to be around 28.3%, while gross margins generally range from 38% to 39%. Management reiterated its sustainable operating margin guidance of 20-22%, acknowledging that current higher margins are due to a favorable product mix. As the company scales up volumes, particularly in grinding media, the average realization and margins are expected to normalize towards the guided range, reflecting the changing product mix.

Welcast Steel Plant Closure

The company confirmed the closure of its Welcast Steel Plant, citing its age, awkward location, and lack of financial viability for further investment. This decision was made in the interest of financial prudence, as the parent company has sufficient capacity created elsewhere. The closure is not expected to impact the company's overall operational capabilities.

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