Electrosteel Castings Limited — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Electrosteel Castings reported a challenging Q2 FY26 with consolidated total income declining to INR 1,491 crores and sales volumes down 28% YoY, primarily due to a slowdown in the DI pipe segment. Despite these headwinds, H1 FY26 consolidated EBITDA stood at INR 386 crores (12.6% margin) and PAT at INR 167 crores, supported by export growth and a one-time other income gain of INR 64 crores. The company remains optimistic about a demand rebound in calendar year 2026, driven by government infrastructure spending, and is integrating its recent T.I.S valve business acquisition.

Highlights

  • H1 FY26 consolidated EBITDA of INR 386 crores (12.6% margin) and PAT of INR 167 crores.

  • Export market volume grew 8% YoY, providing support to overall business performance.

  • Gross margins maintained at around 48% in H1 FY26.

  • Other income included a one-time provision written back of INR 64 crores from Entry Tax matter settlement.

  • Receivables are largely backed by BGs/LCs, with clean credit exposure less than 1%.

Concerns

  • Q2 FY26 consolidated total income was INR 1,491 crores, lower YoY due to reduced sales volume.

  • Q2 sales volume for DI pipe, fittings, and CI pipe declined 28% YoY to 1.39 lakh tons.

  • H1 sales volume declined 25% YoY to 3.02 lakh tons compared to H1 FY25.

  • Net debt increased by INR 230 crores to INR 1,626 crores compared to June 2025.

  • The Ductile Iron pipe segment faces demand slowdown, moderated production, increased costs, and downward pricing pressure.

Key financials

2 periods

Q2 FY26

  • Consolidated Total Income
    ₹1,491 Cr
  • Consolidated EBITDA
    ₹188 Cr
  • Consolidated EBITDA Margin
    12.6%
  • Consolidated PAT
    ₹78 Cr
  • Sales Volume
    1.39 lakh tons
    YoY -28%

H1 FY26

  • Consolidated Total Income
    ₹3,077 Cr
  • Consolidated PAT
    ₹167 Cr
  • Sales Volume
    3.02 lakh tons
    YoY -25%

What they filed

Q1 FY27: revenue down 22.2%, net profit down 93.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,692 1,659 1,563 1,402 1,192 −30%1,242 −25%1,197 −23%1,091 −22%
EBITDA249 264 175 162 83 −67%34 −87%25 −86%43 −73%
Net profit152 157 191 86 76 −50%-20 −113%-11 −106%6 −93%
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.

Order book

medium confidence

Execution

pending order of 6-7 months

Composition

Mix 3 client types
  • Jal Jeevan Mission (JJM) 60%
  • Domestic (including JJM) 55%
  • Non-JJM & Export 45%

Share of order book by client type· categories overlap, and sum to 160%

There is an adequate order book in the market, but the challenge is the dispatchability of orders due to funding stoppages.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹300 Cr
    • Sustenance CAPEX and rebuilding one battery at Srikalahasthi
    • Minor debottlenecking capital expenditures
    For this year, predominantly, we are focusing on sustenance CAPEX like at Srikalahasthi, we are rebuilding one of our battery. And apart from that, the major focus is definitely on, I mean, sustenance-based Capex. Figure, it may be difficult for me, but possibly around INR 300 crores or so, everything put together. This would include minor debottlenecking capital expenditures as well. So a mix of maintenance and debottlenecking. There is no major CAPEX per se that is planned for this financial year or the next.
  • Debt Net ₹1,626 Cr
    Net debt at a stand-alone level stood INR 1,626 crores. The utilization increased by around INR 230 crores compared to June 2025 mainly due to cash outflow relating to acquisition of valve company and other business requirements. Interest cost more or less remained stable in spite of high utilization, supported by lower borrowing cost.
  • M&A T.I.S valve business Acquisition · Integrated · Consideration ₹[object Object] (cash)

    Integrate valves into product portfolio, diversify geographic and customer base.

    Approximately EUR 37-38 million revenue with profit margins of around 8% to 10% (EBITDA around 15%, 16%). Contributed INR 55 crores revenue in 2 months, more than breakeven.

    following our acquisition of the T.I.S valve business in Europe, we are progressing with plans to integrate valves into our product portfolio, overseas as well as in India. So, sir, since it is only been 2 months since we merged, and it's a same industry but very different products. So, this particular year, we will probably see a similar performance as it had last financial year, which is approximately EUR 37-38 million revenue with profit margins of around 8% to 10%. I am talking about profit margin, not EBITDA, EBITDA is around 15%, 16%. Sir, total cost of acquisition is INR 120 only, we have paid the entire money. That is INR 55 crores. Okay. And that EBITDA level, we are breaking even, we-are making money? Yes, it is more than breakeven.
  • M&A Singardo (Singapore) Acquisition · Integrated

    Diversify product portfolio for water and gas companies.

    Seen positive results, 40%-45% of its revenue coming from other items bought and sold for water and gas companies.

    Yes. So sir, Singardo, we have seen positive results for the quarter and half yearly. There is a slow increase in the other product portfolio within Singardo, where we are seeing that almost 40%-45% of its revenue is coming from other items that we are buying and selling over there for the water and gas companies.
  • Liquidity Cash ₹400 Cr Cash and bank balances increased by more than INR 400 crores due to fixed deposits maturing and transferring from non-current to current assets.
    I can see there is a dramatic increase in your overall cash and bank balances on a consolidated basis, we have gone up by more than INR 400 crores. So, is this on the back of the subsidiaries or anything else? So, there were some fixed deposits, which as per Ind AS, beyond 12 months were clubbed in other Non-current assets, which are now supposed to get matured and hence, has been transferred to Current assets. So, it was always there in the books.

Guidance & targets

Volume

  • Total Sales Volume Volume · FY26 · Medium confidence 550,000 tons
    This year, possibly, it could be 550,000 around that.

    — Sunil Katial

  • Total Sales Volume Volume · FY27 · Medium confidence 800,000-850,000 tons
    Next year, as of now, we are thinking that we should get to possibly between INR 8-8.5 lakhs MT, in that range.

    — Sunil Katial

Profitability

  • Quarterly Net Profit Profitability · Q2 FY27 · Medium confidence INR 150 crores
    Sir, I think Q2 next FY, we should start seeing numbers close to that.

    — Madhav Kejriwal

M&A - T.I.S Valve Business

  • Revenue M&A - T.I.S Valve Business · FY26 · High confidence EUR 37-38 million
    So, this particular year, we will probably see a similar performance as it had last financial year, which is approximately EUR 37-38 million revenue with profit margins of around 8% to 10%.

    — Madhav Kejriwal

  • Revenue Growth M&A - T.I.S Valve Business · FY27 · Medium confidence Decent growth
    Starting next year, from our current estimates, there should be decent growth.

    — Madhav Kejriwal

Capex - DI Pipe Capacity

  • Cost for 1 lakh ton expansion Capex - DI Pipe Capacity · High confidence INR 60 crores
    Around INR 60 crores.

    — Madhav Kejriwal

  • Installation Time for 1 lakh ton expansion Capex - DI Pipe Capacity · High confidence 6-8 months
    I think it will take around 6 to 8 months for the capacity to get added another 3 months, you can say, 1 year or so.

    — Madhav Kejriwal

Capex - Overall

  • Total Capex Capex - Overall · next 3-4 years · Medium confidence INR 500 crores
    No. In fact, we have a broad plan for next 3-4 years. We have planned that possibly it could be around, say, INR 500 crores for next 4 years.

    — Sunil Katial

Market context

  • EBITDA Margin per ton Profitability · Q2 FY27 · High confidence Double-digit
    So definitely, I think a double-digit margin per ton is very much achievable starting Q2 next year.

    — Madhav Kejriwal

What to watch in Q3 FY26

JJM funding release and project execution

starting calendar year 2026
Current Slowdown due to government scrutiny and funding issues
Target Start of fund deployment and project acceleration

Why it matters

JJM is a major demand driver for the DI pipe industry, and its recovery is crucial for volume growth.

I am fairly confident that starting next calendar year, things will start moving.

Risks & concerns

  • Demand slowdown in Ductile Iron pipe industry

    high

    Due to delays in government spending, leading to moderated production, increased costs, and downward pricing pressure.

    Management acknowledged

  • Delays in Jal Jeevan Mission (JJM) project execution and funding

    high

    Issues include non-timely completion, funding constraints, operational delays, and administrative problems, causing a temporary slowdown in dispatches.

    Management acknowledged

  • Receivables from EPC contractors and government departments

    medium

    Some payments are stuck, though largely backed by BGs/LCs, and issues are slowly clearing up.

    Management acknowledged

Q&A highlights

8 direct
Confidence in demand rebound for JJM projects Direct
Sir, there is definitely work pending to be done, which is evidenced from the fact that there is adequate order book in the market. It is about whether that order book materializes to material getting dispatched. Now the level of activity that is taking place, if you see even in the news, it's highlighted that the central government is working towards getting clarities on certain issues that have been shown that has been reported to them and they are doing this because they have a clear intention that they need to clarify these issues and continue with the project and implement whatever is remaining to be implemented.

Addresses the core concern about the slowdown in government spending and provides management's rationale for optimism regarding future demand.

Asked by Pujan Shah

Government's assessment of JJM project completion Direct
I would say from the supply of pipe perspective, around 40% and from the work on ground perspective, probably 50%-55%.

Clarifies the actual progress of JJM projects on the ground, indicating significant remaining work despite government claims of 81% completion, suggesting future demand.

Asked by Pujan Shah

Timeline for government fund deployment and market recovery Direct
Sir, based on the progress they have made so far and the further inquiries that they have shared with the states, that makes me feel that starting calendar year, they would have reached their conclusions and they will start opening up the funds. And as and when they do that, there's always a delay of 2, 3 months for it to show in your books, in your performance because there is the buildup of stocks and everything that's associated with it, like how when there's a slowdown, it took a quarter to take effect. So based on those movements that I see, I am fairly confident that starting next calendar year, things will start moving.

Provides a specific timeline (starting calendar year, with 2-3 month lag) for the expected recovery in fund deployment and market activity.

Asked by Sailesh Raja

Gross margin expansion despite revenue contraction Direct
Yes. So gross margins was around 48% for the first half. It has been more in line with what it was last year because the prices of the products have come down, but also at the same time, raw material prices have also come down. And hence, gross margins have been intact.

Explains how the company maintained gross margins despite lower volumes and revenue, attributing it to balanced movements in raw material and product prices.

Asked by Rudraksh Raheja

Increase in other income Direct
Other income increase is just because of reversal of our previous liability, which I have said in my opening remarks on account of this Entry Tax matter. Entry tax matter got resolved, and there was a case going on with the government of West Bengal, INR 64 crores amount has been reversed. That is why the other income has increased in the P&L.

Clarifies that the significant increase in other income is a one-time event from a tax liability reversal, preventing misinterpretation of recurring income.

Asked by Rudraksh Raheja

Status of coal block compensation Direct
Sir, there are some clarities that have been requested for by the allotee JSW. So, we have submitted our answers against all those clarities. And we are hopeful that within this financial year, we will get some at least on the asset which has been valued, at least we should see further work.

Provides an update on the long-pending coal block compensation, indicating progress and potential realization within the current financial year for at least one asset.

Asked by Saket Kapoor

Integration and future plans for T.I.S valve business Direct
So, sir, since it is only been 2 months since we merged, and it's a same industry but very different products. So, this particular year, we will probably see a similar performance as it had last financial year, which is approximately EUR 37-38 million revenue with profit margins of around 8% to 10%. I am talking about profit margin, not EBITDA, EBITDA is around 15%, 16%. And then starting next year, once the integration process is done, we should see good jumps.

Outlines the current performance and future growth expectations for the newly acquired valve business, including its revenue and margin profile, and the timeline for significant growth post-integration.

Asked by Saket Kapoor

Plans for manufacturing T.I.S valves in India Direct
We are going to install a new plant in India as well. That plant will continue to cater largely to that geography itself. Some of the products that they make are very high-value, low-volume products and very specialized so that today in India is imported entirely. So, for that product, we continue to purchase from Italy and sell in India. But apart from that, the other day-to-day products that they are making, we will start manufacturing in India. In fact, we would like to manufacture in India and export them.

Details the strategy for localizing valve manufacturing in India, indicating a shift from import to domestic production and export for certain products, which could enhance competitiveness and margins.

Asked by Rudraksh Raheja

3 min read 6 chapters

Detailed narrative

Challenging Environment for DI Pipe Segment

The Ductile Iron (DI) pipe industry faced a challenging environment in Q2 FY26, primarily due to a demand slowdown caused by delays in government spending, particularly within the Jal Jeevan Mission (JJM). This led to moderated production levels, increased costs, and downward pressure on pricing. Consequently, the company's Q2 sales volume for DI pipe, fittings, and CI pipe declined by 28% year-on-year to 1.39 lakh tons, and H1 sales volume saw a 25% decline to 3.02 lakh tons compared to H1 FY25.

Jal Jeevan Mission (JJM) Outlook and Recovery Expectations

Management expressed confidence in a demand rebound for JJM projects, anticipating a strong recovery starting in calendar year 2026. They noted that the central government is actively addressing issues and clarifying funding, which should lead to funds opening up. While the government reports 81% work completion, the company estimates that from a pipe supply perspective, 40% of the work remains, and from a ground-level execution perspective, 50-55% is still pending, indicating significant future demand. The pace of recovery is expected to take a quarter or two, with things starting to move by the next calendar year.

Financial Performance Overview

For Q2 FY26, consolidated total income stood at INR 1,491 crores, with an EBITDA of INR 188 crores (12.6% margin) and PAT of INR 78 crores. H1 FY26 consolidated figures showed a total income of INR 3,077 crores, EBITDA of INR 386 crores (12.6% margin), and PAT of INR 167 crores. Gross margins remained stable at around 48% in H1 FY26, as reductions in raw material prices offset lower product prices. A significant positive was a one-time other income of INR 64 crores from the reversal of an Entry Tax liability settlement with the West Bengal government.

Capital Expenditure and Capacity Plans

The company's CAPEX for FY26 is estimated at around INR 300 crores, primarily for sustenance and minor debottlenecking, including rebuilding a battery at Srikalahasthi. A broader plan for the next 3-4 years involves approximately INR 500 crores for sustenance and debottlenecking. While plans for a 1 lakh ton DI pipe capacity expansion (costing around INR 60 crores and taking 6-8 months to install) are on hold due to market slowdown, the company aims to reach 90-95% of its 850,000 tons installed capacity by next financial year.

T.I.S Valve Business Acquisition and Integration

Electrosteel Castings acquired the T.I.S valve business in Europe for INR 120 crores, which contributed INR 55 crores in revenue over two months in Q2 FY26 and is operating at more than breakeven. The business had an FY25 revenue of approximately EUR 37-38 million with profit margins of 8-10% (EBITDA 15-16%). The company is actively integrating the business and plans to establish a new manufacturing plant in India to produce valves for domestic and export markets, aiming for 'decent growth' in FY27 and beyond. This acquisition is expected to diversify the product portfolio and customer base.

Net Debt and Liquidity

Stand-alone net debt increased by INR 230 crores from June 2025 to INR 1,626 crores, mainly due to cash outflow for the T.I.S valve business acquisition and other business requirements. Despite this, interest costs remained stable due to lower borrowing costs. The company also saw an increase of over INR 400 crores in cash and bank balances, attributed to fixed deposits maturing and being reclassified from non-current to current assets, indicating healthy liquidity.

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