Detailed Narrative
Strong Financial Performance in Q2 and H1 FY26
Gala Precision Engineering reported robust financial results for Q2 FY26, with consolidated revenue from operations reaching ₹71 crores, marking a 40% year-on-year increase. Net profits for the quarter grew by 59% YoY to ₹8 crores, with PAT margins at 11.76%. For the first half of FY26, revenue stood at ₹134 crores, a 29% YoY growth, and net profit was ₹15 crores, up 30% YoY. The fastener division was a key growth driver, achieving ₹44 crores in revenue for H1 FY26, an 84% YoY increase.
Chennai Plant Ramp-up and New Product Development
The new Chennai facility has shown significant progress, with sales reaching ₹3 crores in October 2025, following its first dispatch of over ₹75 lakhs in September. The company aims to achieve ₹3-4 crores in monthly sales from this plant, with manufacturing load targeted to reach ₹5 crores by January 2026. A key development is the introduction of new bolt and nut products, which address a global market opportunity exceeding $1 billion, with pilot orders already secured, validating the company's design and engineering capabilities.
Capacity Expansion and Future Outlook
Gala Precision is actively pursuing capacity expansion across its facilities. The remaining CAPEX for the Wada facility, amounting to ₹49 crores, is planned for completion within the next 6 to 9 months, aiming for an annual capacity of ₹325-350 crores. For the Chennai plant, ₹171 crores are yet to be deployed to build Phase-2 capacity, with plans to commence this in Q4 FY26 or Q1 FY27, targeting an annual capacity of ₹120-130 crores. Management maintains a revenue growth target of 22-25% for FY26 and 20-25% for subsequent years, with EBITDA margins expected to reach 17-19% as capacities stabilize.
Market Dynamics and Segment Focus
The company views the Indian renewable energy market, particularly wind, as the fastest-growing segment, with strong order flows expected for the next 2-3 years. Gala Precision serves OEMs, Tier-1 suppliers, and channel partners across industrial, renewable, and mobility sectors. The segment mix is projected to evolve, with industrial contributing 35-38%, renewable around 35%, and mobility 28-30% in the next 1-2 years. Product-wise, DSS is expected to be 45%, SFS 40%, and mobility 15% in the mid-term.
Working Capital and Cost Management
Operating cash flow remained muted due to high inventory levels, which stood at 129 days in September 2025, compared to a historical 120 days. This is attributed to new product development and growth, requiring inventory for future demand. Management acknowledged that in a growth phase, cash flow generation takes a secondary priority. EBITDA margins were partly impacted by higher raw material and labor costs, job work, freight costs, and forward contract losses. However, the company manages steel price volatility by passing on fluctuations to customers with a 3-6 month lag.