GMM Pfaudler

GMM Pfaudler reported a robust Q2 FY26, with revenue reaching ₹902 crores, marking a 14% QoQ and 12% YoY increase. EBITDA grew even faster at 20% QoQ and 27% YoY to ₹122 crores, achieving an EBITDA margin of 13.5%. The company's strategic diversification efforts are yielding positive results, as growth in new segments and geographies is effectively offsetting the slowdown in traditional European chemical and pharma markets.

The quarter saw strong order intake of ₹878 crores, contributing to a healthy order backlog of ₹2,146 crores. The India business performed particularly well, with its order book increasing by ₹90-100 crores QoQ and showing an upward trajectory. Management anticipates at least a 15-20% improvement in India's order backlog over previous years, providing good visibility for the next financial year.

GMM Pfaudler completed two key acquisitions: SEMCO in Brazil for USD 18.5 million (₹162 crores) and a JV in Poland for 11 million Polish zloty (₹25 crores). SEMCO alone added USD 20 million to the order backlog. The company is actively integrating its four mixing technology platforms (SEMCO, MixPro, Mavag, Mixel) under a unified umbrella, aiming to leverage their distinct expertise across global industry segments like metals, minerals, mining, chemicals, pharma, and biotech.

While traditional markets face headwinds, GMM Pfaudler is seeing significant traction in new areas. The systems business, particularly in acid recovery, secured a very large order last quarter and is negotiating several more large contracts for nitric acid production. The heavy engineering segment is expanding into nuclear (supplying heat exchangers for NPCIL) and green hydrogen (already executed an order for a German EPC), with management expecting approximately 15% growth in heavy engineering revenues this half year.

The US market shows signs of improvement, with the 'Make in U.S.' initiative and the recently passed Biosecure Act presenting potential opportunities. Management noted requests for US-made equipment for US sites, which could significantly benefit GMM Pfaudler's US entity as one of the few large-scale glass-lined equipment manufacturers there. This could drive future investments in chemical and pharma within the US.

Working capital increased in H1 due to higher inventory (especially in India) and receivables, but management expects an improvement in H2. In the domestic glass-lined business, pricing has stabilized after a period of undercutting, and the Karamsad facility is running at full capacity with a 5-6 month backlog. The company is cautious about adding new capacity to avoid initiating another price war, prioritizing sustainable margins.

Unfunded pension liabilities increased by approximately ₹30 crores over FY25, primarily due to changes in actuarial assumptions and FX impacts, as the plan itself is closed with no future additions. On the FX front, the significant USD-Euro depreciation in Q1 FY26, which caused a financial loss and increased tax rate, did not materially recur in Q2 FY26, leading to an improved tax rate for the international business.