GMM Pfaudler Limited

GMM Pfaudler reported a stable Q3 FY26 with strong order intake, leading to a record backlog. For the nine months ended December 31, 2025, revenue increased by 8% year-on-year, while EBITDA grew by 14%, with margins improving from 12% to 12.7%. Q3 FY26 saw an order intake of INR 961 crores, marking a 9% sequential and 20% year-on-year growth. The total backlog now stands at INR 2,205 crores, which is 27% higher than the previous year, providing a strong foundation for future revenue.

A key highlight is the success of the company's diversification strategy, with 50% of the order intake over the last nine months and the corresponding backlog originating from non-traditional industries (non-chemical and non-pharma). These new verticals, including defense, nuclear, metals, minerals, and oil & gas, are contributing significantly to growth, particularly in India and the Americas. Management confirmed that these non-traditional businesses are expected to maintain or improve margin profiles and Return on Capital Employed (ROCE) compared to traditional segments.

The company recorded exceptional items^📎 totaling INR 57 crores in Q3 FY26. This includes INR 44 crores related to a cost-reduction program at its Pfaudler GmbH facility in Germany, which involves reducing approximately 30 people over two years, expected to yield over INR 40 crores in total savings. An additional INR 13 crores was provisioned for the new labor code in India. These measures are part of a broader strategy to consolidate manufacturing footprints and improve cost structures, particularly in glass-lined businesses in Europe.

While India continues to show improvement, driven by investments in pharma, oil & gas, and nuclear, Europe remains slow and uncertain, especially in traditional chemical and pharma markets. China also presents challenges, leading to underperforming units in these regions that are impacting overall EBITDA margins. Conversely, American markets are recovering, and South America (Brazil) is seeing growth in metals, minerals, and oil & gas sectors.

The Heavy Engineering (HE) business in India has sufficient capacity to generate INR 600-700 crores in revenue from its current site, with potential to reach INR 1,000 crores with further capacity additions. The HE division is strategically moving up the value chain by diversifying materials from 90% carbon steel to 40% carbon steel, incorporating stainless steel, Hastelloy, and Titanium. The mixing business, with four brands globally, is also a focus area for growth, particularly in South America, though Europe remains weak.

Management expressed confidence in a strong Q4 FY26 for India in terms of revenue and shipments, expecting continued order intake momentum. The company aims to achieve a mid-term EBITDA margin in the 16% to 18% range, driven by faster growth in higher-margin new businesses and improvements in underperforming glass-lined units through ongoing restructuring. The 27% higher backlog for the next financial year is anticipated to drive both revenue and profitability growth.