Harsha Engineers International Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Harsha Engineers International reported a robust Q1 FY26, driven by positive industrial demand in Europe and India, leading to a 6.73% YoY revenue growth in its Engineering business. The new Advantek greenfield facility, though contributing minimally in Q1 FY26 due to its recent commissioning, is expected to turn profitable by year-end. Management expressed strong confidence in the Bushing segment's growth, backed by new contracts, and outlined plans to significantly reduce losses from its international subsidiaries.

Highlights

  • Consolidated Engineering business top line was INR349 crores in Q1 FY26, growing 6.73% YoY.

  • Consolidated EBITDA for Engineering business stood at INR65.2 crores in Q1 FY26, up 4.48% YoY.

  • Harsha Advantek (new greenfield facility) reported INR1.65 crores in Q1 FY26 sales, with initial sales of INR2 lakh from the new site.

  • The Bushing business, with FY25 revenue of INR100 crores, is expected to grow at least 30% in FY26.

  • A new long-term Bushing contract is projected to achieve peak annual sales of around INR117 crores over 2-3 years, with incremental sales in Q4 FY26.

  • Combined losses for Romania and China, which were INR17 crores in FY25, are targeted to reduce by approximately 50% in FY26.

  • Capex in Q1 FY26 was INR44 crores, primarily allocated to the Bhayla site.

  • Overall working capital cycle was 139 days.

Key financials

  1. Engineering Revenue ₹349 Cr +6.7%YoY
  2. Engineering EBITDA ₹65.2 Cr +4.5%YoY
  3. Solar Revenue ₹16.4 Cr
  4. Solar EBITDA ₹0.9 Cr
  5. Capex ₹44 Cr
  6. Working Capital Days 139 days

What they filed

Q1 FY27: revenue up 25.2%, net profit down 2.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue353 339 373 365 378 +7%409 +21%474 +27%457 +25%
EBITDA42 43 35 55 54 +29%57 +33%73 +109%67 +22%
Net profit29 27 -2 38 36 +24%34 +26%47 +2450%37 −3%
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

  • India Engineering
    70% Bearing Cages Contribution25% Bushings & Stamping Contribution
  • Romania
    80% Semi-finished Casting Contribution20% Cage Contribution

Guidance & targets

Revenue

  • Harsha India Engineering business top line growth Revenue · FY26 · Medium confidence low-teens
    To conclude, I wish to reiterate overall target for FY '26. This is that it is to be -- is to expect at least a low-teens top line growth in Harsha India Engineering business...

    — Vishal Rangwala

  • Consolidated top line growth Revenue · FY26 · Medium confidence higher single-digit
    ...and a higher single-digit top line growth in a consolidated basis.

    — Vishal Rangwala

  • Bushing product revenue growth Revenue · FY26 · High confidence at least 30%
    I believe that as compared to FY 2025 where Bushing product reported a revenue of about INR100 crores, this product should grow handsomely at least 30% in current financial year due to strong tailwinds that we are witnessing in this segment.

    — Vishal Rangwala

  • Bushing segment revenue (new contract) Revenue · 2-3 years to fully realize, incremental sales in Q4 FY26 · High confidence around INR117 crores (peak annual sales)
    This contract, what we are expecting is peak annual sales to be around INR117 crores and which can take about 2 to 3 years to fully realize, while some incremental sales related to this contract will come in, in fourth quarter current financial year.

    — Vishal Rangwala

  • Bushing segment revenue (overall) Revenue · next 2-3 years · High confidence at least INR200 crores plus
    So right now, Bushing contributes about INR100 crores in last financial year to the revenue. And we believe that we are on a good growth trajectory there. And over next 2, 3 years, we believe that it would be at least INR200 crores plus revenue in overall...

    — Vishal Rangwala

Profitability

  • Profitability growth Profitability · FY26 · Medium confidence better growth compared to adjusted EBITDA and PAT in FY25
    It will be evident there should be a better growth in profitability as compared to adjusted EBITDA and PAT that we have achieved in FY 2025.

    — Vishal Rangwala

  • Combined loss for Romania plus China Profitability · FY26 · Medium confidence come down considerably, maybe to the tune of roughly 50% of FY25 (from INR17 crores)
    We are feeling confident that this should come down considerably in current financial year and maybe to the tune of roughly 50% of FY '25.

    — Vishal Rangwala

Capex

  • Remaining investment in Bhayla site Capex · next 1.5 years or so · Medium confidence ~INR100 crores
    So we are expecting at least about INR100 crores over next 1.5 years or so. This is a rough estimate we have right now.

    — Vishal Rangwala

Risks & concerns

  • Harsha Advantek (new greenfield facility) initial losses

    medium

    The new greenfield facility reported a negative bottom line in Q1 FY26 due to ramp-up costs, higher overheads, depreciation, and interest.

    Management acknowledged

  • Sluggish auto sector demand in India

    medium

    The auto sector continues to remain sluggish, impacting domestic engineering sales, though management expects a rebound in Q4.

    Management acknowledged

  • Delay in revenue realization from new major sourcing contract for cages (India)

    medium

    Revenue from a new large cage contract, initially expected in H2 FY26, may be delayed to FY27 due to inventory building and customer coordination.

    Management acknowledged

  • Sales mix in Romania not improving in favor of cages

    medium

    Despite good top-line growth in Romania, the desired shift towards higher-value cage products (currently 20% of revenue) is not yet materializing.

    Management acknowledged

  • Uncertainty and softening demand in US due to trade impact

    medium

    Geopolitical factors and potential trade barriers could impact US exports, though current exposure is limited (US sales are ~10% of overall demand).

    Management acknowledged

Q&A highlights

3 direct
New greenfield plant (Advantek) performance and breakeven timeline Direct
Commercialization happened in the last week of June. And hence, no major sales happened from the new greenfield site, except initial sales of INR2 lakh. But yes, we already have a rented site in our subsidiary Harsha Advantek. So total sales of Harsha Advantek in the first quarter was INR1.65 crores... we expect by this year, it will be positive turnaround.

Provides specific initial revenue figures for the new plant and management's timeline for profitability, addressing concerns about initial losses.

Asked by Harshit Patel

Future capex requirements for the new Bushing contract Direct
Yes, we anticipate that we will have to so we have already invested considering anticipation of this additional contract and ongoing growing volume we have in Bushing area. And specifically reference to this contract when this full maturity of this contract takes place in about 2 years, a little bit more, we expect that to achieve those revenue, we will have to invest something in that. I don't have a very accurate number how much at this point in time, but we are expecting that we will have to invest further to even fulfill this contract, but that will come in a little bit later towards maybe end of current financial year, more likely early next financial year.

Clarifies that while some capex is already done, further investment will be needed for the new INR117 crore Bushing contract as it scales up, indicating future capital allocation.

Asked by Amit Anwani

Rationale for greenfield expansion despite existing capacity utilization Direct
So it is a very difficult question because we have a subsegment level micro, I mean, capacity going on... Overall, I would say that we have -- if I just talk about last quarter, we I would say that we would have a 65% to 70% range overall utilization... we don't think that we can optimally utilize more than 80% when it comes to capacity because of ups and lows of demand and the product mix and the complexity of engineering this product line and business... Significant growth on the Bushing side... large-size cages, we are seeing long-term growth... we run out of space here.

Explains the strategic rationale behind the new greenfield plant despite existing capacity, citing product-specific growth, space constraints, and optimal utilization limits, which is crucial for understanding long-term growth strategy.

Asked by Jason Soans

3 min read 6 chapters

Detailed narrative

Q1 FY26 Performance Overview and Demand Trends

Harsha Engineers reported a consolidated Engineering business top line of INR349 crores in Q1 FY26, marking a 6.73% YoY growth from INR327 crores in Q1 FY25 and a 5.76% QoQ growth from INR330 crores in Q4 FY25. Consolidated EBITDA for the Engineering business stood at INR65.2 crores, up 4.48% YoY from INR62.4 crores in Q1 FY25. Management noted positive signs of industrial demand improvement in Europe and India, leading to higher sales in Harsha Romania and good order inflow for large-sized cages, although the auto sector in India remains sluggish.

Advantek Greenfield Facility Ramp-up and Capex

The new greenfield facility, Harsha Advantek, commissioned in May 2025, contributed INR1.65 crores in Q1 FY26 sales, with initial sales of INR2 lakh from the new site. The facility is currently operating at a negative bottom line due to higher overheads, depreciation, and interest charges during its ramp-up phase, but management expects a positive turnaround by the end of the current financial year. The company incurred INR44 crores in capex during Q1 FY26, primarily for the Bhayla site, as part of a larger INR300 crore investment plan over 2.5-3 years, with approximately INR100 crores remaining to be invested over the next 1.5 years.

Bushing Business Growth and New Contracts

The Bushing business is experiencing strong traction, with FY25 revenue of INR100 crores expected to grow at least 30% in FY26. A new long-term contract for bushings has been secured, projected to achieve peak annual sales of around INR117 crores over 2-3 years, with incremental revenues starting in Q4 FY26. Overall, the Bushing segment is targeted to reach at least INR200 crores in revenue within the next 2-3 years, driven by significant growth and the need for additional capacity.

International Operations and Profitability Improvement

Harsha Romania showed good top-line growth in Q1 FY26, driven by overall industrial demand improvement in Europe, though the sales mix has not yet shifted significantly towards cages (currently 20% cages, 80% semi-finished casting). The combined loss for Romania and China, which stood at INR17 crores in FY25, is targeted to reduce considerably, potentially by 50%, in FY26. Management is actively working on restructuring and cost savings initiatives in Romania, expected to yield full results in 6-8 months.

Capacity Utilization and Expansion Strategy

Overall capacity utilization in India facilities was estimated at 65-70% in Q1, with Romania at very low utilization and China around 60%. Management explained that the greenfield expansion was necessary despite existing capacity due to product-specific growth in Bushings and large-size cages, which required additional space and capacity beyond what existing facilities could optimally provide. The new Bhayla site offers significant room for future expansion, with 55-60% land free and 20% building space available for new products without additional infrastructure spend.

FY26 Outlook and Strategic Priorities

For FY26, Harsha Engineers targets low-teens top-line growth for its India Engineering business and higher single-digit consolidated top-line growth, with better profitability growth compared to FY25. The company expects H2 FY26 sales to be stronger than H1. Efforts to increase sales to Japan-based customers continue, and while revenue from a new major sourcing contract for cages may be delayed to FY27, management remains confident in the long-term growth trajectory of its core product lines.

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