Harsha Engineers International Limited — Q3 FY26 earnings call

Call held 5 Feb 2026

Management summary

Harsha Engineers International reported a mixed Q3 FY26, with strong 17.4% YoY revenue growth and healthy 23.8% normalized EBITDA margin in its India Engineering business. However, foreign subsidiaries, particularly Romania and the new Advantek unit, faced profitability challenges due to copper price volatility and higher interest/depreciation, resulting in a combined net loss of INR3.98 crores for foreign subsidiaries. The company announced a USD 9.94 million China expansion for steel cage manufacturing and expects Advantek to reduce losses in Q4 and breakeven next year.

Highlights

  • Our India Engineering business has reported a 17.4% revenue growth in Q3 on a Y-o-Y basis.

  • If we normalize the effect of onetime exceptional provision, then our India Engineering business operating EBITDA margin has shown a healthy 23.8%.

  • Our export from India are also gradually going up with EU continuing to show revival in industrial demand for cages.

  • Bronze Bushing business has continued its strong growth trajectory, reaching a sales revenue figure of about INR92 crores in 9 months.

  • Harsha China has continued to report a consistent steady performance, resulting into maintaining a decent profitability and a growth trajectory.

  • Solar business, as mentioned, has achieved a revenue of INR59.7 crores with an EBITDA of INR5.5 crores.

  • Overall, working capital cycle at consolidated level is around 140 days against 146 days in the previous quarter.

Concerns

  • Harsha Advantek, which has commissioned its greenfield facility, has reported losses at the PAT level of INR3.7 crores in Q3 FY26, primarily owing to impact of higher interest and depreciation.

  • A onetime provision of around INR5.97 crores was made in Q3 in India for additional gratuity and leave encashment due to new labour code changes.

  • Romania's performance was below par, resulting in an operating loss due to a steep increase in copper prices globally which could not be immediately passed on.

  • The combined net loss of our foreign subsidiary stood at around INR3.98 crores in quarter 3, and for 9 months, it stood at INR6.09 crores.

  • Sales growth to Japanese customers is slow, attributed to both internal delays and customer demand issues.

Key financials

  1. Consolidated Engineering Revenue ₹350 Cr +15.9%YoY
  2. Consolidated Engineering EBITDA ₹58.6 Cr +21.6%YoY
  3. Adjusted Engineering EBITDA ₹64.3 Cr
  4. India Engineering Revenue Growth 17.4%
  5. India Engineering Normalized EBITDA Margin 23.8%
  6. Harsha Advantek Net Loss ₹3.7 Cr
  7. Foreign Subsidiaries Combined Net Loss ₹3.98 Cr
  8. Solar Business Revenue ₹59.7 Cr
  9. Solar Business EBITDA ₹5.5 Cr
  10. Working Capital Cycle 140 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 Business
    17.4% Revenue Growth23.8% Operating EBITDA Margin (Normalized)21.7% Operating EBITDA Margin (Reported)
  • Harsha Advantek
    ₹3.7 Cr Net Loss (Q3 FY26)₹9 Cr Net Loss (9 Months FY26)
  • Romania
    — Operating Loss (Q3 FY26)
  • Foreign Subsidiaries (Combined)
    ₹3.98 Cr Net Loss (Q3 FY26)₹6.09 Cr Net Loss (9 Months FY26)₹0.51 Cr EBITDA Loss (Q3 FY26)
  • Solar Business
    ₹59.7 Cr Revenue (Q3 FY26)₹5.5 Cr EBITDA (Q3 FY26)9% EBITDA Margin (Q3 FY26)
  • Large-sized Cages
    ₹39 Cr Sales (9 Months FY26)₹31 Cr Sales (9 Months FY25)
  • Bronze Bushing Business
    ₹92 Cr Sales (9 Months FY26)₹75 Cr Sales (9 Months FY25)
  • Stamping Business
    ₹41 Cr Sales (9 Months FY26)₹39 Cr Sales (9 Months FY25)
  • Japanese Customers
    ₹51.5 Cr Sales (9 Months FY26)₹50 Cr Sales (9 Months FY25)

Order book

low confidence

Pipeline

qualified rfp

New product development and additional RFQs/opportunities

Management noted strong new product development and signed supply agreements, indicating future growth, but did not quantify the order book value.

Source: Inferred

Capital allocation

high confidence
  • Capex ₹32 Cr this quarter · ₹250 Cr (FY26) planned China expansion primarily through debt (70-80%) and balance through equity
    • Capacity expansion in China for steel cages $9.94 Mn
    • Advantek greenfield facility investment ₹210 Cr
    We have firmed up a brownfield expansion plan in China at the outlay of approximately USD 9.94 million for expanding cage manufacturing capacity in China with primary focus of steel cages. We will fund this expansion primarily through debt and then up to maybe 70% to 80%, or rather, we will fund this by borrowing locally and balance of it would be funded through equity. We have incurred capex of INR32 crores in the last quarter and cumulative capex of around INR100 crores in the last 3 quarters in the current financial year. Currently, investment is around INR210 crores-plus... we expect it to end this year around INR250 crores-plus.

Guidance & targets

Product Segment Growth

  • Bronze Bushing business growth Product Segment Growth · this segment · High confidence 30%-plus
    we are on track to achieve about 30%-plus growth Y-o-Y basis in this segment.

    — Vishal Rangwala

Overall Growth

  • Overall growth Overall Growth · FY26 · High confidence a little over 10%
    we will be in terms of growth a little over 10% overall. This Q4 should also continue the same run rate with maybe a little bit marginal improvement, so let's see. That's what the guidance was. We are, I think, on track. We should be okay.

    — Sanjay Majmudar

Profitability

  • FY26 PAT Profitability · FY26 · Medium confidence INR145 crores or so
    I believe this we should be reaching the targeted PAT level in the range of around, say, maybe INR145 crores or so. Let us see.

    — Sanjay Majmudar

Subsidiary Performance

  • Advantek breakeven Subsidiary Performance · from next year · High confidence breakeven
    It will not completely breakeven. It should break even from next year.

    — Sanjay Majmudar

  • Romania profitability Subsidiary Performance · near term · Medium confidence breakeven first at EBITDA level, followed by at a profit level
    Romania, our intention is to make it breakeven first at EBITDA level, followed by at a profit level. That's the major intent.

    — Maulik Jasani

  • India Engineering business EBITDA margin Subsidiary Performance · consistent level · High confidence 22%, 23%
    India level consistently, we should be in the range of 22%, 23%.

    — Sanjay Majmudar

Capacity Expansion Revenue

  • China expansion revenue Capacity Expansion Revenue · full maturity · High confidence around 2x current revenues
    we are expecting at full maturity, it should give around 2x. Current revenues will be double. We are looking at the 2x overall revenue in China when the full maturity of all this capacity takes place.

    — Vishal Rangwala

Capacity Expansion Timeline

  • China expansion operational Capacity Expansion Timeline · before end of financial year '28 · High confidence operational
    we intend to make this operational before end of financial year '28.

    — Vishal Rangwala

Subsidiary Ramp-up

  • Advantek optimum level Subsidiary Ramp-up · within 2 years or around in 2 years from our capitalization · High confidence optimum level
    we see that we are on the same track of achieving the optimum level within 2 years or around in 2 years from our capitalization.

    — Maulik Jasani

Subsidiary Investment

  • Advantek total investment Subsidiary Investment · end this year · High confidence around INR250 crores-plus
    we expect it to end this year around INR250 crores-plus.

    — Vishal Rangwala

Subsidiary Revenue Potential

  • Advantek peak revenue Subsidiary Revenue Potential · full maturity · High confidence 2x of the plant and machineries
    2x of the plant and machineries, but you also have to keep in mind the incremental plant and machineries to be in pipeline.

    — Vishal Rangwala

Market context

  • India GDP growth rate Macro Economy · coming years · High confidence around 7%
    India can sustain a good GDP growth rate of around 7% in coming years.

    — Vishal Rangwala

What to watch in Q4 FY26

Overall FY27 Guidance

Q4 FY26 results call
Current Prefer to give at Q4 FY26 results call
Target Specific guidance for FY27

Why it matters

Provides forward-looking visibility for the next financial year, crucial for investor planning.

we would prefer to give our overall guidance for FY '27 at the time of quarter 4 FY '26 annual results call.

Risks & concerns

  • Romania profitability due to commodity price volatility

    medium

    Steep increase in copper prices globally could not be immediately passed on to customers, leading to an operating loss in Romania in Q3 FY26. Management notes significant volatility and ongoing risk.

    Management acknowledged

  • Harsha Advantek initial losses impacting overall PAT

    medium

    The newly commissioned Harsha Advantek facility reported a net loss of INR3.7 crores in Q3 FY26 (INR9 crores for 9 months) primarily due to higher interest and depreciation costs during its initial operational phase.

    Management acknowledged

  • Slow sales growth from Japanese customers

    low

    Sales growth to Japanese customers has been slow, attributed to a combination of internal program delays and customer-side demand issues, though management remains confident in future growth.

    Management acknowledged

Q&A highlights

6 direct
India Engineering business growth drivers and pricing vs. volume mix. Direct
This growth is primarily we are seeing it's purely quantity-driven growth. We are seeing a volume growth. As yet, I think in the last I mean, quarter 3, we don't see any material impact or pass-through, which has materialized, so which will happen in the current quarter.

Clarifies that the strong 17.4% YoY growth in India Engineering is primarily volume-driven, with pricing impacts expected in the current quarter.

Asked by Harshit Patel

Rationale for China capex despite current utilization and future revenue potential. Direct
We are seeing industrial segment grow and our ability to participate and get some share of business significantly changes when we are a local manufacturer there. That's the what is primarily driving this capacity expansion... we are expecting at full maturity, it should give around 2x.

Explains the strategic shift to local manufacturing in China to capture industrial steel cage demand and penetrate local markets, projecting a doubling of current revenues at full maturity.

Asked by Harshit Patel

Outlook for Romania subsidiary given commodity price volatility. Partial
I think I will not be able to exactly say how it's going. There is a lot of volatility in the commodity market... I mean, not knowing future, but what we have seen so far so there's a significant volatility. That there is a risk and a concern remains.

Highlights the ongoing uncertainty and risk associated with Romania's profitability due to high commodity price volatility, despite internal improvement efforts.

Asked by Amit

Advantek subsidiary losses and timeline for breakeven. Direct
Advantek, as you could see, we have already given the figure that Advantek was around INR9 crores... It will not completely breakeven. It should break even from next year.

Provides clarity on the magnitude of Advantek's losses (INR9 crores for 9 months) and sets a clear target for achieving breakeven by next year.

Asked by Jason

Reasons for slow sales growth from Japanese customers and recovery prospects. Direct
It's a little bit of both. As I was mentioning that there were last quarter, I mentioned that there were some programs which got delayed at our end. Then some of it was demand and delay from customer end so on. It was a combination, and we are very hopeful that we'll come back on track.

Explains the dual factors (internal delays and customer demand) contributing to the stagnation in Japanese customer sales and expresses optimism for future recovery.

Asked by Jaymin

Overall value creation for investors and impact of macro factors. Partial
Saket, you are right in what you have observed, but also please appreciate that macro level factors are beyond our control... I think I don't want to speak more, but it seems that this year was much better than last year and now next year will still be better.

Addresses investor concerns about value creation, attributing past challenges to uncontrollable macro factors and projecting improved performance for the current and next financial years.

Asked by Saket Kapoor

Sustainability of India Engineering EBITDA margin and raw material pass-through mechanism. Direct
Usually, Manish, we have said that our margins should be tracked on the absolute front, considering there is a material pass-through impact impacting the percentage... Our suggestion is the same. Please track our absolute margin improvement, and we are confident to improve that margin definitely year-over-year, as well as quarter-over-quarter.

Clarifies the company's focus on absolute margin improvement, acknowledging the impact of raw material pass-through and a typical 4-month lag in price adjustments.

Asked by Manish Goyal

Expected benefits from recently concluded FTAs (India-UK, India-EU, India-US). Direct
Obviously, the export demand will pick up. That's our expectation. There is no direct linkages, but definitely, there is a linkage, and considering that our product is a multi-usage product and multi-industry usage product, we can't identify the exit end-to-end benefit. Yes, we see that as a positive outcome for our business line.

Indicates a positive outlook for export demand due to new FTAs, although specific end-to-end benefits are hard to quantify given the multi-usage nature of their products.

Asked by Manish Goyal

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Overview and Macro Tailwinds

Harsha Engineers International reported a consolidated engineering top line of INR350 crores in Q3 FY26, marking a 15.89% YoY growth but a 3.58% QoQ decline. Consolidated EBITDA for the engineering segment was INR58.6 crores, up 21.58% YoY. The company noted positive macro-level events, including new FTAs with the UK, EU, and a pending India-U.S. trade agreement, contributing to a confident outlook for India's GDP growth rate of around 7% in coming years.

India Engineering Business and Advantek Performance

The India Engineering business demonstrated strong performance with a 17.4% YoY revenue growth in Q3 FY26. Normalized operating EBITDA margin for this segment stood at a healthy 23.8%. However, the newly commissioned Harsha Advantek subsidiary reported a net loss of INR3.7 crores in Q3 FY26, primarily due to higher interest and depreciation. Management expects Advantek's Q4 performance to improve, reducing losses, and aims for breakeven from next year.

Foreign Subsidiary Challenges and Strategic Shifts

Foreign subsidiaries faced challenges, with a combined net loss of INR3.98 crores in Q3 FY26 and INR6.09 crores for the nine-month period. Romania, in particular, incurred an operating loss due to a steep increase in global copper prices that could not be immediately passed on to customers. Despite this, the company remains confident in Romania's recovery in the coming quarter through a focus on finished cage business and cost control strategies, with an intention to achieve EBITDA breakeven first.

Strategic Capacity Expansion in China

Harsha China continued its steady performance with decent profitability and growth. The company announced a brownfield expansion plan in China with an outlay of approximately USD 9.94 million (approx. INR 82.5 crores) to expand steel cage manufacturing capacity. This expansion is driven by strong demand in the industrial segment and the need to be a local player, with an expectation to double current revenues at full maturity and become operational before the end of FY28.

Product Segment Highlights and New Developments

The Bronze Bushing business maintained strong growth, achieving INR92 crores in sales for the nine-month period, on track for over 30% YoY growth. Large-sized cages sales reached INR39 crores in 9 months, up from INR31 crores last year. Stamping sales recovered in Q3, reaching INR41 crores for 9 months, with new components under development expected to drive further growth in the next financial year. New product development remains strong, with 123 SKUs added in Q3 and 382 SKUs for the 9-month period.

Capital Expenditure and Working Capital Management

The company incurred INR32 crores in capex during Q3 FY26, bringing the cumulative capex for the last three quarters to INR100 crores. Total investment in Advantek is currently around INR210 crores-plus, expected to reach INR250 crores-plus by the end of FY26. The working capital cycle at the consolidated level improved to 140 days in Q3 FY26, down from 146 days in the previous quarter, indicating efficient capital management.

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