Harsha Engg Intl

Harsha Engineers International reported a Q4 FY25 consolidated engineering segment top line of INR330 crores, achieving an adjusted EBITDA of INR66 crores. For the full fiscal year 2025, the engineering segment's top line reached INR1,269 crores, representing a 3.42% increase from FY24's INR1,227 crores, with an adjusted EBITDA of INR227 crores. The solar business recorded an annual revenue of INR139 crores but posted an EBITDA loss of INR14 crores, primarily due to a INR20 crores bad debt write-off and a INR5 crores ECL provision.

The company made a significant one-time^📎 impairment provision of INR95 crores for its investment in Harsha Romania in standalone books, which translated to a net INR28 crores provision in consolidated financial statements for FY25. This action was prompted by continued weak demand in Europe and a major customer's indication of reduced semi-finished product offtake from the Romania facility. Management is actively formulating a comprehensive long-term strategy, acknowledging that 'Romania operations cannot continue at the current level in this form'.

The India Engineering business demonstrated robust performance in Q4 and is anticipated to grow in 'low teens' in the coming financial year. The bronze bushing business was a key highlight, achieving a turnover exceeding INR100 crores in FY25 and is projected to grow 'at least about 30%' in FY26, supported by additional capacities in new Greenfield facilities. While sales to Japanese customers were flat in FY25 due to project delays, their offtake is 'likely to increase in coming quarter'.

Harsha Engineers successfully improved its consolidated working capital cycle to 126 days by March '25, a notable reduction from 144 days in the previous quarter and 142 days in March '24. Capital expenditure for Q4 FY25 amounted to INR78 crores, contributing to a total of INR209 crores for the full financial year 2025. These investments include new Greenfield sites for Harsha Engineers Advantek and a 10-megawatt ground-mounted solar project.

Management acknowledged a 'prolonged turbulent period' due to geopolitical tensions and economic turmoil, making it 'difficult to project with very high confidence' for the global market. Despite this, the 'China plus One' strategy remains a long-term focus, with expectations of direct business from various geographies, particularly the U.S. The company also anticipates indirect benefits as customers deleverage their supply chains from China and increase manufacturing capacities in India, leading to more product supply into India for export.

For financial year 2026, Harsha Engineers expects 'at least a higher single-digit growth' in its consolidated top line and a 'much stronger growth in the bottom line'. This outlook is provided amidst acknowledged global market volatility^🌐 and varying customer signals regarding demand sustainability. The company's confidence is anchored in the robust performance and prospects of its India Engineering business and specific high-growth segments like bushing.