Detailed Narrative
Strong Q4 and FY26 Performance for Engineering Segment
Harsha Engineers International's Engineering segment delivered a robust Q4 FY26 with a top line of INR382 crore and EBITDA of INR77 crore. For the full fiscal year 2026, the segment's top line grew 13.8% to INR1,444 crore, up from INR1,269 crore in FY25. Adjusted EBITDA for the Engineering business also saw a significant increase of 18.9% to INR270 crore, compared to INR227 crore in the previous fiscal year, even after adjusting for new Labour Code impact.
Robust Growth in Bushing and Solar Businesses
The Bushing business demonstrated strong performance, achieving INR127 crore in revenue for FY26, marking a 25% growth over the last financial year. The Solar business also experienced substantial growth, with revenues reaching INR183 crore and a PAT of INR10.2 crore in FY26, more than doubling from INR5 crore in the prior year. Management expects the Solar business to continue growing over 25% annually, supported by favorable government policies.
Mixed Performance from International Subsidiaries
While Harsha China performed well with a turnover of INR120 crore and a PAT of INR5 crore in FY26, the Romania subsidiary continued to underperform, reporting a turnover of INR247 crore but incurring a PAT loss of INR14 crore. The Advantek unit, despite positive EBITDA, posted a combined loss of INR11.5 crore in FY26 primarily due to higher depreciation and interest in its first year of operations. Overall, combined foreign subsidiary losses amounted to INR9 crore for FY26.
Strategic Growth Drivers and Market Outlook
The company is focusing on several key growth drivers, including increasing wallet share with Japan-based customers, expanding large-size cage business (which grew 14% to INR49 crore in FY26), and growing the bushing and stamping segments. Management noted that export growth was driven by improving global industrial markets and reduced US import tariffs on cages. Domestic demand remains robust, with India's cage business growing over 10% and overall India engineering expected to grow in the mid-teens.
Capital Expenditure and Capacity Expansion Plans
Harsha Engineers incurred a total capex of INR120 crore in FY26, with INR20 crore spent in Q4. For the current financial year, INR30-40 crore is planned for maintenance capex in India. Additionally, INR70 crore is allocated for the China brownfield expansion project in the current FY, with another INR20 crore planned for next FY, aiming for operation by H2 FY28. The company is also finalizing plans for the second phase of Advantek to create additional capacity for key growth verticals.
Working Capital Management and Margin Outlook
The company maintained its working capital cycle at 130 days at year-end FY26, a slight improvement from 134 days in the previous quarter. Management expressed confidence in maintaining its current margin profile in FY27 and aims for marginal improvement, targeting an overall increase of 100 to 200 basis points in EBITDA over the next 2-3 years. They acknowledge inflationary pressures on raw materials but have an established pass-through mechanism with customers to mitigate cost impacts.