Hind Rectifiers Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Hind Rectifiers reported a strong Q1 FY26 with revenue growing 58.5% YoY to INR214.8 crores and PAT increasing 85.5% YoY to INR12.8 crores, driven by robust order book execution and margin expansion. The company achieved an all-time high order book of over INR1,022 crores, including significant new orders for locomotive products. Management highlighted progress in indigenous propulsion systems, strategic backward integration, and diversification efforts, while acknowledging component-related supply chain bottlenecks.

Highlights

  • Strong revenue growth: Revenue from operations grew 58.5% Y-o-Y to INR214.8 crores.

  • Significant EBITDA growth: EBITDA stood at INR24.2 crores, reflecting a growth of 66.9% Y-o-Y.

  • All-time high order book: Order book reached an all-time high of more than INR1,022 crores as of June 30.

  • Robust PAT growth: PAT grew 85.5% Y-o-Y to INR12.8 crores.

  • Margin expansion: EBITDA margin increased by 60 bps to 11.3% and PAT margin by 80 bps to 5.9%.

Concerns

  • Component supply chain issues (availability, quality, price) identified as a bottleneck for growth.

Key financials

  1. Revenue from Operations ₹214.8 Cr +58.5%YoY
  2. EBITDA ₹24.2 Cr +66.9%YoY
  3. EBITDA Margin 11.3% +0.6%YoY
  4. PAT ₹12.8 Cr +85.5%YoY
  5. PAT Margin 5.9% +0.8%YoY

What they filed

Q1 FY27: revenue up 20.3%, net profit down 49.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue166 169 185 215 227 +37%277 +64%280 +51%258 +20%
EBITDA18 18 20 24 26 +41%26 +45%8 −58%13 −45%
Net profit10 10 10 13 15 +44%13 +27%-2 −116%7 −49%
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.

Order book

high confidence

Total value

₹1,022 Cr

as of 2025-06-30 quantified

Inflow this quarter

₹228 Cr

Execution

12 to 18 months, with new products having longer gestation

Composition

  • Locomotive Products (Transformers) (product) ₹228 Cr
Order book reached an all-time high, providing strong visibility, with new orders largely for transformers and some smaller components.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹50 Cr two third by debt and one third by internal accruals
    • New product range
    • Backward integration
    At present, in this year, we are targeting around INR50 crores capex. This is mainly for our backward integration, which we have declared earlier also. Yes, partially by debt and partially by internal accruals -- yes, I can say approximately two third by debt and one third by internal accruals

Guidance & targets

Revenue

  • Revenue Growth Revenue · FY26 · High confidence minimum 30%
    No, I don't believe we gave any guidance. We were asked a question, and we said, yes, we will do minimum 30%, and we stick to the same.

    — Suramya Nevatia

  • Revenue Potential from Current Capacity Revenue · Annual · Medium confidence INR1,000 crore to INR1,200 crore
    Means, it's fair to say that you can do around INR1,000 crore to INR1,200 crore of revenue from the current capacity and new capex, you are driving, I think, by next 1 year.

    — Suramya Nevatia

  • Revenue Potential with New Capex Revenue · Annual · Medium confidence INR1,200 crores to INR1,500 crores
    But yes, I mean, going to INR1,200 crores, INR1,500 crores. See, I can't put a number because it also depends on the product mix.

    — Suramya Nevatia

Market Share

  • Propulsion System Market Share Market Share · Initially · Medium confidence 10%
    So initially, we will target a much lower market share, maybe 10% is what we are looking at.

    — Suramya Nevatia

Volume

  • Propulsion System Target Quantity Volume · Upcoming tenders · Medium confidence 150-odd systems
    So I'm saying that there are around 1,500 locomotives, right? So you will be targeting 10% of that, right? So 150-odd propulsion system is the target that should we work for, for the upcoming tenders. Am I correct? Right. That's what we would be aiming for.

    — Suramya Nevatia

  • Locomotive Production per year Volume · Next 4-5 years · High confidence 1,500 to 1,800
    It will be at sustained levels. We have the plan that Railway Board gives us and gives out to all the companies in the industry. I mean it's pretty much 1,500 to 1,800 is what they are targeting over the next 4 to 5 years.

    — Suramya Nevatia

  • Traction Transformers per month Volume · Monthly · High confidence 60
    No, our goal is basically to fulfill our requirement every year and we are targeting to do 60 transformers every month and we want to maintain that.

    — Suramya Nevatia

Revenue Growth

  • Growth Trajectory Revenue Growth · Next few years · Medium confidence 25-30%
    Last quarter, you said you'll be growing this year for 30%.so, directionally, should we grow for next few years in this range, ballpark 25% to 30%? Yes, hopefully

    — Suramya Nevatia

What to watch in Q2 FY26

Propulsion System Field Trial Completion

Next quarter (within 2-3 months)
Current Field trials restarting in 2-3 days, 50,000 km trial expected to take 2-3 months.
Target Completion of 50,000 km field trials and receipt of letter from Railways.

Why it matters

Crucial for full commercialization and participation in larger tenders for propulsion systems, impacting future order book and revenue.

we now expect to restart our field trials where we need 50,000 kilometers to be done. And hopefully, we should be able to start this in the next 2- 3 days. And this 50,000 kilometers should take maybe 2 to 3 months' time to finish.

Risks & concerns

  • Component Supply Chain Bottlenecks

    medium

    Difficulty in sourcing enough components, or components of the right quality and price, is a bottleneck for achieving growth, despite sufficient internal capacity.

    Management acknowledged

  • Execution Delays for New Products

    low

    New orders and advanced propulsion systems have a longer gestation period (12-18 months) compared to regular products (12 months), which can impact revenue recognition timelines.

    Management acknowledged

  • Heavy Dependence on Indian Railways

    low

    The company derives around 90% of its revenue from Indian Railways, posing a concentration risk, though management is pursuing diversification and sees strong visibility in the railway sector.

    Analyst acknowledged

Q&A highlights

7 direct
Propulsion System Field Trials and Approvals Direct
So let me clarify basically what has happened. Our propulsion system was commissioned in Eastern India in one of their divisions. and then we started the field trials, but then the Indian Railways decided to move our locomotive to Western Railway at, I think, Valsad shed, that's where the commissioning is going on. so, because of this, we had to wait and there was a delay since the locomotive had to come all the way from East India to West. and again, we'll have to start the process of the approvals of these bridge and signaling and stuff like that. and we now expect to restart our field trials where we need 50,000 kilometers to be done. And hopefully, we should be able to start this in the next 2- 3 days. And this 50,000 kilometers should take maybe 2 to 3 months' time to finish.

Clarifies the reasons for delays in field trials and provides a new timeline for their restart and completion, which is critical for commercialization.

Asked by Manish Goyal

Development vs. Approved Orders for Propulsion Systems Direct
No, that's incorrect. Development order basically means that you are restricted to 20% of the tendered quantity because you are not an approved source, you are a development source. But that does not mean that your products don't run full scale in the field. So that is not a roadblock for us.

Explains that being a 'development source' does not hinder full-scale product usage and clarifies the quantity restriction for such orders, which is important for understanding market access.

Asked by Divyansh Gupta

Competition in Propulsion System Market Direct
So, the competitors in propulsion system are all the big multinational companies like Siemens ,ABB and Alstom. And apart from that, there are big Indian companies like BHEL and Crompton Greaves and Medha from Hyderabad. So I think that's fine. There's enough space for all of us to coexist. and yes, there are new entrants who are trying to build this technology, but it's not easy. and we will wait and watch how the newer entrants perform in this field. But even if they do, we actually have a lot of competitive advantage over everybody else. and we are not really worried about getting orders for propulsion.

Provides an overview of the competitive landscape for propulsion systems and management's confidence in their position despite new entrants.

Asked by Manish Goyal

Capacity Bottlenecks and Supply Chain Direct
So the bottlenecks that we face are not related to capacity. The bottlenecks are related to components. We are not able to get enough components or the right quality or the right price. So it is actually the supply chain, which is a problem for us because of the scale and the growth that we're trying to achieve, our vendors or at least reliable vendors are not able to have that

Identifies the specific nature of bottlenecks (component supply chain) rather than internal manufacturing capacity, highlighting a key operational challenge.

Asked by Akshay

Backward Integration Plans Partial
So, regarding the differences between the propulsion systems, the new one, which is a more advanced one is more technologically advanced, firstly. There is newer technology being used. and there is an addition of different types of additional converters which are not part of the existing propulsion system... and secondly, regarding backward integration, we cannot disclose the products at this stage. But as and when the products are ready and they are being commercialized, we will make announcements, and we will inform everybody. we don't want our vendors to stop their support to us. So we can't make things public.

Management declined to provide specific details on backward integration products due to competitive reasons, indicating strategic importance but lack of immediate transparency.

Asked by Manish Goyal

Vande Bharat Market and Tier 1 Ambition Direct
And do we want to become Tier 1 there? Is that something which is there in the pipeline in terms of R&D, right, just like we did it in the other parts where we used to already supply some of these equipments that go into propulsion system to Alstom and other companies. Do we also want to become Tier 1? And is that something that we are aiming for, for some of the other EMUs and Vande Bharat trains? Yes. Definitely.

Confirms the company's strategic ambition to become a Tier 1 supplier for Vande Bharat trains, signaling a potential shift in market positioning.

Asked by Prolin B. Nandu

Order Book Execution Timeline Direct
I'm saying 12 to 18 months because we have new orders, new products, they have a gestation period for development. So that takes 18 months. Like I just mentioned the advanced propulsion system, that will not go within 12 months. That will take maybe some more time. We're not sure. we have some new variants of existing product. That all will take more time. So 12 months is your regular production, your regular products. And -- but some of it goes up to 18 months.

Clarifies the extended order book execution timeline is due to the gestation period of new and advanced products, providing insight into future revenue recognition patterns.

Asked by Ankur Kumar

Derisking from Railway Dependence Direct
So firstly, yes, we are continuously working to diversify to other domains and to other segments. we have already built certain products which we have started pushing outside to other industries. and we are now going to launch a very specialized and specific products. In fact, I think those announcements will be made very soon maybe within the next 6 to 8 weeks about the new products that are being launched.

Outlines the company's strategy for diversification beyond Indian Railways, including new product launches, to mitigate concentration risk.

Asked by Nilabja Dey

2 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Financial Performance

Hind Rectifiers delivered robust financial results for Q1 FY26, with revenue from operations growing 58.5% year-on-year to INR214.8 crores. This strong top-line growth translated into significant profitability improvements, as EBITDA increased by 66.9% year-on-year to INR24.2 crores, and PAT surged by 85.5% year-on-year to INR12.8 crores. The company also saw margin expansion, with EBITDA margin rising 60 basis points to 11.3% and PAT margin improving 80 basis points to 5.9%, attributed to order book execution, scale benefits, and cost optimization.

Record Order Book and Strategic Wins

The company achieved an all-time high order book of over INR1,022 crores as of June 30, 2025, providing strong revenue visibility. This includes two major orders from Indian Railways totaling INR228 crores (INR127 crores and INR101 crores) for locomotive products, primarily transformers. Management indicated that the order book is executable over the next 12 to 18 months, with new products and advanced propulsion systems having a longer gestation period.

Advancements in Propulsion Systems

Hind Rectifiers successfully commissioned its indigenously developed propulsion system, which is now assigned to Western Railways for field trials. While the 50,000 km trial is yet to be completed, management expects to restart it within 2-3 days, with completion anticipated in 2-3 months. The company also secured a development order for next-generation propulsion systems for passenger locomotives, a new technology for Indian Railways, and aims to capture an initial 10% market share of the 1,400-1,500 annual locomotive market.

Diversification and Backward Integration Initiatives

While Indian Railways remains the core customer, contributing around 90% of revenue, Hind Rectifiers is actively pursuing diversification into other industrial applications and new product segments. The company plans to launch specialized new products within the next 6-8 weeks. To address component supply chain bottlenecks, which are currently the main constraint rather than internal capacity, Hind Rectifiers is undertaking backward integration initiatives, with approximately INR50 crores capex planned for this purpose, funded by a mix of debt and internal accruals.

Long-Term Growth Outlook and Capacity

Management expressed confidence in achieving a minimum 30% revenue growth for FY26 and directionally 25-30% growth for the next few years. The current manufacturing capacity is capable of supporting INR1,000-1,200 crores in revenue, potentially reaching INR1,200-1,500 crores with the new capex for product range expansion. The company also aims to become a Tier 1 supplier for Vande Bharat trains, supplying components to OEMs and directly to Railways for the targeted 200 trains per year.

Capital Raise for Growth

The Board of Directors approved a preferential issue of warrants amounting to INR27.4 crores to the promoter group. This capital infusion is intended to facilitate growth across key business segments, leveraging tailwinds from government initiatives like Make in India, railway modernization, and electrification.

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