HLE Glascoat Limited — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

HLE Glascoat reported strong revenue growth in Q2 and H1 FY26, driven by robust demand across segments. The company successfully completed the Omeras acquisition using internal accruals and maintains a healthy order book of ₹722 crores. However, margins faced pressure due to competitive pricing and initial losses from Omeras, though management expects recovery in H2 FY26.

Highlights

  • Q2 FY26 Revenue from operations at ₹351 crores, up 48.8% YoY, reflecting robust demand and execution.

  • H1 FY26 Revenue grew by 37.1% to ₹635 crores, and H1 EBITDA increased by 35.3% to ₹80 crores.

  • Order book remains robust at ₹722 crores as of September 30, 2025, providing strong revenue visibility.

  • Acquisition of Omeras Global business was entirely funded through internal accruals, demonstrating financial strength.

  • Inventory days reduced from 121 days to 110 days, indicating improved working capital management.

Concerns

  • Q2 FY26 EBITDA margin was 11.4%, impacted by higher material costs and competitive pricing on certain high-value orders.

  • Initial losses of approximately ₹3.6 crores EBIT were incurred at the newly acquired Omeras business, affecting glass line segment margins.

  • The agrochemical sector continues to be under pressure, and US tariff situation has caused some players to slow capital investment.

Key financials

2 periods

Q2 FY26

  • Revenue from Operations
    ₹351 Cr
    YoY +48.8%
  • EBITDA
    ₹40 Cr
    YoY +13.2%
  • EBITDA Margin
    11.4%
  • PAT
    ₹14 Cr
  • PAT Margin
    4%

H1

  • FY26 Revenue
    ₹635 Cr
    YoY +37.1%
  • FY26 EBITDA
    ₹80 Cr
    YoY +35.3%
  • FY26 EBITDA Margin
    12.6%

What they filed

Q1 FY27: revenue down 7.9%, net profit down 26.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue114 130 195 164 193 +69%164 +26%202 +4%151 −8%
EBITDA11 12 26 20 23 +109%13 +8%27 +4%15 −25%
Net profit0 1 14 15 8 1 +0%13 −7%11 −27%
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

Share of Q2 FY26 Revenue
₹350 Cr Total
  • Glass Line Equipment ₹157 Cr 44.9%
  • Filtration, Drying, Other Equipment ₹137 Cr 39.1%
  • Heat Transfer Equipment ₹56 Cr 16.0%

Order book

high confidence

Total value

₹722 Cr

as of 2025-09-30 quantified

Execution

India business: a little over 5 months; Thaletec Germany & US: in excess of 9 months

Composition

  • Kinam (Heat Exchanger) (segment) ₹100 Cr

Pipeline

deal pipeline tcv

Omeras pipeline of inquiries

Cancellations & deferrals

  • cancelled: Omeras orders canceled due to non-viability
Order book remains robust with strong revenue visibility, and inquiry pipeline looks encouraging across all business segments.

Source: Prepared remarks

Capital allocation

high confidence
  • Debt Debt disclosed
    Our debt reduction strategy for the full year remains unchanged from what we had outlined in the previous earnings concall. We continue to prioritize efficient working capital management, disciplined capital allocation and internal accrual funding to further strengthen our balance sheet.
  • M&A Omeras Global business Acquisition · Closed

    Entry into glass fused steel products and panels business, opening significant global opportunities in sectors such as biogas digester systems, large storage tanks and architectural facade solutions.

    Initial losses incurred at HLE Surface Technologies GmbH Germany, approximately INR 3.6 crores EBIT loss accounted for in glass line segment.

    The quarter marked an important milestone for HLE Glascoat as we completed the acquisition of the Omeras Global business through our wholly owned step-down subsidiary, HLE Surface Technologies GmbH, along with the shares of Omeras Store GmbH. I would also like to highlight that the acquisition of Omeras business was entirely funded through internal accruals without any external borrowings.
  • M&A Kinam Enterprise Private Limited Merger · Integrated

    Consolidation to achieve 70% ownership of Kinam business.

    Further, we are pleased to inform you that the scheme of amalgamation of Kinam Enterprise Private Limited with HLE Glascoat Limited has been approved by the Honorable NCLT, Ahmedabad Bench, effective 7th August 2023, being the appointed date. This consolidation marks the completion of the formalities towards achieving the 70% ownership of the Kinam business as intended.
  • Liquidity Liquidity disclosed Omeras acquisition funded entirely through internal accruals without any external borrowings, reflecting inherent financial strength.
    I would also like to highlight that the acquisition of Omeras business was entirely funded through internal accruals without any external borrowings. This reflects the inherent financial strength of the company and our prudent approach towards expansion, while ensuring that the balance sheet remains robust even as we pursue strategic growth opportunities.

Guidance & targets

Profitability

  • Omeras Business Breakeven Profitability · Q4 FY26 · High confidence Breakeven or above
    I think on the Omeras business, we do not have a guidance for this particular year, except to say that by the end of the year, we should be at breakeven or above because as we said, we will need about 2 to 3 quarters to stabilize and grow this business.

    — Nilesh Ganjwala

  • Overall EBITDA Margins (H2 FY26) Profitability · H2 FY26 · High confidence ~16%
    On the business other than Omeras, I think our second half of the year should see improved EBITDA margins. We are expecting EBITDA margins for the overall business at about between -- roughly about 16%, which will be far more healthier than what we have declared in the first half.

    — Nilesh Ganjwala

  • Kinam EBIT Margin (Median) Profitability · Going forward · High confidence 20-22%
    So do you expect going forward to improve the EBIT margin in Kinam side to the median level, right? That's correct. ... So the oil and gas to answer your question on the margins, our, let's say, stable annual margins for the heat exchanger business should be in the range of between 20% and 22%.

    — Nilesh Ganjwala

  • Kinam Oil & Gas EBIT Margin Profitability · Going forward · High confidence ~18%
    The oil and gas margins are slightly lower given the higher volumes and are likely to be at about 18% is what we are expecting.

    — Nilesh Ganjwala

  • FY26 PAT Margin Profitability · FY26 · High confidence 6.5%-7%
    And I think at the PAT level, we would be -- it would be fair to say that number should be at a net for the year basis in excess of between 6.5% to 7%.

    — Nilesh Ganjwala

Revenue

  • Revenue Split (H2 FY26) Revenue · FY26 · High confidence 55%-60% of annual revenues
    And the first half of this year, of course, has been substantially better than what it was during the first half last year. And this will probably be on the back of a better number, better top line as well simply because historically, again, over the last 2 decades, you would have seen that the second half roughly constitutes between 55% and 60% of our revenues. So we expect a similar trend to play out this year as well.

    — Nilesh Ganjwala

Growth

  • Thaletec GLE Business Growth Growth · Annual basis · High confidence More than double-digit growth rate
    I think we are looking at more than double-digit growth rate in Thaletec, GLE business on an annual basis.

    — Nilesh Ganjwala

Capacity

  • Glass Line Capacity Utilization (India) Capacity · Q4 FY26 · High confidence ~80%

    From 60-65% today

    We are currently -- in the glass line business, we are currently at between 60% and 65% capacity utilization. We are hoping to take that up to about 80% by quarter 4.

    — Nilesh Ganjwala

  • Filtration & Drying Capacity Utilization Capacity · Q4 FY26 · High confidence 85-90%

    From 80% today

    I think the filtration drying, we are already at 80%. We'll probably be closer to 85%, 90% in Q4.

    — Nilesh Ganjwala

  • Heat Transfer Capacity Utilization Capacity · Q4 FY26 · High confidence 65-70%
    In the heat transfer business, we are likely to be closer to about 65% to 70% capacity utilization in exit Q4.

    — Nilesh Ganjwala

Market context

  • Glass Line Business EBIT Margin Profitability · Q4 FY26 · High confidence Double-digit
    We expect to be in double digit for the entire Glass-line business as a whole by quarter 4. ... At EBIT level, double digit, that's correct.

    — Nilesh Ganjwala

What to watch in Q3 FY26

Omeras Business Breakeven

Q4 FY26
Current Initial losses incurred
Target Breakeven or above

Why it matters

Successful integration and profitability of the newly acquired Omeras business is crucial for overall company performance.

I think on the Omeras business, we do not have a guidance for this particular year, except to say that by the end of the year, we should be at breakeven or above because as we said, we will need about 2 to 3 quarters to stabilize and grow this business.

Risks & concerns

  • Margin pressure due to competitive pricing and material costs

    medium

    Margins were impacted because of higher material costs caused by certain high-value orders which were accepted in the previous quarters at very competitive prices.

    Management acknowledged

  • Initial losses from Omeras acquisition

    medium

    Initial losses incurred at the newly acquired business at HLE Surface Technologies GmbH Germany, approximately INR 3.6 crores EBIT loss.

    Management acknowledged

  • Agrochemical sector weakness

    medium

    The agrochemical is still under pressure.

    Management acknowledged

  • Impact of US tariffs on India

    medium

    Some decisions or some players have been going slow in terms of capital investment because of the situation that is panning out in the U.S. with regards to tariff on India.

    Management acknowledged

  • Long lead times for orders and execution in new segments

    low

    Heat transfer equipment business takes a little longer time in terms of the lead time for getting orders. Omeras pipeline conversion also takes time due to large projects and new management relationship building.

    Management acknowledged

Q&A highlights

7 direct
Glass Line Margins & Omeras Impact Direct
On the glass line reactor margins, one of the reasons why the margins look a little diminished is predominantly also because of the initial losses that we've incurred at the new acquisition, which is Omeras Store. Omeras and Omeras store business. ... So almost about INR3.6 crores of loss -- EBIT losses have been accounted for during this period, which are adjusted against the glass line segment. So that probably explains the main reason why the glass line margins overall look a little I say reduced. The margins otherwise continue to be stable.

Clarifies the reason for current margin pressure in the glass line segment and provides a specific figure for Omeras losses.

Asked by Dhaval Shah

Heat Transfer Equipment Growth & Oil & Gas Entry Direct
And on the heat transfer equipment, yes, you're right. We have -- had a large oil and gas order, which we had talked about earlier. This order has very largely already been dispatched and this now adds to our track record in the oil and gas segment. We are actively in conversations to get similar and even larger orders in this segment, both in India and offshore. ... And we believe that we should become a strong player in this segment over the next year or 2.

Confirms successful execution of a large oil & gas order and outlines plans for further expansion in this segment.

Asked by Dhaval Shah

Thaletec & MNC Pharma Investments Direct
Yes. So yes, that's a good question. So yes, some of the players have announced or rather all of the big players have announced large investments in U.S. and also some in Europe. However, so far, only a few of the so many announcements are really going off the paper. But overall, Thaletec is very well positioned in the U.S. ... So we are, from Thaletec point of view, very well positioned to capitalize on all these opportunities that we hope will come about.

Addresses how global pharma investments could benefit Thaletec, highlighting the company's strategic positioning in the US market.

Asked by Dhaval Shah

Omeras Pipeline Conversion & Challenges Partial
So like you mentioned Omeras. At Omeras and Omeras Store, we had a very healthy visibility of inquiries, which was in the tune of 28 million 45 days ago, and that has only grown by a couple of million as we speak today. However, in terms of conversion, we are still awaiting conversion of these inquiries into orders, partly because there are some fairly large projects in there. ... But also a lot of relationship building is currently going on with these customers as new management, which has just taken charge of the organization.

Provides an update on the Omeras pipeline and explains the challenges in converting inquiries to orders due to project size and new management integration.

Asked by Ajay

Glass Line Segment Improvement & Thaletec India Direct
So on the composition of glass line sales, the India sales in the glass business is well in excess of INR 55 crores. It's close to INR 57 crores. And the India glass line business is growing on a quarter-on-quarter basis, we have grown at over 20%. So as I said, the Indian glass line business looks to be on the right positive trajectory as we speak. ... The material cost impact that we discussed was not so much from a perspective of higher cost of material, but it was from a more competitive pricing that we had offered on some of these large projects that we have won in the past.

Clarifies the nature of margin pressure (competitive pricing, not raw material costs) and outlines the positive trajectory of the Indian glass line business.

Asked by Ajay

Overall Glass Business Growth & JV Performance Direct
I think the JV business has shown growth in this quarter. I don't know -- you are saying there is no growth, but the JV business is showing growth on the top line even during this quarter, even quarter-on-quarter and on a year-on-year basis. ... In the glass line business, we are in the process of establishing our technology superiority and which is where we are seeing a substantial growth in both the inquiries as well as the order book pipeline. It is slightly a business of patience.

Corrects the analyst's perception of JV growth and explains the strategic approach to building the glass line business through technology superiority.

Asked by Vibhav Khandelwal

Omeras Breakeven & H2 Outlook Direct
I think we answered this earlier today. We expect Omeras be breakeven and above by quarter 4 this year. ... On the business other than Omeras, I think our second half of the year should see improved EBITDA margins. We are expecting EBITDA margins for the overall business at about between -- roughly about 16%, which will be far more healthier than what we have declared in the first half.

Reiterates the target for Omeras breakeven and provides a clear EBITDA margin target for the second half of the fiscal year.

Asked by Vibhav Khandelwal

Kinam Minority Interest Direct
So Kinam was always structured from a perspective of having our erstwhile promoters to continue with us, and they actively are engaged in the business, and they have been absolutely wonderful partners. And I think we see no reason to disturb that arrangement because I think it's working very, very well for us. ... Absolutely. That's correct.

Clarifies that the 30% minority interest in Kinam will continue, highlighting the value contribution of the erstwhile promoters.

Asked by Deekshant Boolchandani

2 min read 6 chapters

Detailed narrative

Robust Revenue Growth in Q2 & H1 FY26

HLE Glascoat demonstrated strong financial performance in Q2 FY26, with revenue from operations reaching ₹351 crores, marking a significant 48.8% year-on-year growth. For the first half of FY26, the company reported a revenue of ₹635 crores, up 37.1% from ₹463 crores in H1 FY25. This growth was attributed to robust demand, operational discipline, and consistent execution across all business segments, indicating a healthy market environment.

Segmental Performance and Growth Drivers

The Filtration, Drying, and Other Equipment segment was a key growth driver, expanding by an impressive 111.1% to ₹137 crores in Q2 FY26. The Heat Transfer Equipment segment also showed strong momentum, growing by 124.8% to ₹56 crores in the same quarter. The Glass Line Equipment business recorded an 8.9% growth, contributing ₹157 crores to Q2 revenues. These figures underscore the diversified growth across the company's specialized processing equipment portfolio.

Margin Pressure and Omeras Integration Impact

Despite strong top-line growth, Q2 FY26 EBITDA margin stood at 11.4%, with PAT margin at 4%. Management noted that margins were impacted by higher material costs on certain high-value orders accepted at competitive prices in previous quarters. Additionally, the newly acquired Omeras business incurred initial losses of approximately ₹3.6 crores EBIT, which were accounted for within the glass line segment. The company anticipates margin improvement in H2 FY26, targeting around 16% EBITDA for the overall business.

Strategic Acquisitions and Order Book Visibility

A significant milestone in the quarter was the completion of the Omeras Global business acquisition, funded entirely through internal accruals, marking HLE Glascoat's entry into glass fused steel products. The amalgamation of Kinam Enterprise Private Limited was also approved, securing 70% ownership. The consolidated order book remains robust at ₹722 crores as of September 30, 2025, providing strong revenue visibility for the coming quarters and reflecting growing market acceptance of the company's offerings.

Outlook on Profitability and Capacity Utilization

Management is confident that the Omeras business will reach breakeven or above by the end of FY26. They project overall EBITDA margins to improve to approximately 16% in H2 FY26. Capacity utilization targets include increasing India's glass line utilization from 60-65% to 80% by Q4 FY26, and Filtration & Drying utilization to 85-90%. These improvements are expected to drive operational efficiency and enhance profitability.

Working Capital Management and Financial Prudence

The company emphasized its focus on efficient working capital management, disciplined capital allocation, and internal accrual funding. Inventory days have been reduced from 121 days to 110 days, indicating improved efficiency. This prudent approach aims to strengthen the balance sheet and ensure long-term sustainability while supporting growth plans, with the Omeras acquisition being a testament to internal funding capabilities.

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