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    ISGEC Heavy Q4 FY26 earnings call

    ISGEC
    Construction·29 May 2026
    Management Summary

    ISGEC Heavy Engineering reported a mixed Q4 and FY26, with strong standalone PBT growth and significant export revenue increase, though overall standalone revenue growth missed guidance. Consolidated PAT declined due to reclassification and losses from the Philippines ethanol plant. The company provided optimistic guidance for FY27, expecting revenue growth of 10-12% and improved project business margins, while actively managing input cost pressures and currency risks.

    Highlights

    6

    • Q4 standalone revenue grew 16% year-on-year.

    • Q4 standalone PBT grew 48% year-on-year.

    • FY26 standalone PBT grew 17% to INR455 crores.

    • Export revenue more than doubled year-on-year to INR1,169 crores, representing 22% of total revenue.

    • Dividend increased 20% to INR6 per share, reflecting confidence in standalone business strength.

    • Net borrowings improved substantially to INR476 crores as on March 31, 2026, from INR836 crores last year.

    Concerns

    4

    • FY26 standalone revenue growth of 4.2% (INR5,229 crores) was below the 7-8% guidance.

    • Consolidated PAT for FY26 decreased 25% to INR154 crores, primarily due to INR278 crores depreciation (including catch-up on Philippines assets) and INR95 crores forex variation.

    • Philippines ethanol plant incurred a FY26 loss of INR295 crores, with significant depreciation and interest costs.

    • Geopolitical developments are leading to increases in input costs (steel forgings, castings, chemicals, imported materials) and gas shortages.

    What Changed2

    vs Q1 FY27

    Guidance items12 → 11 (-1)Risks discussed3 → 5 (+2)

    Key financials

    Single quarter

    11 metrics
    1. 01Standalone Q4 Revenue Growth16%
    2. 02Standalone Q4 PBT Growth48%
    3. 03Standalone FY26 Revenue₹5,229 Cr+4.2%YoY
    4. 04Standalone FY26 PBT₹455 Cr+17%YoY
    5. 05Standalone FY26 Operational PBT₹375 Cr

    Segment breakdown

    Manufacturing
    12.5% EBIT Margin
    Project Business
    4.6% EBIT Margin
    List

    Order Book

    high confidence

    Total Value

    ₹ 7,000 crores

    as of 2026-03-31

    quantified

    Inflow this qtr

    ₹ 1,400 crores

    Composition

    Export(geography)
    ₹ 1,450 crores
    Isgec Hitachi Zosen JV(segment)
    ₹ 763 crores

    Cancellations / Deferrals

    • cancelled:2 orders cancelled during the year

    "The company expects the increased level of exports to continue and is seeing strong inquiry pipeline and order booking outlook in both domestic and export markets."

    Source:
    Prepared remarks

    Capital allocation

    5
    high confidence
    CategoryHeadline
    Capex

    ₹153 crores

    Debt

    Net ₹476 crores

    Dividend

    ₹6/share (final)

    M&A

    Philippines business

    divestment · abandoned

    Liquidity

    Cash ₹241 crores

    Cash and cash equivalents as of March 31, 2026, after funding INR150 crores of capital expenditure during the year from internal accruals.

    Guidance & targets

    11
    CategoryTargetPriority
    Revenue
    Standalone Revenue Growth
    10% to 12%
    		High
    Revenue
    Manufacturing Segment Revenue Growth
    INR500 crores
    		Medium
    Revenue
    Project Business Revenue Growth
    3% to 4%
    		Medium
    Revenue
    Cavite Biofuel Revenue
    closer to INR700 crores
    		Medium
    Revenue
    Isgec Hitachi Zosen JV Revenue
    closer to INR700 crores
    		Medium
    Profitability
    Manufacturing EBIT Margin
    12% to 13%
    		High
    Profitability
    Project Business EBIT Margin
    closer to 5.5%
    		High
    Profitability
    Cavite Biofuel Profit
    INR100 crores plus
    		Medium
    Profitability
    Isgec Hitachi Zosen JV Profit
    INR100 crores plus
    		Medium
    Capacity
    Cavite Biofuel Capacity Utilization
    85% to 90%
    		Medium
    Depreciation
    Cavite Biofuel Depreciation
    around INR150 crores
    		Medium

    What to watch in Q1 FY27

    5

    Cavite Biofuel operational profitability and capacity utilization

    FY27
    CurrentFY26 loss of INR295 crores, running at 70-75% capacity
    TargetRevenue closer to INR700 crores, profit INR100 crores plus, 85-90% capacity utilization

    Why it matters

    The Philippines plant has been a drag on consolidated PAT; its turnaround is crucial for overall profitability.

    So the plant is running. I think even today, it is running at 70% - 75% capacity, and we are expecting the capacity to be running at close to 85% - 90% for the rest of the year... We are expected to do slightly better than this. So we are hoping that revenue could be closer to INR700 crores. And the profit should be in the range of INR100 crores plus.

    Risks & concerns

    5
    RiskSeverity

    Uncertain international business scenario affecting asset sales

    The Philippines business was reclassified from 'assets held for sale' to 'continuing operations' due to difficulty in estimating when it can be sold amidst uncertain international conditions. — Management acknowledged

    medium

    Geopolitical developments leading to input cost increases

    Increases in costs for steel forgings, castings, chemicals, and certain imported materials are observed, though expected to be absorbed through normal contingency provisions. — Management acknowledged

    medium

    Gas shortages and increased fuel costs

    Gas shortages have raised fuel costs, but there has been no disruption to manufacturing operations. — Management acknowledged

    low

    Increased export and import logistics costs and lengthened transit times

    Logistics costs have increased and transit times have lengthened, but the company is taking steps to mitigate risks. — Management acknowledged

    low

    Currency and receivables risk in export markets

    Analyst raised concerns about currency and receivables risk in Southeast Asia and Africa; management stated they use confirmed letters of credit and forward covers to mitigate. — Analyst acknowledged

    low

    Q&A highlights

    8

    “So ISGEC has a play in some part of the value chain, it certainly has a play. We are keeping abreast of it, and we are doing some work in some part of that value chain. ... We have got orders for equipment which are used in these processes or these new technologies.”

    Analyst inquired about the company's strategic positioning in emerging green technologies, and management confirmed active participation and order wins for related equipment.

    asked by Digant Haria

    3 min read6 chapters

    Detailed Narrative

    01

    FY26 Performance Overview and Guidance Miss

    ISGEC Heavy Engineering reported a standalone revenue growth of 4.2% to INR5,229 crores for FY26, which was below the company's earlier guidance of 7-8%. Despite this, standalone PBT grew 17% to INR455 crores. The company clarified that adjusting for INR80 crores from the Philippines business, the underlying operational PBT was approximately INR375 crores, broadly in line with the prior year. Q4 saw a strong recovery with standalone revenue growing 16% and PBT growing 48% year-on-year.

    02

    Consolidated Profitability Impacted by Philippines Business

    Consolidated PAT for FY26 decreased by 25% to INR154 crores, down from INR204 crores in the previous year, despite a 19% increase in consolidated EBITDA to INR671 crores. This decline was primarily attributed to the reclassification of the Philippines business from 'assets held for sale' to 'continuing operations'. This reclassification resulted in a catch-up📎 depreciation charge, contributing to a total consolidated depreciation of INR278 crores (up INR104 crores YoY) and a FY26 loss of INR295 crores for the Philippines unit, which included INR170 crores in depreciation, INR95 crores in forex variation, and INR70 crores in interest costs.

    03

    Strong Export Growth and Market Expansion

    Export revenue for FY26 more than doubled to INR1,169 crores, now accounting for 22% of the total revenue, up from INR532 crores in the previous year. The company expects this increased level of exports to continue, driven by new markets in Southeast Asia (Vietnam, Thailand, Indonesia) for manufactured items and successful order bookings in Africa and Latin America for project business. The export order book stood at INR1,450 crores as of March 31, 2026.

    04

    FY27 Outlook and Margin Expectations

    For FY27, ISGEC expects standalone revenue to grow by 10-12%. This growth is anticipated to be driven primarily by the manufacturing segment, contributing approximately INR500 crores, while the project business is projected to grow by 3-4%. The company is confident in maintaining manufacturing EBIT margins at 12-13% and expects project business EBIT margins to improve to closer to 5.5% from 4.58% in FY26, attributing this to newer orders with better margins and a shift to shorter-duration projects.

    05

    Capital Allocation and Debt Reduction

    The company's net borrowing position improved substantially, reducing to INR476 crores as of March 31, 2026, from INR836 crores last year. Capital expenditure for FY26 was INR153 crores, with a further investment of INR25 crores approved for the Muzaffarnagar steel castings plant to expand capacity. Over INR200 crores of FGD-related retention money has been realized, with INR165 crores remaining, expected to be collected by August. The company also increased its dividend by 20% to INR6 per share, reflecting confidence in its standalone business.

    06

    Philippines Ethanol Plant Operational Update

    The ethanol plant in the Philippines commenced commercial production on December 17, 2025, and started ethanol sales on March 25, 2026. The FY26 losses were primarily due to initial operational costs and delays in receiving government allocations for sales, leading to ethanol storage. For FY27, the company expects the plant to achieve revenue closer to INR700 crores and a profit of over INR100 crores, with capacity utilization projected to reach 85-90% from the current 70-75%.

    This is an AI-generated summary of a publicly available earnings call transcript.