M & B Engineering Limited — Q1 FY26 earnings call

Call held 25 Aug 2025

Management summary

MBEL delivered a strong Q1 FY26 with robust revenue and profit growth, driven by both PEB and Proflex divisions. The company highlighted a healthy order book and aggressive export expansion plans, particularly to North America, leveraging its unique certifications. While working capital days saw an increase, management provided strategic rationale and outlined significant capacity expansions to capitalize on domestic and international growth opportunities.

Highlights

  • Total revenue from operations stood at ₹237.65 crores in Q1 FY26, up 69% from ₹140.22 crores in Q1 FY25.

  • PAT for Q1 FY26 was ₹17.95 crores, a 159% increase from ₹6.94 crores in Q1 FY25.

  • Reported EBITDA margin improved to 14.17% in Q1 FY26 from 11.62% in Q1 FY25.

  • Order book of ₹843 crores as of July 1st, 2025, provides strong revenue visibility.

  • New order intake in Q1 FY26 totaled ₹277.62 crores, with a full-year target of at least ₹1,200 crores.

Concerns

  • Net working capital days increased to 55 days as of June 30, 2025, from 32 days as of March 31, 2025.

  • Q1 FY26 gross margin (33%) was lower than Q1 FY25 (36%) due to lower export booking in the quarter.

Key financials

  1. Revenue from Operations ₹237.65 Cr +69%YoY
  2. EBITDA ₹33.68 Cr +107%YoY
  3. PAT ₹17.95 Cr +159%YoY
  4. Reported EBITDA Margin 14.2%
  5. Net Working Capital Days 55 days

What they filed

Q1 FY27: revenue up 16.2%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue182 295 290 228 260 +43%282 −4%314 +8%265 +16%
EBITDA37 31 41 25 29 −22%40 +29%28 −32%21 −16%
Net profit22 16 28 15 18 −18%26 +63%19 −32%15 +0%
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 Revenue
₹237.65 Cr Total
  • PEB Division (Phoenix) ₹176.23 Cr 74.2%
  • Proflex Division ₹61.42 Cr 25.8%

Order book

high confidence

Total value

₹843 Cr

as of 2025-07-01 quantified

Inflow this quarter

₹277.62 Cr

Execution

Most large orders are in the range of Rs. 50-100 crores, with mid-sized orders at Rs. 10-50 crores, implying varied execution timelines. Some specific large projects may have longer execution periods.

Composition

Mix 3 segments
  • PEB Division (Phoenix) 75.2%
  • Proflex Division 24.8%
  • Proflex Railway Projects 4.2%

Share of order book by segment· categories overlap, and sum to 104.2%

Pipeline

other

Healthy pipeline of potential orders

Management expressed confidence in the strong order book and pipeline, with significant opportunities in exports and domestic infrastructure projects like railways and agri warehousing.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹150 Cr Partially from IPO proceeds and additional ₹20-30 crores from cash accruals
    • Sanand Brownfield expansion (PEB capacity by 20,000 tons/year)
    • Cheyyar PEB Brownfield expansion (additional 20,000 capacity)
    • Proflex capacity augmentation (additional mobile units)
    We have done Rs. 130 crores estimated CAPEX. There will be another Rs. 20, Rs. 25-Rs. 30 crores of CAPEX, which is not planned as a part of IPO, but which we will do. So you can take it around Rs. 150 crores
  • Debt Debt disclosed
    • Repayment Loan repayment in June ₹40 Cr
    • Repayment Recent loan repayment ₹20 Cr
    and then our debt part is almost 0 now as we speak.
  • Liquidity Liquidity disclosed Utilized ₹104 crores from IPO proceeds after listing, with ₹259 crores net money available. Approximately ₹88 crores from IPO proceeds are currently in money market instruments, planned for deployment by mid/end next year for capex.
    we have already utilized about Rs. 104 crores after listing on 6th August and we are on 25th August out of Rs. 259 crores of net money available out of my primary portion.

Guidance & targets

Topline

  • Overall Topline Growth Topline · FY 2026 · High confidence over 25%
    We are targeting an overall topline growth of over 25% in FY 2026.

    — Malav Patel

Profitability

  • EBITDA Margins Profitability · FY 2026 · Medium confidence further improving
    Further, with a strong increase in the exports expected in the current fiscal, we are confident of further improving our EBITDA margins in FY 2026.

    — Malav Patel

Exports

  • Exports to US Exports · FY 2026 · High confidence more than three times

    From Rs. 65 crores (FY25) today

    As against FY 2025 exports of around Rs. 65 crores, this year we are targeting to increase the exports by more than three times to the US.

    — Malav Patel

  • Share of Topline from Exports Exports · next 2 years · High confidence at least 20%
    So next 2 years, we want to target at least 20% of our topline to come from exports, even after factoring full domestic growth.

    — Sanjay Majmudar

Capacity Expansion

  • Sanand PEB Brownfield Expansion Operationalization Capacity Expansion · Q1 FY 2027 · High confidence Q1 FY 2027
    Our target is to make it operational in the 1st quarter of FY 2027.

    — Malav Patel

  • Cheyyar PEB Brownfield Expansion Operationalization Capacity Expansion · Q1 FY 2028 · High confidence Q1 FY 2028
    We also plan to thereafter start implementing the Cheyyar PEB Brownfield expansion project with an additional 20,000 capacity as well, which should become operational in Q1 of FY 2028.

    — Malav Patel

Order Inflow

  • New Order Intake Order Inflow · this year (FY26) · High confidence at least Rs. 1,200 crores
    But you may take it that at least Rs. 1,200 crores new orders we are targeting this year, minimum.

    — Sanjay Majmudar

Capacity Utilization

  • Cheyyar Plant Utilization Capacity Utilization · FY 2026 · High confidence 50-60%
    This year, I believe it should go up to 50%-60% without too much of a difficulty.

    — Sanjay Majmudar

Capex

  • Total CAPEX Capex · FY26 · High confidence around Rs. 150 crores
    We have done Rs. 130 crores estimated CAPEX. There will be another Rs. 20, Rs. 25-Rs. 30 crores of CAPEX, which is not planned as a part of IPO, but which we will do. So you can take it around Rs. 150 crores

    — Sanjay Majmudar

Revenue Potential

  • Revenue Potential Post Expansion Revenue Potential · post expansion · Medium confidence 4x of the CAPEX
    You can very safely take about 4x of the CAPEX.

    — Sanjay Majmudar

What to watch in Q2 FY26

FY26 Topline Growth

next quarter
Current 69% YoY in Q1 FY26
Target Over 25% for FY26

Why it matters

To assess if the company is on track to meet its full-year revenue growth guidance.

We are targeting an overall topline growth of over 25% in FY 2026.

Risks & concerns

  • Market Volatility

    medium

    Management cited 'extremely volatile conditions' as a reason for conservative growth guidance, indicating potential external impacts.

    Management acknowledged

  • Increased Net Working Capital Days

    low

    Net working capital days increased from 32 to 55, though management provided a strategic explanation involving low-cost buyers' credit.

    Analyst acknowledged

  • IPO Funds Lying Idle

    low

    Analyst questioned ₹88 crores from IPO proceeds lying idle, which management stated would be deployed for capex by mid/end next year, acknowledging a short-term compromise on ROCE.

    Analyst acknowledged

Q&A highlights

7 direct
Order Inflow and Realization Trends Direct
So 1st quarter, we have got new order intake in Proflex division to the tune of Rs. 80 crores and in Phoenix Rs. 196.80 crores, so totaling to Rs. 277.62 crores. ... at least Rs. 1,200 crores new orders we are targeting this year, minimum. ... as we move more on the exports, actually realization will go up. But, for now, from a domestic standpoint, what you are saying makes sense. Around Rs. 119,000 to Rs. 120,000 on the domestic front, export will be definitely higher.

Provided specific Q1 order inflow numbers and full-year targets, along with clarity on higher realizations from export orders.

Asked by Harshit Patel

Superior EBITDA Margins Compared to Peers Direct
Basically, the number, we have a combination of domestic business as well as international business when we are talking about our PEB division. So in the US, we have been working for the last 5 years. ... US margins, EBITDA margins stand at any point between 25%-27%. When we combine that with our Indian margins, which stand at around 10%-11%, the weighted average comes to around 13%-14%. Plus, our Proflex business, which no other PEB company in India has, our Proflex roofing division, that itself, by itself, the business is having an EBITDA margin of anywhere between 11%-12%.

Explained the key drivers behind MBEL's higher margins, including the profitable US export market, comprehensive solutions, and unique Proflex business.

Asked by Mann

Elevated Working Capital Days Direct
Sir, we have a 55-day working capital cycle during the current quarter, which was 32 days in the previous quarter. ... One, Proflex 90%, 95% of my raw material is imported from a very reputed Korean supplier, who gives us open credit of $10 million every year. ... after the normal credit period, we take buyers credit at 6% or 7% rate of interest, where my banks extend that credit from 180-270 days. Our idea is that this is a very cheap credit we get, which is sort of an extended credit at a very low cost that we avail, which gives us a lot of flexibility in managing our working capital.

Addressed concerns about increased working capital days by detailing the strategic use of low-cost buyers' credit for imported raw materials and inventory management.

Asked by Mann

Conservative Growth Guidance Partial
Our philosophy is to remain a little conservative in guiding. And we have said over 25%. So let us see. See, again, please understand, we are working under extremely volatile conditions. Nobody knows after a few days what Mr. Trump is going to do. So you know, we want to remain a little cautious. Let us see. Let us reach our 2nd Quarter. Maybe we will review our guidance if required. Don't worry. But minimum 25% is what we are ready to commit.

Management acknowledged the analyst's query about potentially under-guiding but reiterated a conservative stance due to market volatility, committing to a minimum 25% growth.

Asked by Mann

Opportunities in Vande Bharat and Railway Underbridges (RUBs) Direct
Vande Bharat, as everyone is aware, they are expanding the Vande Bharat trains across India. So for Vande Bharat, they are putting their pit line shed, their maintenance shed everywhere across India. ... the big opportunity that also we are seeing is for the RUBs, which Malav earlier said, there are about 20,000 level crossings and Indian railways have decided to convert these level crossings with an RUB in rural areas. ... Yes, the railway part is about Rs. 35 crores of Proflex. It would be a mix of Vande Bharat plus some platforms, etc., but Rs. 35 crores of Proflex outstanding.

Highlighted significant, specific growth opportunities for the Proflex division within the Indian Railways sector, including the Vande Bharat project and the conversion of 20,000 level crossings to RUBs.

Asked by Raman KV

Impact of US Sectoral Tariffs on Exports Direct
Trump put 25% sectoral tariff on steel and aluminum in February. Correct? So because we are technically steel, we have been paying that duty. After this, in May and June, when did you put it, somewhere in June, another 25 came. Today, all my customers are paying 50%. ... I understand that $4,000-$5,000 between our price and their price, I still enjoy that arbitrage. You get my point? I don't pay. Customer pays tariff, mind you. And I have not seen single order cancellation or renegotiation.

Management clarified that despite the 50% US sectoral tariff, MBEL maintains a significant price advantage and has not experienced order cancellations, with customers bearing the tariff.

Asked by Surya Narayan Nayak

Capacity Expansion Funding and Utilization Direct
we have already utilized about Rs. 104 crores after listing on 6th August and we are on 25th August out of Rs. 259 crores of net money available out of my primary portion. ... This year, I believe it should go up to 50%-60% without too much of a difficulty. ... We have done Rs. 130 crores estimated CAPEX. There will be another Rs. 20, Rs. 25-Rs. 30 crores of CAPEX, which is not planned as a part of IPO, but which we will do. So you can take it around Rs. 150 crores

Provided details on the utilization of IPO funds for debt repayment and planned CAPEX, clarifying the strategic rationale for capacity expansions and expected utilization rates for the new Cheyyar plant.

Asked by Surya Narayan Nayak

Competitor Entry into US Export Market Direct
I will put that question. See, we have been working very hard for the US market. Currently, I have a team of 5 people who is on the ground in the US who is selling to our customers, making inroads with the general contractors because there the end customer is our general contractor, which is an EPC contractor for Akin in India. So it takes time. ... And I think we should maintain that early mover advantage, the lead. We can't say that nobody else will enter. That is not possible. It is possible people will enter. ... it is going to be a long process before we can establish a certain standard and a platform before we can start doing business in the US.

Management explained the significant effort and time (5+ years) required to establish a presence and gain certifications in the US market, suggesting a high barrier to entry for new competitors despite attractive margins.

Asked by Vandit Shah

3 min read 7 chapters

Detailed narrative

Strong Q1 FY26 Financial Performance

M&B Engineering reported robust financial results for Q1 FY26, with revenue from operations growing by almost 69% year-over-year to ₹237.65 crores, up from ₹140.22 crores in Q1 FY25. This growth was significantly driven by the PEB division, which saw an 87% increase in revenue to ₹176.23 crores, and the Proflex division, which grew 34% to ₹61.42 crores. The company's PAT surged by 159% to ₹17.95 crores, and the reported EBITDA margin expanded to 14.17% from 11.62% in the corresponding prior quarter.

Robust Order Book and Inflow

As of July 1st, 2025, MBEL's order book stood strong at ₹843 crores, with ₹634 crores from the PEB division and ₹209 crores from Proflex. The company secured new orders worth ₹277.62 crores in Q1 FY26, comprising ₹80 crores for Proflex and ₹196.80 crores for Phoenix. Management has set an ambitious target of achieving at least ₹1,200 crores in new order intake for the full FY26, indicating strong future revenue visibility.

Aggressive Export Expansion Strategy

MBEL is strategically focusing on expanding its export market, particularly to North America (US and Canada). The company aims to increase its exports to the US by more than three times in FY26 compared to FY25's ₹65 crores, with pending export orders of PEBs already at ₹123 crores. Leveraging its unique AISC and CWB certifications, MBEL offers comprehensive solutions that yield significantly higher margins (25-27%) in the US market compared to domestic operations (10-11%), with a long-term target for exports to contribute at least 20% of the topline within the next two years.

Strategic Capacity Augmentation

To support its growth trajectory, MBEL has planned significant capacity expansions. A Brownfield expansion at the Sanand facility will add 20,000 tons per year of PEB capacity, primarily for North American exports, targeted to be operational by Q1 FY27. A similar additional 20,000 tons per year capacity expansion is planned for the Cheyyar PEB plant, expected by Q1 FY28. The company also intends to procure additional mobile units for its Proflex division, with new equipment coming online in Q4 FY26, bringing the total planned CAPEX to around ₹150 crores.

Key Opportunities in Railways and Agri Warehousing

The Proflex division is well-positioned to capitalize on significant opportunities within the Indian Railways, with its self-supported roofing system approved for Vande Bharat sheds, railway platforms, and Railway Underbridges (RUBs). With approximately 20,000 level crossings slated for conversion to RUBs, this represents a substantial market, with ₹35 crores of Proflex railway orders already outstanding. Additionally, the government's decision for Primary Agriculture Credit Societies (PACS) to install Proflex roofing for agri warehousing presents a massive growth opportunity.

Working Capital and Debt Management

The company's net working capital days increased to 55 days as of June 30, 2025, from 32 days as of March 31, 2025. Management explained this is a strategic decision, utilizing low-cost buyers' credit (6-7% interest for 180-270 days) for imported raw materials and maintaining 4-4.5 months of inventory for Proflex. MBEL has also significantly reduced its debt, repaying ₹40 crores in June and another ₹20 crores recently, resulting in an 'almost 0' debt position and a low CC utilization of 0.53.08.

Sustainable Margin Profile

Management attributed its superior EBITDA margins to a combination of factors, including a strategic mix of high-margin international business, comprehensive solution offerings (engineering, detailing, manufacturing, delivery), handling complex jobs, a high rate of repeat business (60-70%), and an in-house erection team. The company targets sustainable gross margins of 30-32% for domestic PEB, 32-33% for Proflex, and over 40% for exports, reinforcing confidence in its ability to maintain profitability.

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