M & B Engineering Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

M&B Engineering reported strong Q2 FY26 results with significant revenue growth driven by both Proflex and Phenix divisions, supported by a robust order book of Rs. 930.56 crores. While margins faced temporary pressure from forex losses and tariff absorption, the company maintains a full-year EBITDA guidance of 13% and targets 25% revenue growth to Rs. 1,225-1,250 crores, backed by ongoing capacity expansions.

Highlights

  • Consolidated revenue grew 49% YoY in Q2 FY26 to Rs. 306.85 crores and 57% YoY in H1 FY26 to Rs. 544.5 crores.

  • Outstanding order book reached Rs. 930.56 crores as of September 30, 2025, providing strong revenue visibility for 8-9 months.

  • H1 FY26 new order intake was robust at Rs. 672.20 crores, with subsequent orders including a USD 24 million export order and INR 98 crores domestic order.

  • EBITDA for Q2 FY26 stood at Rs. 36.82 crores, with a reported consolidated EBITDA margin of 12%.

  • Capacity expansion underway with 3 new mobile units for Proflex (1 operational by Dec 2025, 2 by Q1 FY27) and brownfield expansions at Sanand (Q1 FY27) and Cheyyar (FY28).

Concerns

  • Q2 FY26 margins were impacted by a foreign exchange loss of Rs. 2.15 crores (Proflex) and absorption of Rs. 2.85 crores in US export tariffs (Phenix).

  • Net working capital days increased to 79 days as of September 30, 2025, from 32 days as of March 31, 2025, primarily due to a reduction in trade creditors.

  • Domestic Phenix volumes saw a QoQ decline in Q2 FY26 due to heavy monsoon impacting site readiness.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹306.85 Cr
    YoY +49%
  • EBITDA
    ₹36.82 Cr
  • EBITDA Margin
    12%
  • Net Working Capital Days
    79 days

H1

  • Consolidated Revenue
    ₹544.5 Cr
    YoY +57%
  • EBITDA Margin
    12.9%

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

SegmentRevenue GrowthH1 Revenue GrowthSales Quantity
Proflex Division57%45%366.675 lakh sq m
Phenix Division47%61%15,809 lakh sq m

Order book

high confidence

Total value

₹930.56 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹394.58 Cr

Execution

8 to 9 months to complete the total order book

Composition

Mix 2 divisions
  • Phenix Division 75.6%
  • Proflex Division 24.4%

Share of order book by division

Pipeline

other

Sizable export order of USD 24 million and domestic order of INR 98 crores received after Sept 30, 2025

Cancellations & deferrals

  • cancelled: Loss of profit compensation for a cancelled large order from a Japanese PMC in FY23-24, booked as one-time income of Rs. 14.66 crores in Q2 FY25
The company has a very robust order book that provides strong visibility and will help achieve revenue targets, with execution timelines of 8-9 months for the total book.

Source: Prepared remarks

Capital allocation

medium confidence
  • Capex ₹60 Cr
    • 3 new mobile units for Proflex (1 UAE, 2 US)
    • Brownfield expansion at Sanand (20,000 MTPA)
    • Brownfield expansion at Cheyyar (20,000 MTPA)
    The CAPEX for this current year will be around, say, 60 crores, to the tune of 60 crores. And next year, it will be under the IPO. So the balance of the IPO projections will be done in the second year, which will be, again, 60 crores to 70 crores.
  • M&A Phenix Building Solutions Acquisition · Integrated · Consideration ₹[object Object] (undisclosed)

    To remove conflict from earlier related party transactions and simplify tax structure, making it a 100% subsidiary.

    Earlier, we used to separate out the jobs that we received on the supply side and direction side. What we were doing earlier that all the jobs PBSPL was taking as separately and it was within the group. But what we did in order to remove the conflict, we made that company our wholly owned subsidiary.
  • M&A Phenix Energy Service Private Limited Divestment · Closed · Consideration ₹[object Object] (undisclosed)

    The company had no utility as the group decided to use Phenix Building Solutions due to its existing track record for erection orders.

    Sir, Phenix Engineering Services Private Limited was incorporated just to have the erection order. But finally, the group considered that thing with a new company instead of going with a new company, going with the old company with a track record with all our existing customers is good. So Phenix Building Solutions was already having a track record with all the customers. So we stick to Phenix Building Solutions. So having no utility for Phenix Engineering Services, we get sold off that company.
  • Liquidity Liquidity disclosed Cash flow is very comfortable despite increased working capital days due to reduction in trade creditors.
    But cash flow is very comfortable. So trade creditors, we always plan cash purchase according to the fund plan we have. So it will be always under a comfortable position.

Guidance & targets

Revenue

  • Export Sales Revenue · current fiscal · High confidence Rs. 160 crores
    Even then, our target is to achieve export sales of about Rs. 160 crores in this current fiscal through physical shipments of a higher value would have been made out of India in the current fiscal.

    — Malav Patel

  • Overall Topline Growth Revenue · current fiscal · High confidence 25%
    As indicated in Q1, we are very much confident of achieving the overall topline of 25% growth in the current fiscal

    — Malav Patel

  • Total Topline Revenue · current fiscal · High confidence Rs. 1,225 - Rs. 1,250 crores
    which will translate into a total topline in the range of Rs. 1,225 and Rs. 1,250 crores with export sales targeted in the range of Rs. 160 crores as indicated earlier.

    — Malav Patel

Profitability

  • Combined EBITDA Level Profitability · full year basis for current fiscal · High confidence ~13%
    We believe that we should be able to maintain a combined higher EBITDA level in the range of around 13% on a full year basis for our current fiscal.

    — Malav Patel

Growth

  • FY27 Growth Growth · FY27 · Medium confidence 20-25%
    I think considering the additional capacity and also considering the fact that our export should grow, I think around 20% to 25% is the growth we are targeting. But let us close the third quarter and we will give you a more clearer guidance. But the target is in the range of at least 20% to 25% in FY'27 as well.

    — Sanjay Majmudar

Working Capital

  • Sustainable Net Working Capital Days Working Capital · Medium confidence 55-60 days
    I would say a sustainable net margin, including buyer's credit, net working capital could be in the range of 55 to 60 days.

    — Sanjay Majmudar

What to watch in Q3 FY26

H2 FY26 Revenue Achievement

next quarter
Current H1 revenue at Rs. 544.5 crores
Target H2 revenue of Rs. 675-700 crores to meet full-year target

Why it matters

To verify if the company can achieve its ambitious H2 revenue target, which is crucial for meeting the full-year guidance.

So, Rs. 550 crores translates approximately 42% to 44% of the annual target that we have made, right? The remaining 55% to 60% will come in the H2 and that is a historical trend, right?

Risks & concerns

  • US Sectoral Tariffs

    medium

    25% (Feb 2025) and 50% (May 2025) tariffs on steel/aluminum imports into US led to absorption of Rs. 2.85 crores for some Q2 export orders, impacting Phenix division margins. New orders factor in tariffs.

    Management acknowledged

  • Rupee Devaluation

    medium

    Caused a foreign exchange loss of Rs. 2.15 crores on imports for the Proflex division in Q2 FY26.

    Management acknowledged

  • Increased Working Capital Days

    medium

    Net working capital days increased to 79 days from 32 days due to a reduction in trade creditors (extensive payments for discounts and cyclically lower buyer's credit).

    Management acknowledged

  • Competitive Export Market for Margins

    medium

    Arbitrage in the US market has reduced, leading to lower export EBITDAs (now higher teens vs. >20% earlier), requiring the company to be competitive on pricing.

    Management acknowledged

  • Monsoon Impact on Domestic Execution

    low

    Heavy monsoon in Q2 FY26 resulted in lower domestic Phenix sales/tonnage as project sites were not ready to receive material.

    Management acknowledged

Q&A highlights

6 direct
H2 Revenue Execution vs. H1 Performance Direct
See, basically in our industry, because of the site conditions pertaining to the weather, 40% to 45% of the execution planned for the entire fiscal happens in H1 and the remaining, the majority part of around 60% happens in H2.

Analyst questioned the feasibility of achieving the full-year revenue target given the H1 performance, and management clarified the seasonal nature of their business and confirmed capacity/order book support.

Asked by Raman from Sequent Investments

Margin Pressure from Tariffs and Forex Loss Direct
See for the export orders, as I earlier said, see it is always our endeavor to ask our customer because there were two tariffs that happened... So we had always requested our customers to consider our request to absorb. And we introducing new customers and new general contractors, we thought it would be prudent to help them also.

Analyst questioned why the company absorbed tariffs despite earlier statements, and management explained the strategic decision to maintain customer relationships and that new orders factor in tariffs.

Asked by Nikhil Purohit from Fident Asset Management

One-time Income in Q2 FY25 Direct
This project involved some Chinese engineers also to be here, but for some reason it could not happen. They called it off... So, what they did, we had already started production. So, they paid us for all the raw materials that we had purchased, whatever direct overhead we had expand and there was loss of profit negotiation. Now, in Q2, they agreed to this loss of profit compensation of about 14.66 crores

Analyst sought clarification on a significant one-time income in the prior year's Q2, which management explained was compensation for a cancelled large order.

Asked by Nikhil Purohit from Fident Asset Management

Domestic Phenix Volume Decline in Q2 Direct
See, if you see this year, monsoon was extra heavy everywhere across India. So, unfortunately, our sites were not ready to take the material. And that is the reason our Quarter 2, which generally falls in full monsoon time will result in lower sales or lower tonnage dispatches

Analyst noted a QoQ decline in domestic Phenix volumes, and management attributed it to the impact of heavy monsoon and prioritization of exports.

Asked by Nikhil Purohit from Fident Asset Management

Increase in Net Working Capital Days Direct
This particular quarter, buyer's credit was it just cyclically got a little on the lower side and we had made extensive, because of the cash flows and comfortable, just to avail a little more discounts, we had made some decent, extraordinary payments to creditors also.

Analyst questioned the significant increase in working capital days, and management explained it was due to a combination of lower buyer's credit and strategic payments to creditors for discounts.

Asked by Nikhil Purohit from Fident Asset Management

FY27 Growth Guidance Partial
I think around 20% to 25% is the growth we are targeting. But let us close the third quarter and we will give you a more clearer guidance.

Analyst sought preliminary growth guidance for FY27, and management provided a range but indicated more clarity would come later.

Asked by Raman from Sequent Investments

Cheyyar Plant Capacity and Expansion Direct
It's 31,800... Brownfield will be next year in Cheyyar. It will be available in FY'28. Then it will be about 52,000.

Analyst sought clarification on the current and future capacity of the Cheyyar plant, which is a key part of the company's expansion plans.

Asked by Raman K from Sequent Investments

FY27 Margin Trajectory Partial
Mr. Vedant, I think it is a bit premature. But you can say a minimum sustainable 13. Let us see. But it's not to be treated as a guidance. Let us see and wait for a quarter more.

Analyst probed for FY27 margin guidance given current pressures, and management provided a directional minimum but refrained from formal guidance.

Asked by Vedant from Mask Investment

2 min read 6 chapters

Detailed narrative

Strong Revenue Growth and H1 Performance

M&B Engineering reported robust financial performance in Q2 FY26, with consolidated revenues growing 49% YoY to Rs. 306.85 crores. H1 FY26 revenues also saw a significant 57% YoY increase, reaching Rs. 544.5 crores, driven by strong growth in both the Proflex Roofing (57% YoY Q2) and Phenix Pre-engineered Building (47% YoY Q2) divisions. This performance positions the company to achieve its full-year revenue target of Rs. 1,225-1,250 crores, representing a 25% growth.

Robust Order Book and Future Visibility

The company's outstanding order book stood at a healthy Rs. 930.56 crores as of September 30, 2025, with Phenix contributing Rs. 703.51 crores and Proflex Rs. 227.05 crores. New order intake for H1 FY26 was Rs. 672.20 crores, further bolstered by subsequent orders including a USD 24 million export order and INR 98 crores domestic order. Management indicated that the current order book provides 8-9 months of execution visibility, with PEB projects typically taking 6-8 months and Proflex 3-5 months.

Margin Pressures and Management Actions

Q2 FY26 EBITDA margins, reported at 12%, faced pressure from a Rs. 2.15 crores foreign exchange loss on Proflex imports due to rupee devaluation and the absorption of Rs. 2.85 crores in US export tariffs for Phenix. These tariffs, which increased from 25% to 50%, impacted earlier negotiated orders. Despite these headwinds, management expects full-year EBITDA to be around 13%, with export margins remaining in the higher teens, as new export orders have factored in the tariff impacts.

Strategic Capacity Expansion

To meet increasing demand, M&B Engineering is actively expanding its capacity. Three new mobile units for the Proflex division are being added, with one from UAE becoming operational by December 2025 and two from the US by Q1 FY27, each adding 1 lakh sq m per annum. Additionally, brownfield expansions are planned for the Sanand plant (20,000 MTPA by Q1 FY27) and Cheyyar plant (20,000 MTPA by FY28), which will increase Cheyyar's capacity to 52,000 tons.

Working Capital and Liquidity Management

Net working capital days increased to 79 days as of September 30, 2025, from 32 days in March 2025, primarily due to a reduction in trade creditors resulting from extensive payments for discounts. Management stated that cash flow remains comfortable and aims for a sustainable working capital cycle of 55-60 days. The company's CAPEX for FY26 is projected at approximately Rs. 60 crores, with another Rs. 60-70 crores planned for FY27.

Market Dynamics and Segment Performance

The roofing segment (Proflex) is experiencing strong tailwinds from railways, warehousing, and SME sectors, with order book increasing 150% over recent months. The Phenix division saw significant export growth in Q2, contributing Rs. 54 crores, though domestic volumes were affected by heavy monsoon. The company continues to focus on complex, higher-value projects in India, which contribute to better realizations compared to peers.

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