Omnitech Engineering Q1 FY27 earnings call

Omnitech Engineering Limited delivered a robust Q1 FY27, with consolidated revenue growing 61.5% year-on-year to ₹166.6 crores. This strong top-line growth translated into significant profitability improvements, with EBITDA increasing 90.8% to ₹50.62 crores and PAT surging 468.7% to ₹29.73 crores. The company also demonstrated sequential growth, with revenue up 12.1% and PAT up 1.4% quarter-on-quarter, reflecting disciplined execution and strong demand momentum.

The company's order book stood at over ₹3,000 crores as of July 31, 2026, providing strong revenue visibility for the coming years. This includes a multi-year order from Weatherford exceeding USD 100 million. Management indicated that approximately ₹2,000 crores of the order book has a 4-5 year execution timeline, while the remaining ₹1,000 crores comprises short-to-moderate cycle orders executable within 6-18 months, ensuring a steady revenue stream.

Omnitech is investing ₹250 crores in capex, with ₹100 crores allocated for building and ₹150 crores for plant and machinery, primarily for two new facilities in Chhapara. This expansion aims to increase annualized machine capacity from 31-32 lakh hours to 42-43 lakh hours. The new Chhapara facilities are expected to commence operations in FY28, with some minor spillover from FY27 due to recent weather conditions, ensuring future growth capacity.

The company is actively diversifying its revenue base, with Q1 FY27 revenue split across Energy (49%), Motion Control & Automation (24%), Industrial Equipment Systems (19%), and other diversified industrial applications (7%). Geographically, North America contributed 52%, Asia 27%, India 17%, and Europe/UK 3%, with exports accounting for 78% of total revenue. Management is working to balance geographical risk, targeting 10-20% diversification into Middle East and Europe regions.

Net working capital days improved significantly to 233 days as of June 30, 2026, down from 294 days at FY26 year-end, driven by reductions in inventory and receivable days. Management aims for a further 10-20% improvement in working capital. Despite sequential increases in raw material costs (from 20% in Q3 FY26 to 28% in Q1 FY27), the company maintains a gross margin target of 68-71% due to pass-through mechanisms with OEM customers, albeit with a 2-3 month lag.

The company is making steady progress in the defense and aerospace segment, with First Articles (FAs) undergoing and Nadcap accreditation in progress. Management expects this segment to contribute revenue within 1-3 years, with potentially higher margins. Beyond the two main anchor customers, Omnitech is also pursuing approvals with other large customers like Oshkosh, BLY, ABB, and Siemens, with loose compound FAs completed and final approvals anticipated within 6-15 months, indicating future order inflow potential.

Following the IPO, Omnitech repaid ₹50 crores of long-term debt, with total debt currently standing at ₹390 crores, resulting in a net debt to equity ratio of 0.41. The company is also restructuring NBFC loans to reduce interest costs. Furthermore, a strategic shift from written-down value to straight-line depreciation for new assets is planned to enhance financial efficiency in the coming years, contributing to the annualized Return on Capital Employed improving to 17.8% from 13.7% in FY26.