Pennar Industries Limited — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Pennar Industries reported a quarter of solid top-line growth driven by its Diversified Engineering segment. However, profitability was tempered by approximately ₹4 crores in one-time employee-related provisions, leading to a modest 10.14% PAT growth. Management indicated that past labor issues in the PEB India business are now resolved, and with a strong order book across key verticals (PEB India, PEB US, Boilers), they expect a significant ramp-up in execution and a return to 20%+ profit growth from Q4 onwards. The recently acquired Telco business in the US is also expected to start contributing meaningfully from the next quarter.

Highlights

  • Consolidated Revenue increased 12.3% YoY to ₹943 crores.

  • PAT grew 10.14% YoY to ₹33.55 crores, impacted by one-time employee-related costs of ~₹4 crores.

  • Adjusted PAT growth, excluding one-time items, would have been approximately 20%.

  • Diversified Engineering segment revenue grew strongly by 25.2% YoY to ₹520.31 crores.

  • Custom Designed Building Solutions (PEB) revenue remained flat at ₹440 crores.

  • Strong order book position: PEB India at ₹820 crores, PEB US (Ascent + Telco) at $62 million, and Boilers at ₹123 crores.

  • Management reaffirmed its commitment to achieving over 20% YoY PAT growth going forward.

  • ROCE stood at 21.3% and Working Capital was at 76 days.

Key financials

  1. Total Revenue ₹943 Cr +12.3%YoY
  2. EBITDA ₹98.54 Cr +7.2%YoY
  3. PAT ₹33.55 Cr +10.1%YoY
  4. ROCE 21.3%
  5. Working Capital 76 days
  6. Finance Cost (% of Net Revenue) 3.6%

What they filed

Q1 FY27: revenue up 2.8%, net profit up 9.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue748 840 906 846 907 +21%943 +12%925 +2%870 +3%
EBITDA75 72 92 86 81 +8%83 +15%105 +14%93 +8%
Net profit27 30 36 32 32 +19%34 +13%41 +14%35 +9%
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
₹960.31 Cr Total
  • Diversified Engineering ₹520.31 Cr 54.2%
  • Custom Designed Building Solutions ₹440 Cr 45.8%

Guidance & targets

Profitability

  • PAT Growth Profitability · this year and coming years · High confidence double-digit, north of 20%
    That remains, that definitely remains... But with the revenue growth plans that we have, we will absolutely maintain our double-digit profit growth commitments.

    — Aditya Rao, Vice Chairman and Managing Director

Margin

  • Long-term sustainable PAT Margin Margin · next 2 to 3 years · High confidence 7%
    our long-term sustainable PAT margin is at 7% levels and we're quite confident we'll achieve that in the next, within the next 2 to 3 years.

    — Aditya Rao, Vice Chairman and Managing Director

Revenue

  • Sales Growth Revenue · ongoing · Medium confidence double-digit, 15% is a target
    I will say double-digit sales growth. 15, we can definitely say is one of the targets we have in mind, but double-digit sales growth will come in too.

    — Aditya Rao, Vice Chairman and Managing Director

  • Telco Acquisition Annual Revenue Revenue · annual · Medium confidence substantially over ₹100 crores
    It'll be higher than that, sir. It would be substantially higher than that... we're not giving guidance for the year, but it'll definitely be substantially over INR100 crores.

    — Aditya Rao, Vice Chairman and Managing Director

Other

  • Consolidated Tax Rate Other · ongoing · High confidence ~25.5%
    We continue to guide to a consolidated tax rate of approximately 25.5%.

    — Shrikant Bhakkad, Chief Financial Officer

Capacity

  • Raebareli Plant Utilization Capacity · by end of Q4 FY26 · High confidence 70%

    From 60% today

    As of right now, we are at about 60% capacity utilization. We'll get to, we'll get to 70% by the end of this quarter.

    — Aditya Rao, Vice Chairman and Managing Director

Risks & concerns

  • Credibility on resolving PEB execution issues

    medium

    An analyst noted that the labor issue was claimed to be resolved in the previous call, yet Q3 performance was weak, raising questions about management's timeline for fixes.

    Analyst acknowledged

  • High Working Capital

    medium

    Management stated working capital at 76 days is high and they are actively working to reduce it through better inventory turns and sales acceleration.

    Management acknowledged

  • Recurrence of 'one-time' costs

    low

    While management detailed the specific one-off costs for Q3, the emergence of such items could pose a recurring risk to reported profitability.

    Analyst acknowledged

Areas of evasion (2)

  • Initially vague on the exact breakup of the INR 780 crore order booking across verticals.
  • Did not provide a precise monthly revenue number for PEB India when asked, giving a directional growth figure instead.

Q&A highlights

2 direct
Quantification and reason for one-time costs impacting PAT Direct
Yeah, the one-time cost from an account of three things, which comes in salaries and wages. One is on account of labour code compliance implementation. Second, we have received a Chennai High Court order for the union employees settlement... Third, there are wage agreements... So all inclusive, close to around INR4 crores is the impact that we have one-time cost.

This directly explains the ~10% gap between expected PAT growth (~20%) and reported PAT growth (10.14%), clarifying that underlying business profitability remains strong.

Asked by Deepak Poddar

Underperformance of PEB business and commitment to 20% PAT growth Direct
My comment on that is there is been no retraction. We have absolutely have plans in place, which will allow our profit to grow at 20% per quarter... So we would like to commit that and recommit that we are committed to that number. Double-digit profit growth and yes, what you mentioned 20% is, is absolutely the stated target for us.

It addresses investor concern about repeated misses in a key segment and forces management to publicly reaffirm their most important guidance, setting a clear benchmark for future quarters.

Asked by Nitin Jain

Reconciliation of PEB order book figures Partial
See, the order book that we've given as part of our press media release, that includes multiple businesses... So that INR780 crores is for the entire company, the order book, while the PEB order book, INR810 crores specifically is for PEB India...

This exchange revealed a potential point of confusion in the company's disclosures, distinguishing between quarterly order *bookings* (for the whole company) and the current order *backlog* (for a specific segment), which is crucial for accurate modeling.

Asked by Nitin Jain

2 min read 6 chapters

Detailed narrative

Q3 Financial Performance: Top-line Growth Muted by One-Off Costs

Pennar Industries reported consolidated revenue of ₹943 crores, a 12.3% YoY increase. However, PAT growth was limited to 10.14%, reaching ₹33.55 crores. Management attributed this subdued profit growth to one-time employee-related costs amounting to approximately ₹4 crores, stemming from labor code implementation, a court order, and wage agreements. Excluding these non-recurring items, management stated that PAT growth would have been around 20%, in line with their guidance.

PEB Segment: Awaiting a Q4 Rebound After a Flat Quarter

The Custom Designed Building Solutions (PEB) segment, a key vertical, reported flat revenue of ₹440 crores. This was due to lingering labor challenges in India which are now reportedly resolved, and a delayed revenue contribution from the new US acquisition, Telco. Management is highly optimistic for a strong rebound, citing a robust PEB India order book of ₹820 crores and a combined US order book (Ascent Buildings and Telco) of $62 million. The Telco acquisition is now fully integrated and expected to contribute meaningfully from Q4 FY26.

Diversified Engineering Shines as a Key Growth Engine

The Diversified Engineering segment was the standout performer, with revenue growing 25.2% YoY to ₹520.31 crores. This growth was primarily driven by strong performance in the steel BU, boilers, and BIW (Body in White) divisions. The boilers division, in particular, has a strong outlook with its order backlog increasing to ₹123 crores, bolstered by export orders from Australia and Sri Lanka. Management expects this segment to be a major growth lever in the coming year.

US Business Expansion and Outlook

The US operations are poised for significant growth. The combined order backlog for metal buildings (Ascent) and structural (Telco) stands at $62 million, up 30% over the last six months. The company is expanding its sales and business development teams in the US to capitalize on this momentum. Furthermore, the reduction in US tariffs for hydraulics is expected to provide a significant boost to that business vertical, with management already seeing renewed interest from US customers.

Guidance Reaffirmed: Confident in 20%+ PAT Growth Trajectory

Despite the Q3 PAT miss, management firmly recommitted to their guidance of achieving double-digit PAT growth north of 20% YoY. They also reiterated their long-term target of reaching a sustainable 7% PAT margin within the next 2-3 years, up from the current adjusted level of ~4%. This confidence is underpinned by the resolution of operational issues, a strong and growing order book, and multiple growth levers firing across their key business verticals.

Capital Efficiency and Financial Position

The company maintained healthy capital efficiency metrics, with ROCE at 21.3% and Return on Equity at 12.1%. Working capital days stood at 76, which management acknowledged as high and is an area of focus for improvement. Finance costs were well-managed at 3.56% of net revenue, below their guidance of 4%. The cost of debt is a blend of 9.5%.

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