Quality Power El

Quality Power Electrical Equipments achieved a significant milestone in FY26, crossing INR 1,000 crores in total revenue for the first time, reaching INR 1,007 crores, representing a nearly 157% YoY growth. The full-year EBITDA stood at INR 236 crores, a 98% increase, with an EBITDA margin of 23.5%, comfortably exceeding the revised guidance of 22%. Q4 FY26 was the highest ever quarter with INR 310 crores in total revenue, and the gross margin improved to 47.7%.

The reported Q4 FY26 consolidated EBITDA margin of 19.1% and PBT margin of 17.3% were impacted by a non-cash hyperinflationary adjustment of INR 25.7 crores in the Turkish subsidiary (Endoks) under IndAS 29. Management clarified that this is a purely accounting-driven adjustment, not reflecting any deterioration in underlying business performance or cash flow. Normalized for this, the consolidated PAT for FY26 would have crossed INR 210 crores.

The company is strategically investing in high-growth areas like Battery Energy Storage Systems (BESS) and data center infrastructure. The current BESS order book stands at US$31 million, with a target to secure US$60-80 million in orders for FY27. A dedicated PCS factory for BESS applications is being set up, and a 1,725 KW PCS inverter is expected to launch within the next two quarters. The data center segment also presents a significant opportunity, with an order of INR 49 crores recently bagged and a market size of INR 1,500 crores per year for reactors in the US market alone.

To support future growth, Quality Power is undertaking significant capacity expansions. The new factory in Sangli is expected to commence operations around July-August 2026, with a peak revenue potential of INR 1,500 crores. Mehru is adding additional oven capacity post-September 2026 and developing GIS manufacturing infrastructure, with first prototypes expected by July-August 2026. Endoks is also setting up a new BESS manufacturing facility and a new PCS facility at Nigde targeted for December 2026, underscoring the company's innovation-led growth strategy.

The company's order book stands robust at over INR 1,400 crores as of March 31, 2026, representing 1.4x last year's revenue. Q4 FY26 saw a strong order inflow of INR 870 crores. Management is targeting an order book of INR 1,500-1,800 crores before the start of FY28. For FY27, the company expects revenue growth of 15-20%, with a more aggressive growth target of over 50% for FY28, following a period of stabilization and capacity build-up.

Quality Power maintains a debt-light approach, focusing on internal accruals for growth. The board recommended a final dividend of INR 1 per share for FY26, with promoters voluntarily waiving their entitlement to conserve cash for growth investments. The company has also approved an enabling authorization to raise up to USD 75 million for strategic international expansion, acquisitions, and technology investments, indicating a proactive capital allocation strategy for future opportunities.

The company acknowledges ongoing challenges from geopolitical conditions and a congested supply chain, particularly affecting insulators and winding conductors, leading to project delays of 18-24 months. While mitigation efforts, including in-house cable manufacturing, are underway, raw material price volatility and geopolitical tensions are expected to potentially impact Q1 and Q2 FY27 margins. Despite these headwinds, management expresses confidence in its ability to navigate the environment through vertical integration and strategic sourcing.