Salzer Electronics Q3 FY26 earnings call

Salzer Electronics reported a robust 24% YoY increase in Q3 FY26 revenues, reaching INR 424 crores, and a 23% YoY growth for the nine months ended December 31, 2025, totaling INR 1,284 crores. This growth was primarily fueled by strong demand in the industrial switchgear and wires and cables segments. However, profitability was impacted, with Q3 EBITDA growing only 4% YoY to INR 37 crores, resulting in a 9% EBITDA margin. PAT for Q3 stood at INR 13 crores, and for 9M FY26, PAT grew 4% YoY to INR 43 crores.

The smart meter segment significantly underperformed expectations, contributing only INR 1.25 crore to Q3 revenue and INR 25 crores for the nine-month period. Management acknowledged that while capacity is in place, securing and executing large-scale orders has been challenging due to stringent eligibility criteria, evolving tender conditions, and delays in customer clearances for existing orders, including a pending INR 30 crore LOI. The addressable market for smart meters is still estimated at INR 20 crores over the next 2-4 years, and management expects improvements in order inflow.

The company faced unprecedented^🌐 increases in key input costs, particularly silver and copper, which led to a marginal impact of approximately 200 basis points on Q3 margins. Silver prices, a major contributor to switchgear costs, have risen nearly threefold. To counteract this, management implemented a small price hike in November and plans a more significant price adjustment in February and March 2026.

The industrial switchgear division was the largest contributor, accounting for 56% of Q3 revenues and growing 12% YoY, with a consistent 12% EBITDA margin. The wires and cables business showed strong top-line growth of 49% YoY in Q3, contributing 39% of revenues, but maintained a lower EBITDA margin of 5%. Building products contributed 5% to revenues. Exports accounted for 21% of Q3 revenue. Subsidiary Kaycee Industries also performed well, with Q3 top-line growth of 22% to INR 14 crores and an EBITDA of INR 2 crores.

Salzer Electronics is expanding its global footprint with Salzer Saudi Arabia Limited expected to commence commercial production by June 2026. The company also secured a patent for a high voltage disconnecting and earthing device for railway applications, enhancing its product portfolio. Management reiterated its FY26 revenue growth guidance of 20% (excluding smart meters) and aims for similar growth in FY27, targeting blended EBITDA margins of 9.5-10% for FY27, with wires and cables margins improving to 6.5% over the next 1.5 years.

The company strengthened its capital base for ongoing and future expansions, including projects like Effilume Private Limited (Bengaluru energy saving project, revenues from Sept 2026). Debt levels have remained stable since March, with increases primarily attributed to working capital for the smart meter business. Interest expenses have risen compared to the previous year. Management expects debt to stabilize in FY27 and then be reduced as smart meter operations normalize.