Salzer Electron.

Salzer Electronics reported robust revenue growth in Q4 FY26, with a 26% YoY increase to INR 474 crores, and a full-year FY26 growth of 24% YoY, reaching INR 1,758 crores. This performance was primarily driven by strong demand for industrial switchgears, wires and cables, and building products. The industrial switchgear segment contributed 56% to FY26 revenues with a 20% YoY growth, while wires and cables accounted for 39% of revenues, growing 30% YoY.

Despite strong top-line growth, profitability was impacted by external factors. Q4 FY26 EBITDA margin stood at 7%, and the full-year margin was 8%, with PAT growing only 3% YoY to INR 54 crores. Management attributed this to elevated commodity prices (plastics, silver, copper) and geopolitical tensions, which caused a 2-3% margin impact. The company implemented a 15% price increase in February 2026 and plans another 7-10% hike in June 2026, expecting margins to stabilize at 12-13% from Q2 FY27, targeting 9.5% EBITDA for the full FY27.

Working capital as a percentage of total revenue increased to approximately 30%, exceeding the company's target of 25%. This was linked to geopolitical tensions, commodity price increases, and slower-than-expected scaling of the smart metering business. Short-term borrowings for FY26 stood at INR 503 crores, with an average interest cost of approximately 8%. Management aims to normalize working capital to 25% or below in FY27, which is expected to help reduce overall debt levels.

Salzer is actively pursuing opportunities in smart metering and EV charging. A strategic partnership with Wirepas was announced for smart meters, and the company has executed INR 45 crore worth of business over the last year. An INR 200 crore energy management project in Bangalore is under execution, with revenue expected from Q2 FY27. In EV charging, the subsidiary Ultrafast Chargers Limited sold around 100 chargers, generating INR 9 crore, and holds orders for another 100 DC fast chargers, targeting INR 25 crores in revenue for FY27 with an expected EBITDA margin of 12-15% once volumes pick up.

Exports contributed 21% to FY26 revenues, with a current contribution of around 24%. The Middle East and Africa export business currently stands at INR 24 crores. The planned Saudi Arabia manufacturing facility, intended to cater to GCC countries, was delayed by six months due to geopolitical tensions but is now back on track, with operations expected to commence in September or October 2026. The Phase-1 investment for this project is approximately INR 15 crores, with a long-term revenue target of INR 100 crores from the Saudi plant.

The company continues to focus on R&D and vertical development of products within its existing range, including HVAC-specific applications and solar-specific products. All new developments are under the Salzer branding. Management acknowledged analyst suggestions regarding unlocking shareholder value, particularly concerning the wires and cables business, and stated that increasing shareholder value and market cap is a key objective. The company targets an 18% Return on Capital Employed (ROCE).