Synergy Green Industries Limited

Synergy Green experienced a significant revenue decline in H1 FY26, with half-yearly revenues decreasing by 49.49% YoY. Q2 FY26 revenue also saw a 16.4% drop YoY, primarily due to customer scheduling and slower domestic wind industry off-take. Despite the revenue challenges, PBDIT margins improved to 15.56% for H1 FY26, a 143 bps increase over H1 FY25 (which was 14.13%). This margin resilience was attributed to stable business conditions, favorable raw material prices, and healthy export growth. However, PBT and PAT declined due to the overall revenue reduction.

The company is actively pursuing capacity expansion and modernization. Its foundry capacity is being upgraded from 30,000 MT to 45,000 MT, with the new capacity expected to be online by Q3 FY26. A 10 MW captive solar power project has been completed and became operational in October, enhancing energy efficiency. Additionally, an in-house machining facility with 20,000 tons per annum capacity is being developed in two phases, with Phase 1 expected to be fully operational by Q3 FY26 and Phase 2 by Q4 FY26. This machining capability is projected to contribute 5-6% margin expansion from the current 14% level.

Synergy Green maintains its full-year FY26 revenue growth guidance of 20%, supported by a robust order book. New customer developments with Envision, Nordex, and Adani (3.3MW platform) are well on track, expected to contribute 25-30 crores in the next 3-4 months. The company sees significant opportunities in the global wind casting market, with an estimated demand of 8,000-10,000 crores from existing top-tier clients, where SGIL aims for a 10% share. Furthermore, the non-wind power sector presents new opportunities, particularly from government initiatives for 80 GW conventional coal pulverizer projects.

For a long-term capacity expansion to 100,000 tons, the company estimates a total investment of 400-500 crores. This includes 250-300 crores for foundry, 150 crores for machining, and 80-100 crores for renewables, with land acquisition costs included. The funding strategy for this 400-crore capex involves 25% internal accruals, 25% equity inflation, and 50% borrowing, targeting a debt-to-equity ratio of 1:1. The company also plans to stretch its existing 45,000 MT capacity by 10-15% if the product mix is favorable, before initiating Greenfield expansion with a minimum starting capacity of 30,000 tons.

The domestic wind segment experienced a significant revenue decline from 44 crores in H1 FY25 to 12 crores in H1 FY26, primarily due to assembly delays by Gamesa and slow off-take from Senvion, though Gamesa is expected to resume in Q3/Q4 FY26. Cost-wise, power tariffs increased by 10% in July, coupled with a policy shift discouraging solar and incentivizing wind, resulting in a 1% margin impact. Additionally, logistic costs from China to India/US have surged from 14-15% to 35-40%, and the absence of basic customs duty for OEM exports under export obligation removes an 8-8.33% advantage.

The Indian wind industry, stagnant until 2021-22, is now witnessing a 3-4x growth in the domestic market, with annual installations potentially reaching 8-10 GW in the next 1-2 years. This, combined with the 'China Plus One' strategy driving export demand, is fueling Synergy Green's aggressive capacity expansion. The company is the only Indian supplier for Nordex's 5MW and 6MB platforms. Key domestic competitors include Suzlon's subsidiary and Baettr, a German company with a foundry in Chennai.