Shera Energy Q3 FY26 earnings call

Shera Energy delivered a strong financial performance for the first nine months of FY26, with consolidated total income increasing by 30% to INR 1,182 crores compared to INR 909 crores in the prior year. Consolidated EBITDA rose by 55% to INR 66 crores, and profit before tax (PBT) grew by 57% to INR 34 crores. Net profit for the period stood at INR 25 crores, also a 57% increase, resulting in a 49% improvement in EPS to INR 8.01. For Q3 FY26, EBITDA was INR 24.92 crores, up from INR 21 crores in Q2 FY26, with the EBITDA margin improving to 6.24% from 5.49% sequentially.

The company is in the final stages of commissioning its copper cathode facility in Zambia, a key backward integration initiative. This project is expected to significantly enhance raw material security and improve overall margins by 15% to 20%. Trial production commenced in January, yielding approximately 10 tons, but was paused for further process modifications to optimize recovery. A second trial run is anticipated by early March, with production stabilization expected in Q1 of the next financial year. Phase 1 targets an annual capacity of 1,200 metric tons and an estimated revenue potential of USD 12 million, with long-term plans to scale up to 5,000 metric tons annually.

Simultaneously, Shera Energy is aggressively expanding into higher value-added segments in India, including electrical conductors, superfine wires, and solar ribbons. The company has invested INR 60-70 crores in new capex for EHV grade transformer winding machines (CTC conductors), which have been procured and are currently in the installation phase. Commercial production for these products, specifically for 765 kV transmission lines, is expected to commence by Q2 of the next financial year. This forward integration is projected to add another 7% to 10% to margins.

Shera Energy has planned a substantial capital investment of INR 300 crores to INR 500 crores for the expansion of its Zambia operations over the next few years. This expansion will be funded through a combination of equity raising and debt, with specific financing plans to be finalized after the smooth commercial operation of the Zambia plant in Q1 of the next financial year. The company noted an increase in finance costs due to these long-term borrowings for Zambia and short-term working capital requirements, with the average cost of new debt expected to be below 10%.

While 9M FY26 saw a volumetric growth of approximately 12% year-on-year, Q3 FY26 experienced a slight sequential decline in sales volume by about 240 metric tons. This was attributed to an abnormal increase in raw material prices, particularly copper, which the market was slow to absorb. Management highlighted the company's operational flexibility, stating its ability to switch production between copper and aluminum based on market demand and price dynamics, ensuring continuous sales despite market fluctuations.

Having completed three years since its listing on the SME platform in February 2023, Shera Energy is now eligible and in the process of completing formalities for migration to the Main Board. Management expressed confidence in future growth, projecting overall revenue growth of 40% to 60% for the coming financial year, with the top line expected to double within two years. The company also anticipates its EPS to most likely double in the next 2 to 3 years, driven by strategic investments and improved profitability.