Detailed Narrative
Q4 FY26 Performance and Full Year Overview
Shilchar Technologies reported Q4 FY26 revenue from operations at INR 152 crores, with an EBITDA margin of 21% and PAT of INR 28 crores. For the full fiscal year 2026, the company achieved INR 652 crores in revenue, reflecting a 5% year-on-year growth. EBITDA stood at INR 190 crores with a 29% margin, and PAT grew 8% year-on-year to INR 158 crores, resulting in an EPS of INR 138. Over a five-year period, revenue, EBITDA, and PAT have grown at CAGRs of 38%, 77%, and 83% respectively.
Impact of External Factors and Margin Compression
Q4 dispatches were significantly weighed down by two external factors. Firstly, uncertainty around US tariff policy in Q3 moderated order intake, though order inflows recovered in Q4. Secondly, INR 35-40 crores of shipments scheduled for Middle East customers in March '26 could not be dispatched due to the crisis in West Asia, leading to logistics disruptions and an estimated INR 80-90 crores of lost sales in Q4. These factors, coupled with a 100% increase in oil prices and 10-25% rise in other commodity prices, led to a 7-8% compression in gross and EBITDA margins for the quarter.
Raw Material Price Volatility and Margin Management
The company faced significant raw material price volatility, with transformer oil prices almost doubling since February 2026, and other commodities seeing 10-25% increases. Management is actively engaging with customers for price revisions, with some already agreeing to the hikes. While the company typically hedges against raw material price risks by booking copper or aluminum immediately upon order, the current situation is described as a 'force majeure🌐 condition' where suppliers are also demanding price increases, necessitating customer negotiations.
Capacity Expansion and Future Growth Outlook
Shilchar's Gavasad expansion project, adding 6,500 MVA to reach a total installed capacity of 14,000 MVA, is on track for commissioning in April '27. This INR 120 crore capital expenditure is being funded entirely through internal accruals. The new facility will also enable the company to manufacture transformers up to 160 MVA 220 kV class, expanding its product capabilities. Management expects this new capacity to drive the next leg of growth from FY27-28 onwards, with the full impact anticipated by FY29-FY30.
Order Book and Demand Visibility
The company currently holds an order book of almost INR 452 crores as of May 5, 2026, with 30-32% of this attributed to exports. For FY27, Shilchar has strong order visibility of approximately INR 800 crores and is confident in achieving this target, potentially reaching INR 900 crores. Demand remains firm across power transmission, distribution, and renewable energy sectors, both domestically and internationally. The company expects to utilize its existing 7,500 MVA capacity at almost full utilization and target 90-95% utilization for the coming year.
US Market Opportunity and Tariffs
US exports contributed 18-19% of Shilchar's revenue in FY26. The US market experienced fluctuations due to a 50% tariff announced in August last year, which led to some lost orders. However, this tariff has since reduced to 10%, allowing the company to regain competitiveness and secure new orders from US customers. Management anticipates significant growth in US exports over the next three years, viewing the market opportunity as substantial.