Simplex Castings Ltd.

Simplex Castings delivered a solid performance over the last 9 months of FY26, driven by strong demand across traditional sectors like steel, railway, and EPC. The company achieved approximately ₹150 crores in revenue and a bottom line of ₹15 crores for the 9-month period. While Q3 FY26 saw moderate revenue growth and softer EBITDA margins, management clarified this was a conscious effort for strategic initiatives and capacity readiness, not demand-led. PAT margins were maintained at 10% for the quarter, supported by a one-time^📎 income of ₹1.6 crores from a gratuity fund.

The current quarterly order book stands above ₹100 crores, providing healthy revenue visibility. The order book composition is approximately 50% from the steel plant sector, 30% from fabrication for the power industry (including Gaza Engineering), and 20% distributed among gearbox, pump, and machine tool manufacturers. A new order of ₹12.71 crores was secured from a public sector steel plant via ThyssenKrupp. The company is also re-entering the shipbuilding industry with a 5-6% contribution from Mazgaon Dock, leveraging past experience.

A key milestone was the successful completion of a ₹50.15 crores fundraise. This capital will be utilized in a structured manner, with approximately 50% allocated towards capital expenses for expanding sheds, fabrication facilities, and railway bogies. The remaining 50% will address incremental working capital requirements needed for the anticipated increase in turnover. This fundraise enables the company to restate and scale its business with appropriate capacity and cost structure.

Management projects a 40-50% CAGR over the next three years with a sustained 10% margin. Railways are expected to be the biggest contributor, with casted bogies (adding ₹40-50 crores to topline) and fabricated components coming online by 2027-28. The power sector is also seen as a tremendous growth area for the next 4-5 years, with significant orders from NTPC and Adani. The company aims to restrict steel sector contribution to 40-50% of the order book, while defense shipbuilding is targeted for 10-15% due to higher profit margins. The long-term vision, 'SIMPLEX 3.0', involves a worldview approach, moving up the value chain by offering completely machined castings and assemblies, becoming a solution provider rather than just a foundry.

The company is actively working on strengthening financial discipline, cash flow, and faster receivable realization. Initiatives include empanelment with RXIL platforms and InvoiceMart under the TREDs platform to improve cash flow conversion. While acknowledging past working capital challenges, management is confident that current market conditions and the fundraise will prevent recurrence. Payment cycles for railway and power sectors are expected to be shorter (30-45 days for railways, 45 days for PSUs in power, potentially shortened by 15 days with InCred), significantly improving overall working capital days to a target of 30-45 days, or 3 months on the outer side.