Detailed Narrative
Strong Q2 and H1 FY26 Financial Performance
Tega Industries delivered robust financial results for Q2 and H1 FY26. Consolidated revenue for Q2 FY26 reached INR 4,211 million, marking a 15% year-on-year growth. For the first half, consolidated revenue stood at INR 7,927 million, up 10% YoY. EBITDA for Q2 was INR 849 million, with the EBITDA margin expanding significantly to 20% from 13% in the prior year, reflecting strong operational efficiency. H1 EBITDA also stood at INR 1,561 million, maintaining a 20% margin compared to 17% last year.
Exceptional Growth in Equipment Business
The equipment business was a key driver of growth, achieving INR 707 million in revenue for Q2 FY26, a substantial 55% year-on-year increase. Management noted that the EBITDA margin for this segment has improved to a sustainable 14% on a half-year basis, up from 5% last year. The company expects this segment to grow beyond its 25% annual guidance for FY26 and aims for the McNally equipment business to reach INR 1,000 crores in revenue within the next 3-4 years.
Healthy Order Book Provides Revenue Visibility
As of September 30, 2025, Tega Industries boasts a strong order book of approximately INR 11,556 million. Of this, INR 7,306 million is scheduled for execution over the next 12 months, providing excellent revenue visibility. The order book remains robust for both the consumable and equipment business segments, reinforcing confidence in the company's growth pipeline.
Molycop Acquisition Progress and Financing
The Molycop acquisition is progressing as planned, with regulatory approvals anticipated by end December 2025 or potentially January 2026, leading to the first consolidation in Q4 FY26. The total equity requirement for the acquisition is INR 2,300 crores, of which INR 2,000 crores has been raised. The company plans a further equity raise of INR 400-500 crores to cover the remaining shortfall. A debt commitment of INR 1,000 crores is also in place, though management may revisit if a smaller amount is needed.
Chile Capex Project on Schedule
The Chile capex project is on track, with commercial production expected by Q2 FY27 (September 2026). The total capex for this project is estimated to be in the range of $30-35 million. Approximately 25-30% of the total project cost has already been spent on land, capital work-in-progress (CWIP), and capital advances, indicating steady progress.
Navigating Global Headwinds with Proactive Strategies
Tega Industries is actively managing global macroeconomic headwinds🌐, market volatility🌐, and geopolitical disruption🌐s. The company has implemented proactive measures such as ensuring raw material security through advanced order placement, developing alternate vendors, and optimizing shipping routes. For instance, manufacturing for the U.S. market is being shifted to alternate locations like Chile to mitigate the impact of potential tariffs.
Consumables Segment Performance and Outlook
The consumables business recorded INR 3,389 million in revenue for Q2 FY26, a 10% YoY increase. However, H1 growth for this segment was around 3%, with an EBITDA margin of approximately 16.5%. Management expects a stronger performance in H2, which is traditionally heavier, to meet the annual growth target of 15% and achieve an annualized margin of 22-23%.
Depreciation Trends and Future Impact
The current quarterly depreciation expense is in the range of INR 22-24 crores, primarily influenced by the retirement of assets that have completed their useful life. This run rate is expected to continue for the current fiscal year. However, depreciation will increase once the Chile project and the Dahej debottlenecking project are capitalized, though this will be partially offset by further asset retirements.