Tega Industries Q3 FY26 earnings call

Tega Industries reported consolidated revenue of ₹1,210.3 crores for the nine months ended December 31, 2025, marking a 6% year-on-year growth. EBITDA for the same period stood at ₹216.1 crores, with an 18% margin, which was marginally lower than the 20% in the prior year due to one-time^📎 expenses. For Q3 FY26, consolidated revenue was ₹417.5 crores with an EBITDA of ₹60 crores, resulting in a 14% margin, down from 24% in Q3 FY25. Excluding one-off^📎 items, EBITDA margins for both periods would have been above the 20% threshold.

Gross margins remained healthy at around 60% of revenue in Q3 FY26 and improved by 200 basis points to 59% for the nine-month period, driven by product mix and high-margin orders. The decline in reported EBITDA margins for Q3 and 9M FY26 was primarily due to one-time^📎 expenses totaling ₹45-50 crores for the nine-month period. These included approximately ₹6 crores for new labor code regulations and a significant portion for Molycop acquisition-related professional fees, due diligence, and legal consultancy.

The company has upsized its stake in the Molycop entity to 84% and expects the transaction to close by March 31, 2026, with potential for some spillover. Anti-trust filings have been completed in 12 jurisdictions, including the U.S., Canada, and Australia, along with an FDI filing in Spain. The acquisition is being financed through a mix of internal accruals, debt, and equity, with current funds deemed sufficient for financial closure. Milestone-based refinancing fees and other acquisition expenses will be recognized in subsequent quarters at the Singapore entity level.

The equipment business demonstrated strong momentum, recording revenue of ₹182.6 crores for the nine-month period, a 34% year-on-year increase. The company's order book stands at ₹1,140.2 crores as of December 31, 2025, with ₹810.2 crores executable within the next 12 months, providing strong growth visibility. Tega Industries is expanding across Europe, Latin America, and Australia, with these initiatives expected to contribute meaningfully from FY27. The Chile CAPEX project is on track for commercial production in Q2 FY27, with alternate plants addressing interim capacity needs.

The consumables business, which contributes 84% of 9M FY26 revenue, experienced a weaker Q3 with only a 2% year-to-date growth. This was attributed to a time lag in volumes and deferral of new customer conversions, rather than market share erosion. Management expects Q4 to be strong, bringing the full-year consumables growth to a high single-digit range of 7-8%, revised from an earlier 15% guidance. Long-term, the company aims to maintain a 15% CAGR momentum for the segment, with EBITDA margins typically in the 22-23% range.

The company benefits directly from higher gold and copper prices, as increased commodity values incentivize mines to process higher throughput, leading to greater demand for Tega's consumables. Independent expert assessments project copper demand to rise at a 4% CAGR through 2030, driven by electrification and EVs, while gold production is also expected to grow, supported by investment demand. These trends are driving increased mining activity, particularly in copper-rich regions like LATAM, North America, and Africa.