Technocraft Industries (India) Limited

Technocraft Industries reported a reasonably good Q2 FY26 across all its four divisions, demonstrating strong sales and profitability despite global turbulence. The Formwork segment recorded approximately INR 402 crores in revenue for the quarter, largely driven by increased Mach One sales. The Aurangabad formwork plant is now fully ramped up and has turned positive after accounting for interest and depreciation, contributing positively to both top and bottom lines. The Scaffolding segment achieved a 14% profitability in Q2, benefiting from increased volumes.

The Formwork division is well on track to achieve its annual revenue target of INR 900 crores for FY26. Domestic demand remains robust and buoyant, with demand exceeding current capacity. The company's aluminum formwork capacity currently stands at 70,000 to 75,000 square meters per month, with plans to increase this to 1 lakh square meter per month by Q4 FY26. In the next two years (2027-2028), Technocraft plans to double its extrusion plant capacity, entailing a capex of approximately INR 150 crores.

The Scaffolding segment faced significant headwinds, with US demand experiencing a 45-50% reduction from July to October due to tariff uncertainty^🌐. This slowdown is expected to impact Q3 FY26 results. The European market also remains soft, with slow demand pickup. However, management noted a pickup in US demand in November, driven by greenlighting of capital projects, and expressed hope for an imminent trade deal and tariff reduction. Despite volatility, the segment achieved 14% profitability in Q2 due to higher volumes.

The ER&D division is performing well, seeing good progress with larger accounts and adding new customers. The company expects this segment to achieve a quarterly revenue run rate of INR 75-80 crores by the end of Q4 FY26, driven by traction in manufacturing automation, plant engineering, and digital transformation services. The Textile division is expected to maintain breakeven to slightly positive EBIT levels for FY26, although a slight drop in yarn results is anticipated for Q3 due to environmental factors.

The Drum Closure business experienced a marginal degrowth in revenue, but volumes remained largely flat compared to the previous year. Profitability, however, was significantly impacted by a 50% US tariff, of which only half could be passed on to customers. This is expected to lead to a further margin impact of up to 10% in the next quarter. Despite these challenges, the overall outlook for the drum closure business is considered fairly stable, with growth observed in China and clamp products.

In the Defence segment, samples of the JT Cooler product have been supplied to companies in Israel and France, with advanced discussions underway. While no written purchase orders have been secured yet, management is hopeful for commercial orders in the near future. Small orders under INR 10 crores have also been received. The company acknowledges the large opportunity in defence but notes the long lead times involved in working with government departments.