Technocraft Industries (India) Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Technocraft Industries reported a balanced Q3 FY26, marked by a significant increase in other income and a pickup in Scaffolding demand from November. While Scaffolding margins were compressed due to lower volumes, tariff reductions in Drum Closures and strong growth in Engineering Services offer positive outlooks. The company is actively addressing competition in Aluminium Formwork and working to improve the performance of its Garments business.

Highlights

  • Other income increased by ₹21 crores YoY to ₹28 crores, driven by mark-to-market gains on investments.

  • Scaffolding demand in the US saw a pickup from November, with December, January, and February sales aligning with 2024 levels.

  • Drum Closure tariffs reduced from 50% to 25%, which is expected to have an immediate positive effect on margins.

  • Engineering Services segment continues strong growth, targeting 25% year-on-year growth and stable 15% margins.

  • Mach One (Formwork) is on track to achieve ₹900 crores revenue for the full year, with the overall Scaffolding and Formwork segment targeting ₹1,400 crores.

Concerns

  • Scaffolding segment margins dropped to an all-time low of ~8% in Q3 FY26, primarily due to a decrease in volume.

  • Aluminium Formwork (Engineering front) margins declined to 9.5% in Q3 FY26, attributed to seasonality and increased competition.

  • Garments business is currently losing money, operating at only 60% capacity utilization.

  • Uncertainty remains regarding the interpretation of the US Section 232 tariff on Scaffolding products (full product value vs. steel content).

Key financials

  1. Other Income ₹28 Cr +366.7%YoY
  2. Cash & Equivalents ₹405 Cr
  3. Working Capital ₹390 Cr
  4. Gross Debt (Consol) ₹600 Cr

What they filed

Q1 FY27: revenue up 12.7%, net profit up 45.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue521 545 568 503 532 +2%500 −8%495 −13%567 +13%
EBITDA78 77 95 69 70 −10%67 −13%102 +7%109 +58%
Net profit65 50 66 59 56 −14%53 +6%76 +15%86 +46%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Scaffolding
    8% EBIT Margin₹180 Cr Revenue Reduction (this year)
  • Aluminium Formwork (Mach One)
    9.5% EBIT Margin₹200 Cr Q3 FY26 Sales₹550 Cr 9M FY26 Sales₹400 Cr Revenue Increase (this year)
  • Drum Closures
    2 million sets/month China Volume30% US Exports Share
  • Engineering Services
    60% Offshore Share40% Onsite Share
  • Garments
    60% Capacity Utilization

Order book

high confidence

Total value

3,50,000 square meters

as of 2025-12-31 range

Inflow this quarter

1,00,000 square meters

Execution

Mach One order book visibility of 6 months

Composition

  • South America (geography)
  • India (geography)

Cancellations & deferrals

  • deferred: Site delays with customers leading to delays in getting drawings approved and material dispatch.
The company is selective about orders to protect margins, focusing on quality over quantity, especially in Aluminium Formwork.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    • Doubling Scaffolding capacity
    • Phase 2 for extrusion plant and Mach One capacity increase
    Yes. FY '29 is some time away. So we will be doubling our capacity for sure in scaffolding. But whether it will be FY '29 or FY '28 or FY '30, it's a little difficult to give. The capex guidance is on track. We are almost at 100% capacity utilization in the new Sambhaji Nagar plant where we completed our capex 1.5 years back. We do plan to add Phase 2 probably sometime towards the later part of '26, '27, where we will put up another extrusion plant and further increase in Mach One capacity. That will probably be towards the end of '27 or maybe early '27, '28.
  • Debt Gross ₹600 Cr
    So in totality, the gross debt is around to the tune of INR600 crores, right? Correct. That's right.
  • Liquidity Cash ₹405 Cr Working capital against cash and cash equivalents is INR 390 crores.
    Yes. So the cash and cash equivalent is around INR405 crores and the working capital against that is around INR390 crores.

Guidance & targets

Profitability

  • Scaffolding Segment Margin Profitability · next year · High confidence 15%
    In the scaffolding segment, which has been really volatile, I think, as I said earlier, our outlook is to be at 15% margin next year, barring any more major geopolitical disturbances, if the implementation of the trade deal remains intact, if the US demand continues to be like it is right now, I think with our product mix, with our strategy, we should be able to have growth in revenue as well as deliver a 15% net margin.

    — Navneet Saraf

  • Aluminium Formwork Segment Margin Profitability · general · High confidence 10-15%
    But on an average, in general, the scaffolding segment operates at anywhere from 15% to 20%, whereas the aluminium formwork operates from 10% to 15%.

    — Navneet Saraf

  • Engineering Services Segment Margin Profitability · going forward · High confidence 15%
    Stable margins are about 15%, even with the growth and that we continue to have. So with the growth of 25% year-on-year that we expect, we should be operating at about 15%.

    — Navneet Saraf

  • Scaffolding Q4 Performance Profitability · next quarter · High confidence better than Q3
    Yes, we are expecting next quarter to be better than the December quarter in terms of profitability.

    — Navneet Saraf

Revenue

  • Scaffolding Segment Revenue Growth Revenue · next year · Medium confidence growth
    In the scaffolding segment, which has been really volatile, I think, as I said earlier, our outlook is to be at 15% margin next year, barring any more major geopolitical disturbances, if the implementation of the trade deal remains intact, if the US demand continues to be like it is right now, I think with our product mix, with our strategy, we should be able to have growth in revenue as well as deliver a 15% net margin.

    — Navneet Saraf

  • Engineering Services Segment Growth Revenue · year-on-year · High confidence 25%
    Stable margins are about 15%, even with the growth and that we continue to have. So with the growth of 25% year-on-year that we expect, we should be operating at about 15%.

    — Navneet Saraf

  • Mach One (Formwork) Full Year Revenue Revenue · full year · High confidence 900 crores
    But I think for the entire year, we should be on track to do INR900 crores or maybe close to INR900 crores.

    — Navneet Saraf

  • Scaffolding & Mach One Total Full Year Revenue Revenue · full year · High confidence 1,400 crores
    We should be looking at close to INR1,400 crores.

    — Navneet Saraf

  • Scaffolding & Formwork Segment Revenue Revenue · next 3 years · Medium confidence 2,000 crores
    So I think next 3 years, we continue to be quite bullish that the Scaffolding and Formwork segment will cross revenue of INR2,000 crores.

    — Navneet Saraf

Volume

  • Drum Closures China Volume Growth Volume · FY27 · Medium confidence 10-15%
    So I think going into FY '27, we should be able to average maybe a 10% to 15% increase in this volume and the capacity is available.

    — Navneet Saraf

Capacity

  • Garments Capacity Utilization Capacity · next 2-3 months · Medium confidence 80-90%
    We expect the capacity utilization in garments to go up to 80%, 90% in the next 2 to 3 months when orders from US start coming in.

    — Ashish Saraf

What to watch in Q4 FY26

Scaffolding Segment Margin Recovery

next quarter (Q4 FY26)
Current ~8%
Target Closer to 15%

Why it matters

Scaffolding is a key segment, and its margin recovery is crucial for overall profitability.

I think this quarter, the demand will be good. So we are expecting this quarter to do quite well. ... Our target is always 15%. We budget at 15%, and that's what we operate at. So I think we are very optimistic and we are positive that we should get to that level.

Risks & concerns

  • Geopolitical disturbances affecting demand

    medium

    Geopolitical disturbances have become the norm, making long-term demand views difficult.

    Management acknowledged

  • Uncertainty in US Section 232 tariff interpretation

    medium

    Question mark on whether the 50% tariff applies to full product value or just steel content for Scaffolding products.

    Management acknowledged

  • Increased competition in Aluminium Formwork

    medium

    Influx of new, less organized suppliers leading to pricing pressure in the domestic market.

    Management acknowledged

  • Project execution delays due to customer site readiness

    low

    Site delays with customers can lead to delays in drawing approvals and material dispatch, affecting revenue recognition.

    Management acknowledged

  • Raw material price volatility (Aluminium)

    low

    Rising aluminium prices put pressure on margins, though contracts are variable and linked to NALCO.

    Management acknowledged

Q&A highlights

7 direct
Scaffolding situation and tariff impact post trade deal Direct
Currently, we are paying 50% on only the steel content, and we are subject to the reciprocal tariff on the non-steel content. That reciprocal tariff until now was also 50% because there were 25% reciprocal and 25% Russian oil tariff. Now the Russian oil tariff has gone away with immediate effect. So to that effect, it has come down to 25%, which will further come down to 18% once the US administration releases the official notification of the same, which we expect in a few days. So we will see a reduction in our tariffs, but there is a potential question mark on whether the interpretation going forward imposed by the US customs is going to be 50% on the full product value or just the steel value.

Clarifies the complex tariff situation for the Scaffolding segment and its potential future impact on costs.

Asked by Chetan Vora

Reasons for Scaffolding margin drop to 8% Direct
Absolutely. The margins have dropped only because of decrease in volume. There is from INR400 crores to INR300 crores. So that's the big effect. There has also been some reduction in operating margins in the domestic Aluminium Formwork business. That's getting a little more competitive. Aluminium prices have been rising. So that's been putting pressure. Competition has also increased drastically in India, but demand is also strong. But overall, we are seeing some competitive pressures in India compounded by increase in raw material costs. But the main reason is the volume reduction.

Explains the primary drivers behind the significant margin compression in the key Scaffolding segment.

Asked by Chetan Vora

Sharp increase in other income from ₹6 crores to ₹28 crores Direct
Yes. Year-on-year from INR6 crores to INR28 crores is because of mark-to-market of the investments. So last year, third quarter, it was minus INR8 crores. And this time, it is plus INR14 crores. So delta is of around INR21 crores. That is the difference between the other income.

Provides a clear explanation for a material non-operating income fluctuation.

Asked by Chetan Vora

Scaffolding volume growth in December and January Direct
So July to November, we were at about 50% of our sales levels averaging of '24. December, we were back to our original sales levels. And January also, we are close to that. So at the moment, December, January and even February, our sales is almost similar to the levels that we had in 2024. And the outlook is quite good. We are seeing a lot of capex projects that were delayed start now getting green lighted in the US and so the demand outlook is actually quite strong in the short to medium term. Medium term, I mean, about the next 3 months.

Indicates a positive inflection point in demand for the Scaffolding segment after a period of slowdown.

Asked by Avnish

Impact of reduced Drum Closure tariffs on margins Direct
I don't know the exact quantum in rupees because we don't pay the tariffs, our customers pay the tariff, but the percentage was 50% on Drum Closures, and that has now reduced to 25%. So that will certainly have an immediate positive effect in our margins. ... So what we have absorbed now will go away.

Clarifies how the tariff reduction directly translates into margin improvement for the Drum Closures segment.

Asked by Avnish

Low liquidity in stock and plans for stock split or bonus Partial
Yes. Basically, liquidity in the market is relatively low for Technocraft because 75% shares are held by the promoters and promoters do not buy or sell single share in the market. And rest of the shares are distributed to about 75,000 to 80,000 shareholders. So over a period of time, the liquidity has spread. But splitting of the shares so far is not with the Board. Maybe in future appropriate time, the Board may consider that. But as of now, there is no such proposal.

Addresses shareholder concerns about stock liquidity and potential capital structure changes, indicating no immediate plans for a split or bonus.

Asked by Nilesh Doshi

Competition and margin pressure in domestic Formwork market Direct
Yes, there has been clear influx of competition, new companies coming in and adding aluminium formwork because the demand is growing in India. So I think that is something that is going to gradually play out and filter out. ... What's going to happen is that over a period of a year or 2, it's going to get filtered out. We are going to see a lot of the smaller players getting weeded out of the system because they'll not be able to compete and they'll not be able to afford to sell products at the pricing at which they are currently willing to sell it.

Acknowledges the competitive landscape in Aluminium Formwork but expresses confidence in long-term market consolidation.

Asked by Ruchit Agrawal

Feasibility of entering the rental business for Scaffolding/Formwork Direct
No. So we don't do rentals. We are focused 100% on outright sale. In the domestic market, we sell primarily to developers, real estate developers and also construction contractors. Rental is somewhat prevalent not in the aluminium formwork, but in the steel formwork as well as steel scaffolding space. So we have distributors of ours, and we are actually increasing the number of distributors in India who buy from us and rent, but we don't directly rent. ... You see India is not a very mature market when it comes to protecting somebody else's asset, okay? That kind of maturity does not exist in India. So it is okay to say that on paper, you have 15 months payback period, but wait till the material, the contract finishes and you have to get back material. Because typically, if you don't own the material, you will abuse it and you will use it the way you are. We have experienced that in India in the past. So we know the entire economics of the rental business.

Provides a detailed rationale for the company's decision to avoid direct rental business, citing market maturity and asset protection challenges in India.

Asked by Prateek Chaudhary

2 min read 5 chapters

Detailed narrative

Q3 FY26 Performance Overview and Scaffolding Recovery

Technocraft Industries reported a balanced Q3 FY26, with other income significantly boosting results, rising to INR 28 crores from INR 6 crores YoY due to mark-to-market gains on investments. The Scaffolding segment experienced a challenging period from July to November, leading to a revenue reduction of INR 180 crores and margins dropping to ~8%. However, demand showed a strong pickup from November, with December, January, and February sales returning to levels seen in 2024, indicating a potential recovery for the segment in the coming quarters.

Tariff Reductions and Margin Outlook for Drum Closures

The Drum Closures segment is poised for margin improvement following a reduction in US tariffs from 50% to 25%. Management clarified that the company previously absorbed 25% of these tariffs, and this absorbed portion will now go away, leading to an immediate positive effect on margins. In China, Drum Closure volumes are currently at 2 million sets per month and are projected to grow by 10-15% in FY27, contributing to the segment's overall positive outlook.

Aluminium Formwork (Mach One) Performance and Competition

The Aluminium Formwork (Mach One) business recorded sales of INR 200 crores in Q3 FY26 and INR 550 crores for the first nine months of FY26, with a full-year revenue target of INR 900 crores. While the segment typically operates at 10-15% margins, it saw a seasonal decline to 9.5% in Q3. The company acknowledges increased competition from new, less organized players in the domestic market but anticipates that these smaller players will filter out over the next 1-2 years, allowing Technocraft to maintain its focus on quality customers and profitability.

Engineering Services and Textile Segment Turnaround Efforts

The Engineering Services segment continues to be a strong growth driver, with management targeting a 25% year-on-year growth rate and stable margins of 15%. In the textile division, the yarn business is expected to improve in Q4 FY26, and the fabric business is nearing break-even. The garments business, currently operating at 60% capacity utilization and incurring losses, is undergoing restructuring with a target to increase utilization to 80-90% in the next 2-3 months, driven by anticipated orders from the US.

Capital Allocation and Debt Profile

Technocraft maintains a healthy capital structure, reporting cash and cash equivalents of INR 405 crores, with working capital against this at INR 390 crores. The consolidated gross debt stands at INR 600 crores, comprising INR 390 crores standalone and INR 200 crores from subsidiaries. The company has historically utilized buybacks for shareholder returns but has transitioned to dividends. Capacity expansion plans are on track, including doubling Scaffolding capacity and adding Phase 2 for extrusion and Mach One capacity by late 2026 or early 2027.

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