Ladies and gentlemen, good day and welcome to the Harsha Engineers International Limited Conference Call. As a reminder, all participant lists will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please email an operator or operations staff at zero on your touch-tone phone. I now hand the conference over to Mr. Vishal Rangwala, CEO of the company. Thank you, and over to you, Mr. Vishal Rangwala, CEO of the company.
Thank you. I would like to welcome you all to our Quarter One, Financial 2026 Investor Call. As we have been doing in the past, Maulik, our CFO, will take you through some numbers in a little more detail. I'm presuming that you've all had a chance to look at the numbers already. Let me start with the outset. Let me give you some heads up on certain key issues before going into specifics of our quarter one performance. First and foremost, I'm happy to share that we have started getting positive signs of improvement in industrial demand in Europe. This is partly reflected in one of the highest sales reported by Harsha Romania in the last several quarters, in quarter one of 2026. We have also started seeing a positive improvement in exports from India, particularly to Europe.
Another point to this aspect is the fact that, again, in quarter one of 2026, for the first time after several quarters, we have reported a significant improvement in sales of large-sized cages . We have also started seeing a good inflow of orders for large-sized cages in India. This makes us cautiously optimistic, though we still want to wait and see at least for one or two quarters more before we can positively conclude that this is a sustainable trend. I believe that this growth in Europe is coming from industrial demand, and we are still not witnessing any significant improvement in demand from the wind market. Nevertheless, this is surely a welcome release, and I'm hopeful that we should be able to witness a better scenario going forward in Europe.
If I talk about the India engineering business, we are quite satisfied to report a reasonably good performance of India engineering business in quarter one of 2026, which is almost at par with performance that we have reported in quarter four of 2025. This is in spite of the fact that our India subsidiary, Harsha Advantek, where we have commissioned the greenfield facility phase I in May 2025, has reported a negative bottom line. This is due to the impact of higher overheads and also the charge of depreciation and interest post-commissioning without any significant increase in revenue, which will eventually start flowing over the next few quarters. We have also started getting signs of overall improvement in industrial demand in India, though the auto sector continues to remain sluggish.
This also includes regular orders that we have started receiving from our customers' new facilities commissioned in India, which could be partially attributed to their increased sales from these facilities as part of their strategy to realign their overall supply chain for servicing their global requirements. Further, we continue to witness a strong gap in our booking business. Thus, we have also recently announced that we have entered into a long-term contract with one of our existing key customers for the manufacture or supply of bookings. This contract, what we are expecting is peak annual sales to be around INR 117 crore, and which can take about two to three years to fully realize.
While some incremental sales related to this contract will come in in the fourth quarter of the current financial year, I believe that as compared to FY 2025, where booking products reported a revenue of about INR 100 crore, this product should grow handsomely at least 30% in the current financial year due to strong tailwinds that we are witnessing in this segment. Similarly, as indicated earlier, I'm also happy to report that we have started witnessing good order flow in large-sized cages , which again has grown handsomely in quarter one of 2026 over quarter one of 2025. However, sales of stamping components have remained more or less flat in quarter one. Lastly, our effort to increase sales to Japan-based customers continues with the same rigor, though it has not yet translated into growth numbers.
However, we continue to remain very confident about our potential of increasing the sales in this segment, though it may take a little longer time than we are anticipating. In our previous call, we had indicated that sales from India under the new major sourcing contract for cages concluded by us with this large customer, and we were expecting some revenue to come in in the second half of this financial year. However, we are working with the customer on this, and we are building inventory, and it would look like that impact may be postponed to or pushed back to the next financial year in terms of realizing that revenue. In spite of that, we are feeling quite bullish for our second half of 2026.
Sales should be much stronger than the first half because of a combination of other favorable factors, what we have talked earlier. As I mentioned in the opening portion of my presentation, Harsha Romania has shown a good top-line growth in quarter one of 2026. However, the sales mix in favor of cages has still not improved. We are in touch with our key customers as well as other customers for increasing sales of cages. From the indication available from our customers, there are some positives coming our way about increasing their purchases for cages as well as some additional semi-finished plastics. We are hopeful of concluding something in a positive way in the coming quarters, and we remain positively cautious of that.
I am also happy to inform that China continues its positive performance in the financial year 2026 with a decent top line as well as bottom line growth. That is against overall loss of around INR 17 crore on a combined basis for Romania plus China level in FY 2025. We are feeling confident that this should come down considerably in the current financial year and maybe to the tune of roughly 50% of FY 2025. I will be able to give more clarity, particularly for Romania, hopefully by the end of quarter two, maybe early quarter three in this financial year. Lastly, our position on the solar business remains the same, and it continues to operate more or less in auto mode with very little top management involvement. To conclude, I wish to reiterate overall targets for FY 2026. This is both.
It is to expect at least a low teens top line growth in our India engineering business and a higher single-digit top line growth on a consolidated basis. It will be evident there should be a better growth in profitability as compared to, you know, adjusted in the planned path that we have achieved in FY 2025. I would like to really express my sincere thanks to all of you for continued trust and confidence and hope to share some better news in the coming quarters. Now, I hand it over to Maulik to talk more about numbers.
Thank you, Vishal, for the business overview. Hello everyone and good afternoon. For the quarter ended June 2025, our engineering business had consolidated near and achieved a top line of INR 349 crore against INR 330 crore in the immediate previous quarter and INR 327 crore in the same quarter last year. We have achieved consolidated EBITDA for engineering business at INR 65.2 crore for this quarter against the reported EBITDA of INR 38.3 crore and adjusted EBITDA of INR 66 crore due to one-off in the last quarter and INR 62.4 crore in the last year's same quarter. For our Harsha Advantek greenfield site, Bhayla has commissioned the commercialization and production. However, since the plant has not scaled up, HEIL has given a negative EBITDA and PAT, mainly due to fixed overheads as well as interest and depreciation charges.
Solar division has done a top line of INR 16.4 crore with EBITDA of INR 0.9 crore in the first quarter of FY 2026, and solar divisions continue to have a good order level in Gujarat. Overall, the working capital cycle at the consolidated level remains at 139 days, and the company has incurred a CapEx of INR 44 crore in the first quarter, mainly towards the Bhayla site. With this brief note on the financial numbers, I hand it over to the operator for taking the Q&A one by one. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Harshit Patel from Equirus Securities. Please go ahead.
Thank you very much for the opportunity, sir. My first question is on our new greenfield plant. Since we have already commenced the production activity, could you shed some color on how much revenue we have booked in the first quarter from this facility and the kind of products we have produced? At what scale will we be able to achieve EBITDA breakeven as many overheads initially would have already come into picture, as you have already explained?
Sure. As you have observed from our public announcements, commercialization happened in the last week of this June, and hence, no major sales happened from the new greenfield site at that initial sales of INR 2 lakh . Yes, we already have a rented site in our subsidiary, Harsha Advantek. The total sales of Harsha Advantek in the first quarter was INR 1.65 crore. Now, on the EBITDA front, as we have discussed in the past, this new greenfield site will have booking business, large-sized bearing cages, and stamping business over there. I will not be able to comment specifically on the breakeven point, but we expect by this year it will be positive turnaround. That is our expectation, and we will update you more once we have a better scale-up available in the plant.
Understood. Secondly, on the CapEx front, I think we have already incurred a major amount of CapEx in FY 2025 towards this facility. As you have explained, we have incurred another INR 44 crore in this. What is the remaining CapEx that we will do both in FY 2026 as well as FY 2027?
From an engineering perspective that we had first, and maybe Vishal can add later, our major focus is there are three some CapEx which are in pipeline, order but partly paid. Those CapEx will continue to be incurred in this year for incremental line setup at our subsidiary, Bhayla, mainly on the stamping and large-sized bearing cages requirement. Apart from that, we will continue to have some incremental CapEx in our existing both sites for the motor net machines. Those are the plants in India.
I think what I understand or what I believe, what we have shared, that now we will, over two and a half, three years, we will invest about INR 300 crore in this site. We have now already invested about INR 200 crore, a little bit more than that already in this. We are expecting at least about INR 100 crore over the next year and a half or so. This is about the estimate we have right now.
Understood. Perfect. Thank you very much for answering my questions. I'll come back with the questions.
Thank you.
The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Hi, Sir. Thanks for taking my question. First question is on the booking side. You did allude to some INR 25 crore sales for Q1. I just wanted to understand the 35% growth, which you said will be on the core, the base bushings business, not including the new contract which you have, right?
Yeah, we have shared about 30% growth, maybe a little bit plus over the last year, last financial year for this financial year. We may see some amount from the new contract you're trying, but not much significant out of it.
Understood. For the new contract which you got and you already invested in bushings, is any new CapEx required from the current factories when the new contract will start, when you start having revenues for bushing from the new MNC customer? I just wanted to understand, will there be more CapEx particular to bushings in the coming time since we already have this contract again?
Yes, we anticipate that we will have to. We have already invested, considering the situation of this additional contract and ongoing growing volume we have in the bushing area. Specifically in reference to this contract, when the full maturity of this contract takes place in about two years, a little bit more, we expect that for this growing revenue, we will have to invest something in that. I don't have a very accurate number how much at this point in time, but we are expecting that we will have to invest further to even fulfill this contract. That will come in a little bit later towards maybe the end of the current financial year, more likely early next financial year.
Understood. Second question,
marginalized the post, only marginal amounts.
Understood.
Yeah. Second question on Romania, since the situation is fluid with respect to the trades and the geopolitics, just wanted to understand, are we also sensing some impact of all of this, what is happening globally to our business? What led to the Romania? I think last quarter, I recollect the offtake were completely impacted. Is it that the customers came back, or you're trying to diversify also from Romania since the revenue was not coming there? Is there some filler there, plus any impact of the trade war which is happening here?
Yeah. Romania, we are trying to diversify revenue base from semi-finished to tail. We are not yet fully successful. We see some traction there. However, what we have seen growth in Romania right now is, you know, for all the portfolio we were supplying right now, which includes semi-finished and some amount of cage as well. We are seeing overall industrial slightly improve in the European region, which is positively impacting Romania in general. We will continue to work with our customer on diversifying the portfolio, adding more cages, and we are building up for that. On the trade impact, for us, U.S., there is a lot of uncertainty there. We see U.S. demand softening already this financial year as compared to the previous year. It doesn't consist more than about, it's about 10% of our overall demand for U.S.
Till right now, we don't see a major impact or a big decision by a customer on the long-term sourcing strategy. Once things settle down, maybe the customer will start taking some decisions. We may get some impact of it as the trade barriers remain high. We are also closely watching the situation, and every day there is new information on this. We are trying to figure out as we speak.
Just to add, Vishal, I think the trade barriers had nothing to do really with the Romania standalone sales per se. It was more to do with the European environment, which seems to be improving as Vishal mentioned.
Understood. Thank you, sir.
Yeah, yeah.
Thank you. The next question is from the line of Samarth Khandelwal from ICICI Securities. Please go ahead.
Hello. My questions have been answered. Thank you.
Thank you. The next question is from the line of Parikshit Gujrati from Niveshaay. Please go ahead.
Hello. Sorry to interrupt. I was kind of testing on that. I'm expecting to get the revenue comes from the bushing side. What are the plans for the future and how much in the future the bushing segment will continue to increase?
Your voice was not pretty clear, Parikshit. What we heard is you intend to know the bushing future, right?
Yes. My question was what is the contribution of the bushing segment now and what are the plans for the future? How much will the bushing segment contribute to the revenue?
Right now, bushings contribute about INR 100 crore in the last financial year to the revenue. We believe that we are on a good growth trajectory there, and over the next two to three years, we believe that it would be at least INR 200 crore plus revenue.
What I was asking you for is percentage.
Percentage will vary, no?
It can be difficult.
Yeah, its quite a percentages has been varying because as the top line grows overall, but bushing on a standalone basis can easily be INR 200 crore, as Vishal said, in the next two to three years.
Okay, thank you so much, sir.
Thanks.
Thank you.
The next question is from the line of Devesh Kayal from Monarch AIF. Please go ahead.
Yeah. Vishal, if you build a new order of INR 117 crore, is that a part of the existing INR 100 crore which we did last year, or is this a completely new order over and above this INR 100 crore?
This is in a way a new order, but some of the products within the portfolio of this new order may replace some of the existing products. There might be a little bit of overlap. Our current estimate is about 20% or so. It's completely difficult to say how the customer keeps the older product live versus newer product and so on and so forth. There might be minor overlap there.
Understood. Sir, on the domestic engineering side, there's a different kind of compute revenue to it. Basically, revenue from these things which happened in India , or some export out of India, but a different kind of compute. Can you give some more color on that?
Can you? I have observed some breakage in the voice. You are asking about engineering.
Domestic, yes.
Domestic.
Engineering sales, domestic in India.
Domestic growth is low this quarter.
Yeah. I think for us, usually, it's the fourth quarter when it comes to domestic. Fourth quarter is usually the high, and there is a certain amount of prejudice to this domestic growth. We expect we are seeing still positive signs from our customer. Obviously, there is a little bit of softening on the automotive side, which was last year. We think that there is a little bit of cyclicity to this, and domestic should continue to grow at a good, healthy rate. We are seeing, if I look at overall, we are seeing good growth in domestic. I think this quarter, you might be right that we are not seeing as good growth, but we expect that will come back. You know, domestic, as I mentioned, driven by some, you know, automotive fourth quarter.
Automotive, we are expecting it to be a little better considering Diwali kind of situation and all that. Those are, you know, when it comes to domestic, fourth quarter and Diwali are the highlight or the key points, and we expect that to return.
Yeah, that's our comment.
Thank you. The next question is from the line of Nikunj Doshi from Bay Capital. Please go ahead.
Thanks for the opportunity. Just wanted to check, suppose U.S. imposes very high penalty and tariffs. Is there any possibility of routing export to Romania subsidiary? Because we have operations there. Since India can export to Romania, and from there, we can stick to U.S.
In Romania, we don't have any facility for our steel cages. There is a facility for brass cage manufacturing there. Maybe we can look at, if once we get a better clarity, we can look at Romania supplying for U.S.
This is routing through Romania, not supplying through.
No, no.
Not producing, routing through, dealing through Romania.
No, we can't. I tell you, we have to also establish that it is produced there.
Just tell me you can do that. Just tell me you can do that.
No, no. I'll clarify two things here from whatever little I've gathered in various other companies also which we are tracking. One, whenever there is a sector-specific duty imposed, say under Section 232, there is additional 25% or even that penalty threat generally will not be there because it's already imposed earlier in February, correct? Secondly, wherever you want to do a sourcing, that country of origin is very important. You just have to establish that it is manufactured in Europe. As Vishal said, our series type cages' capacity is high. I think let's not worry too much about it. Let's wait for a few more days. This should definitely settle down. As we speak, our sales to the U.S. today are also just around 10%. It's not a big, I would say, it doesn't move the needle too much.
Okay. Yeah. Regarding this write-back, what we have taken for Romania investment last quarter, now Romania is doing well. Is there any possibility of writing it back?
The entire bank, you mean?
Yeah, entire bank.
Maulik bhai, if you can.
I just started thinking to see that has been taken care of when we write it up. The valuation was taken care of by anticipating the growth and the recovery. We have not write up 100%. In terms of fair market valuation, based on the latest data.
Okay. Okay. Yeah.
We have to wait for a very clear trend to impact.
Okay. Yeah. Thank you. Thank you so much.
Thank you.
Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead.
Yes, sir. Thanks for taking the question. Just wanted to know, when I look at the subsidiary's performance for FY 2025, I understand FY 2025 was a weak year, especially for the European market. Looking at that, probably, we clocked in a loss of around INR 13.4 crore odd in the subsidiaries that will basically be between Romania and China. Right now, I understand you told me that you told us that you have to see for one to two quarters more. Are we kind of like probably have some more positive confidence that at least these losses will get reduced in 2026? Just some color on that would be helpful. How much? INR 13.4 crore loss last year.
Yeah. Jason, as I mentioned, we are fairly confident that we will reduce this from that INR 15-odd crore bottom line number for combined China and Romania. We are working towards at least cutting it in half. It depends on a lot of factors, how the markets are, and some of the issues we are facing, how they perform, some of the new orders, what we are working on, how they are realized, and so on. Right now, we are working with at least cutting it into half or somewhere around that number.
Yeah.
Okay, sir. Sir, just also wanted to know, I mean, in terms of you had spoken last time also about restructuring operations and all this in the Romanian facility. All of that has been done. Anything else more to do in terms of, you know, making the operations more lean and other things? Or that has all been completed?
No, we have just initiated that as a project last quarter. We are continuing that, and that will take at least about six to eight months further to really fully realize all the work here, you know, results of all the work on the cautionary side.
Okay. Sir, I also wanted to know, I mean, in terms of our current capacity utilization in terms of our facilities here in India, what will be the capacity utilization of our facilities?
It is a very difficult question because we have a subsegment, micro, I mean, capacity going on. There is some amount of fungibility, but for the most part, it is difficult. There is a segment to segment different situation going on. Overall, I would say that we have, if I just talk about last quarter, I would say that we would have a 65%- 70% range overall utilization. There will be pockets which would have high utilization and pockets which would have lower. We have to work with various things within that. That's the general thing.
Okay.
This is our talking to India, and then maybe Romania being a little different, you know, very low utilization. China would be again more like a 60%.
Just to clarify, this is excluding Advantek, huh?
Yes, sir.
Yeah, yeah.
Yes, yes, yes.
Yeah. Actually, I was coming from the point that, you know, we built up, I mean, we had a greenfield capacity, which is Advantek one. I just wanted to know, if you have 65%- 70%, was there not more room for expanding there only? The thing is, why you had to put up a greenfield capacity? What is basically the idea behind that? Are we seeing more future growth coming through, and you know, we want to get ready for that? What exactly is it?
It's a combination of various things. One, to begin with, we don't think that we can optimally utilize more than 80% when it comes to capacity because of ups and lows of demand and the product mix and the complexity of engineering this product line and business. That being said, also further, what is happening is that we are seeing significant growth on the bushing side. That needed additional capacity and a space to expand because we have actually run out of, initially, the booking was expanded within the existing facility of brass cages. Now we have, since we have added the additional facility in the third site. Similarly, for last site stages, we are seeing long-term growth. We have received some of the orders, some future orders, some product development and discussion going on with customers.
A combination of all that, again, is another pocket where we thought we needed space, I mean, capacity and then physical infrastructure to put it there because we ran out of space here. It was a combination of all that. Plus, again, still we believe about the long-term future growth of some of our product line on the industrial side, large-sized cages , and bushing as well as stamping. All three of them are what we are adding capacity specifically in, and they are already added as our third site.
Right. Okay. Okay. Sir, at so same thing, I mean, in terms of the greenfield CapEx, so bushing, large-sized bearing cages, and stamping are the main products going to be produced in Advantek. Is that right?
Right. That's the plan.
In the current stage, yes.
Yeah, yeah.
Yeah, just wanted to ask, do we have at that same site, if we, let's say, in the future want to add more engineering products, do we have more land available? Do we have more land to expand? If, let's say, there's another product you want to add, do we have more land available at the Bhayla facility?
Yeah. We have about 55%, 60% land free at Bhayla site as of today. Further, even on the buildings we have built, when fully operational by next year, we still believe that on the building space, also there will be about 20% odd space left for us to expand without adding to the infrastructure spend. All those are advantages of, you know, making a big investment there in Bhayla front, but then utilization or real, real utilization will come over a period of time.
Sure, sure. Of course, if you see opportunity, there is more scope for adding in that for 2024. Is that it?
Yes, yes, yes.
Okay. That was my point. Sir, just lastly, one thing. The INR 117 crore contract, if I heard it right, Q4 will see some revenues coming from that, and it will take two to three years for basically to touch that INR 117 crore revenue. Is that right?
Yes, incremental, yes.
Yeah, yeah. Only Q4 will have some incremental revenues, but it will take two to three years for it to clean up to the INR 117 crore target, right?
Yes. Yes.
Okay. Okay. Okay, sir. Okay. Those were all my questions. Thank you so much for answering.
Thanks.
Thank you. I remind all the participants you may press star and one to ask a question. The next question is from the line of Prathmesh Salunkhe from PL Capital. Please go ahead.
Hi, sir. Thank you so much for the opportunity. My question was on bearing cages. I understand we are trying to expand the bearing cages footprint in Romania. I just wanted to know what is the revenue mix in Romania right now of the bearing cages? Also, in India engineering, what sort of contribution did the bearing cages make in terms of revenue?
Romania, as you might be aware, Prathmesh, we have two major categories of products. One is a semi-finished casting and another is a cage. Cage is hardly 20% of our top line.
In Romania?
In Romania, 80% is a cage.
In Romania.
80% is a semi-finished casting. In India, you can say that almost 70%- 75% is a cage. Bearing cages is there.
I meant in the present spot, sir.
Oh, yes, yes, Vishal. Sorry. Maulik, one clarification. In India, we don't do semi-finished castings at all. Practically, no.
Yeah, in India, I was asking for bearing cages.
Bearing cages is around. Out of our total revenue in India, 70%- 75% is the bearing cages. Balance are bookings and the stamping.
Exactly.
Same Q1 FY 2026?
Similar. Almost.
Okay. Thank you so much for that clarification.
Thank you. I remind all the participants you may press star and one to ask a question. As there are no further questions from the participants, I now hand the conference over to Mr. Vishal Rangwala for closing comments.
Yes, thank you very much to all of you for participating and joining this call. Wishing you a very good evening and hope to talk to you next time.
Thank you.
Thank you very much.
Thank you.
On behalf of Harsha Engineers International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect.