Ladies and gentlemen, good day and welcome to the Tega Industries Limited Q2 and H1 FY 2026 Earnings Conference Call. As a reminder, all participant lines 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 signal an operator by pressing *, then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Varun Jain from Dolat Capital for opening remarks. Thank you, and over to you, sir.
Yeah, good evening, everyone. So it's very delighted to welcome everyone on the Q2 and H1 FY 2026 Earnings Conference Call of Tega Industries. So today we are joined by the management, Mr. Mehul Mohanka, MD and Group CEO, Mr. Sharath Khaitan, the Chief Financial Officer, and Mr. Pratik Basu Roy, President, Product Management, Global Sales and Marketing. And management will deliver some opening remarks followed by the Q&A.
Good evening and a warm welcome to all the.
Hello.
Good evening and a warm welcome to all the participants on the call. I am joined this evening by Mr. Sourav Sen, CEO of Tega McNally, Mr. Pratik Basu Roy, President, Product Group and Sales, and Sharath Khaitan, our CFO. Thank you for joining us today. It's a pleasure to connect with our valued investors, analysts, and stakeholders. As we close the quarter-ended September 30th, 2025, Tega Industries remains focused on sustainable growth, leveraging our strengths to overcome market volatility and capture emerging opportunities. I'm pleased to share our performance highlights for the quarter and the first half of the fiscal year. For Q2, our consolidated revenues stood at INR 4,211 million, representing a 15% year-on-year growth, driven by strong demand and operational execution. For the first half, consolidated revenue reached INR 7,927 million, up 10% year-on-year, reflecting consistent momentum across our businesses. Our focus on operational efficiency continues to deliver results.
We reported an EBITDA of INR 849 million for quarter two and INR 1,561 million for H1, maintaining healthy margins of around 20%. I'm pleased to share the strong performance of our equipment business, which delivered revenue of INR 707 million, a robust 55% growth year-on-year compared to INR 456 million in the same period last year. Looking ahead, we remain confident and on track to achieve our FY 2026 earnings guidance, supported by strong fundamentals and strategic initiatives. As of September 30th, our order book stands at approximately INR 11,556 million, with INR 7,306 million scheduled for execution over the next 12 months. This gives us strong visibility into near-term revenues and reinforces confidence in our growth pipeline. Looking forward, we maintain a balanced outlook. While global macroeconomic headwinds remain, our diversified portfolio, resilient balance sheet, and customer-first approach equip us to navigate volatility and capture opportunities in key markets.
Our focus remains on delivering sustainable growth and creating long-term value for stakeholders. On the Molycop -Tega transaction, we are pleased to confirm that the process remains on track. We are progressing through regulatory approvals and execution of definitive documents. As planned, we will continue to keep our investors informed as key milestones are achieved and share timely updates on the developments. I want to thank all our employees for their unwavering commitment, our customers for their trust, and you, our investors, for your support. We are committed to delivering sustainable value and transparent communication. Now, I would like to hand over to Sharath, who will take you through the financial performance of the company.
Thank you, Mehul. A very warm welcome to everyone, and thank you once again for joining the earnings call for Q2 of FY 2026 and H1 of FY 2026 performance and results. The total group revenues for Q2 FY 2026 stood at INR 4,211 million, with an EBITDA of INR 849 million. That is an EBITDA margin of 20%. The group revenues for the same year as last year, that is Q2 of FY 2025, were at INR 3,658 million, with an EBITDA of INR 478 million and an EBITDA margin of 13%. In comparison to last year, the revenues improved by 15% on a quarter-to-quarter basis. During the current quarter-end reporting, the consumer business segment and the equipment business segment contributed 83% and 17% of the group's revenue from operations, respectively. The revenue from operations of the consumer business reported revenues of INR 3,389 million in Q2 of FY 2026, which is INR 3,094 million same period last year.
That is marginally up by INR 295 million or 10%. While we have witnessed some disruptions due to global economic and political developments, war, logistics, supply chain disruptions, sanctions, tariffs, etc., the overall business is unaffected, and the sales run robust. The revenue from operations of the equipment business witnessed a significant increase of INR 251 million, or 55%, with Q2 of FY 2026 revenues at INR 707 million, as against INR 456 million reported during the same period last year. We have maintained healthy gross margins in Q2 of approximately 59% at the group level, which is approximately 53% same period last year, in spite of raw material volatility, global uncertainties, and a higher share of the equipment segment. The order book for both the business segments, that is the consumable business and the equipment business, remains strong.
We have an order book of INR 11,556 million as of 30 September 2025, out of which executable orders within one year is INR 7,360. The total group revenues for H1 of FY 2026 stood at INR 7,927 million, with an EBITDA of INR 1,561 million. That is an EBITDA margin of 20%. For the similar period last year, that is H1 of FY 2025, the group revenues were at INR 7,184 million and an EBITDA of INR 1,237 million, with group EBITDA margins of approximately 17%. On a year-on-year basis, the total revenues have grown by approximately 10%. On an H1 basis, the gross margins have shown a significant improvement of 300 basis points, roughly from 56% to 59%, mainly on account of regional and product mix, specific execution of high-margin orders.
The equipment business saw considerable growth in the bottom line, with increased revenue and increased EBITDA margin from approximately 5% last year to the current levels of 14%. There has been considerable easing on transportation freight supply chain concerns, with shipment time freight costs coming down, with the availability of containers becoming a lot more easier than in the recent past. With the Middle East conflict easing, the Suez Canal is open for tariff traffic now, and the traffic is slowly showing improvement as the shipping companies are making a gradual return to the canal as stability in the Red Sea.
We are keeping a close watch over the situation and have also proactively taken actions to ensure raw material security by advanced placement of orders, forming alternate vendors and shipping routes, dispatch readiness in time, reduced manufacturing through time to offset the increased timeline, and packing all the shipments on a real-time basis. The risk related to the recently imposed tariffs by the U.S.A. is changing every day, and the derisking plan has been put in place to offset the impact, if any. The mainland U.S.A. accounts for roughly 2%-3% of our total revenues, and the impact of US tariffs globally is still unfolding, and we are keeping a close watch on the development. We have made manufacturing of products for the U.S.A. from alternate manufacturing locations, which are less affected countries like Chile.
The Chile CapEx project is on track with the project in full action, and we shall have the same ready for commercial production by Q2 of FY 2027. It may be noted that no sales shall be impacted in the present period, as we have put up alternate plans at Chile, which we shall address any capacity limitations to meet the revenue growth. Thank you very much for your time, and the forum is now open to questions you may have.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on the touch-tone phone. If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. The first question comes from the line of Chirag from Centrum Broking. Please go ahead.
Yeah, thank you. So sir, firstly, on the consumable segment, so in H1, we have grown by around 3% with a margin of around 16.5%. So normally, we aim to grow annually by 15% and have an annualized margin of 22%-23%. So based on the delivery schedules, etc., is our H2 looking strong enough to meet these goals, or do we feel that FY 2026 could be slightly lower?
Chirag, generally, if you see traditionally, our H2 is always heavier than H1. And if you see the Q2 results over Q1 and Q2 of this year versus Q2 of last year, you will find significant improvement in the revenues and the EBITDA margin. We are committed to the full-year estimates, and we hold on to our guidance as we have given over. These are only reasons for spillover to the subsequent periods.
Okay, okay, sir. And sir, on the Chile CapEx, in your opening remarks, the words were not very clear. So I mean, you mentioned the updated timelines of Chile project commissioning and what?
In last investor call also, we had said that it will be by September of 2026, and that is what I have mentioned in my opening remarks, that is Q2 of FY 2027.
Okay, so it remains on track for September 2026?
Yeah, it remains on track. Yeah.
Okay, okay, sir. Any qualitative remarks you mentioned regarding easing of freight transportation, etc., in terms of overall global demand, competitive intensity, etc., any concerns there?
No concerns as of now, Chirag.
Okay, and sir, last thing on our Molycop acquisition. So we have done INR 2,000 crore worth of raise. So I mean, henceforth, for Molycop financing, do we expect further INR 1,000 crore of debt on the Tega books, which were originally planned? So any timeline on that and any further capital raise likely beyond this INR 2,000 crore?
Yeah, this is Mehul. We will be doing another small equity raise of about anywhere between INR 400-INR 500 crores to complete the entire equity raise. Because if you remember, in our presentation also, we mentioned that the total equity requirement is INR 2,300. So we are about INR 300-INR 400 crores short. So we will be soon raising the balance. I'm not yet sure whether we'll do it in the form of QIP or pref allotment, but that's what we're going to be doing. And the debt part of it is INR 1,000. As of now, the debt commitment is closed, but we may revisit some of that to see if we really require INR 1,000 or a number smaller than that.
Okay. So another timeline of 31st December, 1st January, remains as it is as far as your expectation of approval, etc., is concerned?
We're expecting end December, but it may spill over to January because the timelines when it comes to regulatory approvals is not really in our control, but I'm just sharing with you what has been given to us as guidance by our counsel's.
Okay. Sure, sir. Yeah, thanks. Those were my questions. Thank you.
Thank you. Participants wishing to ask questions may press * and 1. The next question comes from the line of Varun Jain from Dolat Capital. Please go ahead.
Yeah, hi sir. So at the start of the year, I think you had guided equipment business revenue growth of 25%, and now it seems we're massively overshooting, more than doubling that in FY 2026. So sir, what happened? Any reason why such a bumper growth has come?
So it has been backed by a strong order book in the equipment business, as well as the execution has been strong. So we've been able to convert a substantial portion of the order book into revenue in the two quarters. So we are expecting a robust growth in the equipment business. We have guided 25%, but we think that we would be achieving beyond that by the end of the year.
That is visible. So this high run rate of 65%, will this continue in H2 also for equipment business?
We will be meeting our guidance and be over the guidance what we have given, but it will not be a 65% increase year on year. But definitely, it will be 25% plus what we have committed.
Okay, okay. And sir, for this same equipment business, company had earlier guided a margin band of 12%-13% for FY 2023. But in this quarter, Q2, the margins are very high, close to 80%-90%. So sir, would you like to revise your guidance on this front, or what is the sustainable margin in this business, and why were the margins so high in this quarter?
In the equipment business, generally, we work with a gross margin of anything between 40%-50% and an EBITDA margin of roughly 12%-13%. We have improved our EBITDA margins to about 14% this quarter and on a half-year basis. And this is going to sustain a 14% EBITDA margin. And it's been a reason of the mix and the certain high-value orders, high-contribution margin orders, which we have been able to get in the current period.
Okay, and this is supposed to continue this range of 14%?
Yeah. Yeah, so when we had acquired the business, it was around 5% EBITDA margin through process improvement, setting up the processes, having alignment at both McNally and Tega. We are now seeing the fruits of what we had borne at that point of time, and we have been able to maintain a healthy margin of 14% now.
Okay. And sir, my last question was on DynaPrime. So what was your DynaPrime share for Q2 and for H1 FY 2026? And what was the growth also for both these periods?
Sir, we don't get the breakup of DynaPrime due to being a sensitive information. But what I can comment to you is that the growth of DynaPrime has been anything above 20%, not above.
20% above in both H1 and in Q2?
You should see our business in an H1 because quarter on quarter, it's difficult to evaluate our business because of the spillover, complexity, etc. So if you see on a full-year basis, you will find the numbers we are telling you.
Okay, sir. Got it. Okay, sir. Thank you and all the best.
Thank you.
Thank you. Participants wishing to ask questions, you may press * and 1. The next question comes from the line of Mayank Bhandari from AM Securities. Please go ahead.
Sir, just checking one thing on the equipment side. NMDC order execution is started? Last time, I think you mentioned that it is still the order, the execution order is not received yet.
No, we have received the NMDC order, and we have started the execution of the NMDC order. So the income will be booked both in FY 2026 and FY 2027 for the particular order.
The 25% growth guidance you are giving, will it include the execution of NMDC order in the equipment business?
Yes, it will include the NMDC revenue as well.
And so if I were to understand that it was a large order of INR 120 crore, so it's like the major contribution will come in 27?
It will be spillover between the two financial years. Difficult to comment on exact numbers at this point of time, depending on the deliveries, what the customer expects at this side and at the timing of that. But what we remain committed is that Tega McNally business will definitely grow 25% plus and above over last year.
And, sir, we had also been talking about spillovers. Like last in Q4, we said some of the deferment of revenues will be in Q1. Q1 again, it was in Q2. So the 9%-10% growth in this quarter in consumables, it includes some of the deferred revenues, is it?
It's a spillover, something from last quarter coming to this quarter, this quarter going on to the next quarter. It will always happen like that, Manish.
Manish, just to be clear, we should look at the revenues, not just the revenue, but in the broader picture of revenues plus pending order, because that's the business in hand. It will depend on the timelines of the shutdown of your customers when you're delivering, as you mentioned, because that's when the revenue recognition takes place, either on the dispatch date or on execution date, right? So it has to be in tandem with both the revenues as well as the pending orders. So it's a continuous process. So we have got orders in Q2, which will again get executed in Q3, Q4, and also in FY 2027.
So I'm just checking. Chile CapEx, I can see on the balance sheet CapEx for the first half is very low. So we still have maintained, and I think last call you mentioned $200 million for Chile alone and maintenance CapEx INR 50 crore and some CapEx management in the hedge. So this year, CapEx expectation would be how much then?
Manish, it is not $200 million for this thing. The overall CapEx what we have committed is about in the range of $30-$35 million. If you see for Chile, a significant part has been spent on land, is land in Chile, and is in certain capital advances which have been given. So overall, if you see, we have spent a significant amount of cash flow, which is anything between 25%-30% of my total project cost as of now, and as I told earlier during my starting of the call, the Chile CapEx project is on track, and we expect the commercial production to happen by September 26. That is Q2 of FY 2027.
I think this year, FY 2026, what would be your total CapEx?
So it will be the total CapEx will be a function of our Chile CapEx, what has been capitalized. So it will be, I doubt till the entire factory gets commercial production, I'll be able to capitalize that in the books. But you will see the amount in land and CWIP to that account. The routine CapEx what we have is about 50 crore per year, which includes our maintenance CapEx as well. That is what you can see on a capitalized basis. Manish, you are there?
Mr.
Hello?
Yeah. Deepak.
Hello?
Yeah, you're in?
Yes, sir, you are.
Yeah, yeah. So sir, most of my questions have been answered. I just had one bookkeeping question. So if I look at our depreciation expense, let's say in Q3 and Q4 of FY 2025, it was roughly around INR 26 crore. Now it has come down to around INR 22-23 crore. So I want to understand why there is a deceleration in depreciation expense and what would be the quarterly run rate, let's say, going forward into this year?
Since what we have is in the range of about INR 45-50 crore, what we have told, the depreciation expenses account assets deployed at various manufacturing facilities and installation sites as well, which yield benefits to us beyond one accounting period. And the reduction of the same is mainly due to retirement of assets which have completed their useful life. So our CapEx, which includes growth CapEx, sustenance CapEx, and specially designed self-constructed assets deployed at certain sites. And on a conservative basis, the same are depreciated over a shorter lifespan if required.
Okay. Then this INR 22-24 crore run rate should continue going forward also, at least for this year.
Yeah, for this year, it should continue. Once my capitalization happens for the Chile project and if the edge debottlenecking project gets capitalized, then you will see a higher depreciation on these counts. But by that time, certain assets must have been retired, so that will also partially offset the increase in depreciation.
So the current participant seems to have disconnected. Participants who wish to ask questions may press * and 1. The next question comes from the line of Devesh from SPL Family Office. Please go ahead.
Hi. I want to confirm the result. I have questions around the Molycop acquisition.
Hello.
Hello.
Yeah, please go ahead. We can hear you. Yeah, it's a little hazy, but we can still hear you.
Yeah, yeah, yeah.
There's a lot of background noise which is coming.
Yeah, yeah. I'm actually sorry for that. After acquiring the Molycop, how will we have a continuous return partnership between our Dolat and between our Sayaji and CapEx?
Sir, we have not been able to hear you. Can you please repeat your question? There's a lot of background noise from your end.
I'm extremely sorry for that. After adjourning the Molycop, how will the capital allocation partnership between leveraging our books or main CapEx? Do you have any guidance on that?
Sir, we will be looking at. We don't have. I can't give you a clear guidance at this juncture. We will be seeing the businesses and run them at separate verticals for both the Tega consumables, the Tega equipment, and the Molycop as such.
Okay. And the second question, can you give us any rough guidance about our FY 2027?
I'm not being able to hear you again.
Can you give us any guidance on our FY 2027 performance post-acquisition?
I would not like to comment anything on the acquisition at this juncture. What I can assure you is that for FY 2026, we stand by our guidance given that the consumer business will grow at about 15%, and the equipment business shall grow at anything up 25% and not above.
Okay. I do not have any further questions. Sorry.
Thank you. Participants who wish to ask questions may press * and 1. I repeat, participants who wish to ask their questions may press * and 1 on their touch-tone phone. The next question comes from the line of Varun Jain from Dolat Capital. Please go ahead.
Yeah, I just have a small follow-up. So sir, this equipment business, you had, I think, earlier guided that by FY 2030, you expected to reach a 1,000 CR run rate, right? So do you see that happening sooner than that with this kind of growth? We would be very happy to have a sooner growth to what you are saying. But to be on a conservative side, we will still maintain our stance that in the next three to four years, we will have McNally equipment business touching 1,000 crore. Okay. And on this Molycop sir, so sir, by which quarter do you expect the transaction to close and then we get the consolidated numbers in the reporting?
Like we told earlier in the call, we expect the transaction to close anything between December or January.
Quarter four of this financial year, you will have the first consolidation for Molycop into Tega Industries.
Okay, okay. And from there onwards, the cross-sell benefits will start also appearing with the mill liner and grinding media and all from FY 2027.
These are all complementary products, and we expect certain revenue synergies, cost synergies coming into this acquisition. We will keep you informed. We have given a detailed presentation on those things which is available on our website. We'll keep the investors posted of subsequent developments, what happens in this regard.
Okay, sir. Okay. That's all from me. Thank you, and all the best.
Thank you. Participants who wish to ask their questions may press * and 1. I repeat, as a reminder, participants who wish to ask their questions may press * and 1 on their touch-tone phone. As there are no further questions from the participants, I now hand the conference over to the management of Tega Industries for closing comments. Please go ahead.
Thank you once again for taking out your time and coming to our investor call. We'll keep you posted of any subsequent developments. Happy to interact and take any subsequent questions you may have. You can reach out to our investor department, and we will be happy to address in case you have any further questions. Thank you so much.
Thank you. On behalf of Tega Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.