ISGEC - ISGEC Heavy Engineering Limited Share Price

Management's outlook for ISGEC Heavy Engineering Limited indicates a positive trajectory for both revenue and profitability in the upcoming periods. The management reported a standalone total income of INR 1,365 crores for Q3 FY '26, marking a 21% increase from INR 1,128 crores in Q3 FY '25, and a consolidated profit before tax of INR 150 crores, up 72% from INR 87 crores in the same quarter last year.

Key forward-looking points highlighted include:

1. Order Book Growth: Standalone orders booked in the December 2025 quarter were INR 1,426 crores, up from INR 1,290 crores in the previous year's quarter. The company holds a comfortable order book of INR 7,649 crores as of December 31, 2025, which includes export orders valued at INR 1,629 crores (21% of total orders).

2. Capacity Expansion: Two major expansion projects have received board approval. The expansion of the Machine Building division is projected to increase annual revenue by INR 600 crores (INR 225 crores from one expansion by July 2026 and INR 375 crores from another by July 2027).

3. Market Demand: There is an encouraging demand trend with a robust inquiry position, particularly in exports. The management anticipates that capital investments will further enhance the company's capabilities and market share.

4. Future Guidance: While the company maintains current revenue growth guidance of 7%-8% for this financial year, it has not revised these figures despite a strong performance in the first nine months, with the expectation of doing better than the current year in the next.

5. Commodity Pricing Risk Management: The management acknowledged rising commodity prices but stated that they are not adversely affected currently, with fixed-price contracts in place for the order book.

Overall, the management expresses an optimistic view regarding sustained growth, enhanced production efficiency, and market competitiveness through strategic investments and capacity expansions.

Q1: Regarding the strong margins in the Industrial Machinery and Manufacturing division, was there any one-off event? Can this be sustained?
Aditya Puri: The margins do fluctuate; 15.5% to 15% isn't a fixed standard. We aim to maintain double-digit margins consistently, but specific figures may vary quarter-to-quarter based on operational efficiencies and market conditions.

Q2: What is the peak revenue potential after completing the three capex projects?
Kishore Chatnani: We estimate peak revenue potential at approximately INR 3,600 to INR 3,700 crores once all investments are fully operational, which will be rolled out over the next years, with timelines extending to July 2027 and March 2028.

Q3: How is the current demand outlook across sectors, and are we seeing more positivity in client sectors?
Aditya Puri: We're optimistic about market demand. Our acceptability and market share are growing, leading us to capture more opportunities across various industries, including automotive and defense sectors.

Q4: What led to the significant improvement in margins for machinery equipment, especially for your subsidiary, Hitachi Zosen?
Aditya Puri: Margin improvements stem from enhanced efficiency and capacity utilization. While we hope for double-digit margins, quarter-to-quarter variations can occur due to changes in job specifics, cost adjustments, and operational efficiencies.

Q5: What does the order book look like for Hitachi Zosen currently?
Kishore Chatnani: As of December 31, 2025, Hitachi Zosen's order book stands at INR 946 crores, with order inflow during the past nine months totaling INR 601 crores.

Q6: With commodity prices rising, how do we mitigate pricing risks in our current order book?
Aditya Puri: Current projects aren't seeing adverse cost impacts yet, but significant increases could pose issues. We closely monitor costs and often include provisions for changes in commodity prices.

Q7: Can we anticipate higher order bookings from the private sector now that tariff clarity exists?
Kishore Chatnani: Yes, with tariff visibility, we expect improved order bookings from the private sector, particularly in automotive components, improving overall demand trends.

Q8: What guidance can you share regarding order inflow for the upcoming year?
Kishore Chatnani: While we won't specify numbers, we expect to perform better than this year based on current market trends and active order bookings.

Q9: Any updates on the sale of Cavite Biofuel?
Kishore Chatnani: The sale could not proceed due to the buyer's failure to finance. We are still actively seeking buyers and continue operations at the plant, which has reached 75% capacity utilization.

Q10: Do you have any guidance for revenue growth in FY '27?
Kishore Chatnani: On a standalone basis, we expect to grow revenue 8% to 9%. We'll maintain a cautious but upward trajectory based on order book strength and market conditions.