Harsha Engineers International Ltd (HARSHA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, the conference call for Harsha Engineers International Limited will begin in the next couple of minutes. Thank you for your patience and please continue to stay connected.
Moderator: Ladies and gentlemen, good day and welcome to the Harsha Engineers International Limited 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Rangwala, CEO of the company. Thank you, and over to you, sir.
Vishal Rangwala (Harsha Engineers International Ltd): Hi, good evening to all of you, and welcome to Harsha Engineers' Q2 H1 FY 2027 post-result update call. As per our normal practice, I will just talk through, you know, how we look at this numbers, and you know, what we what are our thoughts, and then also, Mr. Maulik Jasani will take us to more details of the numbers. However, I'm assuming that you would have had a chance to go through the numbers and the presentation. So, if I have to summarize our quarter two performance in one sentence, I will say it was a business as usual and largely on track. However, let me touch bases on our on our key business vertical, starting with our India engineering business comprising of you know, Harsha Engineers International, as well as our wholly owned subsidiary, Harsha Engineers Advantek. And as you you will see from the numbers, we have witnessed a strong top-line growth over you know, 24% in Q2, with an equally strong 23% in first half on YoY basis. This growth has come more or less from almost all the key verticals, including cages, bushings, as well as stampings. Talking of cages, I am happy to state that we have witnessed a decent demand traction both from industrial as well as automotive segment in India. Similarly, on the export front, we have witnessed continued strong demand coming largely in industrial segment from key geographies in of Europe, US, as well as Japan and other countries. Again, as announced earlier, the progress on the new you know, re-sourcing, outsourcing project that we had announced last year is quite good, and we are ex- we expect the commercial sales under this project to commence sometime sometime in Q3 and Q4 in the current financial year. And
Vishal Rangwala (Harsha Engineers International Ltd): real visibility will start coming in in quarter four. Although the sales relating to this project will start in a gradual way, at peak level, the sales can reach a run rate of around 75 crore per year. And also we are working on a couple of other resourcing outsourcing project from Europe and North America market. The first project is relatively small, but it is at a fairly advanced stage of development and we expect the commercial sale to also start somewhere in financial year 27-28. And second project where we have just commenced initial development and which could start in somewhere financial year 28-29. Again, under the cage category, we have a strong demand visibility for large size cages and we expect a significant ramp-up in sales in this segment in second half of financial year 2027 which should result into an overall annual growth of at least, you know, 20% in the current financial year in this segment. Similarly, we have started witnessing a decent growth in sales of cages to our Japan-based customer and though it's slow, it should definitely pick up speed in coming quarters which gives us confidence of our, you know, 10 to 15% annual growth in this segment. Lastly, as I said, export from India have remained quite strong with our H1 exports at around 280 crore against annual export of 480 crore achieved last year. So, talking of now bushings, as I said in the earlier call, I'm confident that we should be able to attain about you know, 30% growth in current financial year in this segment aided by good demand visibility from key wind big windmill gearbox manufacturing companies and we have also developed you know, newer designs of bushings for for these customers. We remain very bullish about this segment going forward with our target annual sales of you know, annual sales target of within 3-4 years to hit about 300 crore in in some time. Similarly, now talking about stamping, we're also seeing a very good traction for our key stamped components which include certain specialized railway seal inserts, AC compressor components and certain other automotive components. And we have recently introduced a new category in AC air conditioning segment compressor which is known as accumulator which is having a very good demand potential. Thus, we are still fairly con we're seeing a fairly confident of, you know, seeing over 30% sales growth in this segment in this current financial year compared to a revenue sales of about 72 crore we achieved in FY26. We believe that new products that we are also in a process of developing this segment, the target annual sales again in this segment should reach about 300 crore over next 3-4 years. Thus, to conclude I I can say that satisfaction that say with satisfaction that our India engineering business is delivering satisfactory performance almost on all fronts. Now coming to Harsha Romania. We have internally worked out a strategy of downsizing the operations and correspondingly also reducing the operating cost. However, we will continue to focus on increasing the sales of finished cages out of our Romania facility. We believe that this will be a good via model via media medium-term strategy where our target is to arrest operating losses and in incurred in Romania which we believe can achieve we can achieve by end of current financial year. Therefore, we feel that the next financial year in Romania may contribute a lower level of sales.
Vishal Rangwala (Harsha Engineers International Ltd): But it should still be relatively positive to, a positive contribution to profitability is how we are looking at this. Now, talking of, China through quarter two FY 2027, we are a little soft on, sequential basis as compared to quarter one. It has still shown a decent growth on year-on-year basis, and we expect reasonably strong performance to continue rest of the year. Though currently, EBITDA in China is a single-digit, we believe that it should improve going forward, given the relatively stable demand scenario in China. Our expansion projects are progressing quite satisfactorily. First, the Advantage expansion project involving substantial expansion of capac- capacities to manufacture bushings, stampings, as well as large size cages is on is on track. It should commence production, in next few quarters, and similarly you know China brownfield expansion where we are creating capacities for manufacturing of steel cages for industrial and auto sector that should commence production somewhere in quarter 3 FY 2028. To sum it up, I want to reconfirm the previous growth guidance given in the earlier calls that it is to say on a full year basis FY 2027 we should achieve a sales growth in mid to high teens in India, while on consolidated basis, it could be anywhere between 10% to 12%. At the same time, a word of caution. I want to state that historically Q3 tends to be a little soft in terms of demand considering fact that almost all large international buyers whose accounting year calendar year ends in calendar year. So it tends to show a little bit slow, they tend to slow down their purchase a bit. Thus, above guidance should be considered to be on a full year basis. I would like to thank you all for, you know, continued confidence in Harsha. And I wish you, you know, all the best. With that, I ask Maulik to, you know, take forward the presentation and the numbers.
Maulik Jasani (Harsha Engineers International Ltd): Thank you, Vishal bhai. Hello everyone and good afternoon. For the quarter ended September 26, engineering business at our consolidated level have achieved top line of 428 crores against 363 crore in the same quarter last year and 421 crore in the immediately previous quarter. We have achieved consolidated EBITDA for engineering business of 81.1 crore for the current quarter against 63 crore in the same quarter last year and 69.8 crore in the previous quarter. On EBITDA margin, we see a consistent increase for standalone as well as consolidated level based on our last few quarters performance. In solar business, we have achieved revenue of 11.9 crore and EBITDA of 0.73 crore in the last quarter. Solar business has still good order levels due to PV cells relaxations from government up to December 26. Overall working capital at our consolidated level is around 135 days against 139 days in the same quarter last year and 116 days in our previous quarter. We have incurred CapEx of 35.6 crore in the last quarter. For the last quarter, revenue from bushing was around 42 crore, stamping was around 23 crore and RSB was around 14 crore, which has grown by 26%, 19% and 35% respectively compared to the previous quarter. While revenue from Japanese customer was around 24 crore with a growth of 15% against the last quarter. With this brief note on the financial numbers, I hand it over to the operator to take the Q&A from participants. Thank you.
Moderator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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
Moderator: Main, we will wait for a moment while the question queue assembled. The first question comes from the line of Nisarg with P.K. Day Investment Office. Please go ahead.
Nisarg (P.K. Day Investment Office): Am I audible?
Maulik Jasani (Harsha Engineers International Ltd): Yes, yes.
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