INOX India Ltd (INOXINDIA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (ICICI Securities Limited): Ladies and gentlemen, good day and welcome to the INOX India Limited Q2 FY25 earnings conference call, hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star followed by zero on your touch-tone telephone. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities Limited. Thank you and over to you, sir.
Mohit Kumar (ICICI Securities Limited): Thank you, Sarah. Good morning. On behalf of ICICI Securities, I welcome you all to the Q2 FY25 earnings call of INOX India Limited. Today, we have with us from the management, Mr. Deepak Acharya, CEO, Mr. Pavan Logar, CFO, and Mr. Sunil Lavati, Head, Investor Relations. We will begin with the opening remarks from the management, which will be followed by Q&A. Thank you and over to you, sir.
Deepak Acharya (INOX India Ltd): Thank you, thank you so much. Good morning, ladies and gentlemen, and a warm welcome to INOX India Limited Q2 and H1 FY25 earnings conference call. I hope you had an opportunity to review our financial results and investor presentation. I will begin by sharing an overview of the global business environment, our performance across the key business verticals, and the important developments that are shaping our growth trajectory. Let me touch upon the global business and macroeconomic environment. As you are aware, the ongoing West Asia conflict has created additional challenges for the global economy, particularly in logistics and supply chain. These developments have
Deepak Acharya (INOX India Ltd): the operating environment more complex for everyone. We are, at INOX India, are navigating this challenges with focus on execution, operational efficiency, and customer commitments. Despite this, underlying demand drivers across industrial gases, LNG infrastructure, aerospace, space applications, scientific research, and semiconductor manufacturing remain very encouraging. These sectors require increasingly sophisticated cryogenic system, precision-engineered equipment, and reliable manufacturing capabilities. We believe these requirements create opportunities for us. We continue to strengthen our position as a trusted partner for complex cryogenic equipment and engineered solutions, mainly due to our manufacturing infrastructure, technical expertise, and expanding presence across domestic and international markets. Let me now throw some light on our current order book. During the quarter, we have achieved a significant milestone. Our order backlog crossed 2,200 crore, making the highest level in the company's history. Of this, orders from customers in the space sector comprise about 1,100 crore, reflecting the growing traction of our offerings in this segment and being a partner of choice for the customers. Also in the September quarter, we have received a mega order for subcoolers from US space company. We are planning to manufacture these at our Savli facility. This is an important development for our business and further strengthens our position in specialized cryogenic equipment. Let me now take you through the key developments across the business verticals starting with Industrial Gas Solutions. Our Industrial Gas Solution business continue to see a healthy demand for equipment used in storage, transportation of industrial gases. During the quarter, we received orders worth approximately 60 crore from domestic players covering transportation equipment, frame tanks, and large storage tanks. These orders reinforce the continued demand for reliable gas-handling infrastructure. We have also made significant progress in liquid cylinder manufacturing. Following the revamp of our manufacturing unit, production has ramped up meaningfully with more than 1,500 liquid cylinders dispatched in the first half of FY '27 worth more than 25 crores as against 1,600 in the last year. We are particularly encouraged by the progress of this business as we are currently the only player with liquid cylinder manufacturing capabilities, positioning us uniquely in the Indian market. We believe the enhanced production capacity will further strengthen our ability to cater to growing customer demand. Additionally, we secured repeat orders for the disposable cylinders from the US market along with repeat orders for DOT cylinders from the existing customers. Repeat orders from established customers reflect the importance of product quality, delivery, reliability, and consistent execution. I'll now update you on the tractions on the LNG Solution vertical. LNG Solution business continue to benefit from the growing requirement of LNG transportation, storage, and fueling infrastructure. The current geopolitical environment has also reinforced the importance of energy security and reliable storage infrastructure. We are seeing increasing traction in the LNG transportation, particularly in the semitrailer segment. During the quarter, we secured a combined order of 40-plus LNG semitrailers from various customers. These orders demonstrate continued demand for LNG transportation solutions. We also secured orders aggregating approximately 14 crore from the domestic customer for storage tank, vaporization system, and unloading pump skids. Additionally, we received an order from a leading city gas distribution company for LNG fueling station, along with orders for vertical tanks, vaporizers for the glass plant at Bharuch. Another encouraging development is the emergence of LNG-powered railway applications in India. Following the recent launch of LNG train by Indian Railways, we have received four related orders, of which two have already been dispatched. We view this as a promising beginning of new application area and opportunity to build our capabilities as the market develops. These developments demonstrate the breadth of our LNG portfolio spanning transportation, storage, fueling, and emerging applications. Let me now take you through the development of Cryo Scientific and Advanced Engineering Solutions. Our Cryo Scientific business continue to build capabilities
Deepak Acharya (INOX India Ltd): ability to operate under complex technical conditions. During the quarter, we secured an order worth approximately 35 crores for the specialized cryogenic equipment for another important opportunity in India scientific research ecosystem, the upcoming Laser Interferometry Gravitational-Wave Observatory project being established in Maharashtra to detect gravitational waves produced by cosmic events, such as collisions and black holes and neutron stars. It will become a part of the global network of gravitational-wave observatories, significantly improving scientists ability to locate and study such events. The project is in collaboration between the LIGO Laboratory USA, Indian institutions, including RRCAT, IPR and IUCAA. Beyond its scientific importance, LIGO-India will strengthen India's capabilities in precision engineering, advanced instrumentation, ultra-high vacuum technology while providing opportunities for Indian scientists, engineers, and students to participate in frontier research. During the quarter, we also secured an order worth approximately 12 crores from a European customer for prefabrication of TCWS piping, which are currently under manufacturing. For INOXCVA, these projects demonstrate the relevance of our engineering and manufacturing expertise in demanding technology-intensive applications, and support our ambition to participate in increasingly sophisticated scientific infrastructure projects. Let me update you on the beverage kegs. Our beverage keg business has continued to demonstrate a strong momentum during the first half of the FY '27, supported by increasing traction from international beverage customers. During Q2 FY '27, beverage keg sales grew approximately 446% year-on-year. Our beverage keg order book also recorded strong growth, increasing by approximately 155% year-on-year in Q2. These trends reflect encouraging demand and the progress we are making in expanding our presence with global beverage companies. A significant development during this quarter was our entry into the 3-year global supply agreement with a leading global brewing company. The stated requirement for 2027 exceeds around 4 lakh kegs across 22 countries. This represents the customer's overall requirement under the agreement, and not the volume exclusively allocated to us as supplies are expected to be shared among the multiple vendors. Our current allocation relates to 2027. Given the 3-year nature of agreement, we see potential to pursue additional business in 2028 and 2029, subject to customer requirements and further allocations. We are also targeting opportunities across European market, Vietnam, Singapore, as we work to expand our international footprint. Customer approvals continue to be a key focus of our growth strategy. We have made progress in securing approvals from leading global beverage companies, with 4 out of 5 players targeting targeted have been approved by having approved us. Securing approval from the remaining player remains an important milestone, as we continue to expand our presence and pursue opportunities in global beverage market. We are seeing encouraging traction from the repeat customers, and remain focused on strengthening customer relationship, expanding our addressable market, and meeting the stringent quality and delivery requirements of international beverage companies. We believe the combination of growing demand, customer approvals, and our manufacturing capabilities provide a sound foundation for the continued development of beverage keg business. Aerospace and space sector opportunities. The aerospace and space sector continue to represent significant long-term opportunities for INOXCVA. These applications require highly specialized cryogenic systems, stringent quality standards, and exceptional reliability. Our order book already reflects the growing importance of space sector, with approximately 1,100 crore of orders from space sector customers. We have received an order from the leading Indian aerospace player for vertical storage tank, and also engaged in discussions regarding additional requirements. We are actively engaged with several companies across India's emerging private space ecosystem, and see the potential for further opportunities as this business expand their launch capabilities and infrastructure. Another important development is our work on two large kettle-type cryogenic subcoolers for a leading US aerospace company launch infrastructure. One subcooler is designed for liquid oxygen and the other is for methane, using liquid nitrogen as a
Deepak Acharya (INOX India Ltd): as the engineering challenge is to achieve the required thermal performance at extremely high flow rates while ensuring complete separation between the oxidizers and fuel systems. Manufacturing these subcoolers involves precision deep hole drilling, automated orbital TIG welding, hydraulic tube expansion, controlled tube bending, and stringent cleaning procedures. Quality assurance includes helium leak testing, boroscopic inspection, and thermal cycling. We also dispatched two tanks for the US aerospace customer. This is an important execution milestone and reflects our ability to manufacture and deliver specialized equipment for demanding international applications. Overall, we believe our experience in advanced cryogenic systems together with our engineering capabilities and manufacturing infrastructure positions us well to participate in the growing requirements of global aerospace and space industries. Let me talk about new opportunities emerging in the semiconductor space. India's semiconductor manufacturing ecosystem is creating new opportunities for specialized infrastructure, process support system, and precision engineering solutions. During the quarter, we secured a key order and commenced execution for the initial piping scope at a leading semiconductor manufacturing facility in Dholera. We also submitted bids for larger project scope, which are currently under consideration. While these large opportunities have not yet translated into confirmed orders, we believe semiconductor manufacturing represents a promising area for the application of our engineering and project execution capabilities. We will continue to engage with customers in this sector and evaluate opportunities that align with our technical strengths and long-term business objectives. I am also happy to share that we recently have inaugurated an Orbital Welding Skill Excellence Centre under the name SemiOrbit at ITM SLS Baroda University. This institute will provide advanced welding skills to welders, which will help them to become experts in orbital and UHP welding, and will make them capable of working in semiconductor fab infrastructure development teams, which require high degree of precision and training. When we have to such a strong order book, our preparedness in manufacturing, execution, and delivery must also be spoken about. As our order backlog grows and the complexity of project increases, our focus remains firmly on execution, manufacturing productivity, and timely delivery. During September, we dispatched major equipments for the Bahamas project along with the first two tanks for the US aerospace customer and equipment for Eleuthera and Great Abaco projects. We also dispatched five tanks for the Bahamas project, reflecting the progress made on these international deliveries. Our teams continue to work closely with customers and logistics partners to manage the production schedules, transportation, and delivery commitments. Our priorities remain disciplined execution, efficient working capital management, stringent quality control, and consistent delivery. As we convert our growing order backlog into revenue, maintaining these priorities will be essential to sustaining customer confidence and supporting the profitability growth. Looking ahead, we remain encouraged by the range of opportunities emerging across all our categories. Our strong order backlog is very encouraging. We are also making progress in developing a new application areas, expanding international customers relationship, and strengthening our manufacturing capabilities. We will continue to navigate the external environment with focus on operational discipline, customer commitments, and efficient resource utilization. With that, I will hand over to our CFO, Pawan Logar, to discuss the financial performance of Q2 and H1 FY '25 in greater detail. Thank you very much, and wish you all a very Happy Diwali and prosperous new year ahead. Thank you so much.
Pavan Logar (INOX India Ltd): Thank you, Mr. Acharya, and good morning, everyone. I shall have a summarized financial snapshot for the quarter and half-year ended 30th September 2024. For Q2 FY '25, total income stood at INR467 crores, representing a growth of 26.6% on y-o-y basis, driven by strong execution across key segments. EBITDA stood at 100 crores, up by 10.8% y-o-y, reflecting improved operating efficiency and better product mix. The EBITDA margin for Q2 FY '25 stood at 21.3%. The profit after tax was INR66 crores, growing 7.8% y-o-y. The PAT margin came in at 14.2%. For H1 FY '25, total income for the half-year stood
Pavan Logar (INOX India Ltd): 849 crores. This is a record high half year performance. The performance reflects healthy performance across Industrial Gas, LNG and Cryo Scientific Division. EBITDA for H1 was 189 crores, also the highest ever half-yearly EBITDA. The EBITDA margin in H1 FY27 was 22.3%. PAT for H1 stood at 127 crores. The PAT margin was 14.19% in H1 FY27. As of September 30, 2026, our order backlog scaled a new peak of INR 2,268 crores. This reflects sustained order inflows and revenue visibility for the quarter ahead. Of this, 72% is from exports, reaffirming our strong global presence. Our total fund availability as on Q2 FY27 stood at Rs 384 crores, providing ample headroom to support future capacity expansion, ongoing project execution, and other strategic initiatives. That concludes my remarks on the financial performance for the quarter and half year. I will now request the moderator to open the floor for questions. Thank you so much.
Moderator (ICICI Securities Limited): Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may enter star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may enter star followed by two. Participants are requested to please use only handsets while asking a question. We will wait for a moment while the question queue assembles. The first question is from the line of Sameer Thakur from Ambit. Please go ahead. Sameer, your line is unmuted. You may ask your question. As there is no response from this participant, we will move on to the next question from the line of of Mohit Surana from Monarch Networth. Please go ahead.
Mohit Surana (Monarch Networth): Good morning, sir. And congratulation on strong top-line numbers. My first question is with respect to the profit margins. If we take out the other income, our EBITDA margin is now around 19.5%, which is roughly 230 basis points down Y-o-Y. And, you mentioned in the notes that it could be, it was because of the product mix, logistical costs and other reasons. Can you just give some more explanation on whether this, this is a new normal for the company or we will revert back to the earlier range of 21-22% EBITDA margin excluding the other income? That is my first question, sir.
Deepak Acharya (INOX India Ltd): Yeah. Very genuine question you asked. See, margin dip is a mix of freight and strategic pricing, and is not structural, okay? H1 EBITDA margin is 22.3 within the expected range. Forget about the Q2 FY27, but if you consider the H1, it is we we are still within 22.3. And it's a balance sheet is a debt-free and 384 crore net cash. I think, this is definitely because of geopolitical uncertainties and some freight issues, which has ramped up in last quarter, and I don't think we will have severe impact because of these going forward. So, we will be within our range going forward in this on the margin side.
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