Elecon Engineering Company Ltd (NSE: ELECON) Q4 2026 Earnings Call dated Apr. 16, 2026
Corporate Participants:
Abhishek Taparia — Moderator
Aayush Shah — Executive Director
Chintan Shah — Chief Financial Officer
Deepak Dalwadi — Head of Gear Division
Unidentified Speaker
Analysts:
Unidentified Participant
Balasubramanian A — Analyst
Raj Shah — Analyst
Harsh Patel — Analyst
Kashyap Javeri — Analyst
Pratik Kothari — Analyst
Aman Soni — Analyst
Ashwani Sharma — Analyst
Pathanjali Srinivasan — Analyst
Rohan Vora — Analyst
Manish Square — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Elecon Engineering Company’s Limited conference call, hosted by Emkay Global Financial Services Limited. [Operator Instructions]
I now hand the conference over to Mr. Abhishek Taparia, Emkay Global Financial Services Limited. Thank you. And over to you.
Abhishek Taparia — Moderator
Good afternoon everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Aayush Shah, Director; Mr. Chintan Shah, CFO, Mr. Deepak Dalwadi, Head of Gear Division and Mr. Kaushik Patel, Head of Material Handling Equipment Division.
I shall now hand over the call to the management for their opening remarks. Over to you, gentlemen.
Aayush Shah — Executive Director
Thank you, Abhishek. Good evening everyone and a very warm welcome to Elecon Engineering’s quarter four and FY 2026 earnings conference call. Joining me today are Mr. Deepak Dalwadi, Head of Gear Division; Mr. Kaushik Patel, Head of MIT Division and we would like to welcome our CFO, Mr. Chintan Shah, who joined us recently. He brings nearly 19 years of experience and we are confident that he will play an important role in driving Elecon’s continued growth. The earnings press release and investor presentation have been uploaded to the stock exchanges and are also available on our website. I trust that you have had the opportunity to review them.
I will begin with a brief overview of the operating environment and our business performance, following which Chintan will take you through the detailed financials. Elecon Engineering marks a significant milestone this year as we celebrate 75 years of engineering excellence, innovation and strong customer partnerships. Over the decades, we have had established ourselves as one of Asia’s largest and leading providers of industrial gear solutions and material handling equipment, supported by deep domain expertise and strong technical capability. Our material handling equipment division continues to build strong momentum and remains a key growth driver for the company. With a legacy of over seven decades, the division has developed specialized capabilities in designing and manufacturing large, complex and high capacity systems including conveyors, port equipment, feeders and other critical infrastructure. These capabilities are limited to a select group of players in India, providing Elecon with a distinct competitive advantage, serving core sectors such as power, steel, cement, ports, mining and fertilizers. The MHE business consistently delivers customized high value solutions that enhance our operational efficiency and reliability for our customers.
In the Gear division, Elecon continues to maintain a leadership position in India’s Organized Industrial Gear Market. We offer a comprehensive and diversified portfolio ranging from heavy duty gearboxes to precision engineered components catering to industries such as steel, cement, sugar, power and [Indecipherable]. Our continued focus on research and development ensures that innovation, product customization and end-to-end life cycle support remains central to our offerings. With a strong domestic presence, an established distribution network and long standing customer relationships, Elecon is well positioned to enter its next phase of growth and further strengthen its presence across key markets both in India and internationally.
Moving to segment wise performance. The Gear division, which accounted for approximately 63% of consolidated revenue in Q4, reported revenue of INR472 crores, reflecting a decline of 21% year-on-year. This was primarily due to delayed order inflows, extended dispatch timelines and customer led deferment of deliveries amid ongoing macroeconomic and geopolitical uncertainties. While near-term performance was impacted by external factors, the underlying demand fundamentals remain intact. We expect a gradual normalization in timing difference for order flows and execution as market condition stabilize. During the year, we secured a healthy inflow of orders across key sectors including power, steel, cement and material handling equipment, and as we are carrying a strong open order book for the next year, supported by a strengthening demand environment and a healthy project pipeline, we remain confident in Gear division’s ability to regain momentum and deliver improved performance going forward.
The MHE division, which contributed approximately 37% of the consolidated revenue in Q4, continued its strong growth trajectory, posting a 37% year-on-year increase in revenue during the quarter. This performance was driven by sustained demand across core sectors such as power, cement, mining and ports, along with consistent execution. Looking ahead, we remain confident that the division will maintain its growth momentum, supported by a healthy order book, strong sectoral outlook and continued customer engagement.
Despite a challenging environment, we delivered moderate consolidated revenue growth of 6% in FY 2026. The underlying fundamentals across both dimensions remain strong. A robust order book and strong execution pipeline provide clear visibility for sustained growth in the coming financial years. Elecon remains committed to its long term growth strategy with a clear focus on portfolio diversification, expansion into new sectors and geographies, and continuous strengthening of our engineering and execution capabilities.
As part of our strategy to expand into international markets, we are pleased to announce the recent establishment of a step down subsidiary in Mexico, further strengthening our presence in the Latin American region. On the domestic front, core sectors are expected to continue driving sustained capital investments and we are well positioned to capitalize on these opportunities through our strong capabilities and market risks, supported by strategic capital expenditure, strong in-house R&D, differentiated product offerings and a proven ability to deliver customized, high quality solutions. We are well positioned to address the evolving and increasingly complex need of our customers. We believe the current challenges are transient and do not alter or alter our long-term growth trajectory.
With this, I now hand over the call to our CFO, Mr. Chintan Shah who will take you through the detailed financial performance for the quarter and full year FY 2026. Over to you, Chintan.
Chintan Shah — Chief Financial Officer
Thank you, Aayush. Let me give a quick walkthrough of the financial performance for Q4 and then for the full year FY 2026. Financial performance Q4 FY 2026 for the quarter ended March 2026, our consolidated revenue from the operations stood at INR746 crores, compared to INR798 crores in the corresponding quarter of the last year, reflecting a moderate year-on-year contraction. This quarter’s performance was primarily impacted by slower conversion of the order pipeline into the revenue in line with a broader industry trend of uneven execution cycles across all capital intensive sectors.
Several customers across key end user industries recalibrated their capex schedules leading to a shift in the dispatch directions across the value chain. The underlying demand environment remains constructive. Domestic market contributed almost 82% of the consolidated revenue, while international markets accounted for 18%. During the quarter, consolidated order inflows stood at INR657 crores registering a year-on-year growth of about 1.9%. Consolidated EBITDA for the quarter stood at INR158 crores with a margin of 21.2%. Profitability was impacted by operating deleverage due to lower revenue conversion, marginally higher employee cost along with the change in the product mix. Net profit for the quarter came in at INR108 crores translating into a PAT margin of 14.5%. This exclude the one-time impairment of goodwill of INR10 crores recognized as an exceptional item. We expect margins to improve gradually as execution accelerates and volumes pick up.
Now moving to performance for the year ended March 2026. For the full year FY 2026, adjusted consolidated revenue stood at INR2,341 crores, compared to INR2,227 crores in FY 2025. This excludes realized arbitration award of INR25 crores recorded in the first quarter of FY 2026 in the MHE division. Adjusted EBITDA for FY 2026 stood at INR498 crores with margins of 21.3% remaining broadly stable despite near term execution volatility. Apart from arbitration award realized as said earlier, additionally, INR10 crores were recognized under other income as a part of arbitration settlement.
Furthermore, this year also included exceptional gain of INR80 crores below profit before tax representing unrealized mark to market gain arising from the reclassification of investments, as well as impairment of goodwill. Impairment of goodwill INR10 crores — INR102 crores recognized as an exceptional item. Including all exceptional and one time items, reported PAT for FY 2026 [Indecipherable] 11:08 crores — INR341 crores. Moving to segment wise performance starting with Gear Division, the Gear Division contributed 63% of consolidated revenue in Q4 FY 2026 and continues to be the largest contributor.
Revenue for the quarter stood at INR472 crores compared to INR597 crores in Q4 FY 2025. The performance reflects a temporary gap between the order booking and deferment of deliveries driven by the phasing of execution in large industrial projects. Importantly, demand fundamentals remained strong supported by sustained customer engagement and a healthy inquiry in pipeline across both domestic and overseas markets. EBIT for the division stood at INR91 crores versus INR147 crores in the same period last year with margins at about 19.3%.
Margins were impacted by low throughoutput and changes in the product mix. However, these are transitional factors and we are expecting the same to be normalized as execution improves. Order intake remained strong at INR550 crores during the quarter and the open order that we have is about INR894 crores as of 3-31-2026. This provides a good visibility for the coming quarter. As execution timeline normalize and macro condition stabilize, we expect the Gear division to return to its steady growth trajectory.
Moving to Material Handling Equipment Division. The MHE division continued its strong growth momentum in Q4 FY 2026, reinforcing its role as a key growth driver. Revenue for the quarter increased to INR274 crores from INR200 crores in Q4 FY 2025, reflecting a robust growth of 36.8% year-on-year. This performance was driven by sustained demand across sectors such as power, cement and ports, supported by both replacement demand and ongoing industrial infrastructure investments. EBIT for the division stood at INR62 crores compared to INR59 crores in the corresponding quarter of the last year, reflecting stable profitability despite a dynamic revenue mix.
Margins remain healthy supported by a balanced contribution from equipment sales and aftermarket services. Our inflow during the quarter stood at INR107 crores and the order book closed at INR398 crores as of March 31, 2026. This again provides a strong foundation for the continued growth. We continued to see the MHE division as a structurally high growth segment supported by long term trends in the industrial automation and increasing focus on material handling efficiency.
Moving to balance sheet and capital allocation. On the balance sheet front, we continue to maintain a strong financial position with a net cash balance of approximately INR700 crores. This provides a significant strategic flexibility to pursue growth opportunities, while maintaining financial discipline. The board has recommended a final dividend of 150% that is INR1.5 per equity share having a face value of INR1 each. This is subject to shareholders approval. While our performance for the year was below initial expectations, this was primarily due to geopolitical uncertainties and unfavorable product mix and delays in customer led deliveries. Given the continued macroeconomic uncertainty and limited near-term visibility, we believe it is prudent to adopt a cautious approach. Accordingly, we are holding our guidance for FY 2027 at this stage and we’ll revisit our outlook once there is a greater clarity and stability in the operating environment.
With that, we conclude the detailed financial review and now open the floor for the questions. Thank you.
Questions and Answers:
Operator
Thank you. [Operator Instructions] We have the first question from the line of Nimesh Jain from an individual investor. Please go ahead.
Unidentified Participant
Hello?
Operator
Yes, please go ahead.
Unidentified Participant
Thank you for the opportunity. My first question is the care to MSE ratio was 53 is to 37 for quarter four as against historical trend of 75 to 25. Do we expect this as per the trend going forward and its impact in the EBITDA margin?
Aayush Shah
No. Going forward the EBITDA margin should not be affected. We still do expect further growth in the Material Handling Division going forward, while the Gear division goes as well. So the mix might change further, but we don’t expect long term the margins to vary.
Unidentified Participant
Thank you. And my second question is, can you give me the number of domestic and export split for Gear and MHME?
Aayush Shah
We couldn’t hear you very clearly. If you could repeat that please?
Unidentified Participant
So, can you give me the domestic and export split for Gear’s and MHME and engineered versus catalog mix for Gear’s for quarter four?
Chintan Shah
So, the myths of the engineers versus catalog is for the quarter is CP is 55%, that is the standard product and engineers product is 45%, that is the catalog product., sorry that is customized product. And for the year FY 2026 catalog product is 55% versus engineers product it’s 45%.
Unidentified Participant
Okay. And my last question is, what issue is MHME is facing since order flow inflow for the quarter was at 10 quarter low. Thank you. That’s my last question.
Aayush Shah
It’s a timing difference. In fact we were expecting certain opportunity to be converted into order, but it has been different for Q1. In fact in month of April, we have already received almost more than INR15 crore order. So, we are hoping that in April month itself we can mitigate that gap of Q4 which has been generated.
Unidentified Participant
Thank you. Thank you.
Operator
Thank you. We have the next question from the line of Balasubramanian from Arihant Capital. Please go ahead.
Balasubramanian A
Good evening sir. Thank you so much for the opportunity. Sir, we have a capex program of INR400 crore. How much was spent in FY 2026 and if you could share what is the capex split between Gear and MHE? And I’m trying to understand on the ROC part also. So, I think ROC fallen from 29% in FY 2024 to 20.4% in FY 2026. So I’m trying to understand with higher capex and lower margins like whether we can able to bounce back to at least 25% kind of level for FY 2028?
Chintan Shah
Let me take the lead on this question. This is Chintan. So, we have capex plan as we just last quarter we published INR400 crores between FY 2026 to FY 2028. We have roughly spent about INR95 crores towards different, different categories. Out of that, if you want to have a split, Gear has almost 80% spent and MHE has the rest of the spend. Coming back to your question on ROC from FY 2024 to FY 2026, it’s a valid question. What I want to highlight right now is, as we grow our base for equity and capital employed increases and if you look at the quality of the total capital that we employ, almost INR800 crores of the balance that we have is parked into different form of investments. Now we have a policy of investments where we are very conservative with the investments. And so the yield on the investment is about 8%. So, this is point number one.
Point number two, every year in last two years we have generated average cash post tax about INR300 crores, INR350 crores. So, every year we have added the new cash from the capital employed. But to that extent our capex has not has happened. So, we have not increased our installed capacity by way of increasing the capex. So as we move from this year and next two years, we will have our own capex. We will build the capability, increase the installed capacity and have and we’ll see the results in terms of the revenue increase and the EBITDA increase improving the margins. Having said that, this position of INR750 crores, INR800 crores that we have as an investment, it’s a good problem to have it, that gives us the flexibility to remain open for our any strategic investments, as well as the expansion. We are just closely monitoring the macroeconomic conditions and would like to continue with the same approach at least for some more time, till the time we have the clarity on the expansion that we want to do.
Balasubramanian A
Yes sir. Sir, on the defense side, one of the Navy order impacted our margins. However, the future RFP also pushed out like [Indecipherable] say by Q3 FY 2027 and IAC also in Q1 on FY 2027. So like whether we can able to win at least one or two orders, Navy orders by FY 2027 and how long it will take to bid larger defense contracts and we have qualified for upcoming Navy orders.
Deepak Dalwadi
Yeah, I’m Deepak here. So, for this financial year, Q4 we are expecting very good order from the Indian Navy and that is a big order at this moment.
Balasubramanian A
Okay. Sir, and the follow up on that, I think it’s a initial order we might have a lower margins maybe in upcoming defense orders whether we can expect higher margins levels?
Deepak Dalwadi
So, as far as these are the project orders, so margins are all actually good margins and for the small orders of course there will be a margin gap. But for this kind of a big project order, there are good margins.
Chintan Shah
Just to refine the answer, the first order that we executed and as we discussed in our last call, since the first order has a lot of developmental initiatives and activities, we have a slightly lower margin as we communicated last time at 1% or 2% margin was lower. If we get the repeat order of the same grades that what we are talking about then yes, the margins will be good and in terms of timeline it’s almost two years time that we see.
Deepak Dalwadi
Yeah, this kind of project orders are executed between two to three years.
Balasubramanian A
Okay sir. Sir, my last question, first thing about what is our current capacity utilization level in Q4 and secondly trying to understand our pricing power, if you could rank your end markets power, steel, cement, mining, defense, sugar, plastic and rubber by the pricing power side. So, where we have seen more competitive pricing pressure and where we are getting higher margins?
Deepak Dalwadi
So far capacity utilization is concerned, we are at this moment with addition of capex is around 56% to 60% utilization is there.
Balasubramanian A
Yes sir, the second one.
Deepak Dalwadi
So, hello? So for answering your second question, our engineering product has a better margin than the catalog product. So, definitely we are going for the better — more the engineering products.
Balasubramanian A
Okay, sir. Okay. Thank you.
Operator
Thank you. We have the next question from the line of Raj Shah from Enam AMC. Please go ahead.
Raj Shah
Yeah. Hi sir, am I audible?
Operator
Yes, we can hear you.
Raj Shah
Yeah. Thank you for the opportunity. My first question was, sir, on the revenue front, if we see on the export side for the quarter we have largely maintained what was there in the same quarter last year. But when it comes to Gears, especially in the domestic gears, the revenue growth, I mean the revenues are down by 27%. So, within Gears that too in a domestic geography, exactly where are we seeing such kind of delays in dispatches where customers are not ready to take up the delivery? Can you leave little specific in sharing your thoughts?
Aayush Shah
We have faced these issues where the customers asked us to defer the delivery specifically in the steel sector a little bit more. Another reason why also there was a reduction in the turnover is specifically because we got the order booking a little bit later because everyone was trying to defer their capex investments because of the current geopolitical scenario. Hence the order booking was late, so it couldn’t be executed within the year. But we expect it to really improve in this quarter.
Raj Shah
Got it. And this delay in orders, was it specific to any large order or it was broad based within the steel sector you’re talking about.
Aayush Shah
It was not for a specific large order. It was — we saw it across the board.
Raj Shah
Got it, got it. Secondly sir, on this Mexico part we are aware that the management was contemplating investing or setting up some assembly center even before the tariffs kicked in. So, today what is the scenario? Do we still attract 50% tariff or what kind of strategy are we seeing to cater that kind of that part of geography?
Chintan Shah
So, right now in the USA we have the 50% tariff. Whatever we are exporting from India to our subsidiaries in USA or to customers in USA. So, that is attractive 50% because of section 232, but with establishment of this Mexico we will serve the Latin America and the tariff is not applicable there. So, we want to get the opportunity to establish and to supply the our products from there to the Latin America.
Raj Shah
Okay. And will we be investing or incurring any capex in Mexico?
Chintan Shah
Not much right now. We just established, we will come back to you after some time.
Raj Shah
Okay. Okay, sir. And sir —
Operator
Sorry to interrupt you, Mr. Raj, request you come back in the queue for follow up questions.
Raj Shah
Sure, sure. Thank you.
Operator
Thank you. [Operator Instructions] We have the next question from the line of Harsh Patel from Share India securities. Please go ahead.
Harsh Patel
Hello. Thank you so much for the opportunity. I wanted to just wanted a update on export side. So, how as we had planned like we would be ramping our export for to up to 50% in the next three to four years. So, what would be the in current geopolitical scenario, what would be our export mix going forward and how would be our sustainable margins till FY 2027-28 if we are focusing on more on domestic or export probably?
Aayush Shah
Going forward, we still this year despite of the existing scenario we have managed to maintain at least what we were able to perform last year. So, we expect going forward it will still improve. We have some improvement in order booking in a few of our entities, while the Middle east obviously has suffered significantly. So, we still expect regardless of what the situation is that we will be improving going forward. And the product mix, I mean the EBITDA that you asked regarding the product mix and export versus domestic, we expect it to not affect us that much going forward.
Harsh Patel
So, what would be the sustainable margins which we would be focusing forward?
Aayush Shah
Right now, we can’t comment on that specifically because of the current scenario and it’s currently an ever changing scenario. So, we cannot comment on it right now. We will assess the situation and get back once we have a better understanding.
Harsh Patel
One more, one more thing, one more thing I wanted to ask, going forward, what kind of orders would be on gear side? Is it customized gears or catalog gear are on a sale point for Elecon going since last couple of quarters we have the mix has been on major way on catalog kind of —
Deepak Dalwadi
So, major it will be from power industry and steel industries and cement is from debt. So, major will be contribution for engineering and customized product and catalog product, it will be 2%,3% lower than the engineering product.
Harsh Patel
Okay, okay. And what would be the margins in this industry in customized products we would be seeing?
Aayush Shah
See, typically we do not reveal the margin profile. We give a broad range in terms of how the product mix is moving and how it impacts our gross margin percentage. So, customer level, product level and mix level margins, we do not provide our comments.
Harsh Patel
Okay. Okay, thank you.
Operator
Thank you. We have the next question from the line of Kashyap Javeri from Emkay Investment Managers. Please go ahead.
Kashyap Javeri
Two questions from my side. One is to, you know, the first one is to Chintan, on this goodwill side, there is a comment number 8b in the notes to accounts, if you can explain that comment? And also did we get any tax benefit from that goodwill write off? That’s the first question. And second is to Mr. Dalwadi, on the Gear division side or even in fact if Mr. Aayush can also throw some light. You mentioned that because of the geopolitical risk there were some deferment of the order booking. But overall if you look at the geopolitical risks that sort of rose only on the intervening night of 27, 28 February. So, could one month make such a large difference?
Chintan Shah
Right. So let me take up the first question about the goodwill. I think you are referring to note number 8 point B. There’s a detailed note in the notes to accounts which will comprehensively cover. But let me explain to the entire large audience that we have, this goodwill represented the goodwill that we acquired way back in 2010-2011 when Elecon did the acquisition of Benzlers and Radicon Group in the European region. Now what happens is over the last 15 years, Elecon has done a integration of all these business into the Elecon Group of products and the geographies that we have it. We do not have any separate structure. The single team sales and marketing and operations team takes care of all the — all the mix of the products that we have it. So, eventually we realized that goodwill as a standalone on this acquisition do not have much value in our financials. Of course the business as a whole has the valuation which doesn’t need to be like discounted right now, but it has a good cash flow profitability and all. But from a goodwill alone standalone basis, we do not see that the carrying amount should continue like this. And that’s the reason we did the impairment.
Coming back to your sub question about the tax deduction on this write off that we have done, this goodwill was never into the standalone financial. It was always a part of our consolidated financial statements. So, as far as tax deduction is concerned, it will be in the books of the entity where this goodwill used to rest in UK. As far as the tax deduction and the local tax is concerned, there is a tax deduction which is being claimed every year and probably now only 5 years have left with only USD13 million amount, USD1 million amount. So that’s, that’s, that’s is going to be you know, claim as a deduction in next five years time gradually. So, this is how the provision is.
Kashyap Javeri
Okay, understood.
Aayush Shah
Regarding your question about the — sir, if I got it right, you were asking about —
Kashyap Javeri
My question was that you know the geopolitical risks, you know, the major part of it played out starting February 27, 28 and that one month has probably made a fairly large difference on the overall revenue side. So, you know, if you can — so was this largely to do with the month of March or this played out throughout the quarter?
Aayush Shah
Lastly, as you rightly said, I think the news about this disruption started coming in the last week of February. It got intensified in the first week of March. So, the largest impact is in the month of March. About INR77 crores of the orders were in a different bucket like couple of orders of INR12 crore which were ready for dispatch, but it was on hold by the customer. We’ve also had the order about INR34 crores in the month of March which were scheduled to be delivered but now it is to be delivered probably in April and if the situation is clarified in the April itself, we also had a INR31 crores of the order which was scheduled to be dispatched in the March, but the production was put on hold on immediate basis and that’s how we had almost INR70 crores impact for this the event in the month of March. And if you look at your I know what — where you’re coming from. In the December quarter itself, we had lowered down our guidance and we communicated that we are reducing the revenue in the quarter ending March by at least 5%. So, that’s the guidance we already had released in the month of January when we were talking about December quarter and March quarter.
Kashyap Javeri
Okay, okay. Just one last question. On the receivable side, that number has gone up from INR610 crores to about INR720 crores. Any particular reason for that? If I look at versus September —
Aayush Shah
The increase of about INR90 crores compared to last year’s balance sheet if you look at it from INR90 crores, INR70 crores to INR75 crores is largely because of the sale which has happened in the February and in the March which has not due even as on 31st March. And about INR15 odd crores is overdue compared to the same bucket of the last year which is getting realized in the month of April.
Kashyap Javeri
Okay. Okay, understood. Thank you.
Operator
Thank you. We have the next question from the line of Pratik Kothari from Unique PMS. Please go ahead.
Pratik Kothari
Yes. Hi. Good afternoon. Sir, in domestic gears we did highlight the delays in terms of from steel sectors. If you can touch upon the various other sectors we cater to from sugar, power, cement, how are things spanning out there? And because we see the order book kind of building up from INR600 crores last year to INR900 crores. So across sectors is the execution expected to be delayed gradual, if you can just touch upon that?
Deepak Dalwadi
Moving forward, the executions are not being delayed because for the domestic, now there is visibility and we are having good orders in the on hand and at the same time good orders in the pipeline also. So, we anticipate that there won’t be any delays in I mean deliveries for the power sectors and for the cements and steels because steel is also now expanding their all execution and powers. Of course they are demanding the projects to be to be closed very fast. So, they all are demanding. So, I don’t see any, I mean delays in delivery for the power sectors and cement, steel sectors.
Pratik Kothari
And how about the cement, sugar?
Deepak Dalwadi
Cement is stagnant as such. But even though we are getting good orders from two, three major contractors, but cement they are more in the brownfield projects than the greenfield. So, they are moving at their own space and sugar industries now because of this we are anticipating good orders from the sugar because now the gas and this petroleum we are facing problem — we may face problem from this war situation. So, ethanol will be now on the demand. So, we are also anticipating good demand from the sugar also.
Pratik Kothari
Sir, one on margins. I mean usually our engineered products are in, I mean when you look at the mix it’s usually in 50s. I mean this I think was a different year where we saw it at 45%. So one, if this goes back, I mean why aren’t we guiding that our margins will go back to the earlier numbers?
Deepak Dalwadi
I mean we will, I mean we will sustain the margins. But at this moment we are not, I mean —
Chintan Shah
Generally, when we calculate the margins, what we projected at the beginning of the year, we will calculate based on the EP and CP is the 5050 standard we consider. But during the year the orders we received in the catalog product cost, the delay from the customer side and of the projects they have, so catalog product order we received much more than the engineers product in the beginning of the year and the second part of the year. So, that’s why that educate in the same year but the EP products order we have in hand on the 31st of March of 2026. So it may be educated next year sometime.
Aayush Shah
Just to clarify what Ashish is saying, we are not giving clear guidance that we expect it to go up simply because of the current geopolitical scenario and we don’t know how it’s going to pan out. But if all the domestic orders go smoothly and what demand we are expecting comes in, you’re right, we’ll be able to go back to the EBITDA levels that we had suggested even earlier which is close, which yeah.
Pratik Kothari
Close to 22 to 24.
Aayush Shah
22 to 24.
Pratik Kothari
All right. Perfect, sir. And sir last on capex. So we see —
Operator
Sorry to interrupt you, we request you to kindly come in the follow — in the queue for follow up questions.
Pratik Kothari
Okay,
Operator
Thank you. We have the next question from the line of Aman Soni from Investec — from Nvest Analytics Advisory. Please go ahead.
Aman Soni
Hi, am I audible?
Operator
Yes, we can hear you.
Aman Soni
Thanks for the opportunity. First question, do we have any applications or the visibility from the nuclear site?
Aayush Shah
Sorry, from the —
Chintan Shah
Nuclear site?
Aayush Shah
No, we don’t.
Aman Soni
Okay. And secondly, you are mentioning that visibility is there in the domestic market, particularly from the steel and the power and things are improving. Then I’m not able to understand why are we not giving any clear guidance on that part maybe on the growth side and as well as the margins front for FY 2027.
Chintan Shah
Strong order book, right? But we have own learning in last two quarters where despite having order books there were delay in the dispatch schedules and all. So, we have based on that learning decided to stay at least for few months till the time we have a clarity in the situation that we have. It is — the situation is quite fluid still at the moment. While we see that it is, there’s a possibility that everything will be smooth going forward, again I believe yesterday or today we’re seeing conflicting news and conflicting information. So, this is the reason we want to keep a hold on that for right now and once things clear out, we’ll be able to give you a much clearer picture from there.
Aman Soni
Got it. And because of all this scenario in Middle East there must be some infra redevelopment requirement, right? So do you people see any history of that like some new orders may be coming in because of this infra redevelopment that will be required in Middle East?
Aayush Shah
Yeah. There is no doubt that there will be strong requirements going forward once everything clears out. But which direction it is going in we are still not sure based on how the outcomes go ahead. So, while you’re right, there is possibility for a significant uptake in orders from the Middle East. We can’t guarantee that which way it’s going to go until the war is completed.
Aman Soni
Got it. And regarding the defense orders, specifically that aircraft carrier that we were expecting in FY 2027, what is the current update on that, sir?
Deepak Dalwadi
Yes, thanks for asking. Yeah. So the cost, CPR has already got the orders from the Indian Navy. So, anytime in the Q1 or Q1 they are going to release the RFP and then we are expecting orders to come by Q4 of this financial year.
Aman Soni
Earlier I think you mentioned Q2 of FY 2027?
Deepak Dalwadi
Yeah, yeah, it is a little bit differed from the defense.
Aman Soni
Okay, And what about the P-17 Alpha, sir?
Deepak Dalwadi
P-17 Alpha also they have differed. But it may come in the financial year of 2028 around Q3 because even CPR have not received the RFQ.
Aman Soni
Okay, got it. So, all in all, can we expect a marginal growth over FY 2026 or there can be a scenario of degrowth as well in FY 2027?
Aayush Shah
No, we are not expecting any degrowth to happen compared to FY 2026. We are expecting growth. The amount of growth is currently what is under question. But otherwise we are expecting growth.
Aman Soni
And how confident are we on the margins front? Like we will be able to at least maintain or grow from FY 2027?
Aayush Shah
From FY 2026, we’ll be able to definitely maintain or grow it. We are expecting growth, but the geopolitical situation will control it a little bit. What we are anticipating there is going to be an increase in some raw material cost or logistic cost. We’re already filling that in into our new orders. So that shouldn’t affect us in the order.
Aman Soni
Okay. And any kind of supply chain issue. Are you people observing right now because of this threat of Hormuz closure and all that can further lead to some problems maybe in the margin front or the execution of the orders?
Aayush Shah
Generally for our domestic orders, we don’t see that happening. Only wherever there is something in the Middle east, we expect that to be affected. So, our overseas entity, which is in UAE itself, that one will be affected. But our other entities and domestically we don’t see affecting us.
Aman Soni
Got it, sir. Thank you very much, sir and all the best for your future.
Operator
Thank you. We have the next question from the line of Ashwani Sharma from Emkay Global Financial. Please go ahead.
Ashwani Sharma
Yeah. Good evening, sir. Sir, my first question is on the inquiry pipeline which you indicated that we have a healthy inquiry pipeline, is it possible to quantify for both the segments, gear and the MHE?
Chintan Shah
Yeah. So as on Q4, FY 2026, the open orders that we had for the Gear division was about INR894 crore. And for the same period last year what we had was about INR583 crores. If I look at the MHE division for the exact Q4 FY 2026, it’s roughly about INR398 crores versus what we had in Q4 FY 2025 as at Q4 FY 2025 is INR365 crores. That’s how it’s about totaling to about INR1,292 crores of open order we have as on 31st March 2026. That is what we had as a open order about INR948 crores as at 31st March 2025. And basically this only gives us a confidence in lot of the questions that being raised right now in terms of how do we maintain the margins on revenue. So this is one of it, yeah.
Ashwani Sharma
I was referring to the inquiry pipeline which you know, did not get converted, which got deferred because of the geopolitical reason.
Unidentified Speaker
Okay, yeah. For MHE, yes we have a good inquiry inflow. If I am quantifying, it is more than INR1,000 crore, more than INR1,000 crore inquiry we have right now for various sector.
Deepak Dalwadi
And for the Gear division, it is, I mean very and so good news for all of us that in the first week itself we are having whatever inquiry was in pipeline, it is converted, going to be converted in the order in one or two days time. We already got the LOI. So, it’s a very single largest big order ever got in the industrial gear business market. So, that is in few days you will get the good news.
Ashwani Sharma
Okay.
Deepak Dalwadi
From the power sector.
Ashwani Sharma
Okay. And secondly, and sir, deferred revenue when you talk about is it possible to quantify how much was that?
Aayush Shah
We had the last leg and we are having the LOI right now. We would like to publish further details once the things materialize.
Ashwani Sharma
Okay. Sir, second question I had on the MHE, if you look at the growth trajectory of MHE, I think it’s been very, very strong in the last four to five years. This year I think obviously there are some moderation in terms of order inflow and that we see in the order backlog as well. What kind of growth one should, you know, estimate given the fact that, you know, power as a space is doing really great, thermal especially. So, from a estimation perspective, what kind of growth we should assume going ahead, let’s say in the next two to three years, is it possible to quantify, sir?
Aayush Shah
As I mentioned that we have a good inquiry inflow for MHE business, definitely that power sector is going to help us to grow from further. But at this point of time I can only assure you that whatever the growth trajectory we have shown in last two, three years, we definitely we can continue with the same space and this growth percentage.
Ashwani Sharma
All right sir, all the very best to you. Thank you.
Aayush Shah
Thank you.
Operator
Thank you. We have the next question from line of Pathanjali Srinivasan from Sundaram Mutual Fund. Please go ahead.
Pathanjali Srinivasan
Hello, sir. Thank you for the opportunity. I had a couple of questions. So firstly, with respect to increase in prices of input cost, how did it get passed on with respect to the order book business because we would have taken the order sometime back, right?
Aayush Shah
In those cases we would have already placed the orders or secured the prices for the raw material for once as soon as we receive the order because we were expecting this situation to take place. So, to safeguard us, we had already taken action as soon as we received the order.
Deepak Dalwadi
And our execution cycle is also not long so means it will be taken care whatever orders are on hand, we already placed order and we are executing. So, still the even suppliers are not in the position to claim what is their need actually. So, it is all for the pending or is it taken care?
Pathanjali Srinivasan
Whatever inflation is there, that is taken care of already with respect to the order book, so there will not be much impact in terms of margins whatever existing business we have. Is that the correct way to understand?
Deepak Dalwadi
Yes.
Aayush Shah
Yes.
Pathanjali Srinivasan
Okay. And one more question. With respect to our current order book gear and energy, can you tell what would be the segments where we have a sizable chunk like top two, three segments?
Deepak Dalwadi
Power, steel and cement.
Aayush Shah
And cement, these are the three main factors we are seeing good demand
Pathanjali Srinivasan
Okay. And within this you were saying there’s a slowdown or something with respect to steel, right? Could you explain a bit on that?
Aayush Shah
There was a deferment of delivery that was requested from the customer end, the orders were the gearboxes were ready in that case. But we couldn’t deliver it to the customer and we couldn’t invoice it because of that. So, there were few cases where there was deferment. But it will be cleared in the Q1 and they will proceed.
Pathanjali Srinivasan
Okay. Got it. Thanks.
Aayush Shah
This is a usual phenomena it can happen, but specifically because of this geopolitical it was affected even more.
Operator
Thank you. We have the next question from the line of Rohan from Envision Capital. Please go ahead.
Rohan Vora
Hello. Thank you for the opportunity. So, sir, you mentioned that in Sugar given the geopolitical issues related to the crude prices, we expect strong demand going forward and order inflows going forward. So can you explain a little bit more because what we are hearing from some other players is that there is excess capacity building in the country for ethanol. So, how should one look at it? Thank you.
Deepak Dalwadi
No, actually because of this war situation only we anticipate that if there is a — it continues still further then there will definitely lack of supply from the this for the gases and the petroleum. So that’s why we anticipate that there will be demand for the ethanol and we need to produce more and more ethanol. That is all anticipation.
Rohan Vora
Okay. Okay, understood. Thank you.
Operator
Thank you. We have the next question from the line of Manish Square [Phonetic] from Thinqwise Wealth Managers. Please go ahead.
Unidentified Participant
Yes, thank you so much, sir. Sir, this is particularly for the Gear business margins, as you provided the revenue mix for quarter four where catalog is 55% and engineer was 45%. But sir, if I look on Y-o-Y basis and compare with Q4 of last year, your catalog has actually come down from 60% to 55% and your engineered products has improved from 40% to 45%. So, I just do not understand why there is a such a margin impact? And also related question which you earlier alluded to in terms of development order from Navy which is being implemented and whether it’s lower margin. So, like what is the impact? What is the size of the order and what kind of this development order are you referring to? Is it something related to your P-17 Alpha orders or if you can highlight on that? And sir, if we see your overall margins for the entire year for Gear’s business, what we have reported in FY 2026, these margins are in fact lower than what you have reported in FY 2022. In FY 2022 you were roughly at 20% margin and which increased to 26% in FY 2024 and now has fallen to 18.8%. So, how do we see this going forward sir, would really appreciate if you can provide perspective on this. Thank you.
Chintan Shah
Yeah. For the first, your first question for the engineers product versus the catalog product. So, this year we had done the catalog product 55% and engineers were at 45%. We have better margins in the engineers product. But this year we could not execute the orders or we couldn’t supply dispatch the orders to the customers because of the customer’s requirement. So, the margins are not reflecting in the our financials despite because we have the some inventory of the engineers product. So it will and we have not invoiced during the quarter and during the year. So, because of that the margins has not improved this year against the last year.
Unidentified Participant
So, what is this number sir? How much of these orders? Earlier you had mentioned INR77 crores. So, just want to reconfirm how much of these orders are pertaining to Gear’s business and engineered products?
Aayush Shah
So, almost 50% of the open orders we have in the engineers product, but the inventory we have around INR45 crores to INR46 crores. That includes the — because we are evaluating the inventory the cost, so around 30% margins, 20 to 25 to 30% margins if we consider in the inventory when we are invoicing. So, that is not reflecting in the financials.
Unidentified Participant
So, okay. Okay. And so just to complete my earlier question on the five year picture where your margins are lowest right now. So, ideally sir, do you really expect that margin should revert to your mean level of 23%, 24% now with your dispatch is improving you probably get operating leverage with the revenue growth. So in FY 2027, do you expect the margins to improve, sir?
Aayush Shah
So, if you see if you compare with the FY 2022-23 because the India in the growth trajectory, so the capex was going on and it is also going on. So, we were getting the good orders in the engineers product, so that’s why the margins was good that time. Now we are also getting the orders in the engineers product, but that was not reflected in the invoicing this year. So, that’s why the margins is not reflecting. The second thing in R&D cost because we are developing some new products. If you see our investor presentation, we have taken the four patents and we are applied for three more patent. So, we are also working on the R&D to develop new products and upgrade the existing product. So, we are also expanding some costs there.
Unidentified Participant
And what is it pertaining to the development order sir, what you referred to earlier in earlier calls also you had mentioned that there is a couple of percentage point margin impact due to some orders related to Navy. So if you can just clarify on this, sir?
Aayush Shah
For the navy orders we will come back to you, sure.
Manish Square
Okay. And last question on the MHE margin sir, now how do we see that sustainable? Because now MHE margins you are adjusting the inter party or sorry inter segmental number also and after that you are providing the margins in the presentation. So, what is a sustainable margin for MHE? Would it be at 20% to 23% going forward considering now that equipment contribution will increase and your spare parts may not grow in the same pattern as your equipment business?
Aayush Shah
Considering the revenue mix as you mentioned the sustainable margin around 20% to 22% in between.
Unidentified Participant
Okay sir, thank you so much.
Aayush Shah
Thank you.
Operator
Ladies and gentlemen, due to time constraints that was the last question. I would now like to hand the conference over to the management for closing comment.
Aayush Shah
Thank you all for taking the time to join our investor call today and for your continued trust and engagement. While the Gear division experienced a temporary moderation in performance in FY 2026 due to execution timing factors, the underlying fundamentals of the business remained strong. At the same time, the MHE division continues to demonstrate consistent growth momentum and has delivered revenues ahead of the guidance set for the year, supported by robust demand across key sectors and as strong execution pipeline.
With two well established divisions, the business remained structurally balanced and is not reliant on a single segment for the overall performance. Together, both the divisions position us well for sustained and resilient growth going forward. As previously communicated, we will not be providing forward looking guidance for FY 2027. However, our strategic priorities remain unchanged, focused on disciplined execution, operational efficiency, prudent capital allocation and strengthening our presence in high growth markets. Despite near term challenges, we remain confident in our ability to take advantage of long term growth prospects and to deliver long term sustainable value to all stakeholders. Thank you once again for your participation and continued support. Should you have any further questions, please feel free to reach out to our CFO. Thank you and have a great evening.
Operator
[Operator Closing Remarks]