Gala Precision Engineering Ltd (NSE: GALAPREC) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Nupur Jainkunia — Moderator
Satish Dayaldas Kotwani — Wholetime Director
Srinivasan Giridhar — Chief Financial Officer
Kirit Vishanji Gala — Chairman- Managing Director
Analysts:
Unidentified Participant
Yashovardhan Banka — Analyst
Kunal Mehta — Analyst
Pranjal Mukhija — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Gala Precision Engineering Ltd. Q1FY26 earnings conference call hosted by Valorum Advisors. 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jayan Kunya from Valorum Advisors. Thank you. And over to you ma’. Am.
Nupur Jainkunia — Moderator
Thank you. Good evening everyone and a warm welcome to you all. My name is Nupur Jenkunia from Valerim Adviser. They represent the industrial relations with Subcala Precision Engineering Limited. On behalf of the company and Validum Advisors, I would like to thank you all for participating in the company’s earnings conference call for the first quarter of financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call may be forward looking in nature. Such forward looking statements are subject to risk and uncertainties which could cause actual results to differ from those anticipated.
Such statements are based on management’s belief as well as assumptions made by the information currently available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamentals business and the financial quarter under review. Let me now introduce you to the management participating with us in today’s earnings call and hand it over to them for their odds. Opening remarks. We have with us Mr. Balkirshan Jalan, full time director. Mr. Satish Kotwani, whole time director. And Mr. Srinivas Keridar, chief Financial Officer of the company. Without any further delay, I request Mr. Satish Kotwani to start with his opening remarks. Thank you. And over to you sir.
Satish Dayaldas Kotwani — Wholetime Director
Thank you. Good afternoon everyone. Welcome to our earning call to discuss performance of first quarter of financial year 2026. In the interest of some of the people who are new to the company, let me give me a brief overview about the company. Gala Precision is a preferred manufacturer of high quality precision components. We serve various industry sectors like renewable Energy, industrial and mobility. Geographically, we are diversified across sales in India, Europe and US markets. We supply to original equipment manufacturer OEMs, tier 1 and channel partners. We manufacture more than 750 SKUs to solve more than 75 sorry more than 175 active global customers across 25 countries.
Our facilities are fully equipped with advanced technologies and integrated capabilities for designing, developing and manufacturing of diverse product portfolio. To further strengthen our manufacturing footprint and expand the product range, we have established new facility in Chennai. This plant will focus on producing various high tensile fasteners including bolts and nuts. These are mainly complementing the existing product category of fasteners and enhancing to meet our ability to meet customer demand. Now coming to the key operational highlights for the quarter under review we saw a strong growth in top line on a year on year basis. Our orders book for quarter stood at around 70 crores Indian rupees.
Our partner business dispensed a strong 64% sequential growth with revenue raising from rupees 12 crores to 20 crores in quarter one of FY26. On the capex front at the Chennai plant we are making excellent progress. Various customer audits were successfully completed and commercial production has begun in July 2025 and we expect dispatches to commence from this month August. We have also started sales from our VARA plant to new industrial customer in our SFS business. With that said then, I will now request our CFO Mr. Greeder to brief you on financial highlights for the period and the view.
Thank you very much.
Srinivasan Giridhar — Chief Financial Officer
Good afternoon everyone and welcome to the earnings call today. Let me provide a brief overview of the financial performance for the quarter of 2026. For the quarter under review, consolidated revenues from operations stood at 63 crores which increased by 19% year on year and declined by the 2004. Revenues for the quarter had a positive impact from a favorable first quarter trade increase in euro which resulted in a gain of 5.2 crores and in for the quarter was around 10 crores which declined 12% year on year and quarter with EBIT margins reported at 15.21%. Gross margins improved partly supported by benefit from regional transit and foreign exchange rate and with the remaining improvement driven by favorable product.
EBITA was impacted by higher EBIT expenses primarily due to forex laws and upon the revaluation of 2 crores and additional cost of around 1 crore related to freight, power, labor cost, outsourcing cost, foreign travel and other operational activity. Net profit was 6.5 crores representing a growth of 3.2% year on year and a decline of z and and part margins are reported at 10.3%. With this we can now open the floor for Q and a session.
Questions and Answers:
operator
Thank you. 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 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants may press star and one to ask a question. To ask a question. The first question is from the line of Prachi, an individual investor. Please go ahead.
Unidentified Participant
Good evening sir. I just want had a question on the order book. Which segment contributed to major part of your order book and what will be the time frame for implementing it?
Satish Dayaldas Kotwani
Yeah, so I’ll answer this question. Renewable which contributes of wind energy and hydropower equipment contribute about 37% of our order book. Industrial is about 35% which is mainly electrical or highway equipment and mobility sector which is about 28% of the order book. And normally these orders are to be executed in next three to four months. Over and above these orders we also get the schedule from our regular automotive customer and tier one customers. Yes. Are additional to the order book which comes as a monthly schedule.
Unidentified Participant
Okay sir, got it. Thank you so much.
Satish Dayaldas Kotwani
Thank you.
operator
Thank you. The next question is from the line of Yasho Vardhan Banka from Tiger assets. Please go ahead.
Yashovardhan Banka
Thank you. Sir, a couple of questions. So can you give us the capex visibility for say the next two years?
Kirit Vishanji Gala
Yeah. Hi, I’m Jalan here. Basically we are disclosing DRHP and we are in the same line the more or less in Chennai we have completed the CapEx phase one and we just started the production last month. And phase two of capex we will be reviewing in next two to three quarters by last quarter of FY26 and then we will start phase two capex which is going to be around 15 to 20 crore as far as the vara is concerned Again as for the DRSP we are incurring the capex plus in addition based on the how we progress I see the order book we’ll be incurring the incremental capex year on year.
That clarity normally we get two to three quarter in advance.
Yashovardhan Banka
Understood. So. So cumulatively from the Chennai capex after phase two what is the peak levels of revenue that we are expecting on the optimum utilization?
Kirit Vishanji Gala
Yeah, so as we mentioned the total capex in Chennai is Going to be approximately 48 crore to 50 crore. And in peak capacity it will touch around 120 crore top line. And we are seeing we should be touching this in FY27 end or FY28 run rate.
Yashovardhan Banka
So what is the current order book.
Kirit Vishanji Gala
Is around 70 crore. So our business is basically where we get a regular order schedule or projections and to form order we get two to four months in advance. The customer to customer the different they have methodology. So they keep on giving us the predictions plan but they give a firm schedule or firm order form for one or two months in advance. As of now we have a 70 crore order book which we have to deliver in next three, four months. And plus over and above we regularly get the regular OEM schedules for dispatching like auto customer. The similar type of concepts is there in auto customer, industrial or even in renewal industry.
Yashovardhan Banka
Right sir. So we are not facing any sort of sluggishness in the order book, right? Build up?
Kirit Vishanji Gala
No, but we have, we have more pressure from the market to deliver.
Yashovardhan Banka
Right, right, right. So I mean I’m guessing the plan stickiness also might be there considering.
Kirit Vishanji Gala
Yeah, very much. Yeah. Yeah. So this, all these are critical products. The customer and GALA need to put a lot of effort in start from RFQ to product development validation, free trial and all. It takes nine months to a 24 year and that’s how it brings a lot of stickiness. So normally the customer don’t change the sources. So.
Yashovardhan Banka
Right, right. So since you mentioned critical the criticality. So recently I think the government came out with an alwm. So how are we looking to, you know, are we going to benefit from that?
Kirit Vishanji Gala
Satish, you have any idea about this? Because. So as of now the BI is something which is applicable in our fastener products business manufacture in India and for that we are getting the B certifications and all. Otherwise we may have not heard about this concept.
Yashovardhan Banka
Okay. Okay. And just one more question before I join the thing. So are we looking for any sort of inorgan inorganic growth like moving ahead for a fast levels or any other.
Kirit Vishanji Gala
Yeah, we have appointed AVP strategy and we are working with some merchant bankers and yeah, we are not. We are exploring in inorganic area.
Yashovardhan Banka
So for any particular segment if you.
Kirit Vishanji Gala
Can basically in precision engineering including the fasteners.
Yashovardhan Banka
Okay, okay. Okay, got it. And so what would, what sort of, I mean guidance could you provide for sale midterm short term versus FY26 and then follow on FY28, 29 if any. What is that?
Kirit Vishanji Gala
Yeah, so we would like to maintain that in past what we said is same line. We are thinking on an average 20% year on year in mid to long term with the similar type of EBITDA margin of 17 to 19%. And for FY26 we guided we are seeing 20 to 25% type of growth and we still want to maintain that.
Yashovardhan Banka
Understood? Understood sir. Okay. Okay. Thank you so much and all the best. Thank you.
operator
Thank you. Before we take the next question we would like to remind the participants to press star and one to ask a question. The next question is from the line of Kunal Mehta from Sunido. Please go ahead.
Kunal Mehta
Hi sir. My first question would be can you all provide a guidance maybe the next. Two years. Anything that can be, you know helpful for us to you know envision what the company can grow towards. Because the current capacity expansion will take the company’s revenue up to let’s say 440 crores after the company has completed and operates at certain capacity. So beyond that what is the vision? So I can talk about that?
Kirit Vishanji Gala
Yeah. So basically broadly yes, 425 to 450 type of number that depend completely on the product mix and all beyond that we are actually started searching the land in Chennai or even in Maharashtra, Gujarat. And based on the customer’s expectation or requirement we will be finalizing event maybe next 36 month time. As of now we are covered for next at least 1 1/2 2 years to achieve this type of number. So I don’t want to comment specifically what number we will be achieving or target capacity. Why yes these numbers are there and we are there for these capacities are there for next 1/2 2 years at least.
Kunal Mehta
With respect to funding for this, you know the land has been you are talking about in Villa Maharashtra or Chennai and also the inorganic application. I think in the last caller mentioned something in respect to oil and gas in about six to 12 months. So maybe that is also upcoming. So how will it be funded? Will it be funded through. I mean I think cash on books will be used for the current expansion and after that will be through internal approvals or will it will. Will you be taking debt go fund that?
Kirit Vishanji Gala
Sure. So basically we have as of now the general corporates which we raise in it almost 25 crore plus is there in general corporation line in SD. Number two there is no long term debt, zero long term debt on the company’s book. And number three there is a healthy cash accruals are there in company year on year with these three as of now this is something which should Meet but inorganic, you never know. It’s very premature to say anything about that. But then for organic we are very much sufficient availability is there to support the organic growth which what we are seeing in next three, five years.
Kunal Mehta
Okay, so one last question. Currently 38% of our revenues from exports on which 13% is USA. Any impact on that? Do we see that becoming lesser in Europe and the other rest of the world seeing more domestic domestic share improving? I mean, what is the mix going ahead expecting?
Satish Dayaldas Kotwani
Yeah. So basically for us of course the situation is really uncertain. So I think whatever we were expecting between March to June, July we got that business and orders from the customers. As of now there is no cancellation or any postponement of orders. But of course uncertainty continues till the time we have the finalized situation for the tariffs. Now they are talking about penalty. So there can be some impact because of this. But to mitigate that impact, of course we are continuing to grow. Sorry. We are continually aggressively developing business in India, of course and also in the European market. But of course because of this tariff there is uncertainty at least for next couple of months till we stabilize the situation.
Kunal Mehta
Okay, and just one last question. Since we are already also doing a little bit of capex at Nevada facility. So that will be something like a bigger brownfield expansion. So why is it taking like so. Much time to shift till the balance of 7,7 crores is remaining? You know, current it’s only utilized. So what is there any impediments that are coming in the way where expansion is being like delayed?
Kirit Vishanji Gala
Yeah. So basically in engineering company we keep on adding the capex and do the line balancing rather than a completely a complete new setup or complete new line. And this we add like we add presses sometimes we add heat treatment. We add some CNC machining or different type of equipments for example. So that we are keep on adding. And as we see the order book or the position we order and we get this machine. So this a lot of POs and already been issued. And maybe next three months or so we will be getting good number of machine on shop flow. Just I want to clarify delay and we just keep ordered as and when we seek it is a more clarity about the order.
Kunal Mehta
Yeah, yeah. And so just one more question. The gross margin has improved YoY from 58% it’s gone to about 61 is because of the mix of fasteners. Because fasteners and the boats and all have a higher realization.
Srinivasan Giridhar
One would be gross improvement in gross margin. One is because of the impact of increase in the euro rate by 10% compared to March that has given a benefit to the top line of 1.164. At the same time we. That is also benefit due to you know the product mix as well as the digital transit also which also has, you know contributed improved gross margin.
Kunal Mehta
So can we expect the gross margin to be above 60% throughout the year or.
Srinivasan Giridhar
60% going forward? Also.
Kunal Mehta
Do we use any hedging instruments for you know maintaining the gross margin or we.
Kirit Vishanji Gala
We book. We do take. We do. We do take forward covers on. For. On our export collections. How we do is that we book forward covers 12 months down the line and we are able to you know estimate what is 12 based on take the. And keeping based on the trend of exports and export collections over the last. Two to three. As well as we don’t. Do we have an attribute also.
Kunal Mehta
Okay, I’ll jump at the Q4.
operator
Thank you participants and one to ask a question. The next question is from the line of Nisar Desai from PR Investment. Please go ahead.
Unidentified Participant
Yeah hi sir, I’m audible.
Unidentified Speaker
Yes.
Unidentified Participant
Yeah sir. So I have two questions actually. First one is that which segment has led to the margin decline and you know like what will be the margin going forward? And my second question would be what are the margins for our partner segment?
Srinivasan Giridhar
There is no segregation that has contributed to any margin confidence. This is generally.
operator
But your voice is breaking. Could you go to better reception.
Srinivasan Giridhar
Now you can hear.
operator
Yes sir, please go ahead.
Srinivasan Giridhar
See there is no any no particular product segment as under which the margins are present across the product the margins are similar and not any specific to product. Even for SMS also the margins are pretty similar across the product lines.
Kirit Vishanji Gala
I will just add I think so when you are referring the margin if you see the gross margin has improved but as mentioned we don’t see the gross margin will be improved. Margin will be there quarter on quarter. So we maintain that RM cost is going to be around 40 42. Our gross margin is going to be around 58. So this is one and across the product broadly the margins are similar. As far as the margin when you are talking reduce is mainly in EBITDA what you are shipping. And in this. The one major impact happened because of the reval valuation of the forward cover and that impacted the other expenses by one point almost two crore rupees. So this is I think sort of notional or non cash. And going forward this type of impact may get reverse impact. So this may be a temporary impact on UBITA.
Unidentified Speaker
Apart from the there are additional costs incurred around 1 crore. Mainly on foreign travel, freight, aircraft, rental costs and already taken up steps to mitigate control the increase in expenditure going forward.
Unidentified Participant
Okay sir, thank you.
operator
Thank you. The next question is from the line of Pranjal Mukija from Growthspear Ventures llt. Please go ahead.
Pranjal Mukhija
Hi sir. Am I audible?
Unidentified Speaker
Yes.
Pranjal Mukhija
Yeah. Thank you for giving me this opportunity sir. So I have, I have just one question. Given the renewed volatility in the global trade dynamics, particularly with the potential return of like some tariffs. So have you as the other company observed any on ground shift in terms of sentiments or deal source from US clients? I’m only asking if there’s several other Indian fishing engineering peers are reporting increased traction and fresh orders from the US So are you sort of experiencing a similar momentum in your business and if so how are we as a company positioning ourselves to sort of capture this opportunity and scale this opportunity?
Satish Dayaldas Kotwani
So basically for us as we mentioned we are not seeing any decline in the orders what we budgeted. So first quarter, whatever orders we expected, we received the orders. But I think because of the tariff situation and more on the penalty which is still unclear, there is a lot of uncertainty in the business. And I think when we talk to our customers of course they are also waiting and watching and in general we see that this should get removed in next couple of months once we have a complete clear picture on the business. Trade agreements are signed in US Basically we supply two product categories this spring and partners mainly for renewable industries.
So this spring is a very niche product and we normally compete with manufacturers in US or from Europe or China. So we don’t see major impact because of very very niche and special category in fastness. Of course we again compete with European producers including Europe and uk. So we are just waiting and watching like many other players to be very open and honest, we are not seeing any very big upside in coming months. But you never know what surprises can trump give. But at least mid to long term, maybe if there are some favorable situation for India then it can be also positive benefit for to gala.
Pranjal Mukhija
Right. And so like you’re saying that we’re sort of competing with some other countries in the US market for these particular segments. So which countries are these?
Satish Dayaldas Kotwani
Basically for partner we compete with producers from Germany, Norway and Denmark and UK they are mainly supplying to us apart from India.
Pranjal Mukhija
Right, right. Okay sir, thank you.
Satish Dayaldas Kotwani
Thank you.
operator
Thank you. Before we take the next question, we would like to remind the participants to press star and one to ask a question. The next question is on the line of Yasha vardenbanka from Tiger Assets. Please go ahead.
Yashovardhan Banka
Thanks for the follow up. I just wanted to understand.
operator
Sorry to interrupt sir, but your voice is breaking. Could you go to a better reception area?
Yashovardhan Banka
Can you hear me now, sir?
operator
Yes sir, please.
Yashovardhan Banka
So I just wanted to get an update on the seat retractor springs.
Kirit Vishanji Gala
Okay. Yeah. So basically setup is gala testing was completed and we submitted the samples to the customer which is basically tier one customer. They have conducted basic testing and now they are working on complete full plate testing and also discussing with their OEM for approval where they want to use this our spring. So I think progress is happening. But considering the very critical and safety component, they are going really step by step doing all the testing validation very deeply. So maybe in next two to three months we will have some more update after their full fledged internal testing and discussion with OEM on the next step of supplying small batches where they can use in the mass production.
Yashovardhan Banka
Okay, okay, I’m sure. What is the addressable market you are looking out for this, for this product?
Satish Dayaldas Kotwani
The customer whom we are talking, they buy about 20 crores worth of reflector springs in India. Of course globally their demand is at least five to seven times bigger than this. But I think it’s monthly. Get the approvals internally with them and considering the safety critical component, they would like to start with some OEMs and gain the confidence. So ramp up may be slow initially for couple of years till the time they and their OEM get the confidence on the product.
Yashovardhan Banka
Okay, so this 20 crores is annual. Right. So we’ll be looking out for more. Such clients as well. Right?
Kirit Vishanji Gala
Yes. Once you get approved there.
Satish Dayaldas Kotwani
Yeah, yeah, yeah. So I feel for till the time we have been audited by some vehicle manufacturer or oem, we need to stick to them. Once we have some OEM approval and start supply to of our products to this tier one company and our products go to oem then I think we can go to other players also with these credentials.
Yashovardhan Banka
Right. And is there any other peer you know who’s already doing this in India?
Kirit Vishanji Gala
So basically there’s a company named Kern Libert which is a global company based out of Germany, but they also have plant in India in Bangalore and currently they are supplying to Indian manufacturers. Okay. Apart from that, no domestic manufacturer except Carnival. There is nobody. There was one company in joint venture with some Korea, but they were not successful.
Yashovardhan Banka
Okay. Okay. So I’m particularly talking about say any, any sort of employee incentives that you’re planning. You know, introducer. And also the attrition date if you can touch upon that.
Satish Dayaldas Kotwani
Yeah, yeah.
Kirit Vishanji Gala
We have already employee ESOP which been given before IPO and the schemes are there and employee based on their requirement they keep on in caching or taking granted. Vested granted. Have allotted amount immediately. Additionally, we are not seeing any immediate ESOP in near future. At least we have not planned that.
Yashovardhan Banka
Okay. And so the attrition rate
Srinivasan Giridhar
is below. 10% and much lower than the industry benchmark.
Yashovardhan Banka
Just one last question from my end on the plant utilization of the Chennai plant. What is the utilization level you’re expecting before FY26.
Srinivasan Giridhar
Is approximately 30 crore something number from FY22 from Chennai.
Yashovardhan Banka
Okay. 30 crores. Answer from the existing bada plant.
Srinivasan Giridhar
Approximately 270 plus minus something depend upon how we progress.
Yashovardhan Banka
Right. Okay. Okay. And the EBITDA margins are planning to, you know, maintain at least 15 levels or further. We can see.
Srinivasan Giridhar
So if we. If we remove the FX loss which is almost 2 crore we can see around more than 17%. 17 to 18%. And we are seeing barring back which is the. We are seeing ebitda margin of 17 to 19%.
Yashovardhan Banka
Understood? Understood. Thank you. Thank you so much. All the best.
operator
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Srimand Dodoria from Sri Capital. Please go ahead.
Unidentified Participant
Yeah, a couple of questions. First is what is the present duty on our US exports?
Satish Dayaldas Kotwani
So I think before the tariff situation the duty on our component which is fastness in distinct was 5.5% and now I think it is 25%. Okay. And.
Unidentified Participant
And would this tariff confusion have an impact on the ramp up plan for the Chennai phase one expansion?
Satish Dayaldas Kotwani
Not on the phase one because initially Chennai plant we already planned to supply to our domestic customer. And so I think Chennai plant there will not be any impact because of this situation.
Unidentified Participant
Because I think in the last call you said, you know, the first customer you got for the Chennai plant is for export to the US customer. And more audits are ongoing. So would the ramp up plan have an impact because of the tariff confusion?
Satish Dayaldas Kotwani
So basically Chennai plant of course we got the first order of bolts which is a new product from this U.S.
customer. And we already supplied that also after manufacturing in Chennai. And we supplied from our Vara factory after completing the remaining processes so that business will continue. We have the visibility for next two, three orders from them. But that business is not substantial which can impact the Chennai plant. Basically Chennai plant as we discussed in the last call, we went to Chennai since lot of wind turbine manufacturers. [Ends Abruptly]