Harsha Engineers International Ltd (NSE: HARSHA) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Vishal Rangwala — Vishal Rangwala Chief Executive Officer, Whole time Director
Maulik Jasani — Vice President, Finance
Analysts:
Unidentified Participant
Harshit Patel — Analyst
Amit Anwani — Analyst
Parikshit Gujrati — Analyst
Devesh Kayal — Analyst
Nikunj Doshi — Analyst
Jason Soans — Analyst
Prathmesh Salunkhe — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Harsha Engineers International Limited Conference Code. 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 the conference call, please signal an operator by pressing star then zero on your touch tone phone. I now hand the Conference over to Mr. Vishal Rangwala, CEO of the company. Thank you. And over to you Mr. Vishal RangWala, CEO of the company.
Vishal Rangwala — Vishal Rangwala Chief Executive Officer, Whole time Director
Thank you. And I would like to welcome you all to our quarter one financial 2026 investor call. As we have been doing in the past, Maulik, our CFO will take you through some numbers in a little more. Detail and I’m presuming that you all had a chance to look at the numbers already. Let me start with at the outset. You know. Let me give you some heads up on certain key issues before.
Going into specific of our quarter one performance. First and foremost, I’m happy to share that we have started getting positive signs. Of improvement in industrial demand in Europe. Thus, as you might have observed, this. Is partly reflected in our one of the highest sales reported by Hersha Romania in last several quarters in quarter one FY26. And we have also started seeing a positive improvement in exports from India, particularly to Europe.
Another pointer to this aspect is the fact that again quarter one FY26 for. The first time after several quarters we have reported a significant improvement in sales. Of large size cages and we have also started seeing a good inflow of. Orders for large size cages in India. This makes us cautiously optimistic though we still want to wait and see at. Least for one or two quarters more before which we can positively conclude that this is a sustainable trend. I believe that this growth in Europe is coming from industrial demand and we. Are still not witnessing any significant improvement in demand from the wind market. Nevertheless, this is surely a welcome relief. And I am hopeful that we should be able to witness better scenario going forward in Europe.
And if I talk about India engineering business, we are quite satisfied to report a reasonably good performance of India engineering. Business in quarter one FY 2026, which. Is almost at par with performance that. We have reported in quarter four FY25. And this is in spite of the. Fact that our India subsidiary Hersha Advantech, where we have commissioned the Greenfield Facility Phase 1 in May 2025 has reported a negative bott. This is due to impact of higher overheads and also the charge of depreciation. And interest. Post commissioning without any significant increase in revenue which will eventually start. Flowing over next few quarters.
We have also started getting signs of overall improvement in industrial demand in India though auto sector continues to remain sluggish. This also includes regular orders that we have started receiving from our customers new facilities commissioned in India which could be. Partially attributed to their increased sales from these facilities as part of their strategy to realign their overall supply chain for servicing their global requirement. Further, we continue to witness a strong traction in our bushing business. Thus we have also recently announced that we have entered into a long term. Contract with one of our existing key customer for manufacture of supply of bushings. This contract what we are expecting is peak annual sales to be around 117. Crore and which can take about two to three years to fully realize. While some incremental sales related to this contract will come in in fourth quarter.
Current financial year. I believe that as compared to FY 2025 where bushing product reported a revenue of about 100 crores, this product should grow handsomely at least 30% in current financial year due to. Strong tailwinds that we are witnessing in this segment. Similarly, as indicator indicated earlier, I’m also happy to report that we have started witnessing good order flow in large size. Cages which again grown handsomely in Quarter 1 FY 2026 over Quarter 1 FY 25. However, sales of stamping has remained more. Or less flat in Quarter 1 FY 2026.
Lastly, our effort to increase sales to Japan based customer continues with same vigor. Though it is not yet translating into. However, we continue to remain very confident. About our potential of increasing the sales in this segment though it may take a little longer time than we are anticipated. In our previous call we had indicated that sales from India under the new major sourcing contract for cages concluded by. Us this large customer and we were expecting some revenue to come in in second half of this financial year. However we are working with customer on this and we are building inventory and what it looks like that that impact may be postponed to or pushed back to next financial year in terms of realizing that revenue. In spite of that we are feeling. Quite bullish for our second half. FY26 sales should be much stronger than first half because of combination of other favorable factors. What we have talked earlier.
As I. Mentioned in the opening portion of my presentation, Hersha Romania has shown a good top line growth in quarters. However the sales mix in favor of cages has still not improved. We are in touch with our key customers as well as other customers for. Increasing sales of cages from the indication. Available from our customer. There are some positives coming our way about increasing their purchases for cages as well as some additional semi finished. We are hopeful of concluding something in. A positive way in coming quarters and we remain positively cautious on that.
Again, I’m also happy to inform that China continues its positive performance in financial. Year 2026 with a decent top line as well as bottom line growth versus. Again overall loss of around 17 crore. On a combined basis for Romania plus China FY25. We are feeling confident that this should. Come down considerably in current financial year and maybe to the tune of roughly 50% of FY25. However, I will be able to give more clarity particularly for Romania hopefully by. End of quarter two, maybe early quarter three in this financial year.
Lastly, our position on solar business remains the same and it continues to operate. More or less in auto mode with a very little top management involvement. To conclude, I wish to reiterate overall target for FY26. This is that it is to be is to expect at least a low. Teens top line growth in Hershey India Engineering business and a higher single digit top line growth in a consolidated basis. It will be evident there should be a better growth in profitability as compared. To adjusted EBITDA and PAT that we have achieved in FY 2025.
I would like to really express my sincere thanks to all of you for. Continued trust and confidence. Hope to share some better news in coming quarters. Now I hand it over to Maulik. To talk more about numbers.
Maulik Jasani — Vice President, Finance
Thank you Vishalgal for the business overview. Hello everyone and good afternoon for the quarter ended June 25th. Our engineering business at consolidated level has achieved top line of 349 crore again 330 crore in the immediate previous quarter and 327 crores in the same quarter last year. We have achieved consolidated EBITDA for engineering business at 65.2 crore for this quarter against the reported EBITDA of 38.3 crore and adjusted EBITDA of 66 crore due to one off in the last quarter and 62.4 crore in the last year. Same quarter for our sidewanted greenfield site by the as the Commissioner Commercialization and Production.
However since the plant has not scaled up, HAL has given a negative EBITDA and PAT mainly due to fixed overheads as well as interest and depreciation charges. Solar division has done a top line of 16.4 crore with EBITDA of 0.9 crore in first quarter. FY26 and solar divisions continues to have a Good order level in Gujarat Overall working capital cycle at consolidated level remain at 139 days and company has incurred a capex of 44 crore in the first quarter mainly towards the Viner side. With this brief note of the financial numbers I hand it over to the operator for taking the Q and A one by one.
Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchdown telephone. If you wish to remove yourself from the question queue you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Harshit Patel from iCVirus securities. Please go ahead.
Harshit Patel
Thank you very much for the opportunity. Sir, my first question is on our new greenfield plant. Since we have already commenced the production activities could you share some color on how much revenues we have booked in the first quarter from this facility and the kind of products we have produced at what scale we will be able to achieve EBITDA breakeven as many overheads initially would have already come into picture as you have already explained.
Maulik Jasani
Sure Vasil. As you have observed from our published announcements commercialization happened in the last week of the June and hence no major sells happen from the new greenfield sites except initial sales of few masterpieces. But yes, we already have a rentage site in our subsidiary ASA Advantage. So total sales of ASAI advertise in the first quarter was 1.65 crore. Now on the EBITDA front as we have discussed in the past this new greenfield sites will have bushing business, large size bearing cages and stamping business over there. I will not be able to comment specifically on the breakeven point but we expect by this year it will be positive turnaround.
That is our expectation and we will update you more once we have a better scale up available in the plant.
Harshit Patel
Secondly, on the CAPEX front I think we have already incurred a major round of CAPEX in FY25 towards this facility and as you have explained we have incurred another 44 crores in this. So now what is the remaining capex that we will do both in FY26 as well as FY27.
Maulik Jasani
So from India engineering perspective let me add first and maybe Vishal can add later. Our major focus is there are still some capex which are in pipeline order but partly filled. So those CapEx will continue to be incurred in this year for incremental line factors at our subsidiary site mainly on the stamping and last size bearing phase requirement. Apart from that we will continue to have some incremental capex in our existing work sites for the bottleneck mussels. Those are the plants in India.
Vishal Rangwala
Yeah, I think. What I understand or what I believe what we have shared that we will over two and a half three years we will invest about 300 crore in this site. We have now already invested about 200 crore, a little bit more than that already in place. So we are expecting at least, you know about 100 crore over next year and a half or so. This is a rough estimate we have right now.
Harshit Patel
Thank you very much for answering my questions. I’ll come back in the questions.
operator
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Hi. So thanks for taking my question. First question is on the bushing side you did eluded some 25 crore sales for Q1 so just wanted to understand the 35% growth which you said will be on on the core the base bushing’s business not including the new contract which you had, right?
Vishal Rangwala
Yeah, we have, we have shared about 30% growth maybe a little bit plus. Over last year, last financial year for this financial year and we may see. Some amount from the new contract we. Have signed but not much significant out of it.
Amit Anwani
And for the, for the new contract which you got and you already invested in bushing so any new capex is required from the current factories when the new contract will start, when you start having revenues for bushing from the new MNC customer. Just wanted to understand will there be move capex particular to bushings in coming time since we already have this contract Again.
Vishal Rangwala
Yes, we, we anticipate that we will have to. So we have already invested considering anticipation of this additional contract and ongoing growing volume we have in bushing area and. Specifically reference to this contract. When this full maturity of this contract. Takes place in about two years, little. Bit more we expect that to achieve. Those revenue we will have to invest something in that. I don’t have a very accurate number how much at this point in time but we are expecting that we will have to invest further to even fulfill this contract. But that will come in a little bit later, toward maybe end of current financial year, more likely early next financial year.
Amit Anwani
Understood. Marginal amounts. Understood. The second question on Romania since the situation is fluid with respect to the trades and the geopolitics, just wanted to understand are we also sensing some impact of all of this? What is happening globally to Our business. And second what led to the Romania I think last quarter I recollect the offtakes were completely impacted. So is it that the customer came back or. And we’re trying to diversify also from Romania since the revenue was not coming there, just some color there plus any impact of the trade was which is happening here.
Vishal Rangwala
So Romania we are trying to diversify. Revenue base from semi finished to cage. We are not yet fully successful. We see some traction there. However what we have seen growth in. Romania right now is for all the portfolio we were supplying right now which includes semi finish and some amount of cash cage as well. So we are seeing overall industrial slightly. Improve in European region which is positively impacting Romania in general. And again we will continue to work. With our customer on diversifying the portfolio, adding more cages and we are very remain hopeful. But let’s see on the trade impact. Again for us us there is a lot of uncertainty there. We see US demand softening already this financial year as compared to previous year. It doesn’t consist more than about. It’s about 10% of our overall demand for us. So still right now we don’t see. A major impact or a big decision by customer on a long term sourcing strategy. But once the things settle down maybe customer will start making some decision. We may get some impact of it if the trade barrier remains high. So we are also closely watching the situation and every day there is new information on this. So we are trying to figure out as we speak.
Unidentified Participant
Just to add, just to add. I think the trade barriers have nothing to do, had nothing to do really with the Romania standalone sales per se. It was more to do with the European environment which seems to be improving as Vishal mentioned.
Amit Anwani
Understood.
Vishal Rangwala
Thank you.
operator
Yeah, yeah, thank you. The next question is from the line of Sumat Khandelwar from ICICI Securities. Please go ahead. Yeah.
Unidentified Speaker
Hello. My questions have been answered.
Vishal Rangwala
Thank you. Thank you.
operator
Thank you. The next question is from the line of Parikshit Gujarati from Nivesha. Please go ahead.
Parikshit Gujrati
Hello.
Vishal Rangwala
Hello.
Parikshit Gujrati
Thank for this opportunity was that how. Much the revenue comes from the diction. Side and what are you plan for the future that how much in future the predict the segment will continue.
Maulik Jasani
What your oh your voice was not pretty clear Prit. What we heard is you intend to know the boosting future, right?
Parikshit Gujrati
Yeah, yeah, yeah, yeah.
Parikshit Gujrati
That’s my question was what what is the contribution of the bushing segment now and what are your plans for the. Future that how much will the bushing segment contribute to the total revenue.
Vishal Rangwala
So right now bushing contributes about 100. Crore in last financial year to the revenue. And. We believe that we are on. A good growth trajectory there. And over next two to three years. We believe that it would be at least 200 crore plus revenue.
Parikshit Gujrati
Sir, I was asking in percentage terms.
operator
Very.
Parikshit Gujrati
No.
Unidentified Participant
Because as the top line grows overall but pushing on a standalone business can easily be 200 crores resulted in next two, three years.
Parikshit Gujrati
Okay, thank you so much.
Harshit Patel
Thanks.
operator
Thank you. The next question is from the line of Davis Kail from Monarch. Please go ahead.
Devesh Kayal
Yeah. Order of 117 crores. So that is part of existing 100 crores which we did last year. Or this is a completely new order over and above this 100 crores. So.
Vishal Rangwala
See this is in a way new order. But some of the products within the portfolio of this new order may replace. Some of the existing products. So there might be a little bit of overlap. Our current estimate is about 20% or so. But it’s completely difficult to say how customer keeps the older product live versus newer product and so on and so forth. So there might be minor overlap there. Understood. So on the domestic engineering side there has been kind of computer selected trades which happens in India, not from exports out of India. So that has been kind of subdued. So can you give some more color on that?
Vishal Rangwala
Can you? I, I. There was a, some breakage in the voice you are asking about engineering domestic.
Unidentified Participant
Yes, engineering sales domestic in India.
Maulik Jasani
Domestic growth is low this quarter.
Vishal Rangwala
Yeah. So I think for us usually it’s the fourth quarter. When it comes to domestic. Fourth quarter is usually the high and there is a certain amount of cyclicity to this domestic growth. So we expect, we are seeing still positive sign from our customer. Obviously there is a little bit of. Softening on the automotive side which reflects here. But we think that there is a little bit of cyclicity to this and domestic should continue to grow at a good healthy rate. We have seen, if I look at overall, we have seen good growth in domestic and I think this quarter you might be right that we have not seen as good growth but we expect that that will come back, you know, domestic, as I mentioned, driven by some, you know, automotive fourth quarter. So automotive we are expecting it to be little better considering, you know, Diwali kind of situation and all that.
So those are, you know, when it comes to domestic fourth quarter and Diwali are the highlight or peak points and we expect that. Yeah, that’s all from my thing.
operator
Thank you. The next question is from the line of Nikunshi from Bay Capital. Please Go ahead.
Nikunj Doshi
Thanks for the opportunity. Just wanted to check means if suppose. US imposes like very high penalty and tariffs, is there any possibility of routing exports to Romania subsidiary because we have operations there. So since India can export to Romania and from there we can ship to us.
Vishal Rangwala
So in Romania we don’t have any. Facility for our steel cages. There is a facility for brass cage manufacturing. There are. So maybe we can look at, if. Once we get a better clarity we can look at looking at, you know, Romania supplying for us and something like that.
Unidentified Participant
No, no.
Vishal Rangwala
This was routing through Romania, not supplying through. No, no, not producing. No, no milling through Romania.
Unidentified Participant
No, we can’t. I tell you. We have to also establish that it is produced there.
Nikunj Doshi
Just 10 thing. You can do that.
Unidentified Participant
No, no, no. See, I’ll clarify two things here from whatever little I’ve gathered in various other companies also which we are tracking. One, whenever there is a sector specific duty imposed, say under section 232 there this additional 25% or even that penalty threat generally will not be there because it’s already imported earlier in February. Correct. Secondly, wherever you want to do a sourcing, that country of origin is very important. So just you have to establish that it is manufactured in Europe. And as said capacity, I think let’s not worry too much about it. Let’s wait for a few more days.
This should definitely settle down. But as we speak our sales to USA Today are also just around 10%. So it’s not a big. I would say it doesn’t move the needle too much.
Nikunj Doshi
And regarding this, write back what we had taken for Romania investment last quarter. Now Romania doing well. So is there any possibility of writing it back?
Unidentified Participant
The impairment you mean?
Unidentified Speaker
Yeah. Molly bhai, if you can.
Maulik Jasani
Nobody has just started picking up. Yes. To see that this has been taken care of while we write it off. The valuation was taken care of by anticipating growth and recovery. We are not right of 100% in the fair market valuation based on the method.
Unidentified Participant
Okay. Yeah. We have to wait at least for a very clear trend to impact.
Vishal Rangwala
Okay. Yeah.
Nikunj Doshi
Thank you.
Vishal Rangwala
Thank you.
operator
Thank you. The next question is from the line of Jason Sones from IDBI Capital. Please go ahead.
Jason Soans
Yes, thanks for taking my question. So just wanted to know, you know, when I look at the subsidies performance for FY25, you know, I understand FY25 was a weak year especially for the European market. So looking at that probably, you know, we clocked in a loss of around 13.4 crores odd in the subsidies. That will be basically between majorly between Romania and China. So right now I understand you told me that, you told us that we have to be, we have to see for 12 quarters more, but are we kind of like probably have some more positive confidence that at least this losses will get reduced in 26, just some color on that would be helpful from a 13.4 crore loss last year.
Vishal Rangwala
Yeah. So Jason, we, as I mentioned, we are fairly confident that we will reduce. This. From that 15 odd crore bottom line number for combined China and Romania. We are working towards at least cutting in half. It depends on a lot of factors, how the market are and some of the initiatives we have taken, how they perform, some of the new orders, what we are working on, how they are realized and so on. But right now we are working with at least cutting it into half or somewhere around that number. Yeah.
Jason Soans
Okay, sir. And so just also wanted to know, I mean in terms of you had spoken last time also about restructuring operations and all this, the Romanian facility. So all is, all of that has been done, anything else more to do in terms of, you know, making the operations more lean and other things, that has all been completed.
Vishal Rangwala
No, we have just initiated that as. A project last quarter and we are continuing that. And that will take at least about. Six to eight months further to really. Fully realize all the work we have. You know, results of all the work on the cost saving side and also on.
Jason Soans
Okay, okay, okay. So also what is the more, I mean, in terms of our current capacity utilization, in terms of our facilities? You’re in what will be the capacity organization.
Vishal Rangwala
So it is a very difficult question because we have, you know, sub segment level, you know, micro, I mean, capacity. Going on and there is some, some. Amount of fungibility, but for most part it is difficult. So there is a segment to segment. Different situation going on. Overall, I would say that we have. If I just talk about last quarter, we would, I would say that we would have a 65% to 70% range overall utilization with, you know, there will be pockets which would have a high utilization and pockets which would have low. And then we have to work with various things within that. So that’s general.
Jason Soans
Okay.
Vishal Rangwala
And this is. Yeah. And then maybe Romania being a little. Different, you know, very low utilization and and then China would be again more like a 60%. Just to clarify, this is excluding advantage.
Jason Soans
Yes, yes, yes, sir. Yeah, yeah, yes, yes. Yeah. Actually, sir, actually I was coming from the point that, you know, we built up, I mean we had a greenfield capacity, which is advantage one. So just wanted to know, I mean, if you have 65, 70. Was there not more room for expanding there only or I mean the thing is why we had to put up a greenfield capacity. Was there. What was. What is the basically the idea behind that or are we seeing more future growth coming through and you know, will we want to get ready for that or how.
What exactly?
Vishal Rangwala
It’s a combination of various things. So you know, one to begin with we don’t think that we can optimally utilize more than, you know, 80% when. It comes to capacity because of, you know, ups and lows of demand and the product mix and the complexity of engineering this product line and business. That being said also further what was. Happening, what is happening is that we are seeing significant growth on the bushing side. So that needed additional capacity and a space to expand because we have actually ran out of initially the bushing was expanded within the existing facility of brass cases and now we have since we have added the additional facility in the. Third side and similarly for large size. Cages, we are seeing long term growth. We have received some of the orders, some future orders, some product development and discussion going on with customers. So combination of all that again, another pocket where we thought we needed space, I mean capacity and then physical infrastructure to put it there because we ran out of space here. So it was combination of all that plus again still we believe about the. Long term future growth of some of our product line on the industrial side, lot size cages and bushing as well as stamping. So all three is what, three of them are what we are, you know, adding capacity specifically in. And they are all added at our third site.
Jason Soans
Okay, okay. And so at so same thing. I mean in terms of the greenfield capex, so bushings, large size bearing cages and stampings are the main products going to be produced in advantech, is that right? That’s the plan in the current stage, yes. In the current, yeah. And also just wanted to ask, I mean do we have at that same site if we, let’s say in the future want to add more engineering products, do we have more land available? Do we have more land to expand? You know, if, let’s say if there’s another product you want to add, do we have more land available at the Bhaila facility?
Vishal Rangwala
Yeah, so we have about 60, almost. 55, 60% land free at Baila site as of today. Further, even on the buildings we have. Built when fully operational by next year, we still believe that on the building space also there will be about 20% odd space left for us to expand without adding new Infrastructure spend all those days of, you know, making a big investment there and in Baila up front. But then utilization or real, real utilization will come over a period of time.
Jason Soans
Sure. So if. Of course, if you see opportunities, there is more scope for adding at that facility. Yes, yes. Yeah. Okay. Okay. That’s what my point was. Okay. And so just lastly one thing. The 117 crore contract, if just I heard it right, Q4 will see some revenues coming from that and it will take two to three years for basically to touch that 117 per annum revenue. Is that right? Yes, yes. Incremental. Yes.
Parikshit Gujrati
Yeah. So only Q4 will have some incremental value but it will take two to three years for it to scale up to the 117 for your target, right?
Vishal Rangwala
Yes.
Jason Soans
Yes sir. Okay. Okay, sir. Okay.
Vishal Rangwala
That’s.
Parikshit Gujrati
Those were all my questions. Thank you so much for. Thanks.
operator
Thank you. A reminder to all the participants, you may press Star and one to ask a question. The next question is from the line of Pratamesh from PL Capital. Please go ahead. Hi.
Prathmesh Salunkhe
Thank you so much for the opportunity. So my question was on bearing cages. I understand we are trying to expand the bearing cages footprint in the Romania. So just wanted to know what is. The revenue mix in Romania right now. Of the bearing cages and also in. India engineering, what sort of contribution did the bearing cages made in terms of revenue?
Maulik Jasani
So Romania as you might be aware we have a two major category of product. One is a semi finished casting and another is a cage. Cage is hardly 20% around of our top line in Romania. In Romania 80% is a. Yeah. In Romania and 80% is a semi finished casting. And in India you can say that almost 70, 75% is a cage. They’re in cage business in India.
Vishal Rangwala
I meant in the Korean.
Unidentified Participant
No, but just, just Vishal. Sorry Molik, one clarification. In India we don’t do semi finished castings at all. Practically. No.
Vishal Rangwala
Yeah. No sir, in India I was asking about bearing.
Maulik Jasani
The bearing cages is around out of our total revenue in India. 70, 75% is a bearing cages balance are boosting the understanding.
Unidentified Participant
Exactly.
Prathmesh Salunkhe
And in Q1 FY23.
Maulik Jasani
Almost.
operator
Okay, okay, okay. Thank you so much for answering the question. Thank you. A reminder to all the participants, you may press Star and one to ask a question. As there are no further questions on the participants, I now hand the conference over to Mr. Vishal Rangwada for closing comments.
Vishal Rangwala
Thank you very much to all of you for participating and joining this call. Wishing you a very good evening and hope to talk to you next time. Thank you.
Maulik Jasani
Thank you. Thank you very much.
operator
On behalf of Architecture International Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.