Summary
Admach Systems Limited - H1 FY26 Earnings Call Summary Monday, January 27, 2026 12:00 PM
Event Participants
Executives 2 Ajay Longani (Managing Director & Chairman), Mahesh Longani (Executive Director)
Analysts 4 Aryan Bhatia (Inved Research), Ashok Shah (Eklavya Invesco Family Office), Nevil (Credent AMC), Sweta BK (Eqilion)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (H1 FY26) | ₹29.00 crores | Executed orders represent ~41% of the lower end of FY26 guidance. |
| EBITDA Margin | 23.4% | Reported for the current period; management expects improvement post-capex. |
| PAT Margin | ~10% to 15% | Management expects 200-300 bps improvement as machining facilities move in-house. |
| Order Book | ₹76.95 crores | Healthy visibility with 50% split in steel processing and 30% in NDT/Defense. |
| Order Pipeline | ₹200.00 crores | Total value of submitted quotations; management expects >50% L1 conversion. |
| Capex | ₹15.00 crores | Allocated for CNC machines to enable backward integration and faster execution. |
Geographic & Segment Commentary
- Steel and Mining: Represents approximately 50% of the business focus, providing customized finishing and processing equipment for special grade steels (SBQ) and alloys.
- Defense and Nuclear: Currently contributes 10-15% of revenue with high-margin potential; includes a ₹10 crore order from Nuclear Fuel Complex (NFC) and export orders for missile shell testing (Taiwan, Korea) and howitzer assemblies (Brazil).
- Exports: Active presence in 27 countries; management utilizes “China-plus-one” tailwinds and European partnerships to export X-ray and ultrasonic testing equipment.
- Non-Destructive Testing (NDT): Provides integrated solutions including X-ray, ultrasonic, and magnetic particle inspection across regulated industries.
Company-Specific & Strategic Commentary
- Backward Integration: Investing ₹15 crores in CNC machinery to move component manufacturing in-house, aimed at reducing reliance on third-party vendors and improving margins.
- Efficiency and Lead Times: Strategic focus on reducing project timelines by 30 to 60 days through in-house execution, coordination, and transportation savings.
- European Partnerships: Currently collaborating with six European engineering firms to provide end-to-end solutions, leveraging a 30-40% cost advantage over global competitors.
- Manufacturing Footprint: Operating a 2-acre facility in Pune with 35,000 sq. ft. utilized; recently added a new assembly hall providing 40% additional expansion potential.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue | ₹70 - ₹80 crores (FY26) | Firm guidance based on current shop floor projects and healthy order book. |
| Revenue | ₹100+ crores (FY27) | Expected growth driven by conversion of current ₹200 crore bid pipeline. |
| Long-term Revenue | ₹200 crores (Realistic Target) | Capacity can support this scale post-utilization of new assembly sheds and CNC capex. |
| Working Capital | ~60 Days (Cash Cycle) | Management noted physical investment cycle starts after initial 30 days of engineering. |
Risks & Constraints
| Risk | Context |
|---|---|
| Project Concentration | As an engineer-to-order (ETO) business, revenue is tied to discrete project cycles which can lead to quarterly volatility. |
| Working Capital Intensity | Government orders lack advance payments, requiring the company to fund 100% of execution for 3-4 months before 80-90% recovery upon inspection. |
| Geopolitical/Policy Risk | While “China-plus-one” is a tailwind, changes in international trade agreements or EU-India FTA specifics could alter competitive dynamics. |
Q&A Highlights
Capex and Margin Expansion
- Question: Will the ₹15 crore CNC capex lead to better margins and lower working capital? (Aryan Bhatia)
- Answer: In-house manufacturing will save vendor payouts and reduce project timelines by 30-60 days, positively impacting EBITDA and PAT (Mahesh Longani).
Order Book and Pipeline
- Question: What is the current bid pipeline and expected conversion? (Ashok Shah)
- Answer: We have submitted quotations worth ₹200 crores and expect to be L1 in more than 50% of these bids. We expect FY27 revenue to exceed ₹100 crores (Mahesh Longani).
Segment Exposure (Defense & Nuclear)
- Question: What is the contribution of high-margin segments like Defense? (Nevil)
- Answer: Currently 10-15%. We have a ₹10 crore order from NFC and are seeing strong interest from international defense clients like Brazil for howitzer testing (Mahesh Longani).
Competitive Positioning
- Question: Who are the domestic competitors for your tailor-made solutions? (Nevil)
- Answer: We face limited domestic competition for end-to-end concept-to-commissioning solutions. Competition is primarily European, where we hold a 30-40% price advantage (Mahesh Longani).
Key Takeaway
Admach Systems reported a steady H1 FY26 with revenues of ₹29 crores, backed by a robust order book of ₹76.95 crores and a substantial bid pipeline of ₹200 crores. The company is undergoing a strategic transition toward backward integration, deploying ₹15 crores in CNC machinery to capture higher margins and reduce project execution cycles by up to two months. Management maintained its FY26 revenue guidance of ₹70-80 crores, with a clear trajectory toward ₹100+ crores in FY27. Strategic focus remains on high-margin segments including Defense, Nuclear, and NDT, while leveraging European partnerships to capitalize on the “China-plus-one” manufacturing shift. Despite the working capital intensity inherent in government contracts, the company’s expansion of assembly facilities and in-house capabilities positions it to scale toward a long-term target of ₹200 crores in revenue. Substantial growth is expected as new CNC facilities go live in the next 7-8 months.
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