Summary
Quality Power Electrical Equipments Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 10.00 A.M.
Event Participants
Executives 4 Bharanidharan Pandyan (Joint Managing Director), Rajesh Jayaraman (Chief Financial Officer), Sanjog Mhatre (Chief Executive Officer), Sarika Jadhav (Senior Vice President Finance)
Analysts 8 Aditya Trivedi, Dev Gulwani, Eshit Sheth, Kartik Kohli, Naman Parmar, Nemish Sunder, Prafful Agarwal, Praveen Motwani, Shaleen Kumar, Shashank Jha, Yash Dantewadia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Total Income | ₹284.3 crores | +250% YoY, +30% QoQ; driven by scale-up in operations and robust order execution. |
| Consolidated EBITDA | ₹79.3 crores | +28% Margin; supported by operating leverage and disciplined fixed cost management. |
| Consolidated PAT | ₹62.8 crores | Significant YoY growth; driven by higher operating profitability and stable tax structure. |
| Standalone Total Income | ₹59.2 crores | +63% YoY, +9% QoQ; primary driver was higher execution and billing. |
| Standalone EBITDA | ₹20.4 crores | +35% Margin; improved due to better absorption of fixed costs. |
| Order Book | ₹895 crores | +₹300 crores expected in next few weeks; covers over 12 months of execution. |
| Net Current Assets | ~₹390 crores | Reflects strong cash position for potential inorganic growth. |
Geographic & Segment Commentary
- India Operations (Quality Power & Projects): Revenue of ~₹64.5 crores (₹60 cr + ₹4.52 cr). Focus remains on high-margin coil products (34% EBITDA margin) and upcoming HVDC capacity at Sangli.
- Mehru (Instrument Transformers): Revenue of ₹83 crores with 16.4% EBITDA margin. Management is prioritizing global brand growth over immediate margin expansion, exploring a new facility in Turkey.
- Endoks (Turkey - Power Electronics): Revenue of ₹149 crores with ~30% EBITDA margin. Performance peaked in Q3 due to December financial year-end execution; benefits from near-zero tax rates due to R&D incentives.
Company-Specific & Strategic Commentary
- Capacity Expansion: Sangli Global coil factory completion advanced to June 2026. Board approved a new Global Engineering and Technology center at Sangli to anchor deep engineering capabilities.
- Sukrut Acquisition: Completed 50% stake acquisition; turned operationally positive in the first month under new management. Sukrut provides access to 200-300 global transformer manufacturing customers.
- GIS Product Line: First GIS trial product targeted for market readiness by June/July 2026. Partnership with Hyosung (Korea) provides technology hand-holding and access to US/Korean markets.
- Vertical Integration: Setting up HVDC-specific magnet wire capacity to secure critical supply chains for future HVDC projects.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 22% Floor (Upward Bias) | Based on current product mix (QP 34%, Endoks 30%, Mehru 16.4%). |
| Revenue Potential | ₹1,500 crores | Capacity-based potential at 75% utilization from current/upcoming expansions. |
| Execution Timeline | 12-18 Months | 95% of current order book is executable within this timeframe. |
| Growth Curve | “S-Shaped” | Plan involves hyper-growth phases followed by stabilization to build teams and processes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Volatility | Copper and aluminum price spikes impact margins as 98% of the order book is fixed-price. Management mitigates this through weekly price adjustments for new bookings. |
| Supply Chain | Ongoing shortages in insulators (specifically global/Indian sources) necessitate higher inventory stockpiling, impacting short-term operating cash flow. |
| Regulatory Approvals | Sangli plant commissioning is subject to critical environmental clearances and NABL/ISO certifications, which could delay the targeted June 2026 start. |
Q&A Highlights
HVDC & Data Centers
- Question: Does the rise of Battery Energy Storage (BESS) challenge HVDC demand? (Praveen Motwani)
- Answer: BESS is complementary. Large-scale renewable generation (e.g., Khavda) still requires HVDC for long-distance transmission to distribution hubs. AC lines handle ~1GW vs. HVDC’s 6GW capacity (Bharanidharan Pandyan).
Margin Outlook for Mehru
- Question: Is there scope for margin improvement in the Mehru segment? (Shaleen Kumar)
- Answer: While high-teen margins are possible, management may sacrifice some margin for volume growth to establish Mehru as a global brand (Bharanidharan Pandyan).
Working Capital & Inventory
- Question: Why has OCF/EBITDA conversion dropped? (Aditya Trivedi)
- Answer: Strategic stockpiling of critical, long-lead raw materials like insulators and conductors to ensure project timelines (Bharanidharan Pandyan).
Strategic Rationale for Turkey Expansion
- Question: Why build a greenfield facility for Mehru in Turkey instead of India? (Eshit Sheth)
- Answer: Lower land costs (Delhi land is ₹25-30 cr/acre), existing cash reserves in Turkey, and proximity to European customers for faster deliveries and factory acceptance tests (Bharanidharan Pandyan).
Key Takeaway
Quality Power delivered a robust Q3 FY26 with consolidated revenue growing 250% YoY to ₹284.3 crores, driven by strong execution at Endoks and Mehru. The company maintained high profitability with overall EBITDA margins reaching 28% andStandalone margins at 35%. Strategic moves included the integration of Sukrut Electric and advancing the Sangli factory completion to June 2026. The order book stands healthy at ₹895 crores, with an additional ₹300 crores in the immediate pipeline. While commodity volatility remains a watch point for fixed-price contracts, management has guided for a 22% floor margin with an “S-shaped” growth trajectory. The company is well-positioned to capitalize on global HVDC and GIS demand, supported by a strong net current asset position of ₹390 crores for potential inorganic expansion. Forward growth is expected to scale toward a ₹1,500 crore revenue potential as new capacities stabilize.
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