Summary
Rossell Techsys Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 04, 2026, 11:00 AM
Event Participants
Executives 4 Jayanth V. (CFO), Rishab Gupta (MD), Senthil Balasubramanian (CEO), Zeena Philip (COO)
Analysts 8 Amuthan Iyer, Ayush Agarwal, Ayush Mittal, Hemanth, Hriday Chokshi, Karan Sanwal, N. Das, Raj Vyas
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹130 crores | +72.0% YoY; Highest quarterly and monthly revenue in company history. |
| Revenue (9M FY26) | ₹343 crores | +98.3% YoY; Significant growth compared to ₹173 crores in 9M FY25. |
| Profit Before Tax (Q3) | ₹8.23 crores | Performance supported by scalability and operating model resilience. |
| Profit Before Tax (9M) | ₹19.00 crores | Significant increase from ₹1.2 crores in 9M FY25 despite higher finance costs. |
| EBITDA Margin (Target) | 17% - 22% | Current levels at 13-14%; management expects expansion as First Article Inspections (FAIs) transition to production. |
| Total Inventory | ₹289.22 crores | Strategically aligned with FY26-27 growth; includes ₹257 crores in raw materials. |
| Inventory Holding | 7.5 months | Reduced from 10 months in March 2025; targeting 4 months (3-turn) within 18-24 months. |
| Confirmed Order Book | ₹750 crores | Firm POs to be executed over the next 2 years. |
| Strategic Agreements | ₹2,500 crores | Long-term framework agreements with an execution timeline of 3-5 years. |
| Headcount | 1,177 | Includes 904 employees/contractors and 273 trainees; focus on moving contract staff to on-roll. |
Geographic & Segment Commentary
- Semiconductor: Rapidly scaling segment that generated over ₹10 crores in revenue in its first quarter post-qualification. Focus is on wire harnesses for semiconductor manufacturing equipment, characterized by high-volume, low-mix production.
- Space Technology: Programs have advanced to volume-ready status with the first large production batch due by the end of FY26. Management noted the market opportunity is massive, focusing on high-reliability harnesses for satellites and related programs.
- Aerospace & Defence: Remains the core segment (70% of current revenue), benefiting from on-time delivery and duty-free entry into the US. While growing significantly in absolute terms, its share is expected to normalize to 50% as other segments scale faster.
- Geographic Mix: Currently 80% US and 20% non-US (mostly export-oriented at 99%). The company is targeting aggressive expansion into Europe and the Middle East, with new partnerships and bids currently in progress.
Company-Specific & Strategic Commentary
- Diversification: Strategic shift from 70/30 (Defence/Non-Defence) to a 50/50 revenue split by FY27 to capitalize on high-volume semiconductor and space opportunities.
- Capacity Expansion: Planning to lease a new 210,000 sq. ft. facility in Bangalore starting April 1, 2026, to accommodate new Centres of Excellence for emerging customers.
- Operational Efficiency: Investing in automatic and semi-automatic machinery and transitioning from “Build-to-Print” (90%) toward more “Build-to-Spec” (10%) engineering work to deepen OEM relationships.
- Supply Chain Maturity: Shifting toward a distributor-stocking model to reduce in-house inventory levels and conserve cash, aiming for a three-turn inventory cycle.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Similar to FY26 levels | Management expects the 98% growth momentum seen in 9M FY26 to continue into FY27. |
| Revenue Run Rate | ₹1,300 crores (Cumulative) | Management projects delivering the same revenue in FY26-FY27 combined as the previous 14 years cumulative. |
| Margin Expansion | 17% - 22% Range | Expected in the short-to-medium term as programs move past the expensive FAI qualification phase into lean production. |
| Strategic Mix | 50% Non-Aero/Defence | Targeted for next fiscal year driven by semiconductor and space volume uptakes. |
Risks & Constraints
| Risk | Context |
|---|---|
| Margin Pressure | Current margins (13-14%) are suppressed by high FAI (First Article Inspection) activity for new customers and training costs; timing of production ramp-up is critical for recovery. |
| Inventory Concentration | Carrying 7.5 months of inventory ties up significant working capital; failure to transition to the distributor-led stocking model could impact liquidity. |
| Sectoral Concentration | Despite diversification, 80% of revenue remains tied to US markets, though management notes duty-free status mitigates tariff risks. |
Q&A Highlights
Revenue & Growth Visibility
- Question: Can we expect FY26 revenue to be ₹500 crores and FY27 to reach ₹800 crores? (Hemanth)
- Answer: Q4 will be better than Q3, and the company expects the same significant growth momentum next year as experienced this year (Rishab Gupta).
Margin Drivers
- Question: What will lead to the bridge in margins from 13-14% to above 17%? (Ayush Agarwal)
- Answer: Transitioning from First Article Inspections (FAI) to full production, operational efficiencies, and massive scaling are the primary levers (Rishab Gupta).
Semiconductor Opportunity
- Question: What is the market opportunity and competition in semiconductors? (Hemanth / Raj Vyas)
- Answer: The market is massive and Rossell is just scratching the surface. Reputation for high-reliability harnesses for defence makes them attractive to semiconductor equipment OEMs (Rishab Gupta / Senthil B.).
Inventory Management
- Question: How are you managing the high inventory levels? (Saumil Jain)
- Answer: Inventory has dropped from 10 months to 7.5 months. Future strategy involves distributors holding stock and Rossell calling it on a need basis to reach a 4-month (3-turn) cycle (Senthil B. / Rishab Gupta).
QIP & Funding
- Question: What is the status and purpose of the ₹300 crore QIP? (Amuthan Iyer)
- Answer: The process is underway; timing depends on market sentiments and finding the right institutional partners. Funds will fuel infrastructure, machinery, and capacity expansion (Rishab Gupta).
Key Takeaway
Rossell Techsys delivered a record-breaking Q3 FY26, with revenue growing 72% YoY to ₹130 crores and 9M revenue nearly doubling to ₹343 crores. The company is successfully executing a diversification strategy, scaling its semiconductor equipment business to ₹10 crores in its first post-qualification quarter and preparing for volume deliveries in space technology. While current EBITDA margins of ~13-14% are below the 17-22% target due to high First Article Inspection (FAI) costs for new programs, management remains confident in margin expansion as these programs enter production. With a confirmed PO book of ₹750 crores and strategic agreements totaling ₹2,500 crores, the company is preparing for a transformative phase, including a ₹300 crore QIP and a 210,000 sq. ft. capacity expansion in April 2026. Rossell is positioned to deliver as much revenue in the next two years as it did in the previous fourteen, provided it successfully executes its inventory reduction and capacity ramp-up.
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