Summary
Tembo Global Industries Limited - Q3 FY2026 Earnings Call Summary Thursday, February 05, 2026 4:00 PM
Event Participants
Executives 2 Sanjay Patel (Managing Director), Shabbir Merchant (Director)
Analysts 7 Amit Kumar Rajput, Amol Deshmukh, Apurva Sharma, Deepak Poddar, Dinesh Kulkarni, Kriti Tripathi, Rohan Motha, Suruchi Parmar, Vansh Saini
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹251 crores | +49.5% YoY; Driven by strong traction in Engineering and Textile segments. |
| 9M FY26 Revenue | ₹744 crores | +58.6% YoY; Reflects consistent execution and improved scale across businesses. |
| EBITDA | ₹43 crores | +41.9% YoY; Supported by volume-driven operational leverage. |
| EBITDA Margin | 17.2% | +90 bps YoY; 9M FY26 margins improved to 13.9% due to efficiency gains. |
| Profit After Tax (PAT) | ₹26 crores | +36.7% YoY; PAT margin stood at 10.4% for the 9-month period. |
| Order Book | ₹1,484 crores | Robust visibility; Consists primarily of Engineering products and EPC led projects. |
| Working Capital Cycle | 80-90 days | Stable; Management expects to maintain this range despite scaling operations. |
Geographic & Segment Commentary
- Engineering Division: Recorded 52.9% YoY growth in Q3; the segment remains the primary driver, benefiting from infrastructure projects in land, water, and marine sectors. Domestic margins are noted to be higher than export margins as the company acts as an end-user in local EPC projects.
- Textile Division: Reported 44.4% YoY growth; management previously considered a demerger but is now evaluating opportunities arising from the India-EU trade deal and increased inquiries from the USA.
- Exports: Currently contributes 13% to 15% of engineering sales; primarily sold through wholesalers and distributors, resulting in lower margins compared to domestic project-led sales.
Company-Specific & Strategic Commentary
- Manufacturing Expansion: Commenced commercial production at the new Vasai facility, aiming for an installed capacity of 100,000 metric tons over the next 2-3 years. The plant will produce ERW pipes, channels, and precision engineering products with automated machinery to improve operational efficiency.
- Defence Vertical: Obtained arms license and completed land allotment; commercial production is targeted for September/October 2026 with a first-stage revenue potential of ₹300 crores.
- Solar Energy: Executing a ₹650 crore capital outlay project with the Maharashtra government under a 25-year PPA; first-year revenue is projected at ₹75-₹90 crores with a ₹110 crore government subsidy.
- Strategic Merger: The board has proposed the merger of Tembo Infra with Tembo Global Industries to consolidate operations; filings are currently with the NSE.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 35% - 40% (FY27) | Expected growth from current levels driven by new verticals and capacity ramp-up. |
| PAT Margin | 10% - 12% (FY27) | Targeted steady-state profitability for the consolidated entity. |
| Defence Revenue | ₹125 - ₹150 crores (FY27) | Based on 6 months of operations starting Q3 FY27; EBITDA margins expected at 30-35%. |
| Solar Revenue | ₹75 - ₹90 crores (Annual) | Steady-state power generation revenue following full commercialization in FY27. |
Risks & Constraints
| Risk | Context |
|---|---|
| Capital Intensity | The company is entering a high-capex phase with ₹1,000 crores for Defence and ₹650 crores for Solar, necessitating significant debt and internal accrual reliance. |
| Project Concentration | A significant portion of the pipeline (₹700-₹1,000 crores) is tied to negotiations with a single major corporate group for port and fuel farm projects. |
| Execution Timelines | The diversification into highly regulated sectors like Defence (requiring TOT) and Solar (PPA-based) introduces complexities in meeting the targeted late-2026 production starts. |
Q&A Highlights
Defence Vertical Progress
- Question: What is the status of the technology transfer and revenue timeline for the Defence unit? (Deepak Poddar)
- Answer: Machinery and technology payments are made; commercial production is slated for Sep/Oct 2026. Management expects ₹125-150 crores revenue in FY27 with 30-35% EBITDA margins (Sanjay Patel, Shabbir Merchant).
Capacity and Manufacturing
- Question: How will the new Vasai plant impact margins and what is the ramp-up plan? (Vansh Saini)
- Answer: The facility will reach 90-100% utilization in 2-3 years. Margins will improve due to automation, better logistics, and economies of scale (Shabbir Merchant).
Solar and Subsidies
- Question: Can you clarify the revenue and subsidy structure for the Solar business? (Kriti Tripathi, Suruchi Parmar)
- Answer: It is a ₹650 crore project under a 25-year PPA with the Maharashtra government. It will generate ₹75-90 crores annually with a one-time ₹110 crore subsidy (Sanjay Patel).
Textile Demerger
- Question: Is the plan to discontinue or separate the textile business still on track? (Vansh Saini)
- Answer: Separation is planned for 2027, but recent trade deals with the EU have created significant new fabric export opportunities that management is currently evaluating (Sanjay Patel).
Key Takeaway
Tembo Global Industries delivered a robust Q3 FY26, with revenue growing 49.5% YoY to ₹251 crores and a healthy order book of ₹1,484 crores providing 12-24 months of visibility. The company is undergoing a structural shift from a traditional engineering and textile firm to a diversified infrastructure and precision manufacturing player, backed by the commencement of the new 100,000 MT Vasai facility. Strategically, the company is pivoting toward high-margin segments, including a ₹1,000 crore CAPEX in Defence and a ₹650 crore Solar PPA project, both expected to contribute meaningfully by FY27. Management has guided for 35-40% revenue growth in FY27 with PAT margins of 10-12%. While the capital intensity is increasing significantly, the move is supported by project-specific financing and government subsidies, positioning the firm for a higher scale of operations despite execution risks associated with new vertical ramp-ups.
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