Isgec Heavy Eng Q4 FY26 earnings call

What moved the numbers, as management explained it

• Philippines assets reclassified from held-for-sale to continuing operations added INR104 cr YoY to consolidated depreciation (FY26 INR278 cr), compressing consolidated PAT to INR154 cr (~25% lower YoY). (accounting)
• Cavite Biofuels commercial ops began 17-Dec-2025 with ~3.5 months of operations in FY26; FY26 P&L loss INR295 cr (depreciation INR170 cr, interest INR70 cr, forex INR95 cr); operational loss only INR26 cr. (one-off)
• FY26 standalone revenue grew only 4.2% to INR5,229 cr, below prior 7-8% guidance; Q4 recovered with 16% YoY standalone revenue growth.
• Export revenue doubled to INR1,169 cr (~22% of standalone) from INR532 cr; export order book INR1,450 cr as of 31-Mar-2026.
• Manufacturing EBIT margin 12.46% in FY26 within 12-13% guided band; project business EBIT margin 4.58%; Q4 manufacturing margin moderation driven by order-dispatch mix.

The numbers management led with

• FY27 standalone opening order book: INR7,000 crores (after excluding INR550 cr cancelled orders)
• New orders booked in April-May FY27: INR1,400 crores
• FY26 export revenue: INR1,169 crores (~22% of total revenue, up from INR532 crores)
• Isgec Hitachi Zosen FY27 revenue guidance: ~INR700 crores with PBT ~INR100 crores+
• FGD retention money collected: INR200+ crores realized; INR165 crores remaining

Guidance on this call

Guided on earlier calls, and what was filed

Filed figures are summed from the company's own quarterly results for the whole period (EBITDA excludes other income); where one sits against what was guided is arithmetic, not a judgement.

By business

Balance sheet, capex and funding

• FY26 capex INR153 cr, funded from internal accruals; additional INR25 cr approved for Muzaffarnagar steel castings plant expansion.
• Consolidated net borrowings INR476 cr as of 31-Mar-2026 vs INR836 cr last year.
• Cash and current investments INR241 cr as of 31-Mar-2026.
• No working capital borrowings at year-end; borrowings on-lent to Cavite Biofuels.
• FGD retention money INR165 cr remaining; expect to collect one-third in June and remainder by August.

The industry, as management sees it

Management sees a strong inquiry and order booking pipeline in both domestic and export markets, with broad-based demand across sugar, power, oil and gas, automobiles, and fertilizers. The exceptions are paper (described as not doing too well) and new ethanol plants in India (not many coming up). Geopolitical environment and rising input costs are flagged as risks, while a weaker rupee is seen as supportive of export realizations.

Risks management named

• Input cost inflation in steel castings, forgings, chemicals, and imported materials
• Geopolitical uncertainties impacting international business and order pipeline
• Gas shortages raising fuel costs across manufacturing units
• Export-import logistics cost increases and longer transit times
• Philippines ethanol plant sale timeline uncertain; reclassified to continuing operations

Not answered directly

• Cavite Biofuel forward EBITDA number
• Philippines plant sale price and specific buyer
• New technology order values and identity

Asked for a number, answered without one

• Expected credit loss in other expenses (consolidated): Chatnani explained other income has 3 parts (interest, government grants, forex fluctuations of INR103 cr with INR50 cr+ corresponding entry in other expenses) but did not provide an expected credit loss figure.
• Cavite Biofuels FY27 operational P&L: Chatnani gave FY27 depreciation ~INR150 cr but said 'operationally, I don't have a number to give you'; only stated operationally cash positive, no operational loss to fund.
• Philippines ethanol plant EBITDA / return on investment: Chatnani said the plant is operationally cash positive, sales and collections running well, but 'I don't have a number to give you on the EBITDA at this point.'

Every question, with its answer

1. 1. FY27 guidance split

   Digant Haria, GreenEdge Wealth

   Question. For the FY27 guidance of 10-12%, could you split it between the projects division and the products/manufacturing division?

   Answer, Kishore Chatnani, Joint Managing Director and CFO. The major increase will come from the manufacturing segment. We expect ~10% growth, or around INR500 cr, from manufacturing. The project business should also see some growth, maybe 3-4%.

   Follow-up. Is the 4.5% project EBIT and 12-13% manufacturing EBIT at material risk from supply chain disruption and raw material volatility? Are price variation clauses built in?

   Answer. Reasonably confident 12-13% manufacturing EBIT will be maintained; back-to-back supplier orders and contingency margins act as hedges. Some new capacity will lift depreciation. On projects, the situation is uncertain given the war, but we expect margins to improve to closer to 5.5% in FY27, supported by older orders nearing completion and better margins on newer orders.

2. 2. Margin guidance and risk hedging

   Digant Haria, GreenEdge Wealth

   Question. Given the margin risk and PVC question, is the 4.5% project and 12-13% manufacturing margin at material or moderate risk?

   Answer, Kishore Chatnani, Joint Managing Director and CFO. Reasonably confident 12-13% manufacturing EBIT will be maintained. Some new capacity coming online will lift depreciation. Material cost increases have been flagged for castings, forgings and imported items. Manufacturing is hedged through back-to-back orders placed soon after booking and via contingency margins. On projects, situation is uncertain but we expect FY27 to be closer to 5.5%, supported by older orders nearing completion and newer orders booked with better margins and contingencies.

   Follow-up. Does ISGEC have a play in the new technologies coming to India - coal gasification, polysilicon to wafer, solar?

   Answer. ISGEC has a play in some part of the value chain; we are keeping abreast and doing some work. We have orders for equipment used in these new technologies.

3. 3. New technology exposure

   Digant Haria, GreenEdge Wealth

   Question. On new developments like coal gasification, polysilicon-to-wafer, and solar technologies coming to India - does ISGEC have a play in any of these over the next 3-5 years?

   Answer, Aditya Puri, Managing Director. ISGEC has a play in some part of the value chain, it certainly has a play. We are keeping abreast of it, and we are doing some work in some part of that value chain.

   Follow-up. Have we won any orders yet in these new technologies?

   Answer. We have got orders for equipment which are used in these processes or these new technologies.

   Not answered directly.

4. 4. New technology orders

   Digant Haria, GreenEdge Wealth

   Question. Have we won any orders in the new technology areas, or is it too early to say?

   Answer, Aditya Puri, Managing Director. We have got orders for equipment which are used in these processes or these new technologies.

   Not answered directly.

5. 5. Manufacturing margin profile

   Kaushik Doshi, ICICI Securities

   Question. Q3 manufacturing margins were exceptionally strong, while Q4 saw moderation. Was this purely project mix driven or are cost pressures emerging?

   Answer, Kishore Chatnani, Joint Managing Director and CFO. It's a question of which orders actually got dispatched. Manufacturing revenue is booked on actual dispatches under the sale-of-goods method. Look at it on an annual basis, not quarter-to-quarter - we are reasonably certain 12-13% is what we have been doing for the past few years and we will maintain that.

   Follow-up. The export jump from 14% to 23% - is this large jump from execution of existing export orders or are we structurally gaining market share?

   Answer. Billing is from both existing and new orders; market share is increasing. New markets for presses in Southeast Asia (Vietnam, Thailand, Indonesia) and projects in Africa and Latin America. Export order book was INR1,450 cr at March 31, 2026.

6. 6. Export market share

   Kaushik Doshi, ICICI Securities

   Question. Export revenue jumped from 14% to 23%. Is this from execution of existing export orders or structural market share gain?

   Answer, Aditya Puri, Managing Director. The billing is out of existing orders and new orders. So we are increasing our market share.

   Follow-up. Which geographies are contributing the most?

   Answer. Basically, Southeast Asia and Africa.

7. 7. Export geography mix

   Kaushik Doshi, ICICI Securities

   Question. Which geographies are contributing the most to the export revenue?

   Answer, Aditya Puri, Managing Director. Basically, Southeast Asia and Africa.

8. 8. Consolidated ECL, Philippines unit, Hitachi Zosen

   Manish Goyal, Thinqwise Wealth Managers LLP

   Question. On consolidated results - what is the expected credit loss in other expenses, why are other expenses up, and what is the nature of the other income spike? On segmental, Philippine unit revenue looks low and losses high despite peak season - please provide insights. Also Hitachi Zosen JV revenue, PBT, order book and order inflow?

   Answer, Kishore Chatnani, Joint Managing Director and CFO. Isgec Hitachi Zosen order book at March 31, 2026 was INR763 cr; execution was very good. Full year total income INR672 cr and PBT INR103 cr. The other income parts and Philippine details to follow.

   Follow-up. FY27 outlook for Isgec Hitachi Zosen?

   Answer. We expect to do slightly better. Revenue should be closer to INR700 cr and PBT in the INR100 cr+ range.

   Partly answered.

9. 9. Hitachi Zosen FY27 outlook

   Manish Goyal, Thinqwise Wealth Managers LLP

   Question. How should we expect Isgec Hitachi Zosen to do in FY27?

   Answer, Kishore Chatnani, Joint Managing Director and CFO. We are expected to do slightly better than this. Revenue could be closer to INR700 cr and profit in the INR100 cr+ range.

   Follow-up. Coming back to other income and the ECL number on consolidated?

   Answer. Other income has 3 parts: interest income and net gain on sale of current investments; government grants related to Saraswati Sugar Mills; and forex fluctuations on Eagle Press and Singapore subsidiary. Forex fluctuation of INR103 cr; ~INR50 cr is correspondingly classified in other expenses as per accounting standards.

10. 10. Consolidated other income composition

    Manish Goyal, Thinqwise Wealth Managers LLP

    Question. On consolidated results, what is the ECL/expected credit loss number and the nature of the higher other income?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. Other income has 3 parts. One is interest income and net gain on sale of current investments. The second is government grants related to Saraswati Sugar Mills. The third is foreign exchange fluctuations related to Eagle Press and the Singapore subsidiary. Forex fluctuation of INR103 cr; ~INR50 cr of that is classified in other expenses per accounting standards, with a corresponding entry to net.

    Follow-up. Why were Cavite Biofuel losses so high in peak season, and what should we expect in FY27?

    Answer. First full year of commercial production; we were storing ethanol pending Department of Energy allocation. Dispatches actually began March 25. Capacity utilization was not the issue; allocation timing was.

11. 11. Cavite Biofuel Q4 performance

    Manish Goyal, Thinqwise Wealth Managers LLP

    Question. Why were Cavite Biofuel losses so high in a peak season, and how should we expect performance in FY27?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. Cavite Biofuels started production December 17 on local sugarcane. This was the first full commercial year. Capacity utilization was not the reason for the loss. We were making ethanol and storing it because we needed Department of Energy allocation to sell. The allocations cover April-June and July-September. Dispatches actually started March 25 from one customer. So full year reported P&L of INR295 cr includes INR170 cr depreciation, INR95 cr forex, INR70 cr interest, and ~INR26 cr operational loss from 3.5 months of factory operation.

    Follow-up. FY27 outlook for Cavite Biofuel?

    Answer. Plant is running on molasses at 70-75% capacity, expected to reach 85-90% for the rest of the year except 1-1.5 months of heavy rains. FY27 depreciation ~INR150 cr. Operationally cash positive, no funding needed. Self-sustaining now.

12. 12. Cavite Biofuel FY27 outlook

    Manish Goyal, Thinqwise Wealth Managers LLP

    Question. How should we expect Cavite Biofuel performance in FY27?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. Plant is running on molasses from other sugar factories, currently at 70-75% capacity; we expect 85-90% for the rest of the year except 1-1.5 months of heavy rain. FY27 depreciation ~INR150 cr. On an operating basis it is cash positive; no operational loss to be funded. Self-sustaining now; we don't have an EBITDA number to give.

    Follow-up. Interest cost of INR70 cr - is that reflected in standalone?

    Answer. That refers to the standalone balance sheet of Cavite Biofuels. The interest will repeat in FY27 because funding is now from Isgec Heavy Engineering.

    Not answered directly.

13. 13. Cavite Biofuel interest cost

    Manish Goyal, Thinqwise Wealth Managers LLP

    Question. The interest cost of INR70 cr - is it reflected in the standalone accounts because the loans are now with Isgec Heavy Engineering?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. Yes - it will repeat because the funding is now from Isgec Heavy Engineering. I was referring to the standalone balance sheet of Cavite Biofuels.

14. 14. FGD retention money collection

    Shubham, ICICI Securities

    Question. In the previous quarter, management indicated ~INR300 cr of FGD-related retention money was expected to be released in Q4. How much has been realized and what is outstanding?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. More than INR200 cr has been realized. Cash and current investments stand at INR241 cr as of March 31, 2026, even after funding INR153 cr of capex. INR165 cr remains on FGD projects; we expect to collect one-third in June and the rest by August.

15. 15. Subsidiary capital deficiency

    Ahmed, Motilal Oswal

    Question. On subsidiaries Isgec Investment Pte Ltd and Bioeq Energy Holding - there are large losses in the first and capital deficiency in the second. Could you elaborate?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. You are right - this is a negative net worth flagged by their auditors, picked up in our report. If the company had external borrowings or money owed externally, it would have difficulty. But this is all part of the group; whatever borrowings exist are given by us (effectively shareholder loans). There is no difficulty for that company or for the group as a whole.

16. 16. Sector-wise demand outlook

    Digant Haria, GreenEdge Wealth

    Question. Which of the 15-16 sectors you operate in are seeing good demand/traction? And how do you see the India ethanol story this year given higher crude oil prices?

    Answer, Aditya Puri, Managing Director. We have orders from sugar, power, oil and gas, automobiles, fertilizers - all doing well. We cater to a diverse set of industries. Except for paper (not doing too well) and new ethanol plants (not many coming up), we have a healthy order book across industries.

    Follow-up. On the shift 1.5-2 years back to shorter gestation projects - has the goal of improving working capital and order book turnover been achieved, and will this continue?

    Answer. Yes. As Chatnani said, project margins will be slightly higher. One reason is old projects coming to an end; new projects are shorter duration, reducing time-related uncertainties and risks.

17. 17. Project portfolio shift outcome

    Digant Haria, GreenEdge Wealth

    Question. On the pivot to shorter gestation projects in the project division - have you achieved the goals of better working capital and faster order book turnover? Will this continue and drive the 5.5% margin outlook?

    Answer, Aditya Puri, Managing Director. Yes. Project margin will be slightly higher. One reason: old projects that had gone on for years are coming to an end. New projects are shorter duration and the time-related uncertainties and risks are reduced considerably.

    Follow-up. On exports to Southeast Asia and Africa - are we taking enough care of currency and receivable risks?

    Answer. We work with confirmed letters of credit, denominated in USD or EUR, and take forward covers. We run a cash surplus on export projects. We don't have any case of significant money stuck with any customer in Africa.

18. 18. Export currency risk management

    Digant Haria, GreenEdge Wealth

    Question. On exports to Southeast Asia and Africa - are you taking enough care of currency risk, given that companies have faced receivable or currency issues in some African countries?

    Answer, Aditya Puri, Managing Director. We normally work with confirmed letters of credit. These are denominated in dollars or euros, and we take forward covers against them. So for exports where we have taken forward covers, it may work against us, but it's a hedge we don't want to leave exposed. We cover our forex risk and work through confirmed LCs.

19. 19. Philippines plant sale timeline

    Mahendra Jain, Way2 Capital

    Question. On the Philippines plant - the deal was done, at what price was it done? Now that it is a continuing asset, are we looking at a 1-2 year deal to consummate the sale?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. The deal that was done was reported in detail to the stock exchange. I don't want to repeat those numbers. That deal did not go through because the customer could not arrange funds and had problems of their own. We are running the plant now - a running plant demonstrating performance is easier to sell. We are engaged with certain parties but have no specific LOI at this point. We expect it can happen within the next 1-2 years, but accounting requires us to run it as continuing operations.

    Follow-up. Are we looking for at least 10-12% return on the Philippines investment, or what EBITDA can we make from FY27/FY28?

    Answer. We are running it on a cash profit. Between April and May we sold 4.35 million liters. We have contracts with 6 oil companies in the Philippines, lifting and payments happening smoothly. Capacity ramping to 65-70% and going higher, but I don't have an EBITDA number to give at this point.

    Not answered directly.

20. 20. Philippines plant ROI / EBITDA

    Mahendra Jain, Way2 Capital

    Question. From April onwards with ethanol stocking, can you share the expected ROI (10-12%) or what EBITDA the Philippines plant will generate from FY27/FY28?

    Answer, Kishore Chatnani, Joint Managing Director and CFO. We are running it on a cash profit at the moment. Between April and May we sold 4.35 million liters of ethanol. Government allocations are in place; we have contracts with 6 oil companies, lifting happening nicely, payment collection perfect. Capacity ramping from 65-70% upward. I don't have an EBITDA number to give at this point.

    Not answered directly.

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