Tempsens Inst Q1 FY27 earnings call

What moved the numbers, as management explained it

• Revenue +33% YoY driven by Temperature Sensing (+42%) and Electrical Heating (+148.8% on a low base) offset by Specialized Cables (-8.8%) on export order execution timing.
• Gross material margin at 47.4% vs Q1 FY26 high base of 49.3% (~200 bps drag); FY25 at 46.9% and FY26 at 46.0%.
• Employee cost rose 45% to INR20.4 cr (~140 bps margin drag) on headcount expansion to support future projects; FY26 base had INR57 lakh ESOP charge with no comparable charge this year.
• Recently acquired businesses (Tempsens Germany, Polska, Measurement & Control) added employee cost while contributing relatively lower revenue during integration phase. (one-off)
• Domestic revenue grew 18.5% to INR78 cr; exports grew 78.3% to INR39.8 cr on acquisition contribution and growth in SE Asia and North America.

Guidance on this call

By business

Balance sheet, capex and funding

• IPO fresh issue of INR95 cr; INR55 cr used to repay borrowings against total borrowings of INR78 cr at March 2026.
• Land acquired for ~INR25 cr for expansion of specialized cable business from internal accruals.
• Victura JV: agreement to acquire 80,000 sq ft facility (shed built); production to commence Q4 FY27, peak revenue potential ~INR120 cr.
• Inventory ~INR110-120 cr with 65-70% in raw material; raw material booked at order receipt and fluctuations passed through to customers.
• Lower finance cost expected to be visible from the coming quarter following IPO debt repayment.

The industry, as management sees it

Management sees structural tailwinds from electrification of process heat, alternative energy (fuel cells, green hydrogen), the China+1 sourcing shift and continued oil & gas / steel capex; cites a global TAM of ~$50 bn in 2025 growing 7-8% to ~$75 bn by 2030 across their three verticals. Process industries framed at 8-10% growth, with new-age industries expected to grow materially faster.

Risks management named

• EBITDA margin down 330 bps to 22% from upfront hiring and ESOP charges; cost absorption dependent on revenue ramp
• Specialized Cables revenue declined 8.8% on timing of export order execution
• Acquired businesses (Germany, Polska, M&C) adding employee cost during integration with relatively lower revenue base
• Capacity ramp for the four new projects needs time — full utilisation of ₹500 cr potential seen only by FY29/FY30

Not answered directly

• Fuel cell revenue / order book quantification
• Segment-level margin profile of cables vs heaters vs sensors

Asked for a number, answered without one

• Fuel cell order volumes by FY27 exit: This is like a work in progress, and we will come back with the exact results as we execute these projects.
• Order book size for OEMs and fuel cells: As we execute, we would be disclosing to the market. As of now, we have got a solid order book, but we're in the execution phase.
• Segment margin profiles: We have not differentiated on margin profile across segments; the blended margin is already available. Temperature sensors and electrical heaters margins are slightly more than specialized cables.
• New age industry contribution to revenue: We don't have an exact number... growth would be much faster, we expect this to be in a double-digit number or maybe in the high 20s or 30s in the next maybe 2 years-3 years.
• Fuel cell/hydrogen cell order book mix: We wish it will happen, but we're not like we can comment on what would be the order book.

Every question, with its answer

1. 1. New product / OEM opportunity sizing

   Pratik Dharmshi, Union Mutual Fund22:10

   Question. On the new product launches and newer segments — Micro-Epsilon partnership for newer pyrometers, fuel cells and semiconductor applications — can you elaborate the addressable market, share we can grab and how these segments should evolve over 3-5 years?

   Answer, Aryan Rathi, Lead, Global Sales. Aryan described the Micro-Epsilon / newer-product market as roughly a ₹3,000 cr opportunity where Tempsens currently addresses <1%. Micro-Epsilon co-developed products (EDGE pyrometers) will dispatch through both Micro-Epsilon and Tempsens channels from Q3 FY27 — better visibility on trajectory then. Mid-Voltage Heaters is not crowded with only a handful of players; right to win via backward integration; runway from FY28. OEM-plus-new-product mix expected to contribute >25% of revenue starting FY28.

   Follow-up. Are margins on newer industries (data centres, fuel cells, semicon) similar to core? Is the partnership model the go-forward approach?

   Answer. Margins broadly similar across newer products and segments depending on product mix; on partnerships, case-by-case — go solo where right to win exists, tie up with incumbents where joint market capture makes sense.

2. 2. Fuel cell OEM order trajectory

   Sahil, SR Investments23:26

   Question. On fuel cells — how has the OEM order trajectory evolved in Q1 FY27?

   Answer, Vinay Rathi, Managing Director. Vinay noted temperature is a critical parameter in fuel cell operation; Tempsens is tied up with OEMs to supply temperature sensors for this market. Aryan added that they are in advanced stages with field trials and run-up, now focused on executing at scale; other products being attempted as well but further out. On quantification of run-rate and exit-FY27 volumes, Vinay said it is work-in-progress and the company will share exact results as projects execute.

   Follow-up. Can you quantify the run-rate and volumes ramp by FY27 exit? Also, what are the OEM clients in Mexico and South Korea in terms of vertical?

   Answer. Vinay declined to quantify run-rate citing execution stage. On Mexico / South Korea, Aryan clarified they are targeting both OEMs and process industries — steel, oil & gas, cement — with most OEM activity domestic.

   Not answered directly.

3. 3. Competition & moat

   Aman, Blue Sky Fintech23:34

   Question. Two questions — how is competition intensity in your business and how difficult is it for new entrants / existing clients to shift? What is the basic moat?

   Answer, Vinay Rathi, Managing Director. Vinay framed these as small-cost but critical components (<1% of plant cost); malfunction causes safety hazard and productivity issues so customers are very choosy. Number of players is limited in critical industries; competition varies by application — more critical the application, more certified the products (e.g. explosion-proof in petrochem, pressurised vessel certification elsewhere). Vendor approval is a 3-5 year cycle; once approved, subsequent product approvals are easier. Big roadblock for new entrants.

   Follow-up. What % of current revenue comes from critical segments?

   Answer. Vinay estimated 75-90% from critical areas and 10-25% from regular industries where competition is higher; described as a broad estimate.

4. 4. New-age industry TAM & contribution

   Naman Parmar, Niveshaay Investment Advisory24:06

   Question. On the new-age industries (semiconductor, cartridge heating) — what is the TAM and how big will the contribution be?

   Answer, Aryan Rathi, Lead, Global Sales. Aryan said 'new-age' is broad — covers energy, energy storage, decarbonisation. Process industries growing ~8-10%; new-age industries much higher but hard to size. TAM is not the limiting factor; right products to address market is. Vinay added Tempsens has been a heavy-industry player but same products apply to new-age (e.g. Korean JV supplying battery manufacturing); no exact number but expects new-age / new products to grow in high-20s to 30% over next 2-3 years.

   Follow-up. How frequent is replacement for temperature sensing / electrical heating given ~30% MRO revenue? And is the ₹500 cr potential incremental to the ₹445 cr FY26 base?

   Answer. Vinay: replacement life varies — molten aluminium sensors may last hours, nuclear plant sensors up to 20 years. 30% of business is replacement-driven; US/Europe suppliers uninterested in small lots, so Tempsens' six international locations play the replacement-to-project entry strategy. Aryan confirmed ₹500 cr is incremental capacity to be online by Q3 FY28.

   Partly answered.

5. 5. Segment margins & inventory management

   Naman Parmar, Niveshaay Investment Advisory41:06

   Question. What is the margin profile of each of the three segments — temperature sensing, heating, cables? And how do you manage inventory given SKU breadth and raw material price volatility?

   Answer, Priyanka Menaria, Chief Financial Officer. Vinay: no segment-level margin disclosure; blended margin available. Temperature sensors and electrical heaters margins are slightly higher than specialized cables. Priyanka: inventory ₹110-120 cr; 65-70% raw material, balance WIP and finished goods. Raw materials booked at order receipt; price fluctuations passed through to customers.

   Partly answered.

6. 6. MENA geopolitical exposure

   Jenish Karia, Union AMC43:07

   Question. With sizeable petrochemical exposure and awaiting cable approvals in Middle East / Africa / MENA (~10% exposure), do you see short-term challenges and long-term growth challenges in the region?

   Answer, Vinay Rathi, Managing Director. Vinay said exports have actually risen materially during the current political situation; believes more customers will electrify processes which is positive for heater and other businesses. Short-term minimal impact, mid-term positive. On Jenish's clarification — no negative revenue impact expected for upcoming quarters or FY27; next year could be positive.

   Follow-up. Order book visibility — are new-age industry orders (data centres, semiconductors) order-book based or just-in-time? And for fuel cells, is there a visible / contracted order book?

   Answer. Vinay: typical heavy-industry order book is 4-4.5 months; OEM players offer 9-12 month visibility (Victura, furnace contract is 5 years). On fuel cells, 'we have got a clear visibility on that front' but exact size to be disclosed as execution progresses.

   Not answered directly.

7. 7. Margin recovery bridge

   Jenish Karia, Union AMC46:31

   Question. On margin recovery bridge — 200 bps from gross margin high base, 100 bps from employee cost — how does the employee cost line recover?

   Answer, Priyanka Menaria, Chief Financial Officer. Priyanka: hiring is for new areas and project seeding; once full-year executed, cost will absorb against revenue. Recovery will be visible in H2 FY27, not waiting for FY28.

8. 8. Fuel cell supply content

   Parag Agrawal, Second Theory Capital48:13

   Question. On fuel cells — what exactly do you supply? Temperature sensors / thermocouples, or also cables, wiring, heaters?

   Answer, Aryan Rathi, Lead, Global Sales. Mostly temperature sensors — critical sensors mapping temperature across the fuel cell operating in a tight band. Other products across the line being explored.

   Follow-up. On qualification — once an OEM qualifies you, do they keep supplying from you for life on their product, or is there annual rebidding? Is OEM business moving to annual contracts?

   Answer. Aryan: OEMs are stickier than project-based process industries; usually built into spec/machinery. PO-to-PO with milestone-based visibility rather than multi-year contracts (the 5-year furnace contract is the exception).

9. 9. FY27 revenue growth implied

   Gaurav Jawalkar, JM Financial50:51

   Question. If employee cost normalises and margins revert to FY26 level, fair to assume revenue growth of ~25% for FY27?

   Answer, Aryan Rathi, Lead, Global Sales. Aryan: growth should be in line with historical three-year blended CAGR — around the number suggested; better visibility as we get into H2.

   Follow-up. On exports — is Mexico targeted at the US market? And any timeline on Middle East breakthrough orders in FY27?

   Answer. Aryan: Mexico, Poland and South Korea are the geographic focus. Middle East pipeline is opening up significantly across oil & gas, steel, cement and energy; quoted pipeline has increased dramatically, firm orders have further runway.

   Partly answered.

10. 10. Fuel cell RFQ pipeline & cross-sell

    Pujan Shah, Molecule Ventures53:32

    Question. On fuel cells — given rapid US adoption, are we seeing increasing RFQs that could convert to revenue next year? Could fuel cells be 25-30% of revenue in coming years?

    Answer, Vinay Rathi, Managing Director. Vinay: this is one of the focused areas; exact numbers will emerge with execution. Cross-sell opportunity exists — temperature sensors go into high-temperature areas and need to be connected with special cables (500°C / 800°C), and we are working with these customers on cross-sell. Pushed back on Chinese competition — these are engineered, made-to-order products requiring customer fit-and-size; not many Chinese players have the heavy engineering; some customers explicitly moving away from China to India.

    Follow-up. Can fuel cells / hydrogen cell deliver order book of ₹250-300 cr over next 1-2 years?

    Answer. Vinay: 'we wish it will happen' but cannot comment on future order book size.

    Not answered directly.

11. 11. Capacity utilisation timeline

    Vedant S., MARS Investments57:29

    Question. On the ₹500 cr incremental peak revenue potential — when can we expect full run-rate? By FY28 end or starting FY29?

    Answer, Aryan Rathi, Lead, Global Sales. Aryan: projects come online starting Q1 FY28, most construction done by FY28 Q3. Full utilisation will take time; broadly by FY29 end / FY30 starting. Plants typically run at ~80% at max with headroom — current capacity utilisation is also about 80%.

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