AIA Engineering Q2 FY27 Earnings Call: Order Backlog Jumps To Rs. 1,070 Cr, Freight Normalisation Seen In Q3 (AIAENG)

AIA Engineering Ltd held its Q2 FY27 earnings call on November 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Flat Volumes, Slight YoY Profit Declines on Freight Shock

• Q2 FY27 sales of 61,500 MT on production of 63,600 MT; H1 FY27 sales ~126,000 MT vs ~124,000–125,000 MT in H1 FY26 — practically flat YoY.
• Q2 FY27 revenue of Rs.1,093 crore plus Rs.19.5 crore of other operating income (mainly export benefits); H1 FY27 top line Rs.2,246 crore plus Rs.34 crore.
• Q2 FY27 EBITDA of Rs.361 crore and PAT of Rs.249 crore; H1 FY27 EBITDA Rs.786 crore and PAT ~Rs.550 crore — slight YoY declines in both.
• Other non-operating income fell to Rs.71.7 crore in Q2 FY27 from Rs.98 crore in Q2 FY26 (H1: Rs.182 crore vs Rs.207 crore), mainly on lower forex income.
• Per-kg realization up ~Rs.178, largely attributable to the freight increase being passed on; gross margins remain more or less comparable.
• Net working capital cycle at ~129 days — 41 days raw material stock, 79 days WIP and finished goods, 87 days receivables.

Export Freight the Dominant Cost Headwind

• Reported EBITDA down almost 5% YoY in Q2 FY27 (operating EBITDA down ~2.5–3%); primary driver was export freight costs up over 3.5% YoY in Q2 and H1 FY27 — freight was "astronomically high" in Q2.
• Freight ran at ~10% of sales in Q2 FY27 vs a normal long-term level of 7–8%; MD Sanjay Majumdar expects freight to come down to the 7–8% range in Q3 FY27, with some reduction already becoming visible.
• Other expenses up ~20% vs FY 2025-2026, attributed primarily to export freight; management stated all other expense heads are normal.
• QoQ EBITDA decline also reflects product mix — Q1 FY27 carried a higher share of other castings than Q2; MD advised against reading quarter-over-quarter trends.
• Freight pass-through is split across quarters — part reflected in Q2 FY27, remainder expected in Q3 FY27; management hopes freight normalizes or gets passed through if the surge sustains.
• Mitigation via containerized inventory — rather than ~2 months of stock on the ground, ensuring another ~3 months at sea so customer operations do not suffer from shipment delays.
• Shipping framed as a geopolitical risk more than a cost issue — Red Sea and Hormuz disruptions have not normalized; some South American customers have said they would like the environment to settle down during conversion discussions.

Trials Elongated; Management Sees H2 FY27 Visibility

• Mining sales of ~39,700 MT in Q2 FY27 and ~79,000 MT in H1 FY27, up both Q2-on-Q2 and H1-on-H1 YoY; Q2 mining volumes changed 1,340 MT YoY.
• Chile mine shutdown depressed Q2 dispatches — MD Sanjay Majumdar said the mine halted production for almost 2 months in Q2 FY27 and has resumed at normal traction from Q3 FY27.
• NGDS trials in Peru and Ghana face delays — one mine's trial delayed, the other gone in for a reiteration and redesign; management clarified NGDS involves ongoing liner and grinding media design/alloy changes, not a one-shot trial, and will not update in Q3 FY27.
• Management expects NGDS plus liner-based volume success to start becoming visible in H2 FY 2026-2027, with grinding media volumes to follow; H2 may bring possible upside but it is "too early for any clear-cut guidance."
• Trials at various mining sites, including large mines, have been elongated but are ongoing; management is "very bullish internally" but difficult to give any exact time commitment.
• Converted Chilean copper customer is happy with the grinding media purchased; management is hopeful this migrates into more work and says it is on track to exceed expectations there, but declined specific guidance.
• Non-mining volumes fell 12% YoY and 14% QoQ in Q2 FY27 — attributed to timing between quarters, nothing structural; management said non-mining "continues to be good" but is not predictable and any growth there is not expected to be needle-moving.

Mexico Duty Impact Contained; Latin America in Focus

• Mexico's 50% duty on imports — CFO Kunal Shah attributed mining volume losses over the last 12 months partly to duties, including the Trump administration's transit duties on certain countries; the Mexico duty applies to most countries including India (Mexico has no local producer).
• Mexico is not material — historical peak volumes were not more than 8,000–10,000 tons per year (CFO cited under 7,000–8,000 tons max); management said the impact is "already in the numbers" for Q2 FY27 and "this is the absolute bottom for us."
• Duty-related volume losses have hit the absolute bottom — no further duty-related volume reductions expected; freight remains a residual variable of concern.
• Focus is Latin America and other non-US geographies — Majumdar noted the current US duty structure is under Section 232 plus anti-dumping, and whether immediate relief comes, "even if Trump wants it," is unknown.
• Rupee-yuan moves are relatively neutral — responding to an analyst's point that the rupee depreciated ~20% vs the Chinese currency over the trailing year through Q2 FY27, Shah said the company does not really compete with China and sells in cross currencies (US dollar, Brazilian real, Australian dollar).
• US midterm elections immaterial — Shah said the company is largely agnostic to the outcome; end users are in copper, gold and iron, basic commodities that "generally look to be doing okay."

Backlog Jumps; Ghana/China Expansion Still on Hold

• Order backlog jumped to ~Rs.10.7 billion in Q2 FY27 from a Rs.5–7 billion range over FY21 to FY25/26; CFO Kunal Shah said this is simply the nature of open orders, not dispatch/logistics bottlenecks.
• Rise driven by large long-term orders — MD Sanjay Majumdar said some good, reasonably large orders came in during the last month of Q2 FY27; all contracts are long-term and there is no bunching due to delayed dispatches.
• H1 FY27 capex of Rs.86 crore; management expects an additional ~Rs.250 crore in H2 FY27, largely due to completing the corporate house land transaction, plus normal maintenance and incremental capex of ~Rs.50–75 crore.
• Ghana and China capacity expansion on hold through Q3 FY27 — management will reconsider "very soon" and is "definitely looking at" reactivating geographical expansion, hopefully by end of Q3 FY27, with current focus on trials.
• Quarterly production has held around 60,000 tons in recent periods.

FY27 Flat; Internal Plan of 25,000–30,000 Tons from FY28

• FY 2026-2027 volumes expected to remain flat; quarterly figures should normalize over the rest of FY27 with a profit adjustment on account of freight.
• Internal plan (explicitly not formal guidance) targets a return to base growth of at least 25,000–30,000 tons each year in FY28 and FY29, with potential upside if ongoing initiatives come to fruition; CFO called it planning that "looks to be within the realm of possibility."
• NGDS volumes should be assumed as a top-up to the 25,000–30,000 tons plan; management termed NGDS a "game-changing structural shift" but declined to put a timeline on the ramp-up; a core-business vs NGDS split was deferred to Q3 or Q4 FY27.
• Analyst Ankur Periwal (Axis Capital) noted the plan implies ~10–15% volume growth (period unspecified); management stuck to "broad directional commentary."
• Management acknowledged it has signaled growth for the last 2 years without it materializing; firmer guidance will be shared only when confidence improves — near-term commentary remains "wait and watch."
• Closing tone: "facing a little bit of a challenging situation" — MD Sanjay Majumdar said management is "internally very confident" the company "should go back on track" of meeting investor expectations, with no timeframe or numeric targets attached.