Karamtara Engineering Q2 FY27 Earnings Call: Reiterates 60-65% Revenue Growth Guidance, Margin Recovery Expected in H2

Karamtara Engineering Ltd held its Q2 FY27 earnings call on October 06, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Quarter, Margin Pressure from Logistics

• Q2 FY 2026-2027 sales volume of 135,000 tons — management characterised the quarter as strong and reiterated full-year FY 2026-2027 guidance.
• Q2 FY 2026-2027 EBITDA margin of 11% — dinged by elevated shipping/trucking costs in Europe and the Middle East; management expects improvement as those costs subside and new contracts embed higher logistics charges.
• Other expenses of ~Rs.500 cr in Q2 FY 2026-2027 — driven by US tariffs of ~Rs.250 cr and higher freight costs; management stated other expense items remained well controlled.
• Q1 FY 2026-2027 (prior quarter) revenue of Rs.1,581 crore, up 72% YoY — with EBITDA of Rs.174 crore (+45% YoY) and PAT of Rs.87 crore (+45% YoY); renewables contributed 82% of Q1 revenue and international business 66%, with exports to over 50 countries.
• Segment summaries gave conflicting Q1 EBITDA margin readings (~11% in one segment, 13% in another); no specific Q2 margin percentage beyond the 11% figure was confirmed.

Bachao Cluster, Saudi Ramp and PEB Entry

• Installed capacity of 8,89,200 metric tons per annum across 13 facilities (8 Maharashtra, 4 Gujarat, 1 Italy) as of Q2 FY 2026-2027, excluding captive rolling and galvanizing capacity.
• Two new Bachao, Gujarat facilities — a rolling mill for transmission towers and solar tracker piles, and a PEB facility targeting data centers — plus a solar stamp part facility at Boisar; the Bhuj (Bachao) transmission tower plant is already producing, with peak capacity expected within 6–9 months (by Q1–Q2 FY 2027-2028).
• Saudi Arabia multi-product facility timeline — trial production targeted around December 2026 (FY 2026-2027), galvanizing line operational by February–March 2027 (Q4 FY 2026-2027), commercial production likely by end of FY 2026-2027 or early FY 2027-2028; meaningful revenue expected in FY 2027-2028 with 12–18 months to reach target utilization.
• Saudi local-content manufacturing expected to deliver materially better margins per management, following Rs.900 crore of capex in FY 2025-2026 and continued investment in FY 2026-2027.
• PEB margin question left open — management declined to confirm the analyst's 11–13% EBITDA margin estimate for the new PEB business, citing optimism on raw-material procurement scale, existing data-center client demand, and technical fit.
• Capital discipline on the West — no near-term asset setup in the US or Europe; investment only when clear value and scalability are demonstrated.

US Section 232 Fully Passed Through

• US Section 232 tariff on steel and aluminum products at 50% as of Q2 FY 2026-2027 — fully passed through to buyers with no impact on the company due to change-of-law clauses.
• Tariff at 50% of revenue in both Q1 and Q2 FY 2026-2027 — tariff amount was Rs.250 cr in Q1 FY 2026-2027 vs Rs.113 cr in Q1 FY 2025-2026; management stated tariff costs are fully passed on with no profitability impact.
• US domestic prices 30–40% higher than Indian sourcing — giving Karamtara a significant cost advantage for exports; no major Indian competition currently identified in its US product categories.
• Contract structures hedge commodity risk — domestic solar contracts run 4–5 months with steel/zinc booked on order (~90-day mill pickup windows); international contracts run 8–9 months; contracts longer than one year include price variation clauses, and some large international transmission contracts are on FOB basis with shipping as pass-through.

Working Capital at 36 Days, ROC at 25–27%

• Working capital cycle of 36 days in Q2 FY 2026-2027 — down from 67 days earlier and 43 days in the prior period, attributed to the product-company (non-EPC) business model.
• Return on capital of 25–27% as of Q2 FY 2026-2027 — management expects efficiency and ROC to improve as scale increases.
• Interest cost reduced to 2.6% of revenue in Q2 FY 2026-2027 — term loan interest rose from capex, but IPO proceeds are expected to lower this further.
• EBITDA of ~Rs.500 cr and cash conversion of ~Rs.675 cr in FY 2025-2026 — per management's recap of the prior fiscal year.
• Services capped at 3–5% of revenue in FY 2026-2027 — to protect margins, given higher working capital risk in that business.
• Solar revenue scaled from Rs.20 cr in FY 2020-2021 to a guided ~Rs.5,000–5,500 cr for FY 2026-2027 — management highlighted fungible facilities and disciplined allocation across solar, wind, transmission, PEB, and Saudi manufacturing.

FY27 Guidance Reiterated; Margin Recovery Expected in H2

• FY 2026-2027 revenue growth guidance of 60–65% YoY (vs FY 2025-2026) — reiterated, with a historical seasonal pattern of ~40–42% of revenue in H1 and ~58–60% in H2; management expressed an internal aspiration to exceed the range. Growth is expected across solar, wind, transmission, and fasteners.
• Margin improvement expected in Q3 FY 2026-2027 and Q4 FY 2026-2027 — driven by higher revenue, better asset utilization, and absorption of fixed costs; management also cited expected global freight normalization as a support.
• Revenue above Rs.7,000 crore discussed for FY 2026-2027 — implied but not explicitly confirmed by management; cited utilization ramp-up across new facilities, with utilization expected to climb above the historic 55–60% range.
• No explicit FY 2027-2028 revenue guidance — management pointed to strong growth from Saudi operations (partial revenue in FY 2027-2028, major from FY 2028-2029), PEB, and transmission capex, but would not commit to a number yet.
• Transmission expected to mirror solar's trajectory over the next 2–3 years (to roughly FY 2028-2029 / within a FY 2029-2030 horizon) — transmission contributed 13% of revenue in Q1 FY 2026-2027.
• Government's Green Energy Corridor Phase 3 cited as a tailwind — management referenced "the government's Green Energy Corridor Phase 3 scheme with a projected outlay of Rs.1.86 lakh crore" as industry context, noting demand continues to outstrip supply.
• Saudi demand drivers underpin regional confidence — management cited "strong long-term demand drivers from Saudi Vision 2030, the 2034 World Cup" and renewable/transmission grid investments in the kingdom and neighboring countries, and does not expect regional conflicts to cause a slowdown.