Tega Industries Q2 FY27 Earnings Call: Molycop Drives Record Top Line, Legacy Business Logs Record H1

Tega Industries Ltd held its Q2 FY27 earnings call on November 05, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

First Full Molycop Quarter Drives Record Consolidated Top Line

• Q2 FY 2026-2027 consolidated revenue of Rs.42,540 million — EBITDA before one-time expenses of Rs.6,081 million at a 14.2% margin, with Molycop contributing its first full quarter of consolidation.
• H1 FY 2026-2027 consolidated revenue of Rs.59,775 million vs Rs.7,614 million in H1 FY 2025-2026, reflecting complete consolidation of Molycop from 1 June 2026; H1 EBITDA before one-time expenses of Rs.8,720 million at a 14.4% margin.
• Reported H1 FY 2026-2027 consolidated loss after tax of Rs.1,670 million — adjusted PAT excluding one-time/non-cash items was positive at Rs.452 million.
• One-time costs of Rs.2,576 million expensed in H1 FY 2026-2027 (transaction costs tapering from Rs.1,853 million in Q1 to Rs.650 million in Q2) plus a Rs.117 million non-cash inventory step-up charge under purchase price allocation; management confirmed H1 FY 2026-2027 is the last of the one-time expenses, with "business as usual" from Q3 FY 2026-2027.
• Grinding media (Molycop) Q2 FY 2026-2027 revenue of Rs.37,716 million (~USD 396 million) — EBITDA of Rs.5,144 million (~USD 54 million) at a 14% margin; H1 (June–September, 4 months) revenue of Rs.50,632 million and EBITDA of Rs.6,772 million.

Highest-Ever H1 for Legacy Tega; Equipment Drag Persists

• Legacy business (consumables + equipment) H1 FY 2026-2027 revenue +20% YoY to Rs.9,143 million — highest-ever first half; EBITDA before one-time expenses +25% to Rs.1,949 million, margin +70 bps to 20.4%; gross margin improved to 61% from 59% on favorable product mix and pricing discipline.
• Consumables H1 FY 2026-2027 revenue +30% to Rs.8,170 million — EBITDA +42% to Rs.1,916 million, margin +190 bps to 22.4%; Q2 consumables revenue +26% to Rs.4,209 million at a 20.8% margin.
• Q2 FY 2026-2027 legacy revenue of Rs.4,825 million (+19% YoY, +11% QoQ) — highest-ever Q2; EBITDA before one-time expenses +11% to Rs.937 million at an 18.8% margin, gross margin at 60%.
• Order book (excluding grinding media) of Rs.13,976 million as of 30 September 2026 — up 14% from Rs.12,313 million at end of Q1 FY 2026-2027, with Rs.11,576 million executable within the next 12 months.
• Equipment revenue subdued for two consecutive quarters (Q1–Q2 FY 2026-2027) despite a healthy order book — management attributed the drag to revenue conversion, with customer approvals to ship products still pending; equipment growth guidance for FY 2026-2027 was cut from 25% to 15%, citing uncontrollable factors as customers pushed orders to the next quarter.
• Equipment Q2 FY 2026-2027 revenue recovered 72% sequentially to Rs.615 million (from Rs.358 million in Q1), returning to positive EBITDA; management expects Q3 and Q4 FY 2026-2027 to bounce back "very strongly" and recover a large part of the H1 underperformance.

Cross-Selling Trial Underway; 100 bps Margin Bridge Defined

• 500 tons of grinding media secured as a trial order within the first 4 months post-transaction (FY 2026-2027) from an existing mill-lining customer; management sees scale-up potential to 20,000–30,000 tons if the trial converts (period unspecified), with similar initiatives in the pipeline across multiple geographies.
• The $20 million synergy target pertains specifically to cost optimization over 2 to 2.5 years — cross-selling revenue is incremental ("top-up") on top of this; the CFO declined to guide on the immediate cross-selling opportunity size, calling it a "big game changer" for Tega and Molycop on a combined platform.
• Four EBIT margin initiatives expected to add 100 bps (period unspecified) — setting up a GCC, relocating headquarters to a lower-cost base, shaving SG&A/fixed costs, and tracking operating efficiencies to improve yield; consistent with guidance from prior earnings calls.
• Molycop Q2 FY 2026-2027 adjusted EBITDA of 54.1 million — four-month (June–September 2026) volumes up 2.2% vs the prior-year period with adjusted EBITDA of 71.2 million; Q2 three-month volumes were down 0.6% QoQ and "relatively flat" YoY (Molycop CFO Patrick Colley).
• Management intends to lift Molycop's 14% EBITDA margin by 100 bps in FY 2027-2028 as anticipated synergies are developed, with benefits expected in coming quarters; Molycop evaluates margins per ton (prior-year FY 2025-2026 average ~$155/ton) rather than as% of sales.
• No acquisition-related amortization in the depreciation header of reported Q2 FY 2026-2027 numbers, per CFO Ravi Joshi; Molycop net debt stood at 965.3 million as of 30 September 2026 after the June 1 refinancing.

Scaled-Up Balance Sheet; Leverage Reduction Is Top Priority

• Total assets of Rs.227,066 million as of 30 September 2026 vs Rs.43,145 million in March 2026 (FY 2025-2026 end) — Molycop added Rs.204,042 million of assets and Rs.167,895 million of liabilities; purchase consideration was Rs.42,422 million (USD 442.7 million) with provisional intangibles of Rs.34,718 million and goodwill of Rs.50,571 million.
• Gross borrowings of Rs.114,923 million, ~96% long-term — net debt of Rs.104,612 million after cash and liquid investments of Rs.10,311 million; operating cash flows assessed as adequate for immediate repayments with no refinancing requirement.
• Rs.1,000 million of term loan repaid in October 2026 (Q3 FY 2026-2027) from preferential issue proceeds; ratings retained at CRISIL A+ / stable (long-term) and CRISIL A1+ (short-term).
• No further fundraising needed; debt position to remain the same — plan is to continue monetizing non-core assets to pay down debt, a 12-18 month exercise already underway, with some proceeds expected within FY 2026-2027 on a net-debt basis.
• H1 FY 2026-2027 finance cost of Rs.4,086 million includes dividend on Molycop redeemable preference shares per IndAS; consolidated finance cost was ~Rs.291 crore in Q2 FY 2026-2027 (analyst-cited), which the CEO expects to come down as non-core monetization progresses — CFO Ravi Joshi said it is too early to give line-by-line finance cost guidance.
• Rs.710 crore derivative liability in Q2 FY 2026-2027 notes pertains to Apollo's minority stake in the JV — classified as a financial liability per IndAS given Tega's option to buy out Apollo's stake; no immediate cash outflow, negated only when Apollo is given an exit (exit timing unspecified).

Record Copper and Gold Prices; Grasberg and Cobre Panama Ramps

• Copper prices hit record highs over $14,800/mt and currently trade around $14,300/mt, reflecting electrification, grid modernization, renewable energy investment, and AI infrastructure expansion; gold hit highs over $5,000/oz earlier in FY 2026-2027 and trades at $4,000–$4,100/oz.
• Declining ore grades and constrained mine supply support elevated production at existing copper and gold operations — management noted this typically drives higher throughput requirements and stronger demand for comminution consumables.
• Steel/scrap indices rose YoY in Q2 FY 2026-2027 — CRUSPY averaged 216 (+9% vs prior-year 197) and the AMMHM scrap index rose 13% to $387 vs $344; these lift revenue per ton and reported top line but do not immediately affect net sales prices due to contract index, applied formulas, and lag in index application.
• Grasberg Block Cave mill throughput averaged ~67% of pre-incident normalized run rates in Q2 FY 2026-2027 following the September 2025 mud rush — Freeport has indicated recovery remains on schedule and expects ~80% of capacity in mid-2027, with near full operating capacity by end of calendar year 2027.
• Cobre Panama: on September 30th, the Interministerial Commission delivered its final report recommending an assessment of the feasibility of a new agreement that could address outstanding arbitration and provide for a potential restart to support an orderly, self-financed closure — with closure and rehabilitation expected to extend over decades; the authorized stockpile processing program advanced materially in Q2 FY 2026-2027, with sufficient stockpiles until mid-2027.
• Molycop volume growth guidance maintained at 5% annually (period unspecified) — MD & CEO Mehul Mohanka said the guidance is not being revised despite two large mines starting, as Grasberg and Cobre Panama are "still not fully back" and ramping up; management declined to quantify revenue contribution from either mine, citing customer confidentiality.

~14% Consolidated Base Marching Upward; One-Time Costs Behind

• Consolidated margins currently stand at ~14% (Q2 FY 2026-2027) — management does not expect a return to Tega standalone's 22-24% levels but sees the 14% marching strongly upward; the analyst recalled management earlier indicating ~15% as possible in FY 2027-2028.
• Long-term margin vision of 17-18% consolidated — but the timeline is uncertain: "whether we deliver it in 5 years or 2 years, it's a crystal ball right now," in response to a question about the next 3-4 years.
• Analyst framing (not management guidance): Varinder Bansal (Omkara Capital) stated Tega is on track for almost Rs.2,000 crore of EBITDA in FY 2026-2027 based on the Q2 run rate, with possibly 20%+ growth in FY 2027-2028; he flagged that heavy recurring quarterly expenses have prevented conversion of EBITDA into profit in recent quarters.
• Chile expansion on track — soft commissioning/startup by January 2027 (Q3 FY 2026-2027) and commercial production by March 2027 (Q4 FY 2026-2027), with approvals in place; no incremental revenue anticipated from the new capacity in FY 2027-2028, as the plant is built to sustain requirements over the next 4-5 years.
• ~Rs.100 crore tax paid in Q2 FY 2026-2027 is not a steady-state number — inflated by certain disallowances in some regions; management may contest some items and expects the tax rate to taper to the normal rate in coming quarters, with the effective tax rate expected to normalize over coming quarters (FY 2026-2027 onwards).
• Grasberg-linked contingent payments not expected until FY28 — the mine is still ramping up and has not yet reached full volumes and EBITDA margins; the Cobre Panama contingent liability from the Molycop acquisition is not yet triggered as Cobre Panama still does not have mining permits (per First Quantum's public information).