Quality Power Charts Growth with Bold Outlook

Ashwin Thakker

— 2 min read
  • FY26 Consolidated Revenue Guidance: INR 700-800 crores.
  • FY26 Consolidated Margin Guidance: High teens (17-20%).
  • Current Order Backlog: INR 775 crores, with a 12-15 month execution timeline.
  • Anticipated Additional Orders by FY26 End: INR 500 crores.
  • HVDC Market Growth Projection (3-5 years): 60-70%.
  • New Sangli Global Coil Factory Peak Revenue Potential: INR 1,500-2,000 crores.
  • Q1 FY26 Quality Power (Coil Products) EBITDA Margin: 34%.
  • Q1 FY26 Endoks EBITDA Margin: 27%.
  • Q1 FY26 Mehru EBITDA Margin: 9.5%, with a target of mid-teens (around 15%).
  • Employee Benefit Expenses FY26 Projection: INR 30-32 crores, up from INR 25 crores in Q1 FY25, mainly due to new plant staffing.

Quality Power delivered strong Q1 FY26 financial results, with consolidated revenue more than doubling year-on-year to INR 194 crores. The company highlighted a significant demand surge in the high-voltage electrical equipment sector, particularly for HVDC solutions. This positive momentum underpins the management's optimistic forward-looking guidance for both sales and profitability, driven by strategic capacity enhancements and value-accretive acquisitions.

Powering Future: Strong Demand and Sales Growth

Quality Power forecasts consolidated revenue for FY26 to reach between INR 700 crores and INR 800 crores. The company's current order backlog is substantial at INR 775 crores, with an expected execution period of 12 to 15 months. An additional INR 500 crores in orders are anticipated by the end of the fiscal year. This positive outlook is driven by significant “structural long-term demand surge” in the high-voltage electrical equipment sector, specifically HVDC, globally. Demand is currently supply-constrained.

"The sector we operate... is witnessing a structural long-term demand surge driven by grid modernization, renewable energy integration, and digital infrastructure." (Bharanidharan Pandyan, Page 3)

Capacity utilization remains high across all segments. For example, Mehru is operating at approximately 95%. The company is actively expanding its production capabilities, including adding new ovens for Mehru and establishing the new global coil factory in Sangli, which holds a peak revenue potential of INR 1,500-2,000 crores. These expansions are crucial as current capacity limits the ability to take on larger HVDC orders.

Enhancing Profitability and Strategic Expansion

For FY26, Quality Power projects consolidated margins in the "high teens," specifically targeting between 17% and 20%. The Q1 FY26 performance showed strong segment margins, with Quality Power’s coil products achieving a 34% EBITDA margin and Endoks recording 27%. Mehru, a recent acquisition, saw its margin improve by 47% in its first full quarter, now at 9.5%, with a management focus to bring it to mid-teens (around 15%). Synergies from acquisitions are expected to further boost profitability.

Strategic acquisitions are a key part of the company’s growth. The binding term sheet for Sukrut Electric through a joint venture with Yash Highvoltage aims to access new markets and expand product lines, without direct consolidation into the main P&L. Investments in advanced technology, global approvals, and manufacturing quality are translating into increased opportunities and a shift towards a supply-driven environment, reinforcing the company's competitive edge in technically complex projects.

Quality Power's Q1 FY26 earnings call outlines a clear strategy for sustained growth. Buoyed by strong, structural demand in the high-voltage electrical equipment sector, particularly HVDC, the company is systematically expanding capacity and integrating recent acquisitions. The focus remains on improving margins and leveraging technological investments to secure its market position and deliver on its optimistic revenue and profitability guidance for the fiscal year.

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