Quality Power Forecasts Robust Growth and Margin Expansion

Ashwin Thakker

— 2 min read
  • FY26 Revenue Guidance: INR700-800 crores.
  • FY26 Consolidated Margin Guidance: 17-20% (high teens).
  • Additional Order Inflow Target: INR500 crores by year-end.
  • Mehru's Next Quarter Revenue Growth Outlook: 20-30% improvement.
  • Mehru's Margin Target: Mid-teens (around 15%) within four quarters.
  • New Sangli Factory Peak Revenue Potential: INR1,500-2,000 crores.
  • HVDC/FACTS Market Growth Projection: 60-70% over next 3-5 years.
  • Current Order Backlog: INR775 crores, with 12-15 months execution timeline.

Quality Power Electrical Equipments Limited reported a robust Q1 FY26, with consolidated revenue more than doubling year-on-year to INR194 crores. This strong performance underpins an optimistic forward-looking guidance, signaling sustained growth and enhanced profitability. The company is strategically positioned to capitalize on surging demand in high-voltage electrical equipment, driven by global grid modernization and renewable energy integration. Management’s commentary details ambitious sales and margin targets, alongside significant capacity expansion plans designed to meet escalating market needs.

Expanding Capacity and Revenue Projections

Quality Power is targeting consolidated revenue between INR700 crores and INR800 crores for FY26. This outlook is supported by a robust order pipeline, with management aiming for an additional INR500 crores in new orders by the year-end. The current order backlog stands at INR775 crores, primarily from Mehru (INR350 crores) and Quality Power (INR250 crores), with execution expected within 12 to 15 months. The company emphasized its strategic positioning in a supply-driven market, where demand for technical advanced products like ours is strong. Capacity utilization remains high across segments, necessitating ongoing expansion to capture market share effectively.

Margin Expansion and Strategic Market Position

The company has provided a consolidated margin guidance of "high teens, between 17% and 20%" for FY26. This includes anticipated improvements from recent acquisitions; for instance, Mehru's margins are targeted to reach the mid-teens, around 15%, within the next four quarters. Management highlighted the structural long-term demand surge in the high-voltage electrical equipment sector, particularly for HVDC and FACTS solutions, projecting a significant 60-70% industry growth over the next three to five years. Quality Power's technological achievements and approved supplier status for HVDC and STATCOM products with global companies reinforce its competitive edge. The ability to supply critical components, coupled with efforts in backward integration, are expected to further enhance operating margins and solidify market leadership, even amidst ongoing supply chain fluctuations.

Quality Power's Q1 FY26 earnings call painted a clear picture of a company poised for significant growth. Driven by robust market demand, strategic capacity enhancements, and a focus on high-margin products, Quality Power is confident in achieving its revenue and profitability targets. The proactive approach to acquisitions and technological investments positions the company favorably to capitalize on the evolving landscape of global grid modernization and renewable energy integration, promising continued value creation for stakeholders.

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