Quality Power Forecasts Robust Growth and Strong Margins

Ashwin Thakker

— 2 min read

Key Facts: Outlook & Guidance

  • Sales Guidance FY26: Consolidated revenue projected at INR 700-800 crores.
  • Consolidated Margin Guidance FY26: Anticipated high teens (17-20%).
  • Mehru Margin Target: Focus on achieving mid-teens (around 15%).
  • Order Book: Current backlog of INR 775 crores, with an additional INR 500 crores in orders expected by FY26 end.
  • Capacity Expansion: New Sangli global coil factory expected to generate INR 1,500-2,000 crores in peak revenue; Mehru's capacity to expand by 20-30% next quarter.
  • Market Outlook: Structural demand surge for high-voltage equipment, with 60-70% growth projected in HVDC/FACTS over the next 3-5 years.

Introduction

Quality Power Electrical Equipments Limited delivered a strong Q1 FY26, with consolidated revenue more than doubling year-on-year to INR194 crores. The company's future outlook remains highly optimistic, driven by strategic capacity expansion, robust order pipeline, and a structural surge in global demand for high-voltage electrical equipment. Management forecasts significant growth and margin improvements, signaling continued positive momentum.

Strategic Expansion Fuels Future Growth

Quality Power is proactively expanding its manufacturing capabilities to meet surging demand. The newly acquired Mehru business, currently operating at 95% capacity utilization, is set to significantly increase its output. Management anticipates Mehru's numbers to improve by about 20% to 30% in the next quarter, with a long-term goal for the Mehru factory to deliver up to INR450 crores to INR500 crores annually.

“The maximum capacity that the current factory can deliver is about INR450 crores to INR500 crores, depending on the pricing advantages. Our current focus is to bring them to the mid-teens margin.”

Furthermore, the new global coil factory in Sangli is a key growth driver, expected to yield between INR1,500 crores and INR2,000 crores in peak revenue. These capacity enhancements are crucial for fulfilling the company's strong order pipeline, which currently stands at INR775 crores. Quality Power aims for an additional INR500 crores in orders by the end of FY26, with execution timelines between 12 to 15 months.

Robust Margins Amidst Surging Demand

Quality Power is confident in its ability to maintain healthy margins while pursuing aggressive growth. The company has guided for consolidated margins in the high teens, specifically between 17% and 20% for FY26. While Mehru’s Q1 EBITDA margin was 9.5%, there is a clear strategic focus to elevate it to the mid-teens as operational synergies play out. Quality Power's core coil products group already achieved a record high margin of 34%, and Endoks maintained a healthy 27%.

“Looking ahead, with new additions like Sukrut and continued group-level consolidation, we are confident of meeting our revenue and earnings guidance for the year.”

The company notes a structural, long-term demand surge in high-voltage electrical equipment, driven by global grid modernization, renewable energy integration, and digital infrastructure. Specifically, demand for 400 kV and above equipment is expected to last at least a decade, with the HVDC and FACTS sectors projected to grow by 60%-70% over the next three to five years. This favorable market environment, combined with strategic capacity and margin focus, positions Quality Power for sustained profitability.

Conclusion

Quality Power's Q1 FY26 earnings call highlighted a company poised for significant future growth. Driven by strategic capacity build-out, strong demand for high-voltage equipment, and disciplined financial management, Quality Power aims to sustain its impressive trajectory. The reiterated guidance for robust revenue and high-teen margins underscores management's confidence in leveraging structural industry tailwinds and executing on its expansion plans for continued success.

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