Electrosteel Castings reports Q2 FY26 results, discusses market challenges & valve acquisition

* Electrosteel Castings Limited announced its Q2 and H1 FY26 earnings, reporting a challenging quarter for the Ductile Iron (DI) pipe industry due to demand slowdown from delayed government spending under the Jal Jeevan Mission (JJM). * Q2 FY26 Consolidated Financial Highlights: * Total income stood at ₹1,491 crores, lower year-on-year primarily due to reduced sales volume. * EBITDA, including other income, was ₹188 crores (12.6% margin). Excluding a one-time provision write-back of ₹64 crores, EBITDA was ₹124 crores. * Profit After Tax (PAT) was ₹78 crores (5.3% margin). * The company's sales volume for DI pipe, fittings, and CI pipe was 1.39 lakh tons in Q2 FY26, a 28% year-on-year decline. H1 FY26 sales volume was 3.02 lakh tons, down 25% compared to H1 FY25. * Other income for the quarter included a ₹64 crores provision written back following the settlement of an Entry Tax matter with the West Bengal government, which was a one-time item. A corresponding deferred tax reversal of ₹21 crores was also recorded. * Standalone net debt increased by approximately ₹230 crores to ₹1,626 crores, mainly due to the acquisition of a valve company and other business requirements. * Outlook and Initiatives: * Management expects the current challenging phase to be temporary, anticipating a strong rebound in demand for DI pipes starting Calendar Year 2026, with recovery potentially taking 1-2 quarters. * The extension of the JJM to 2028, coupled with demand from river interlinking projects and irrigation, underpins confidence in long-term sector growth. * The company acquired T.I.S valve business in Europe for ₹120 crores and is integrating valves into its product portfolio. The acquired business had a revenue of approximately EUR 36-37 million (around ₹350 crores) last year, with profit margins of 8-10% and EBITDA margins of 15-16%. It is expected to grow by 10% this year, and Electrosteel plans to expand its sales to India, the Middle East, and Southeast Asia from the next financial year. * Electrosteel Castings is confident of achieving double-digit EBITDA per kg by Q2 FY27 and reaching ₹150 crore quarterly net profit by Q2 FY27. * The company expects to achieve 5.5 lakh - 6 lakh tons in volumes for FY26 and 8 lakh - 8.5 lakh tons for FY27. * A valuation of ₹498 crores for one of its coal block assets has been approved, with two more big assets and several smaller ones remaining to be valued. The company hopes to see further progress on this within the current financial year. * Current DI pipe installed capacity is 850,000 tons. Plans for a 1 lakh-ton expansion are on hold due to market slowdown but would require approximately ₹60 crores CAPEX and 6-8 months for installation once resumed. * FY26 CAPEX is estimated at ₹300 crores for sustenance and minor debottlenecking, with no major CAPEX planned for this or the next financial year.