Hirect Limited (HIRECT) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Hind Rectifies Limited Earnings Call for Q3 and 9-month FY26. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinion and expectations of the company as on the date of this call. The statements are not guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing start then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suramya Nevatiya. Chairman and Managing Director of Hind Rectifiers Limited. Over to you, sir.

Good morning, everyone, and thank you for joining us for the third quarter nine-month F526 earnings conference call of Hint Rectifiers Limited. I'm pleased to be joined today by our Chief Executive Officer, Mr. Manoj Nair, our Chief Financial Officer, Mr. Anil Kumar Nimani, and Strategic Growth Advisors, our Investor Relations Advisors. Also joining us today is the newest member of our team, our global CEO, Mr. Douglas Bailey. We have uploaded our Q3 and 9-month FY26 financial results and presentations on the stock exchanges and our website. And I hope everyone has had the opportunity to go through the same. Let me begin by sharing key operational and strategic updates for the quarter, post which I will request Mr. Nimani to take you through our financial performance. The third quarter of FY26 saw steady execution across our core businesses, along with continued progress in capability building and advancing our strategic initiatives. This will strengthen our competitive position over the years to come. On the policy front, the union budget has announced a record capital expenditure of 2.93 lakh crores for Indian railways, the highest ever allocation for the sector. The continued focus on electrification, rolling stock modernization, safety systems, and station redevelopment remains a key priority for Indian railways. The budget also outlined the development of seven high-speed rail corridors, which will be the long-term growth connectors between key cities. Overall, this sustained investment push provides a supportive demand environment and a long-term tailwind for railway equipment and power system suppliers like HiRect. On the operational front, our order book remains high at 1103 crores as of December 31, 2025, reflecting sustained demand momentum across our key product lines. The robust order position continues to be supported by healthy inflows from Indian railways and leading OEM customers, ensuring strong visibility for the coming quarters. Our backward integration project for specialized copper conductors at the Sinner facility continued to stabilize and scale up. As stated in the past quarter, this project enables in-house manufacturing of copper conductors, which are critical inputs for traction transformers. During the quarter, we successfully commenced the deployment of in-house manufactured conductors in our transformers that were supplied to Indian railways. We are currently ramping up capacities and expect this to enhance our cost efficiencies and supply chain reliability, while also reducing dependence on external vendors. Beyond captive consumption, we are actively evaluating external market opportunities within the transformer industry, and we expect this segment to deliver positive results from Q1 FY27 onwards. During the quarter, we further strengthened our leadership team with the appointment of Mr. Douglas Bailey as global CEO of the company. Mr. Bailey brings over three decades of global leadership experience in the semiconductor and power electronics industry. He has led global marketing and application engineering functions and played a key role in establishing leadership in wide bandgap technologies such as GAN and SIC. His experience adds significant depth to our leadership team. And going forward, we remain focused on disciplined execution, operational efficiency, and technology-driven value creation under his leadership. Updates on our global expansion strategy. Our integration with Beelink Solutions is progressing as planned. The business sits under our newly incorporated subsidiary, Beelink Hyrekt SAS. Currently, at Beelink, we are focused on strengthening existing customer relations while also evaluating new opportunities for the printed electronics in adjacent sectors such as railways and defense across the European markets. Furthermore, during the quarter, the Board of Directors has approved an investment of 90 lakhs in CoinKid Studios Private Limited, a wholly owned subsidiary of Hint Rectifiers Limited, to subscription of its equity shares. This investment is directed to strengthen the capital base of the subsidiary and support its business expansion plans and future operational requirements. Just to remind you, CoinKate is our in-house AI software and design company. Lastly, the company is decided to inform shareholders that the Board of Directors has approved the issue of bonus shares in the ratio of 1x1, subject to the necessary statutory and shareholder approval. This bonus issue Made by capitalizing of the balance of share premium account reflects the company's strong financial position and continued confidence in its long-term growth prospects. This initiative aims to reward shareholders for their continued support while improving the liquidity of the company's equity shares in the market. One final update from my side, which has been repeatedly asked in previous meetings, it's about the propulsion system. I'm delighted to inform you, after months of patience, the trials of our propulsion system have officially commenced at Western Railway, and ideally, it should be completed within three to four months. I now request Mr. Nimani to take you through the financial performance.

Thank you, Sulema. Good morning, everyone. Let me present a summary of our financial results for Q3 and 9 months for FY26. Our consolidated revenue from operations grew 64.2% on YOY to INR 277.4 CR in Q3 to FY26. Our consolidated EBITDA for the quarter stood at INR 25.5 CR, which is a growth of 44.9% on YOY basis. Driven by the sustained education, our EBITDA margin moderated by 120 bps year on year, primarily due to expansion-led investment in the copper conductors' plant as seen as an increase in input cost of key raw materials arising from supply chain products and disruptions. Our consolidated bet excluding minority interest for the quarter stood at INR 13 CR. Up to 30.1% on a YY. There is exceptional expenses of 1.3 CR for Q3 FY26 related to increase in employee benefit obligations resulting from the change in labor law by Government of India. Now, in terms of our nine-month number, our consolidated revenue from operations for nine-month FY26 We have reached INR 719.3 CR, making a 52.9% YOY growth over INR 470.3 CR in 9 months 25. Our consolidated EBITDA stood at 75.7 CR in 9 months 26 with a margin of 10.5%. Our consolidated PET stood at INR 40.2 CR, up by 48.2% on YOY. That is all from my side. I now open the floor for Q&A, and Mr. Mnano Nair and our CEO will join us to address your queries. Thank you, everyone.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. Participants, if you wish to remove yourself from the question queue, you may press star and 2. Participants are also requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants who wish to ask a question, may press star and 1 on the touchtone telephone. The first question is from the line of Jay Jayne from KJ Capital. Please go ahead.

Hi, sir. Thanks for the opportunity. The first question is on the address, but our address seems to be muted during the quarter. In Q3, didn't we receive any new address, and can you please share the trajectory of the address that we're going forward?

I'm sorry, the question is not clear. Can you repeat the question?

So my first question is on the address, but our address seems to be muted during the quarter. In Q3, didn't we receive any new address? And can you also please share the trajectory of the address of the game challenge?

Okay. So, if I understand right, the question is regarding the order board during the quarter and the trajectory going forward. So, let me answer this. Our order board is as shown, as mentioned earlier, is robust order board. At the same time, particularly during this quarter, the railway tenders, which were expected to be closed, had moved out by a quarter, but the requirements are building up. Especially for the transformers that is the mainstay of our product line. We are expecting the orders to come in next quarter. So, from an order buildup point of view, the trajectory is going to be positive and upward.

And the second question is how we are seeing on the integration of HIRAC and B-link on the processes and technology transfer front. Sir, also in the past, you had mentioned what...

Sure. So the integration with Beelink is ongoing, and it's a continuous process. The industry that we are in is not like a very quick sell. It takes time to build the product, to design it into the customer systems, and then sell it. And that activity has started, and it's ongoing. And we are reaching out to B-Link's existing customers and also getting them involved in the industry that we are in today, which is railways and, you know, heavy engineering and private customers. So all that work is ongoing, and it will take some time to start giving results. Thank you.

Thank you.

The next question is from the line of Prisha Rathi from NM Securities. Please go ahead.

Hello, sir. Thank you for the opportunity.

Hello. Please go ahead.

Yeah, please go ahead.

So, I have couple of questions. On the R&D front, how many products are currently under development, and do we expect to launch some of these in this coming quarter?

Yes, so there are about 40 products which are under development in R&D. These include completely new products, upgrades, improvements, engineering, and these products are rolled out continuously, so every few weeks something is released either in the factory or in the market.

And, sir, additionally, are we planning to introduce any product solution for adjacent sector like defense or electronics?

We are already working in defense and electronics. Although in defense, our scope is not a lot, but we are trying to improve it.

Okay. One last question. Have we completed the 15,000 km trial run for the propulsion system? Do we have any order for the propulsion system in the pipeline?

Yeah, so, as mentioned earlier during the call, the propulsion system trials have commenced, and we expect the 50,000 kilometers to be completed in three to four months, as mentioned earlier. And, yes, we do have order board for propulsion system currently, and we are expecting more to come.

Okay, okay. Thank you, sir. And all the best.

Participants who wish to ask a question may press star and one on the touch-tone telephone. The next question is from the line of Rahel from Sapphire Capital. Please go ahead.

Hi, sir. Good morning. Can you hear me?

Yes, yes, sir.

Sir, you mentioned in the presentation additional order of 101 crore from Indian Jailways. What is this order regarding to?

There's the total pending orders as of 31st of September.

Okay.

Secondly, you've said the professional systems orders, you have some in hand, right? What is the, you can quantify it.

Valued about roughly about 50 CR. We have the initial orders on hand, and as I said, we are expecting few more orders to come in.

Okay, and the current total overall order book that is at 1013 crores, what is the exact timeline for this?

It's spread over multiple quarters and it keeps building, so that's how it does.

And Q4, F526, how is expanding out so far? And in terms of growth and margins, we can guide for this quarter and exit of F526 and next year. What sort of revenue growth and EBITDA margins we can do?

We don't provide any guidance, but Q4 is looking upwards. It's going very well, going after the plan that we had set out originally. And we expect a growth of 30% year-on-year, and we continue to maintain that going into the next year as well.

And what led to the drop in margins from double digit to single in this quarter? And now what can be sustainable rate going ahead?

So the reduction in the margins is due to fluctuations in volatility in the commodity market, more particularly to do with copper. But we are doing everything that we can to mitigate this, more focused on the internal copper factory, which will help us to further improve the supply chain, which leads to all these issues. And we should be back to... Even better than what margins we've done previously, we should be better in the next couple of quarters.

All right, sir. Thank you. All the rest to you.

Thank you very much. Participants who wish to join the question-and-answer queue may press star and 1 on their touchstone telephone. The next question is from the line of Manish Goyal from Thinkwise Wealth Advisors. Please go ahead.

Yeah, really good morning, sir. Thank you so much. I have a lot of questions on the position system. Already the system is installed on the locomotives and it's been running on the tracks or what is the status? I missed the opening remarks. I'm sorry.

Yeah, so we mentioned in the opening remarks that the propulsion system is already on the locomotive and the trials have begun, has come in, so it's already running.

And which is it on like which part of the region, like is it assigned to us on the western side or how is it, sir?

It's on the western side.

Okay. And we are we are fairly confident that we should be able to complete the first milestone of 50,000 kilometers in next three to four months.

Yes, absolutely.

Okay. And I did hear that you have orders for 50 crores. For how many equipment is that, sir? For how many systems we have?

Roughly about 40.

And going forward, once the product is approved and if we are able to participate in tenders, so will we need to invest more to create capacities and what could be the capex for that?

No, currently there are no plans for any CAPEX or the propulsion system. We have enough capacity already built.

Okay, okay, okay. And sir, like what kind of tender pipeline is there? It was mentioned that there is been a delay of a quarter in order finalization. So would it be possible to give us some sense on the tender pipeline, the concern or something sort of which would be helpful for us to get the perspective for the next year growth and order book?

So, Indian Railway plans to manufacture 1,700 electric locomotives in the next year, and all of those tenders will start coming out now. And, in fact, the quantum of tenders and the outlook is even bigger and better than what it was this year and the previous year. So, it's looking very good.

Great, sir. And, sir, in terms of our product launches for beyond locomotives, like we were looking for one-day borrowers and we were probably looking for other systems. So, how is the progress on that, sir?

So, the progress is ongoing, and the products are in R&D, and once the products are launched in the market, we will do a press release, and we'll make sure we inform all the shareholders about it.

Okay. So, when we're probably looking at 30% growth for next year, it accounts for some of these new product launches and orders from that and execution itself, or how should we understand that?

No, it does not. Growth is from existing business, existing product lines, products that have already been released into the market, and we expect to get a larger share. It's from existing business. Anything that is in R&D today, which adds value next year, will be on top of that.

Okay, okay. And, sir, like on margins, you did say that our CTC factory has started. So, when should we be able to get a normalized production, and from when do you think that it should help us correct our margins, sir?

From Q2 of the next year. Okay, okay, okay.

So by that time, it is like we expect that the production should be reached to a

reasonable level for us to get the benefit of

in-house CTC.

Yes.

So, ideally, does it imply that for Q4 and Q1, the margins would probably trend to what we have seen at quarter three levels, or we should probably look for a little better margin in Q4 and Q1?

No, it should be better. In fact, it will be better for Q4. It will be even better than Q4, which will be in Q1. But the real upside will come from Q2 onwards, and the CTC factor will be in full swing.

Sure, sir. And, sir, last question on the billing. We have probably reported 34 crore revenue and probably a little less than 1 crore of loss. So, how do you expect this revenue run rate and profitability going forward in billing? Do you expect a break-even in near term and then probably start seeing some margins, positive margins going forward?

For Beelink, it will take some time to turn it around, but when the turnaround does happen, the profitability will be in big multiples, and we are at this stage today where we are trying to still do the integration in a proper manner, and we are building a big global team to address those issues and to interlink their customers and our customers and different industries. But we are very confident, and we know we have the strategy very clear of how we are supposed to do it.

Take care, which is rolling in that front.

And will it require further fund infusion from our side, sir?

No, only what we have committed. That's it. Nothing more than that.

And, sir, on exports from India, like, we had a couple of trials which was being done in US and Germany. So, any cereal production orders anticipated or we've started getting orders, how should we look at that, sir?

See, those are, again, they're traction products. It takes time to commission them. It takes time for the customers to get the performance product to do the field trials. It's not really something that happens instantly. So it's a long game, and we have to be patient, and it'll take time.

And, sir, last question on the KPIs side, what is the plan for how much we have done in the current year and next year, sir? Thank you. That's the last question.

Difference is negligible, and we are putting effort to increase that business.

No, I was asking the CAPEX plan for current year and expansion. Capital expansion.

Yeah, approximately, cash flow-wise, around approximately 60 CR, okay.

In FI 26, sir? Yeah, correct, sir, yeah. Okay, sir. Thank you so much, sir. Thank you.

Thank you.

Thank you, sir. The next question is from the line of Pragya Bharadwaj, from Complete Circle Wealth. Please go ahead.

Yeah, hi, sir. Good morning. Thank you for the opportunity. Am I audible?

Yes, ma'am.

Sir, on the B-Link integration, you just mentioned that it's still going on. Is there an internal timeline on when we can expect, you know, this to be completely fully integrated?

No, it's a continuous process, and it will keep going on, at least for the next few months. But while the integration is happening, we are also looking at evolving that business and doing the IP integrations. And it's a long process, but it's ongoing, but it's also not affecting the business activities. So we are doing it parallelly, the integration and the business growth, both of them.

Okay, okay. So, is there an order prospect pipeline that we can sort of look towards, you know, newer order? You spoke about some of it in your previous answer. Just wanted to understand a prospective order book that, you know, we can look forward to, say, for the next year or CSI 27. And if there are any new categories, that would possibly be included in that new launch, like sort of, new order prospect pipeline.

Yeah, so as we mentioned earlier, we are looking at a 30% growth year on year, and we expect a similar kind of growth on the order board. We are expecting some of the products that are under trials to also fetch additional orders next year. So, overall, we would see the ramp up on the order board over the next two quarters, and that's the expectation.

So, this rollout of the railway tendering orders, it's already begun from the government side, because there was some sort of delay that we saw, like an FY26. Has there been, like, pickup on the ground activity? Because the allocation has been large. You also alluded to that. Has there been traction? So we can expect some ramp-up in the ordering activities from the government as well?

Yeah, typically the railway orders starts ramping up from the beginning of the financial year, because that's when the allocation, the respective production units get the allocation. So, you might have seen in the budget, the railway allocation is 10% over last year. So, definitely the order boards we are expecting more this year coming financially.

So just last couple of questions, and I was running the queue back. You said about close to 40 products are still in the R&D stage. Can you expect a rollout, like some color on that, if you can just sort of give a few more details that if there is a launch pipeline that we're working with, in what categories will these products be, like these 14 products? Any announcements expected in Waterfall, or should we expect more in the first half of FY27?

Yes, so of course, we have internal timelines, and these products are across different types of products. Some are completely new, which is where we're building our own IP from scratch. Some are existing products being upgraded to their second version or third version. Some are engineering products to improve quality, improve efficiency. It's a mix of all different things, but they're all power electronics, and they're all pertaining to systems. Most of them are for railways. There are some which are non-railways, but beyond that, I cannot share any detail at this stage, and we will keep you updated as and when things keep coming out. But the R&D product pipeline does not really reduce. It just keeps increasing as we keep growing the R&D team. And if R&D team delivers three products out, they've probably taken four or five products more. So it's a continuous cycle of product development and technology innovation.

Sure, sir. Thank you. I'll join back in the queue. Thank you for taking my questions. Thanks again.

Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question is from the line of Pankaj Kumar from Kotex Securities. Please go ahead.

Thank you, sir. Thanks for taking my question. A question on this proposal system trial that is going on. As you take it right there, another three to four months will be there to complete this trial. And since the railways mostly invite tenders or the companies, of course, stay out of the tendering in June. So with this trial going in June, will we be able to participate in the first transfer of the tender?

We are positive about that. The tender activities will, as you rightly mentioned, might be towards the end of next quarter, and we are positive that we have substantial coverage of the trial, so we should be in a fair position.

And so, second question is on the competition part. So, since railways are approving new players in the proportional system, so, will there be more than one or two players who would be approved after this all trial process? Apart from you, basically, the question is, apart from you, how many other players are there in the race?

As far as propulsion system is concerned we still have from a there are limited players in the approved category and we do expect one or two more to come, but that is a long process. So, at least in the forward looking here next year we expect to gain from the propulsion tender. Okay.

My last question is on the, basically, you are anyway supplying to some of these OEMs who are basically participating in the production system and support this approval. Will we continue to supply the ancillary equipment to those OEMs or will play a role of the OEMs?

We will continue to pursue those, all those complementary, you know, requirements, because that's what we have the manufacturing capacity already available. So, we don't intend to differentiate that.

Okay, sir. Okay, sir. Thank you. Thanks, sir.

Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question is from the line of Abhisha from Siddhi Tech. Please go ahead.

Sir Abhi kindly unmute your mic. Hello.

Yeah, so I have two questions. One is regarding the other expenses. There is steep increase in the other expenses. So can you just give the breakup of what led to those increases and other expenses? And second, I joined late. So can you just provide the status of the Europe subsidiary, which is whether it is still loss-making or whether it is still profitable? And also third question regarding the budget which has been allocated higher towards the high-speed railway corridor. So any plans to enter into those two?

Yeah, if you see the other expenses, impact has not increased if you compare with the December, sorry, if you compare with the Q2, it has been reduced, in fact, compared to Lyok. In Q2, it was 125 million, whereas now it is 112 million also. So, I can say that more than 1 million, it has been reduced, in fact, all that. Sir, ma'am, more than 10 million cities reduce, okay. So there is no increase on this. And your second question regarding... Sir, can I just provide the break-up of other expenses if you can? Yeah, these are, I can say, the regular expenses, basically, the power, consumable stores, office rent, all maintenance, all these. Every expense, I can say, cannot be provided. Definitely, compared to the last December also, there is no major increase, YOI-2 also. Although we have increased, I can say, by approximately 45% turnover, but this is increased just 10%.

And you do definitely have the figures of that in last year.

Okay, okay.

And what regarding the subsidiary, Europe subsidiary, and the entering into the high-speed JV corridors, any light upon it, can you prove it?

So, the B-Link subsidiary question we've already answered multiple times. It is loss-making. It will continue to be loss-making until for the next few quarters, until we can turn it around.

And on the high-speed rail, definitely we might, we are exploring opportunities with related products that we have, obviously not on the propulsion system, but on other. You know, there are a few other products that we have in the basket to offer. So, we are talking to the respective OEMs for that.

Okay. So, what kind of order expectations can we expect or is still in the initial stages?

It is in the initial stages. We cannot comment on the order quantum right now, but we are exploring those opportunities. Okay. Okay. Thank you.

Sorry to interrupt. So, I'll be requesting you to kindly rejoin the queue. Yeah, that's all.

That's all.

Thank you. The next question is from the line of Payal Shah from Billion Securities. Please go ahead.

Yeah, hi. So, all of my questions are already answered. I just have one question. So, you know, while you are strengthening the world with adding reputed industry personnel, where they can further add and, you know, contribute towards the growth? So, just wanted to understand and get some sense on your vision. Like, how are we looking at growth five years down the line?

We have a very ambitious plan. We intend to increase our offering within our segment, which is our electronics, which is industrial electronics, semiconductors, and we want to go beyond railways. Yes, of course, we cannot lose the market leadership that we have in the railway segment. So we want to continue being present and very visible within railways, but we also have to go outside into different sectors, different applications, different product kinds and product types, which is why we are increasing and bringing in experts who can help us to do that, whose vision aligns with the ones with the company. And that's what we're looking at. Also, not just be restricted to India, but also increase our sales outside of India. So export is a big opportunity for us. And now we have European manufacturing capabilities. And so we're trying to stitch everything together. So, across the cross-continental R&D, building of technology, and to take the company really global. That's what the plan is. And in five years, we hope to have that come true.

Thank you so much, Sura. That's it from my side.

Thank you.

The next question is from the line of Kermit Sheda from Complete Circle. Please go ahead.

Yeah, hi. I think my colleague covered most questions. Only the follow-up was, one last was, that since we are, you know, entering newer categories, including propulsion system, power electronics, this will also entail, you know, working capital requirements going up, you know, CapEx requirements going up. Are there any asset monetization plans company has and fundraising plans, and is there an aspiration company has over the next three, four years in terms of any revenue milestones, any other milestones over the next maybe four, five years?

So, regarding the working capital, we are, I think, pretty well covered for the time being. We do have CapEx that keeps coming up, which we are addressing today either through debt or through internal accruals. But as we grow bigger and as we address more opportunities, Maybe later on down the line, we might consider a fundraise. We're not sure yet. But we'll decide when the time comes. And if we feel that the time is right, we might look at doing something not shortly.

Thank you.

Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Suramya Nivathia for the closing comments. Over to you, sir.

Thank you, everyone, for your participation and for taking the time to join us on today's call. We hope we have been able to give you a detailed overview of our business and answer your queries. Should you have any further queries or clarifications, please feel free to reach out to SGA, our investor relations advisors. Thank you. Thanks for joining us.

Thank you very much, sir. On behalf of Hind Rectify is Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.