Hind Rectifiers: Powering Growth with Strategic Moves and Strong H1 FY26 Performance

Hind Rectifiers Limited, a prominent manufacturer of power semiconductor, power electronic, and railway transportation equipment, has reported a robust financial performance for the second quarter and first half of fiscal year 2026. The company's unaudited consolidated results underscore a period of sustained business momentum, disciplined execution, and significant strategic advancements. For H1 FY26, Hind Rectifiers saw its revenue from operations surge by an impressive 46.6% year-on-year to INR 441.9 Crore. This growth was accompanied by a substantial increase in profitability, with EBITDA climbing 52.8% to INR 50.1 Crore and Profit After Tax (PAT) soaring by 60.6% to INR 27.5 Crore. These figures highlight the company's effective operational strategies and its ability to capitalize on market opportunities.

The strong financial performance in H1 FY26 was broadly distributed across its product segments. Railway Transformers continued to be the largest contributor, accounting for 50.3% of the H1 FY26 revenue, generating INR 222.22 Crore. Railway Electro Mechanical products contributed 22.1% (INR 97.61 Crore), while Railway Electronics added 18.9% (INR 83.57 Crore). Industrial Products and Spares & Services made up the remaining 5.5% (INR 24.30 Crore) and 3.1% (INR 13.68 Crore) respectively. This diversified revenue mix, with a strong emphasis on railway-related offerings, reflects the company's pivotal role in India's rail electrification and modernization efforts. The company's order book remains at an all-time high of INR 1,099 Crore as of September 30, 2025, providing excellent revenue visibility for the coming quarters, primarily driven by the expanding railway sector and government initiatives.

*ROCE (Annualized) = EBIT / Average Capital Employed (Tangible Net worth + Total Debt) **ROE (Annualized) = Net Profit after tax / Average Shareholders' Equity

Strategic Initiatives Driving Future Growth

The quarter witnessed several significant strategic developments that are set to shape Hind Rectifiers' future trajectory. A major milestone was the completion of its backward integration project at the Sinnar Plant, with the commencement of commercial production of critical and highly specialized copper conductors, including Continuously Transposed Conductors (CTC), Enamelled Paper Insulated Copper Conductors (EPICC), and Paper Insulated Copper Conductors (PICC). This INR 56 Crore investment, funded through internal accruals and term loans, aims to streamline the supply chain, reduce dependence on external vendors, and improve cost optimization and margins. This initiative also creates a new vertical with substantial export potential, positioning the company to meet the growing demand from its own traction transformer requirements and the wider transformer industry.

Another pivotal move was the strategic acquisition of BeLink Solutions in France. This acquisition, executed through Hind Rectifiers' subsidiary 'BELINK HIRECT SAS', establishes a European manufacturing base for robotics, EMS, and electronics R&D. BeLink Solutions, with its nearly four decades of experience, brings advanced manufacturing capabilities, intellectual property, technology, and customer contracts. This strengthens Hind Rectifiers' global footprint in advanced technology segments and positions it to accelerate innovation across mobility, energy, and industrial markets. While BeLink is currently unprofitable and will require annual funding of EUR1.5 million for three years, management views it as a strategic long-term asset.

Leadership was also bolstered with the appointment of Mr. Manoj Nair as Chief Executive Officer. Mr. Nair's extensive experience across manufacturing, power, infrastructure, and technology-driven businesses is expected to sharpen strategic focus, scale operations, and enhance execution capabilities. Furthermore, the company secured notable export orders for Traction Transformers to Germany and IGBT-based Inverters to the USA, marking a significant step in its global expansion journey. A preferential allotment of equity warrants worth INR 27.4 Crore to a promoter group entity also strengthened the balance sheet and reflected continued promoter confidence.

Operational Efficiency and Market Outlook

Hind Rectifiers demonstrated notable improvement in working capital efficiency, with working capital days reducing from 96 days in H1 FY25 to 80 days in H1 FY26. This optimization of short-term assets and liabilities translated into stronger return ratios, with ROCE rising from 24.1% to 26.3% and ROE improving from 25.9% to 31.4% in H1 FY26. These efficiencies are crucial for managing cash flows and supporting growth initiatives.

Despite the positive outlook, the company acknowledged some challenges, including a contraction in gross margins from 28% to 25% due to historical reliance on imported copper conductors and associated logistics issues. However, the new Sinnar facility is expected to mitigate this, with gross margins projected to return to previous levels from Q4 onwards. Delays in the official commencement of propulsion system trials, attributed to Western Railways' inexperience, were also noted, though management expects completion within two to three months once trials begin. The company is actively diversifying into defense and electronics, with 20% of BeLink's business already in defense and another 20% in aerospace, aligning with Hind Rectifiers' broader strategy to reduce concentration on railways.

Confident Outlook and Future Trajectory

Hind Rectifiers remains focused on enhancing execution, integrating its international operations, and advancing innovation. Management has reiterated its commitment to achieving a 30% year-on-year growth for at least the next three years, driven by a robust order pipeline and strategic initiatives. The company's proactive approach to backward integration, global expansion, and leadership strengthening positions it well to capitalize on India's infrastructure and industrial modernization initiatives, as well as emerging global opportunities. The management's focus on improving margins, optimizing the supply chain, and expanding its product portfolio underscores a clear vision for sustainable growth and long-term value creation for all stakeholders.