Gala Precision Engineering: Navigating Growth with Strategic Expansion and Innovation in H1 FY26

Gala Precision Engineering Limited, a prominent player in the precision components sector, has reported a robust financial performance for the second quarter and first half of Financial Year 2026. The company's consolidated revenue from operations for H1 FY26 stood at 134.5 crore, marking a healthy 28.8% year-on-year growth. Net profits also saw a significant increase, rising by 29.6% year-on-year to 14.9 crore. This strong performance underscores the company's strategic initiatives and operational efficiencies amidst a dynamic market landscape.

The company's product portfolio, comprising Special Fastening Solutions (SFS), Disc & Strip Springs (DSS), and Coil & Spiral Springs (CSS), continues to drive its growth. For H1 FY26, SFS contributed 49% of the revenue, followed by DSS at 32% and CSS at 19%. The SFS segment, in particular, demonstrated exceptional growth, with revenue reaching 43.8 crore, an 84% year-on-year increase. This growth was fueled by strong order bookings in the DSS segment, which grew by 30% in H1 FY26, from 56 crore in H1 FY25 to 73 crore. Gala Precision serves a diversified customer base of over 175 clients across various industries including Renewable Energy, Industrials, and Mobility, and exports to more than 25 countries.

Strategic Expansion and New Product Development

A cornerstone of Gala Precision's growth strategy is its ongoing capacity expansion and new product development initiatives. The company has established a new manufacturing facility in Chennai, primarily focusing on high-tensile fasteners, including bolts. This plant is crucial for complementing existing products and catering to the growing demand in industrial and renewable energy sectors. The Chennai facility's ramp-up commenced in August 2025, with revenues consistently rising each month. Phase-1 capacity of 60 crore is expected to be demonstrated by January 2026, with plans for Phase-2 capacity building in Q4 FY26 or Q1 FY27.

Furthermore, Gala Precision has successfully introduced new Bolt & Nut products, tapping into a global addressable market estimated at over USD 1 Billion (approximately INR 8300 crore). The company has already secured pilot orders for these products, validating its design and engineering capabilities. This initiative is expected to be a significant growth driver, leveraging Gala Precision's strong relationships with major OEMs, Tier-1, and channel partners globally.

Operational Efficiencies and Market Outlook

Despite the strong growth, the company's EBITDA margins for H1 FY26 were slightly impacted, decreasing by 398 basis points year-on-year to 15.46%. This was attributed to a change in product mix, resulting in higher raw material, labor, and freight costs, along with increased other expenses including forward contract losses and CSR outlays. Management, however, remains optimistic, guiding for EBITDA margins to stabilize in the 17-19% range for FY26 and the next 2-3 years, as capacity utilization improves and the new Chennai plant scales up.

Operating cash flow remained muted due to strategic inventory build-up, particularly for the Chennai plant's customer audits, approvals, and developments. Management emphasized that in the current growth phase, achieving a 20-25% growth rate takes priority, with cash flow generation being a secondary focus. The Indian renewable energy market, especially wind energy, is a key growth area, with wind installation capacity growing by 50% in H1. Gala Precision's diversified end-user industry revenue break-up for H1 FY26 shows Renewable Energy at 33%, Industrial at 29%, and Mobility at 38%, indicating a balanced exposure.

Future Outlook and Investor Confidence

Gala Precision Engineering is strategically positioned for sustained growth, focusing on strengthening its core capabilities, moving up the value chain, and leveraging in-house design and development. The company projects a revenue growth of 22-25% for FY26. The management's confidence is bolstered by a strong order book, with visibility for the next three months exceeding 75 crore. The company's export contribution is expected to remain robust at 35-40% of total revenue, primarily to Europe and the US.

With disciplined capital allocation, including the deployment of IPO proceeds towards loan repayment and CAPEX for expansion, Gala Precision is laying a strong foundation for future profitability. The company's proactive approach to new product development and market diversification, coupled with its commitment to operational excellence, instills confidence in its long-term growth trajectory and value creation for stakeholders.