Simplex Castings: Forging a New Future with Simplex 2.0

Simplex Castings Limited, a prominent Indian Precision Metallurgy company, has reported a robust financial performance for the quarter ended September 30, 2025 (Q2 FY26), signaling a significant phase of growth and strategic transformation. The company delivered an impressive 88.60% year-on-year increase in revenue, reaching INR 55.41 crore, alongside marked improvements in profitability. EBITDA surged by 22.46% to INR 9.65 crore, with an EBITDA margin of 17.42%. Profit After Tax (PAT) also saw a substantial rise of 53.29% to INR 5.58 crore, achieving a PAT margin of 10.07%. This strong performance underscores the sustained demand for its products and the effectiveness of its operational strategies, setting the stage for what management terms "Simplex 2.0."

The company's strategic pivot, Simplex 2.0, represents an evolution from a legacy engineering firm to a future-ready enterprise. This transformation is characterized by a renewed focus on high-value precision castings, heavy fabrication, and strategic diversification into the burgeoning Defence and Railways sectors. These emerging areas offer immense growth potential, aligning Simplex's capabilities with the next generation of industrial and national infrastructure needs. The company's long-standing expertise, coupled with its well-equipped manufacturing facilities, including a Cast Iron Foundry and Heavy Engineering & Fabrication Plant, positions it uniquely to capitalize on these opportunities. Each plant is supported by modern machining facilities, a central machine shop with numerous CNCs, an EPC Division for turnkey projects, and a design wing with advanced computer-aided tools.

Financial Highlights at a Glance (Q2 FY26)

Strategic Initiatives and Market Focus

Simplex Castings is actively strengthening its railway projects, having received RDSO (Research Designs and Standards Organisation) approval. The company is participating in railway tenders and executing projects in this high-growth, government-backed infrastructure segment. Developmental orders for fabricated bogies are already in hand, with delivery expected within the current financial year for testing, and bulk orders anticipated in the next financial year. For casted bogies, RDSO clearance is expected by the end of November, allowing order bookings from the next quarter. This re-entry into casted bogies, a business Simplex previously engaged in, is a significant step.

In defence manufacturing, Simplex is developing capabilities in precision castings, focusing on naval castings and collaborating with entities like Gun Carriage Factory, Jabalpur, for trial orders in fabrication and machining of components. This sector is expected to yield higher margins due to the specialized nature of products and government support for supplier development. The company has also enhanced its production capacity with a new Electric Arc Furnace (EAF), increasing total capacity to 21,000 MTPA, which will facilitate the annual manufacture of CASNUB bogie sets.

Furthermore, Simplex is planning a re-entry into Oil & Gas equipment manufacturing, with plans to restart production of Sucker Rod Pumps and other related equipment. Discussions are underway to obtain API certification, crucial for this market. The company is also targeting a transition to 5 MVA solar-based operations, moving towards sustainable energy sources. These initiatives are expected to diversify revenue streams and enhance operational efficiency.

Outlook and Management Commentary

Management is highly confident in achieving its ambitious targets, projecting a 40-50% CAGR over the next three years and committing to sustaining a 10% PAT margin. EBITDA margins are expected to increase, potentially surpassing 20%. This optimism is underpinned by the strong market environment, particularly in steel, railways, power, and defence sectors, which are experiencing significant expansion. The company's quarterly order book remains healthy at INR 60-70 crore, with strong demand and repeat business from prestigious partners.

Simplex Castings has a long legacy of niche product manufacturing, being the world's largest manufacturer of Coke Oven Doors and among Bharat's top two for Torpedo Ladle Cars. It is also the first developer and largest supplier of SG Iron Stave Coolers for Blast Furnaces, and a leading manufacturer of SG Iron Sinter Cars and Pallet Cars. This expertise in specialized, high-value products provides a competitive edge. The company's debt has also significantly reduced from INR 135 crore in 2018-19 to INR 50 crore currently, and it has established a sole banking arrangement with Kotak Mahindra Bank, easing past financial pressures.

Revenue Split by End Industry User (2024-2025)

Simplex Castings is strategically positioned to capitalize on India's infrastructure boom and growing defence sector. The company's commitment to innovation, operational excellence, and disciplined capital allocation, as demonstrated by its Simplex 2.0 transformation, reinforces its potential for sustained growth and value creation for stakeholders. The management's focus on execution and diversification into high-margin segments suggests a promising trajectory for the coming years.