Nelcast Limited: Forging Ahead with Strong Domestic Demand and Strategic Shifts in Q3 FY26

Nelcast Limited, a prominent player in India's ductile and grey iron castings sector, has reported a robust performance for the third quarter and nine months ended December 31, 2025. The company's latest financial results underscore its resilience and strategic agility, driven by strong domestic demand, effective cost optimization, and a clear roadmap for high-value product expansion. This quarter's performance highlights Nelcast's ability to navigate market dynamics while laying the groundwork for sustainable long-term growth.

For Q3 FY26, Nelcast recorded a total revenue of INR 332.2 crores, marking an impressive 11.8% year-on-year growth. This surge was primarily fueled by robust domestic demand, particularly in the Medium & Heavy Commercial Vehicles (M&HCV) and tractor segments. The momentum, which began picking up in late November and continued through December, translated into healthy volume growth and enhanced profitability. The company's EBITDA for the quarter stood at INR 35.9 crores, a significant 56.5% increase year-on-year, with an EBITDA margin of 10.8%. Crucially, the EBITDA per kilogram witnessed a robust growth of 35.0% year-on-year, reaching INR 15.9/kg, one of the best levels in recent quarters. Profit After Tax (PAT) for Q3 FY26 soared by 166.1% year-on-year to INR 15.9 crores, demonstrating the effectiveness of its operational strategies.

Over the nine-month period (9M FY26), Nelcast's total revenue reached INR 971.2 crores, a 3.9% increase from INR 934.4 crores in 9M FY25. The EBITDA for 9M FY26 grew by 25.6% to INR 89.6 crores, with a margin of 9.2%. PAT for the nine months was INR 33.2 crores, reflecting a 39.6% growth year-on-year. These figures collectively paint a picture of a company steadily improving its financial health and operational efficiency.

Strategic Pillars Driving Performance

Nelcast's strong performance is not merely a result of favorable market conditions but also a testament to its well-defined strategic pillars. The company has been diligently working on several fronts to enhance its competitive edge and ensure sustained growth. One of the key strategic shifts has been towards manufacturing value-added products. A decade ago, Nelcast transitioned from a highly competitive low-complexity business to higher value-add products. This involves upgrading its manual molding lines to fully automated state-of-the-art High Pressure Moulding Lines and increasing product capability to handle larger castings, up to 500 kgs, making it one of the few global players with such capabilities.

Another critical area of focus is expanding the export business. Nelcast aims to continue delivering quality products at competitive prices, strengthening long-standing relationships with existing customers, and launching new products. The company is also actively building new relationships and diversifying its geographical and sectoral presence. This strategy is particularly important given the recent challenges in export markets due to global economic slowdowns and tariffs.

Nelcast Limited: Consolidated Financial Summary (INR Crores)

Operational Excellence and Market Outlook

Improving capacity utilization levels and cost optimization are central to Nelcast's strategy. The company is focused on eliminating operational inefficiencies and bottlenecks across its plants. Better capacity utilization helps achieve economies of scale, reduce the impact of costs, and aid margins. Furthermore, Nelcast is making significant investments in energy conservation and renewable energy. The installation of a 1 MW in-house solar power plant at its Pedapariya facility is a prime example, aiming to meet 60% of its power requirement through renewable sources, thereby enhancing sustainability and cost-effectiveness.

The management's outlook remains optimistic. Domestic demand, particularly in the CV segment, is expected to remain strong into early FY27. The tractor industry is also projected to remain robust, supported by rural demand and favorable policy tailwinds. While exports faced headwinds in H1 FY26 due to the U.S. economic slowdown and tariffs, early signs of stabilization and normalizing customer schedules are encouraging. The recent announcements regarding U.S. tariff relief for engineering and auto-related products have lifted sentiment, supporting export demand over the medium term. The company anticipates gradual export recovery towards Q4 FY26, driven by stabilizing schedules and global emission-norm transitions.

Nelcast Limited: 9M FY26 Segment-wise Revenue Break-up

Nelcast's focus on high-value product pipeline, particularly from the Pedapariya facility, is a key growth driver. Commercialization is planned from FY27, with a ramp-up into FY28, which is expected to significantly uplift margins and asset turns. The company aims to achieve 60% utilization at Pedapariya from its current low base. For FY27, Nelcast expects at least 10% volume growth, with a target EBITDA per kg of INR 18-19 by FY27 or FY28. The company's installed capacity of 160,000 tonnes per annum can be further expanded by 50,000 MT with an investment of INR 40-50 crores, indicating significant growth potential.

A Sustainable Future and Strong Foundation

Beyond financial metrics, Nelcast is committed to a sustainable future. Its initiatives include plantation of trees, core sand reclamation, and building with bricks made from waste black sand. The company also actively engages in community support through blood donation camps, medical support to hospitals, and supporting schools. This holistic approach to business, combining financial discipline with environmental and social responsibility, strengthens its long-term viability.

Nelcast's journey is supported by a strong business foundation, including an investment-grade rating from ICRA, adequate liquidity, and robust relationships with major OEMs. The company's strategic location in South India, close to Chennai, provides excellent access to raw materials and a major automotive manufacturing hub. With an experienced board and a clear strategic direction, Nelcast Limited is structurally positioned for sustained growth and margin improvement, making it a compelling entity in the Indian manufacturing landscape.