Ador Welding Q2 FY27 Revenue Rises 23% Despite Margins

Revenue growth remains strong

Ador Welding Limited reported revenue from operations of Rs 345 crore in the second quarter of FY27, up 23% year on year. The company said demand remained healthy across infrastructure, power, oil and gas, railways, shipbuilding, defence and heavy fabrication. Revenue for the first half of FY27 rose by the same rate to Rs 654 crore. The result shows continued volume and business momentum in its core welding operations, even as profitability was affected by higher raw-material costs. Consolidated revenue also increased 11.40% sequentially, according to the earnings-call highlights. Management said the domestic welding consumables market continues to offer growth potential that is linked to rising steel consumption across industries.

Q2 profit growth lagged revenue

Profitability increased at a slower pace than revenue during the quarter. EBITDA, excluding other income, rose 8.6% year on year to Rs 38 crore, while the EBITDA margin declined by 140 basis points to 10.9%. Profit after tax increased 7.7% to Rs 27 crore, and PAT margin stood at 7.8%. Gross profit grew 8.7% to Rs 118 crore, but gross margin fell 440 basis points to 34.2%. This difference between sales growth and profit growth reflected the effect of input-cost inflation during the quarter. For the first half, EBITDA excluding other income was Rs 73 crore, up 26.0%, with a margin of 11.2%, 30 basis points higher than the previous year.

Steel inflation drove the gross-margin decline

Managing Director and CEO Aditya Malkani said severe input-cost inflation was the main reason for the Q2 gross-margin decline. He attributed roughly 75-80% of the drop to higher steel and other raw-material prices. The remaining 15-20% was linked to the company’s aggressive growth strategy, which management said had a more limited effect on margins. Steel prices increased by around 7-8% quarter on quarter, according to the call highlights. Management does not expect these prices to soften soon, keeping near-term pressure on costs. Steel and raw materials have a significant role in the company’s cost structure, making the timing of price pass-through important for operating margins.

Price increases had a time lag

Ador Welding said it implemented calibrated price increases to address cost inflation. However, these actions took time to flow through to customers, and management acknowledged that the Q2 margin drop was larger than it was comfortable with. The company said cost pressures had since been addressed through pricing measures. Malkani said the business aims to reach a sustainable EBITDA margin of 12-13% and then improve further. He also identified a gross-margin range of at least 36-38% as the desired level. These figures are management targets rather than reported results, and their achievement will depend on cost conditions and the effectiveness of price adjustments.

Key Q2 and H1 FY27 financial data

Working capital rose with the order backlog

The company reported elevated inventory levels during the quarter. Management said about 75-80% of the inventory build-up was due to order backlog. Another 15-20% was attributed to concerns about steel availability, which led the company to stock material more aggressively. At the same time, payables were lower. This combination may affect working capital in the short term, although the company linked the inventory increase largely to operating requirements. The development is relevant because higher inventory can temporarily absorb cash even when revenue is growing strongly.

Product mix and innovation are growth priorities

Management expects product mix to account for 60-70% of future growth. This refers to supplying the right products to the right customers in India and overseas markets. Another 20-25% of growth could come from innovation in welding equipment, partnerships and automation. The company noted that maintenance and repair business tends to be smaller but has slightly higher margins. Consumables can have higher turnover depending on the product mix. Equipment is broadly comparable but can be somewhat heavier because of India-based heavy manufacturing instead of sourcing.

Exports and shipbuilding offer additional opportunities

Exports account for around 15-20% of Ador Welding’s revenue. The Middle East is the company’s main international market, while it is expanding into Europe and other regions to diversify its overseas presence. Management also highlighted shipbuilding as a significant opportunity for the welding industry in India. It did not disclose shipbuilding order-book details, citing confidentiality. However, it confirmed that it is receiving orders and enquiries from the segment. Infrastructure-led industrial activity, including railways, power, defence, heavy fabrication and shipbuilding, remains an important demand base for the business.

Dividend and investor relevance

At its board meeting on October 21, 2026, Ador Welding declared an interim dividend of Rs 7.50 per equity share of face value Rs 10 each. The dividend represents 75% of face value. Earnings per share for Q2 FY27 was Rs 15.5, while H1 FY27 EPS was Rs 31.3. For investors, the quarter presents two clear factors: strong revenue growth across industrial end markets and a meaningful reduction in margins caused by cost inflation. The company’s next reported results will indicate whether its pricing actions improve the gross-margin trajectory and whether elevated inventory moderates.

Conclusion

Ador Welding entered the second half of FY27 with revenue growth of 23% in both the quarter and the first half, supported by broad industrial demand. But higher steel and raw-material prices reduced Q2 gross margin to 34.2% and EBITDA margin to 10.9%. Management has cited calibrated price increases and product mix as key levers for improvement. Future quarterly disclosures will provide the next confirmed update on pricing, working capital, international expansion and margin recovery.