ISGEC Heavy Engineering Q3 Profit Jumps 77% on Strong Revenue

Introduction

ISGEC Heavy Engineering Ltd. announced a strong financial performance for the third quarter ending December 31, 2025, reporting a significant 76.6% year-on-year (YoY) increase in its consolidated net profit. The company's robust bottom-line growth was supported by healthy revenue gains and improved operational efficiency. Alongside the impressive quarterly results, the board has approved substantial capital expenditure plans aimed at expanding manufacturing capacity, signaling confidence in future demand.

Stellar Financial Performance in Q3

For the third quarter of fiscal year 2026, ISGEC's consolidated net profit surged to ₹97.5 crore, a substantial rise from the ₹55.2 crore recorded in the corresponding quarter of the previous year. This growth was driven by a 16.3% increase in revenue from operations, which grew to ₹1,738 crore from ₹1,495 crore YoY. The company's operational strength was evident in its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), which climbed 47.9% to ₹194 crore. Consequently, the EBITDA margin saw a notable expansion, improving to 11.2% from 8.8% in the same period last year.

On a standalone basis, the company also delivered a solid performance. Revenue from operations for the quarter increased by 18.55% to ₹1,326.90 crore. Profit After Tax (PAT) on a standalone level grew by 28.15% to ₹75.17 crore.

Key Financial Metrics Summary

To provide a clear overview of the company's performance, the key financial figures for Q3 FY26 are summarized below in comparison to the previous year.

Segment-wise Business Breakdown

The company's growth was primarily led by its core manufacturing and projects divisions. The Manufacturing of Machinery & Equipment segment reported a consolidated revenue growth of 15.9% YoY. The Industrial Projects segment also performed well, with its revenue increasing by 22.8% YoY on a consolidated basis. However, not all segments saw growth. The Sugar segment's revenue declined by 3.0% YoY, while the Ethanol segment faced significant headwinds, with revenue dropping by 30.7% YoY. This mixed performance highlights the diversification within ISGEC's portfolio and the varying market conditions affecting each sector.

Exceptional Item and Operational Efficiency

During the quarter, ISGEC recognized an exceptional item related to the Government of India's new Labour Codes. This led to a one-time provision of ₹16.49 crore for employee benefits based on an actuarial valuation. The company noted that it will re-evaluate the impact once the central and state rules under these codes are fully notified. Despite this one-time charge, the strong underlying operational performance enabled the company to post significant profit growth, particularly at the consolidated level where PAT surged by nearly 248% when considering all factors.

Major Capacity Expansion Plans

In a significant strategic move, ISGEC's Board of Directors approved a series of capital expenditure proposals totaling over ₹350 crore. These investments are aimed at enhancing the company's manufacturing capabilities across key divisions. The approved projects include:

• ₹22.6 crore for a new Machining Shop in the Iron Foundry Division.
• ₹218 crore for the expansion of the Machine Building Division.
• An enhanced investment of ₹110 crore for the Process Skids & Modules facility at the Dahej Special Economic Zone (SEZ).

These investments underscore the management's optimistic outlook on future demand and its commitment to strengthening its market position in the capital goods sector.

Corporate Developments and Market Reaction

In other corporate news, a Sale and Purchase Agreement for the divestment of a wholly-owned subsidiary, 'Bioeq Energy Holdings One, Cayman Islands', expired as the buyer failed to complete the payment. The company is now exploring alternative options for the sale. Following the strong earnings announcement, the market responded positively. Shares of ISGEC Heavy Engineering Ltd closed at ₹790 on the NSE on February 9, marking an increase of ₹20.80, or 2.70%.

Conclusion

ISGEC Heavy Engineering's third-quarter results for FY26 demonstrate a period of strong growth in profitability and revenue, underpinned by margin expansion and solid performance in its core segments. While challenges persist in the Ethanol and Sugar businesses, the company's strategic decision to invest heavily in capacity expansion positions it well to capitalize on future opportunities in the manufacturing and industrial projects space. Investors will be watching closely to see how these new investments translate into sustained growth in the coming quarters.