MMP Industries says FY27 insulator target looks difficult

MMP Industries said in Q2 FY27 that its earlier Rs 18-20 crore FY27 polymer-insulator revenue expectation looks difficult because Power Grid approval remains pending, after the business generated about Rs 1.1 crore in H1 FY27. Management said its facility and audit formalities are complete, but meaningful domestic orders depend on approval.

Why does MMP say its FY27 polymer-insulator target is difficult?

MMP says the Rs 18-20 crore FY27 polymer-insulator target is difficult because it is still awaiting Power Grid approval to enter the domestic transmission market. Management had given that revenue expectation in its May 2026 earnings call and expected a major approval in Q2 FY27. In the latest call, it said the range looked difficult to achieve at this stage.

Reported revenue shows the distance from that earlier expectation. The polymer-insulator business generated about Rs 1.1 crore in H1 FY27, including around Rs 61 lakh in Q2 FY27. MMP described the operation as being at a nascent stage and said it has no domestic order book because it has not yet entered the transmission sector.

The stated constraint is approval rather than plant readiness. MMP said the polymer-insulator facility is ready, while its factory inspection and audit formalities for Power Grid have been completed. Audits for a few other electricity boards have also been completed, but management did not provide a date for any final approval.

What is holding up MMP's Power Grid approval?

MMP said the final Power Grid decision is taking time because it rests with a large external body, despite completion of its inspection and audit process. Management said it expected approval “quite soon” and “very shortly,” but declined to specify a date because such approval processes follow their own timelines.

The timing matters because MMP expects meaningful orders only once approval is received. Management said the business could ramp up fairly significantly from December onwards if approvals arrive, after which it could provide a firmer revenue number. Until then, the earlier Rs 18-20 crore FY27 figure is not reaffirmed guidance.

MMP currently has one polymer-insulator order from Latin America, although it did not disclose its value or delivery schedule. It said there is no domestic order book because the company has not entered the transmission sector. Management therefore did not disclose separate domestic and export order-book values.

When could MMP's polymer-insulator revenue become meaningful?

MMP expects meaningful polymer-insulator contribution to begin in Q1 FY28, subject to Power Grid approval. In its response on new businesses, management said the ready facility was awaiting approvals and that meaningful contribution would start in Q1 of the next year. It separately identified H2 FY28 as the point when the facility could reach optimum utilisation.

Management’s December comment provides a possible earlier ramp point, but it was explicitly conditional on approvals arriving. The transcript does not reconcile a potential ramp from December with the Q1 FY28 contribution expectation. The disclosed sequence is approval, order receipt and then a gradual production ramp.

MMP expects its initial Power Grid approval to cover 400 kilovolt, or kV, polymer insulators. Management said approval for 765 kV products would require another two years of performance. Its immediate objective is to establish quality credentials and supply capability in 400 kV insulators before pursuing the higher-voltage category.

What margin does MMP expect from polymer insulators?

MMP expects polymer insulators to produce an earnings before interest, tax, depreciation and amortisation, or EBITDA, margin of 18% to 20% as the business scales. Management said the niche products should contribute meaningfully to company-wide margin development, while cautioning that ramp-up will be gradual because quality must be mastered over time.

That management expectation is above MMP’s reported consolidated EBITDA margin of 7.65% in Q2 FY27. Consolidated EBITDA rose 44% year on year to Rs 19.3 crore in the quarter, while the margin improved by 53 basis points from the year-earlier period. Management agreed with an analyst that consolidated margins could become double digit if the insulator business reaches sufficient scale.

The current revenue mix illustrates why scale is necessary. Q2 FY27 polymer-insulator revenue of around Rs 61 lakh was small beside aluminium-powder revenue of Rs 161 crore and aluminium-foil revenue of Rs 75 crore. MMP did not disclose the polymer-insulator business’s actual H1 FY27 EBITDA margin, so the 18% to 20% range remains management’s expectation.

How do MMP's existing businesses compare with its new insulator operation?

MMP’s established businesses recorded much larger H1 FY27 revenue while polymer insulators remained in an early commercial phase. Aluminium-powder revenue increased 41% year on year to Rs 315 crore and aluminium-foil revenue rose 38% to Rs 135 crore. Conductors and cables, by contrast, declined 32% to Rs 33 crore, which management attributed primarily to a monsoon-related slowdown in project execution.

At the consolidated level, MMP reported its highest quarterly total income of Rs 252.9 crore in Q2 FY27, up 34% year on year. Profit after tax increased 73% to Rs 12.1 crore, while H1 FY27 operating cash flow was about Rs 22.8 crore. These reported results indicate that the approval delay is affecting a future growth platform rather than the current scale of powder and foil operations.

Sequential profitability did moderate during Q2 FY27. EBITDA margin declined from 9.01% in Q1 FY27 to 7.65% in Q2 FY27, partly because of inventory-valuation losses of about Rs 2.5 crore and combined EBITDA losses of about Rs 1.5 crore at two wholly owned subsidiaries in their initial stages. Management also cited incremental lower-margin foil sales, linking the prospective insulator ramp to its intended product-mix improvement.

Conclusion

MMP’s position is that its polymer-insulator facility is ready but cannot yet convert capacity into domestic transmission orders without Power Grid approval. With about Rs 1.1 crore of revenue in H1 FY27, management no longer considers the earlier Rs 18-20 crore FY27 expectation readily achievable. Its projected 18% to 20% EBITDA margin for the business depends on approval, orders and gradual commercial scale-up.

The next disclosed milestones are Power Grid approval for 400 kV polymer insulators, order conversion following that approval, and management’s expectation of meaningful contribution from Q1 FY28. MMP also identified H2 FY28 for optimum facility utilisation, while a 765 kV approval would require a further two years of performance.