MMP targets 18%-20% EBITDA margin in polymer insulators

MMP expects its polymer-insulator business to earn an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 18% to 20% as it scales, although Power Grid approval remains awaited and management targets optimal facility utilisation from H2 FY28. The business generated about Rs 1.1 crore of revenue in H1 FY27.

What EBITDA margin does MMP expect from polymer insulators?

MMP expects an EBITDA margin of 18% to 20% in polymer insulators once the business ramps up. Management told an analyst that the product line should contribute meaningfully to the company’s margin development, but said the ramp-up would be gradual because polymer insulators are niche products and quality needs to be mastered over time.

The target is above MMP’s consolidated Q2 FY27 EBITDA margin of 7.65%, which was 53 basis points higher year on year but below the 9.01% reported in Q1 FY27. Management attributed the sequential decline mainly to inventory-valuation losses, approximately Rs 1.5 crore of combined EBITDA losses at two wholly owned subsidiaries in their initial operating stages, and incremental sales from the lower-margin foil business.

An analyst suggested that a scaled polymer-insulator operation could take MMP’s consolidated margin into double digits, and management agreed. That exchange was conditional on the business scaling, rather than a formal consolidated margin forecast. The disclosed 18%-20% range applies specifically to polymer insulators, not to MMP’s overall operations.

When will MMP’s polymer-insulator plant reach optimal utilisation?

MMP expects optimal utilisation at its polymer-insulator facility from H2 FY28. Management said the facility is already ready, while meaningful contribution is expected to start from Q1 FY28, subject to customer approvals and order execution.

The timing indicates a phased build-up rather than immediate full capacity use. MMP recorded around Rs 61 lakh of polymer-insulator revenue in Q2 FY27 and approximately Rs 1.1 crore in H1 FY27. Those figures show that the segment remained small compared with aluminium powders, which generated Rs 315 crore in H1 FY27, and aluminium foil, which generated Rs 135 crore.

The comparison illustrates why approvals are central to the margin opportunity. MMP’s polymer-insulator sales were at an early stage in H1 FY27, whereas management described 18%-20% as the expected EBITDA margin as production and sales ramp. It did not disclose a target revenue level, capacity volume, or a specific date for achieving the margin range.

What is the status of MMP’s Power Grid approval?

MMP said factory inspection and audit formalities for Power Grid have been completed, but final approval is still awaited. Management said it expected approval quite soon and that matters were on track, while declining to provide an exact date because the process involves a large institution.

Management separately said audits for Power Grid and a few other electricity boards had been completed. It expects meaningful orders once approvals arrive and said the business could ramp fairly significantly from December onward. However, this expectation was explicitly dependent on how quickly approvals are granted, and management did not provide a confirmed approval date.

The status differs from MMP’s earlier revenue ambition for FY27. In the call, management said its previously indicated Rs 18 crore to Rs 20 crore polymer-insulator revenue range for FY27 looked difficult to achieve at this stage. It said it would provide a firmer estimate after approval timing becomes clearer.

Does MMP already have polymer-insulator orders?

MMP said it has an order from Latin America, while it had no domestic order book for transmission applications at the time of the call. Management said the domestic business remained nascent because MMP had not yet entered the transmission sector, making utility approvals a prerequisite for meaningful domestic orders.

The company’s stated sales base supports that description. Polymer insulators contributed approximately Rs 1.1 crore in H1 FY27, against total income of Rs 252.9 crore in Q2 FY27 alone. By contrast, Q2 revenue reached Rs 161 crore for aluminium powders, Rs 75 crore for aluminium foil and Rs 16 crore for conductors and cables.

MMP also described how it intends to manage a key input to product quality. Star Circlips & Engineering Limited is setting up a facility to supply fittings to MMP Electrical, but management said the arrangement would be a normal buyer-seller relationship, without special transfer pricing. Management said fittings are important to insulator quality and that the supply arrangement is intended to help maintain quality control.

How does polymer insulator fit into MMP’s wider expansion plan?

MMP is pursuing polymer insulators alongside wire rods and low-tension, or LT, cables as newer growth businesses. Management said the wire-rod business was at an advanced stage of completion and was expected to begin contributing from Q1 FY28, while polymer insulators were awaiting utility approvals before meaningful contribution begins.

The LT cable plan has two stages. Management said a small capacity at its existing Bhandara plant had already started and was expected to deliver full revenue from Q4 FY27. A larger LT-cable capacity had machinery ordered, with trials expected to be completed in Q4 FY28 and meaningful revenue anticipated from FY29.

These projects are being developed while the established portfolio produces materially larger revenue. Aluminium-powder revenue rose 41% year on year to Rs 315 crore in H1 FY27, while foil revenue rose 38% to Rs 135 crore. Conductors and cables moved in the other direction, declining 32% year on year to Rs 33 crore, which management attributed to monsoon-related delays in project execution and expected to recover in H2 FY27.

Conclusion

MMP has identified polymer insulators as a potential higher-margin addition to a portfolio whose Q2 FY27 consolidated EBITDA margin was 7.65%. The company’s 18%-20% segment EBITDA expectation is notable, but its H1 FY27 polymer-insulator revenue of about Rs 1.1 crore confirms that commercial scale has yet to be reached. Approval-led order conversion, product-quality execution and gradual capacity utilisation will determine whether that margin potential is realised.

The next disclosed milestones are Power Grid and other utility approvals, meaningful polymer-insulator contribution from Q1 FY28, and optimal polymer-insulator utilisation from H2 FY28. Investors can also watch whether MMP revises its FY27 polymer-insulator revenue outlook after approvals, since management has said the earlier Rs 18 crore to Rs 20 crore expectation now appears difficult to achieve.