Quality Power Q4 FY26: Growth crossed INR 1,000 crore, while margins absorbed accounting and one-time items

Quality Power Electrical Equipments Limited ended FY26 with a milestone year, crossing INR 1,000 crore in total income for the first time. Consolidated total income for FY26 was INR 10,070 million (INR 1,007 crore), up 156.9% YoY, while PAT rose 85.3% YoY to INR 1,855 million (INR 185.5 crore). The company also exited the year with a reported order book of INR 14,060 million (INR 1,406 crore) as of 31 March 2026.

Q4 FY26 was the highest ever quarterly revenue at INR 3,098 million (INR 309.8 crore), up 138.5% YoY. Profitability, however, showed a QoQ decline in reported margins. Management attributed the Q4 margin movement largely to two factors: a non-cash Ind AS 29 hyperinflationary adjustment in the Turkish subsidiary Endoks of about INR 25.7 crore recorded under other expenses, and one-time provisions related to the new Indian Labour Codes.

FY26 performance: strong scale-up, but margins moderated versus FY25

On headline numbers, FY26 reflects a step change in scale. Total income rose to INR 1,007 crore, EBITDA increased to INR 236.2 crore, and PAT reached INR 185.5 crore. But margins compressed versus the high base in FY25.

Gross margin fell to 43.3% in FY26 from 48.9% in FY25, while EBITDA margin reduced to 23.5% from 30.5%. PAT margin also reduced to 18.4% from 25.6%. Management explained that the group is being run as a portfolio, where one business may prioritise growth while another holds margin, depending on raw materials and customer mix.

Note: Company presentation states EBITDA includes other income.

Q4 FY26: understanding the Ind AS 29 impact and other expenses

The most important interpretive point for Q4 is the Ind AS 29 impact for Endoks. Management and the CFO described it as a statutory, non-cash, non-operating adjustment arising from reporting in a hyperinflationary economy. In Q4 FY26, this resulted in a net monetary loss of about INR 25.7 crore recognised in other expenses.

Management also clarified that similar conditions can create net monetary gains in other quarters, meaning QoQ comparisons can be distorted by index movements rather than operating reality. Separately, the finance team noted that other expenses in Q4 also included freight outward of around INR 12 crore and liquidated damages of around INR 5 crore.

The company also cautioned on comparability because Endoks follows a January to December financial year, which makes consolidated QoQ comparisons less clean. Management suggested looking at Endoks on a YoY basis rather than QoQ.

Order book and demand themes: HVDC, FACTS, BESS, and data centers

Quality Power reported a consolidated order book of INR 1,406 crore as of 31 March 2026. Key orders cited in the presentation included a large international BESS order at Endoks of INR 152 crore, expandable to INR 292 crore, to be executed by December 2027. The company also highlighted an INR 200 crore, four-year framework agreement with an Israeli client for 161 kV coil products with deliveries starting Q3 FY26 through FY30.

In the concall, management said the company is seeing demand across utilities, renewables, industrial applications, and data center infrastructure. They also referred to a pipeline of opportunities exceeding INR 1,100 crore for Quality Power alone.

BESS and PCS emerged as a key strategic theme. Management described the value chain as batteries, power electronics inverters, energy management software, and transformers. The company stated it does not intend to enter battery chemistry but is focused on manufacturing the power electronics and integrating software and hardware.

On traction, management stated current BESS order book is about USD 31 million and expects to close another USD 30 to 50 million by end of the year, implying roughly USD 80 million in carry-forward. They also described the BESS market as dominated globally by Chinese players, while noting that software and service support requirements in some markets can favour non-Chinese suppliers.

For data centers, management referenced prior work with Microsoft in Finland and said it recently won an order of around INR 49 crore from one of the big three in the US.

Capacity build-out and integration priorities

Several capacity and capability initiatives were reiterated.

The investor deck stated the Sangli plant construction timeline was advanced to June 2026 from September 2026, and the board approved an additional INR 25 crore capex for a Global Engineering and Technology Centre at Sangli. On the concall, management guided trial production at the new factory around July end to August 2026, while also indicating that meaningful ramp-up depends on audits and approvals.

At Mehru, the company outlined a Bhiwadi expansion plan involving four new autoclaves and warehouse relocation, expected to increase overall plant capacity by about 45%, along with exploration of a new greenfield facility or acquisition opportunity. The CEO also noted GIS manufacturing and testing infrastructure development, with first prototypes expected around July to August 2026.

Endoks is setting up a new BESS manufacturing facility based on in-house developed technology. Management also discussed setting up a dedicated PCS factory in Turkey, citing better price realisation and semiconductor economics at scale.

Guidance and capital allocation: a muted FY27 growth stance

Management guidance for FY27 was positioned as conservative. In the concall, management guided consolidated revenue growth of around 15% to 20%, describing FY27 as a stabilisation year in an S-curve. The rationale provided included commissioning timelines for new capacity and a significant hiring plan of 500 to 1,000 additional employees.

On capital allocation, the board recommended a final dividend of INR 1 per share. Management stated promoters would waive their dividend entitlement and also forgo any incremental salary for the second consecutive year to preserve cash.

The board also approved an enabling authorization to raise up to USD 75 million through permissible modes. Management clarified this is a long-term enabler to be used as and when needed, particularly for international expansion or acquisitions, and not necessarily immediately.

Takeaways

Quality Power delivered a sharp step-up in scale in FY26, exceeding the revenue and margin guidance management said it had set earlier in the year. The order book of INR 1,406 crore provides visibility, while strategic focus is widening from high-voltage equipment into power electronics and grid-scale energy storage.

At the same time, investors need to separate operating performance from Q4 accounting noise. The Ind AS 29 adjustment in Turkey is non-cash but can meaningfully swing reported quarterly margins. Management also acknowledged real execution constraints, particularly in supply chain bottlenecks such as insulators and winding conductors.

FY27 guidance of 15% to 20% growth reflects a capacity and team build-out year. The bigger swing factors will be commissioning pace at new facilities, supply chain de-risking, and how quickly the PCS and BESS efforts scale into repeatable revenue.