/** blogpostTitle: Shilchar Technologies Q4FY26: A soft quarter, but the expansion story stays intact blogpostSlug: shilchar-q4 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra-realistic corporate financial scene showing a clean desk with a laptop displaying a dashboard of quarterly revenue, EBITDA margin, and PAT trends for FY25 to FY26, including a visible dip in Q4FY26, alongside a secondary chart showing capacity expansion from 7,500 MVA to 14,000 MVA with an April 2027 milestone marker; neutral office lighting, no logos, no text labels. blogpostShortTitle: Shilchar Q4FY26 dip and FY27 ramp */

Shilchar Technologies Q4FY26: A soft quarter, but the expansion story stays intact

Shilchar Technologies ended FY26 with steady full-year growth, even as the March quarter turned unexpectedly soft. Revenue from operations for FY26 came in at INR 651.94 crore, up 5% year-on-year versus INR 623.15 crore in FY25. Profit after tax rose 8% to INR 158.16 crore, with EPS of INR 138.25. EBITDA excluding other income and exceptional items was INR 190.42 crore, translating to a 29.2% margin.

The quarterly picture was more volatile. Q4FY26 revenue from operations dropped to INR 151.65 crore, down 35% year-on-year, while EBITDA margin compressed to 21.0% and PAT fell to INR 28.39 crore. Management framed the quarter as an outcome of two temporary external shocks, rather than a demand problem.

What drove the Q4 slowdown

Management highlighted two developments that slowed dispatches in Q4. The first was uncertainty around US tariff policy in the preceding quarters, which moderated order intake from US customers in Q3. Although order inflows recovered in Q4, dispatches remained subdued because the Q3 intake was weaker and policy uncertainty persisted for part of the period. Management said that after subsequent policy amendments, order intake and deliveries picked up notably in Q1FY27.

The second factor was logistical disruption related to the West Asia crisis. A meaningful volume of transformers scheduled to be shipped to Middle East customers in March 2026 could not be dispatched due to the crisis and resulting logistics issues. Management stated these shipments were deferred, not cancelled, and dispatches to the region resumed in April.

On the concall, the company also quantified parts of the mix shift in Q4. Exports in Q4 were around INR 52 crore and domestic revenue was around INR 100 crore. Management indicated that in March it could not ship exports of about INR 35 crore to INR 40 crore due to the disruption.

Margins: mix shift and commodity inflation

The Q4 margin compression was explained through a combination of export mix and input costs. Management stated that export business carries higher margins than domestic business, and the lower export share in March pulled down profitability.

At the same time, raw material inflation intensified, especially transformer oil. Management said that oil prices increased to almost double compared to February, a roughly 100% increase, while other commodities rose in the range of 10% to 25%. On cost structure, management indicated transformer oil typically accounts for about 8% to 12% of total transformer cost, depending on transformer rating and application.

The company said it is in active dialogue with customers for price revisions. Some customers have already agreed, and discussions are underway with others. Management also stated that price increases can be negotiated even for existing orders where delivery is scheduled in future quarters.

Financial summary

Capacity and the next leg of growth

Shilchar’s investment narrative remains anchored in capacity expansion. The presentation notes an existing installed capacity of 7,500 MVA and an under-commissioning addition of 6,500 MVA, taking total to 14,000 MVA. The company expects the new capacity to come online from April 2027.

Management stated that the Gavasad Expansion 3 project remains on track. Civil foundation work has been completed, PEB erection and utilities infrastructure are in progress, and all major production equipment has been ordered. On the concall, the company cited capex of approximately INR 120 crore, funded entirely through internal accruals.

Until the new facility is commissioned, management expects FY27 to be a high-utilization year on the existing base. On dispatches, management indicated FY26 dispatches were about 6,000 MVA, and it is targeting around 7,000 MVA in FY27. It also clarified that the capacity utilization shown in the presentation is based on dispatches, while production can be higher because some output remains as inventory or work-in-progress at year end.

The company also plans to move up the voltage and rating curve with the new facility. Management stated the new facility will have capability to manufacture transformers up to 160 MVA and 220 kV class, compared to the current focus up to 50 MVA and 132 kV class. It added that approvals and customer audits will be required after readiness, and suggested the full impact of the new facility could be visible around FY29 to FY30.

Demand backdrop: domestic renewables and exports

Shilchar positions itself as a custom transformer supplier across renewables and industrial applications. The investor presentation lists a diversified product profile including power transformers, distribution transformers, inverter duty transformers for solar, generator transformers for wind, hydro transformers, and furnace transformers.

Management cited firm domestic demand, specifically linking it to record renewable energy commissioning of around 55 GW in FY26. On the export side, the company operates across more than 25 countries and highlighted a meaningful export mix over the last five years. In FY26, exports were 48% of revenue and domestic was 52%, per the presentation.

On the concall, management indicated that about 30% of total revenue in FY25 to FY26 came from exports to the Middle East. It also stated that around 18% to 19% of revenue in FY26 came from US exports, while acknowledging that US demand was volatile during the year due to tariff announcements.

Balance sheet strength and cash flows

Shilchar continues to highlight a debt-free capital structure. The presentation shows debt to equity at 0.0 for FY24, FY25, and FY26. Shareholders’ funds increased to INR 490.85 crore in FY26.

Cash and bank balances rose sharply to INR 245.95 crore in FY26, with the company noting that cash and cash equivalents include current investments. FY26 operating cash flow was INR 192.02 crore, while investing cash flow was negative INR 169.39 crore, consistent with ongoing capex.

This balance sheet profile matters in the context of the April 2027 capacity addition. Management reiterated that the capex is being funded through internal accruals.

What to watch in FY27

Management provided explicit top-line guidance for FY27. It stated a target of INR 800 crore for the year and said it is confident of achieving it. In a later exchange, management described an INR 800 crore to INR 850 crore range and said revenue could also reach INR 900 crore, while communicating INR 800 crore conservatively.

The key swing factors for FY27 are execution and pricing. First, normalization of exports, especially Middle East shipments that were delayed in March, should support near-term revenue recovery. Second, successful price revisions will determine how quickly margins recover back toward the company’s recent range.

Shilchar’s FY26 story did not end with a perfect quarter. But the documents consistently point to the same operating reality: demand remains healthy, the near-term is constrained by capacity, and the next step-change depends on commissioning the 6,500 MVA expansion in April 2027 and then ramping it up with approvals for higher voltage products.