Tara Chand Q1 FY27: Equipment growth stays strong as margins take a one-off hit

Tara Chand Infralogistic Solutions Ltd started FY27 with higher activity in its core equipment business, even as profitability slipped on a mix of specialized services disruption, a soft warehousing quarter, and prior-period adjustments. In Q1 FY27, revenue from operations rose to INR 67.6 crore, up 11 percent year on year. EBITDA was INR 21.0 crore with a margin of 30.7 percent, down from 37.4 percent in Q1 FY26. Profit after tax fell sharply to INR 1.7 crore, a 2.4 percent margin.

Management was direct about the reasons. Specialized services margins almost halved during the quarter because a client changed project scope after equipment and manpower had already been mobilized, leaving resources idle and adding demobilization costs without corresponding revenue. At the same time, Warehousing and Transportation moved between anchor contracts and saw lower steel activity, which pushed segment profitability down to near break-even levels.

What drove the quarter: fast equipment growth, weak warehousing

The quarter was led by the Equipment Hiring and Projects segment, which reported revenue of INR 48.9 crore, versus INR 31.5 crore in Q1 FY26. Segment EBITDA margin reported at 42 percent reflects the impact of specialized services inside the segment. The company also disclosed that its standalone equipment rental EBITDA margin remained strong at 54 percent in Q1 FY27, supported by 79 percent utilization and an average gross monthly rental yield of 2.91 percent.

Warehousing and Transportation was the weak spot. Segment revenue fell to INR 18.7 crore from INR 29.5 crore in Q1 FY26 and EBITDA margin compressed to 1 percent from 17 percent. In the concall, management attributed this to the closure of the earlier RINL Visakhapatnam contract and the gradual ramp-up of the SAIL Dankuni stockyard, as well as subdued steel movement during the quarter.

Steel Processing and Distribution remained negligible in revenue terms in Q1 FY27 at roughly INR 0.01 crore, with the presentation showing a sharply negative EBITDA margin because of the very small base.

A key accounting item also affected the headline numbers. The quarter included a revenue write-off of about INR 1.9 crore relating to earlier years, and an exceptional charge of INR 0.3 crore for a nonrecoverable earnest money deposit on older warehousing and transportation works. Management noted PAT would be higher excluding these items.

End-market mix and fleet strategy: leaning into power and renewables

A notable shift in the business mix is visible in equipment rentals. The presentation’s equipment rental revenue mix for Q1 FY27 shows cement at 31 percent, rural and urban infrastructure at 18 percent, metals and minerals at 10 percent, renewable energy at 9 percent, power at 26 percent, and petrochemicals at 6 percent.

In management commentary, the focus was on the rising weight of renewables and power together. The Chairman stated that renewable energy and power crossed 50 percent of equipment rental revenue in Q1 FY27, versus about 25 percent a year earlier. On the concall, the CFO also described renewables as around 30 percent of rental revenue and expected the share to remain at least at that level through FY27.

This sector shift ties to the company’s broader strategy of building a high-capability fleet. The fleet totals 430 machines across large cranes, piling and earthwork, trailers, aerial platforms, pick-and-carry cranes, rubber tyre gantries, and other equipment. The company highlights ownership of all assets and an average fleet age of 6 to 7 years.

Capex and balance sheet: investing while keeping leverage below 1x

Tara Chand continued to invest into its fleet. Q1 FY27 capex was INR 42.8 crore. The investor deck indicates additions in the quarter including crawler cranes and a cement batching plant, and highlights 900 MT capacity cranes as part of its differentiated fleet. Gross block rose to INR 600.8 crore and net block to INR 381.8 crore as of Q1 FY27.

Management guided FY27 capex of INR 80 crore to INR 100 crore and said it expects to complete most of this by November 2026. The stated focus is on higher capacity cranes that can be deployed across sectors rather than equipment tied to a single end market.

Despite the investment, management highlighted an improvement in leverage. Net debt to equity stood at 0.87 times in Q1 FY27, inside the company’s stated ceiling of 1 times.

Operationally, receivables remain an area under watch. Receivable days were around 97 in Q1 FY27 versus management’s target of 80. The CFO said collections related to RINL closure have taken longer than expected and are now anticipated to come in the second half of FY27.

Guidance and what to track next

Management maintained its broader guidance framework. It reiterated annual revenue growth of 20 to 25 percent and cited an executable FY27 order book of INR 204.82 crore as of July 2026, with 74 percent tied to equipment rentals and specialized services and 26 percent to warehousing and transportation. On the concall, management also referenced a pipeline of around INR 150 crore.

On margins, the company expects the first half of FY27 to remain below its typical 37 to 38 percent EBITDA margin band, with recovery in the second half as the affected equipment returns to work, the disputed specialized services project is settled, and warehousing improves after the monsoon period.

The quarter’s message is clear. Growth in the core equipment rental platform remains strong, but execution risk in specialized services and the transition dynamics in warehousing can temporarily distort profitability. Investors will likely track three near-term markers: settlement of the specialized services disruption, normalization of warehousing activity including Dankuni ramp-up, and whether utilization returns closer to the company’s typical 83 to 85 percent engagement levels as new capex is deployed.