INOX India Limited (INOXINDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to INOX India Q2 FY '26 Earnings Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhinav. Thank you, and over to you, sir.

Thank you, Trisha. Good morning, everyone. On behalf of ICICI Securities, I welcome you all to the FY '26 earnings call of INOX India. Today, we have with us -- from the management, Mr. Deepak Acharya, CEO; Mr. Pavan Logar, CFO; Mr. Sunil Lavati, Investor Relations. We will begin with the opening remarks from the management, which will be followed by Q&A. Thank you, and over to you, sir.

Thank you, Trisha and Abhinav. Good morning, everyone. I welcome all our shareholders, investors and friends to the Q2 and [ H1 ] FY '25 earnings call of INOX India Limited. I trust you have had the opportunity to review our results, earnings release and investor presentation, which are available on the stock exchange and on our website. Joining me today is Pavan Logar who will later take you through the details and... [Technical Difficulty]

Sorry to interrupt sir, but there is some disconnection in your line.

From my side?

From the management side.

Shall I repeat then again?

Yes, sir, you can repeat. You are now clear.

Okay. Good morning, everyone. I welcome all our shareholders, investors -- there is some background noise. Can you stop that?

Yes sir, I'll stop that.

Okay. So good morning, everyone. I welcome all our shareholders, investors and analyst friends to the Q2 and H1 FY '26 earnings call of INOX India Limited. I trust you have had the opportunity to review our results, earnings release and investor presentation, which are available on the stock exchange and on our website. Joining me today is our CFO, Mr. Pavan Logar, who will later take you through the detailed financial performance, following which we will open the floor for questions. Let me begin with giving some macro level context as well as some industry context. As we cross the halfway mark of FY '26, India's economy continues to demonstrate remarkable strength and resilience. The country remains the world's fastest-growing major economy with GDP growth projected between 6.3% to 6.8%, supported by robust manufacturing activity, infrastructure expansion and rising industrial investments. The government's continued emphasis on Make-in-India and Make-for-the-world, along with strong export momentum and rising global demand for Indian engineering and manufacturing excellence continue to align well with INOX India's long-term growth vision. The continued push towards [ hydrogen ] economy as well as use of LNG, both as a transit fuel as well as fuel for power generation, which advocates well for the cleaner, greener future for the world. It also opens up a lot of growth opportunities for us. Let me give you an overview of the business performance. We are pleased to share that Q2 FY '26 and H1 FY '26 -- H1 FY'26, have been the best performance period in the company's history, making the highest ever sales, highest EBITDA and PAT margins. and record order backlog, reflecting our strong execution capabilities, innovation-led portfolio and rising global footprint. During the quarter, our consolidated revenue increased by approximately 16% year-on-year compared to Q2 FY '25, driven by robust order inflows and higher dispatches across key business segments. Our order backlog stood at INR 1,485 crores as on September 30, 2025, compared to INR 1,457 crores in the previous quarter, reflecting sustained demand visibility. Of this, 63% of the order backlog is from the exports and 37% from the domestic market, reinforcing our growth international reach and our efforts to add newer product applications to our fold. Let me give you some of the segmental highlights. Industrial Gas Solutions. The IG segment had an exceptional strong quarter led by several prestigious order wins and successful project deliveries. We received 2 large 1,500 metric cube cryogenic vessel orders from a leading U.S.-based aerospace company. These are highly engineered tanks designed for critical cryogenic applications, which is a testament to INOX India's precision engineering and credibility in global market among the top-notch consumers. Another key highlight was the successful dispatch of unique radial flow thermal swing absorption vessel for Tata Air Separation Project, which is executed by INOX Air Products. This vessel developed over the last 1.5 years makes a significant technological milestone and reflects our growing strength in complex process equipment manufacturing. Additionally, we secured an order of 90k liquid hydrogen storage tank from European customer for semiconductor and electronics facility, further reinforcing our presence in the high purity and clean energy domains. Together, these orders underline the growing trust of global clients in our capabilities for advanced cryogenic and hydrogen-related applications. LNG solutions. The LNG segment continued its growth trajectory during the quarter 2 and first half of FY '26. We secured 2 important satellite LNG power station project from small island nations near the Bahamas. These projects are part of a broader island energy infrastructure development plan, complementing the main Bahamas project we had earlier executed. Our LNG vehicle fuel tank supplies to major OEMs also remained robust, supported by growing adoption of LNG as a clean and cost-efficient fuel alternatives. We are expanding our capacity and building capabilities to scale our LNG fuel tank production up by 10x over the next few years, supported by favorable regulatory changes and increasing domestic and export demand. Cryo Scientific Division. In the Cryo Scientific Division, we witnessed strong progress with new and follow-on orders from the reputed scientific clients. We received 2 major refurbishment contracts, vacuum vessel thermal shield for Sector F repair and a Cryostat thermal shield repair. These projects underscore our ongoing partnership with global scientific research institutions and reaffirm our execution, excellence at a complex cryogenic facility such as heater project. Discussions are also underway for new heater project assignments, and we expect the next order to be finalized during Q3 FY '26. Beverage Keg division. Our beverage keg business continues to gain traction across the geographies. We secured a 30,000 keg order from a German company. The first batch has been dispatched with the remaining lot scheduled post customer trials in November. Additionally, we received a nonstandard keg order from customer in Germany, reflecting the rising demand for customized keg format. We are also actively bidding for over 0.5 million keg with the major global breweries, including Heineken, AB InBev, Paulaner and many others. These developments indicate rising confidence among the global breweries in INOX India's products, quality and reliability. With multiple approvals and distributor partnership progressing, we remain optimistic about scaling our Keg Business further in the coming quarters. As we have completed our first half FY '26 with a robust foundation, our healthy order pipelines, expanding global customer base, capacity expansion initiatives and diversified portfolio across LNG, industrial gas and Cyro Scientific and beverage application positions us strongly for a sustained growth. We remain confident in maintaining our growth trajectory, driving operational excellence and delivering long-term value for our stakeholders. I will now hand over the call to Mr. Pavan Logar, our CFO, to share the detailed financial highlights. Thank you for your time and continued trust.

Thank you, Mr. Acharya, and good morning, everyone. I shall share a summarized financial snapshot for the quarter and half year ended September 30, 2025. For Q2 FY '26, total income stood at INR 371 crores, representing a growth of 16% Y-o-Y, driven by strong execution across key segments. EBITDA stood at INR 92 crores, up by 18% Y-o-Y, reflecting improved operating efficiency and better product mix. PAT, profit after tax was INR 62 crores, growing 22.9% Y-o-Y, supported by margin expansion and robust volume growth. For H1 FY '26, total income for the half year stood at INR 723 crores, marking the highest ever H1 revenue in the company's history, reflecting healthy performance across Industrial Gas, LNG and Cryo Scientific divisions. EBITDA for H1 was INR 180 crores, also the highest ever half year EBITDA with margin improvement driven by a favorable business mix and cost optimization measures. PAT for H1 stood at INR 122 crores, also the highest ever, registering a growth of 20.9% over the same period last year. As of September 30, '25, our order backlog stood at INR 1,485 crores, the highest till date, providing strong revenue visibility for the coming quarters. Of this, 63% is from exports and 37% from the domestic market, reaffirming our strong global presence. Our total fund availability as on Q2 FY '26 stood at INR 221 crores, providing ample headroom to support future capacity expansion, ongoing project execution and other strategic initiatives. That concludes my remarks on the financial performance for the quarter and half year. I will now request the moderator to open the floor for questions. Thank you.

[Operator Instructions] The first question is from the line of Palash Jain from ICICI Securities.

So I just have a couple of questions. First being that what is the order inflow outlook for H2? Overall growth was 16.7% Y-o-Y in H1, whereas in Q1 was lower as compared to Q2 in terms of order inflow. So what can we expect for the full year? And also, is there any foreseen large order in H2? That's my first question.

For the H2, normally what happens is -- for the H1, it is like [ 46% ] to 45% of our target we achieve. And balance H2 is like 55%. Whatever yearly targets we have kept for the order book as well as the revenue, I think we are quite confident that we will achieve these targets. There are -- yes, as you rightly said, a few big orders we are expecting, especially on Cryo Scientific and LNG, which are likely to come in quarter 2 or quarter 3 now. And this will sum up our revenue as well as our order book in line with our yearly targets.

My second question being, what inference can we draw from the beverage keg approvals, as you rightly said, you have received from major overseas companies. So what is the expectation of sales in FY '26? And is there a potential to scale this category to, let's say, up to 2 billion by FY '27?

Yes. Presently, normally in this keg business, what I have seen is like the season starts from January to July. That is the very peak season and balance portion is like slightly slow. So now the RFQs are on. We have bid for Heineken, AB InBev and Paulaner and many such big breweries. And we are hopeful that another 15 to 20 days or max 1 month, we should get a substantial order from these breweries. And all our products which we have supplied as a sample or a prototype, everybody has approved the products. So there is no further discussion on approval process now. It is only we have to bid for the project and win the orders. And we are quite hopeful that whatever targets we have kept this year, we will achieve. And for the coming years, as we grow and have more and more approvals because we are waiting for [indiscernible] and other approvals are pending and need to visit our plant somewhere in January, February, and they will start. But once they normally, what I understood is the major breweries like Heineken and AB InBev approves, other breweries have very little to say and they approve the product without any difficulty. So we are quite hopeful with the approvals in place coming years will be much better than this year.

That's very helpful. Just one last question, if I could squeeze in. Could you also throw some light on the execution time lines, especially for large orders like you mentioned 1,500 meters cube tanks in industrial gas segment received from U.S.-based company as well as order for LNG regasification for the Bahamas?

Normally for such big jobs, we have a guideline of around 12 to 18 months depending on the size of the project. And we complete within that time span. And these big projects we normally execute from our Kandla facility, because the size of the vessels are very large, and we are very next to the port. So we can easily manufacture those tanks at our Kandla facility. So we are hopeful that whatever we have received the orders, we'll be finishing within time. And as on today, the progress is in line with our plan.

The next question is from the line of Prakash Kapadia from Kapadia Financial Services.

A couple of questions from my end. If I were to look at the H1 results, we've seen a 500 basis point improvement in gross margin. So is it purely mix change? And is it right to relate it to mix change and say if my current order book is how it is, this could further go up as we execute next year and beyond. Is that the right way to look at the business?

Yes. I told you in the beginning also, normally, whenever we from the past experience, our H1 is slightly around 43% to 45% of our total targets. And Q3 and Q4 are much better. As you see, a lot of projects get started or movement start because of the monsoon, we have always a problem in the first 1 and 2 quarters and some disturbance we have seen because of these tariffs also. So I'm hopeful that Q3, Q4, what we have projected, and we have a very good amount of inquiries and other coming in. And already we have bidded for many big projects as well. So we should be in a position to meet our targets without any difficulty.

So it's purely the business mix change, sir. What I was looking at is the gross margin improvement is due to business mix change, and it could further improve if the business mix is tilted towards non-IG is what I was trying to get more clarity on.

Yes. LNG and Cryo Scientific has always a better margin as compared to...

Yes, I was trying to validate. And if I were to look at the quarterly domestic business, over the last few quarters, we've had a run rate of INR 160 crores to INR 170 crores. So post the GST cut, what kind of momentum are we seeing? Because historically, from what I remember, automobiles is a pretty decent contribution to our domestic business that is doing well. Consumer durables after the GST cut is doing well. So if you could give us some sense on the domestic side of the business because I think auto, cement, consumer durable, electronics, these are large contributors to us. So what kind of a growth can we expect from here on, on the domestic side? And how easy or difficult it is to increase market share in the domestic business? What would be our market share in the domestic side of the business?

Normally, our export to domestic is 60 -- 60-40 combination normally. And what you rightly said, the GST impact is just one month old now or maybe less than that. Definitely, automobile has picked up very well. So in automobile, even the OEM manufacturers to whom we are supplying the LNG fuel tanks, we have started getting good inquiries, now again request. Tata is also pushing very hard to see that the LNG trucks are running on the road. So things should improve. But for our product, the GST is saved earlier and today also, it is same. There is no variation in our GST rates. So directly, our product is not cheaper or costlier as compared to early regime. So -- but definitely, yes, as the industry -- overall industry, like you rightly said, electronics, automobile, other manufacturing industry grew at much faster rate. Automatically, the CapEx from those companies get improved and which has a direct impact on our revenues and our targets -- order booking targets.

The next question is from the line of [indiscernible] Shah from Dalal & Broacha Stock Broking Private Limited.

I have a couple of questions. First, it's a continuation of the previous participant. So the question is with regards to the Keg division. In the previous con call, we had the target of about 100,000 Kegs for the year on a very minimum basis. So are we on track to achieve that?

Yes, already, I have received 30,000. And hopefully, this month, we'll get more than that expectation. We are already through and just final order signing is balanced now.

Okay, sir. Secondly, on the new approval side, I mean, any update on the Carlsberg and Asahi audit that was supposed to happen in September or October of this year?

Planned, but they are now coming in January now because they have some other plans. But definitely, I was told that if you get the Heineken and AB InBEV, which are the largest breweries, other small breweries automatically follow those -- this one. We already supplied our samples to Carlsberg and Asahi and results will be known in coming maybe end of November or first week of December. But audit will take place in January. The samples, whatever the beverage we have supplied samples so far, everybody has a very positive outlook on our quality and our performance of our equipment.

Okay. That's helpful, sir. My next question is with regards to the Disposable Cylinder segment. So sir, what sort of target do we have for FY '26 and any guidance for the coming years? Because FY '25, we closed it at INR 125 crores. FY '24 was about INR 100 crores. So what is your outlook for the current and the upcoming years?

See, we have kept our internal target for production around 2 million to 2.5 million. And in the first half, we almost achieved around 0.5 million cylinders manufacturing. And recently, our major U.S. customers have visited last week to our plant. And they are quite hopeful that they will continue their business with INOX India, looking to the quality, delivery and our price constraint. Yes, definitely, there was a small constraint when it was like 25% tariff, people were not so much worried. But now with 50%, slight hesitation they have, but we explained them properly that we can work with them to the extent possible. And as the tariff goes away again, we will come back to the original numbers. So they are quite happy with our, I mean, explanation, and they will place the orders. There is no problem. Earlier in the quarter 1, we already received a national refrigeration order. We almost in H1 sold around INR 46 crores of cylinders to national refrigeration.

Got it, sir. Got it, sir. And sir, one last question, if I could squeeze in. It's with regards to the LNG stations. So any update because I think in the previous quarter, we had about 50 stations as on date. Any traction in that segment?

LNG station somehow is not picking up that fast to our expectation. But definitely, some private players like Ultragas and GreenLine, they are putting almost 100 stations they are coming up in due course of time. And besides that, we have some small stations where 2, 3 requirements from GAIL is coming up now and other small companies. But what we expected so fast, it is not happening. But definitely, at least 10 more stations or 15 more stations will come by end of this year now.

The next question is from the line of [ Divyam Doshi ] from Pragya Securities Private Limited.

So my question was, could you please provide a sense of your average project size or revenue realization per unit in every segment that INOX provides and the segment-wise growth outlook for the rest of FY '26?

You mean all vertical?

Yes, sir.

Okay. So if you see our backlog, our backlog is total INR 1,485 crores. Out of that 45% is from Industrial Gas, 31% from LNG and 23% from the CSD division, okay? And on the revenue side, the income is 57% from the Industrial Gas, 25% from the LNG and 13% from the Cryo Scientific division. So this is for the quarter 2 FY '26.

So I wanted to know that the order book which we have right now, that is INR 1,485 crores, when is that expected to complete? And when is the revenue expected to realize?

So almost like 60% of this will be more than that perhaps will be completed by Q2 and balance will be carried forward for the next year. And this is how it is normal at our pace. So we have almost like INR 732 crores so far -- INR 723 crores we have achieved and balance around INR 800 crores to INR 900 crores will achieve in the next 2 quarters.

Okay. And can you please share where INOX sources its key raw materials, that is, for example, stainless steel or other cryogenic grade materials from?

So normally, around 85% to 90% we procure from India, that is JSW. And there are certain projects which require -- which does not require other Indian origin material, then we buy from mainly Japan or maybe Korea, like that we buy. But most of the material is from JSW.

Okay. So -- and if the whole INOX Group comes together and buys the raw material together, so will there be a great cost cutting in that?

No, INOX Group, our 3 businesses, only the consumption takes place at INOXCVA. And that is how we are doing it for other 2 businesses like Industrial Gases and the [indiscernible] business, they don't procure any material as such.

Okay. Okay. And if I could squeeze a last question. Can you please help us understand the total addressable market for the Fusion-related work for the next 5 years? And how much of that opportunity is likely to be in our project, which could be -- which could help us in the future and to be recurring?

So you're talking about the Heater projects?

No, no, the Fusion-related work project.

All over the world.

The TAM, which we could -- the total addressable market for us?

It's very difficult to say this, because there are many such applications which are coming in. So far, what we have executed is around INR 800 crores to INR 900 crores we executed so far. And whatever the new opportunities are coming in, we expect another for next 5 years, around INR 500 crores to INR 600 crores additional business. Every year, around INR 100 crores, INR 150 crores, we can expect. And this year also, we have received so far a good number, and we are expecting one more order in the quarter 3 or quarter 4. So going forward, at least for the Fusion projects, we have established our name as a good quality supplier, and we are now approved by majority of the Fusion Energy experimentation work. And we have got the ESPN approval also. So that will definitely help us in getting more and more orders in coming days.

The next question is from the line of Eshwar from Ithought PMS.

So I have a couple of questions. Sir, our customer who develops liquid air energy storage projects, they raised funds of around GBP 300 million from U.K. Infrastructure Bank. So approximately, what percentage of this CapEx will be for fuel tanks, LNG?

No, we got the order for cryogenic liquid air storage application for this project, what you rightly said. And there are many such projects they are working. This is not the only project for which that is totally funded now. So they asked for several quotations from us for -- beyond this application. Because this was a pilot project. So now we will be supplying this equipment by end of December or January to them, and that will reach another 2 months. So maybe next year, by mid of next year, pretty this entire station will be operational, and they can feel what is the advantage of this such type of application. But definitely, they have started getting RFQs for the new projects, which are quite big projects. So we are hopeful that we will be in a position to provide them good solutions for these upcoming projects.

Okay, sir. Approximately what percentage of the capital cost will be for kegs?

I'll get you that number, whatever we have received the order. But this is only a small part they have given us, frankly speaking. We have many more opportunities in this project. But as this was the first order and the first interaction with INOX India, I think they have restricted this to only for the supply of cryogenic liquid air storage batteries system only to us. But going forward, once we have developed a good relationship, they can offer many storage equipment, many piping, fleets and many other equipment they can offer us for building up.

Okay, sir. And my second question is how is the outlook for LNG fuel tanks, because one of our Chinese competitors, they make around 2 lakh tanks annually and sell it at a similar landed cost to us domestically. So approximately, what would our market share be in this segment, both domestic and exports, sir?

Yes. Presently, if you see there are 4, 5 OEM manufacturers in India. The biggest one can be Blue Energy, then Tata Motors, Ashok Leyland and Volvo, okay? So we are catering to almost everybody, all the 4. But definitely, the market is going to grow up gradually. We have developed all tanks right from the small tank as small as 200 liters and now to 990 liters, which can carry you to almost 1,000 kilometers in one fill. So the market is going to grow. The OEMs are yet not ready for bigger tank installation because of their chassis design or something is pending. But hopefully, by another or the beginning of the quarter 3, they will be in a position to take bigger tanks as well. Presently, they are utilizing 450 liter 2 tanks, one on left side and one on right side so that they can carry to 900 liters. So going forward, we see a lot of good potential. And over a period of time in next 3 to 5 years, the LNG fuel tanks will be at least 25% to 30% in my opinion. That will require around 30,000 to 40,000 tanks a year.

Understood, sir. And what would be more beneficial to us, sir, having 2 tanks the same vehicle or a single bigger tank realization wise?

Realization-wise, perhaps 2 tanks will be a better solution for us, but it depends on the design of the truck. So if the truck cannot have a turning radius because of the 990-liter tank, which is mounted at the back of the cabin, then it is difficult. They cannot run that tank. But 450-liter, 2 tanks is almost 900 kilometers, and this is also 900 kilometers. So 2 tanks from revenue point of view is better for us. At the same time, whenever the 2 tanks are there, the driver is aware that one tank is already empty, and he will think of filling it up in next filling station. But 990, if something even goes wrong or something issues are there and suddenly the tank is empty, then he is in trouble. So what we have seen, people are happy with 450-liters 2 tanks.

The next question is from the line of Pravesh from FourLion.

One quick update on the Highview project. I think last time we had mentioned it's likely to get completed by October. Can you provide an update on that? Highview?

Yes, we are on the track. Almost our -- all tanks are now completely tested, hydro testing, everything is done, final painting and other thing is going on. So we hope that our deliveries are in January first week, and we'll be meeting those deliveries. And we don't have any constraint for delivery of these tanks now. In fact, we are trying to see that how we can deliver slightly earlier also.

Understand. Is there any plan from Highview, because this was a starter kind of a project on Air batteries. Are you getting more traction on similar lines for Air batteries.

We are getting inquiries from them for future projects, and we already bidded for them. It is under evaluation now.

Understood. On the -- earlier on the call, did you mention that you are bidding for 0.5 million beverage kegs in this season? Is that right number that I got?

Correct. Basically, we have major breweries have total requirement of that size, and we have bidded for that. How much we win is we have to see now.

Understood. And just generally, what is your expectation or target in terms of getting these orders?

We thought that this year, we'll do at least 100,000 to 150,000. Basically, even if they have a requirement of, say, 300,000 being our first entry into the market of INOX India, they will definitely -- even if our prices are lower, they will not give the entire order to us. So normally, it is a strategy of -- purchasing strategy of these breweries that distribute the order to 2 to 3 vendors. So from the reliability point of view, from the delivery or some logistic point of view, they distribute the order to 2, 3 vendors. So out of, say, 0.5 millions kegs requirement, we at least expect 100 to 150.