Ador Welding Q2 FY27 Earnings Call — Analysis (NSE: ADOR)
Ador Welding delivered 23% YoY revenue growth in Q2FY27 driven by strong domestic capital goods activity and exports, though gross margin contracted to 34.2% due to sharp raw material inflation.
Result quality: watch — Margin pressure. Management sentiment: optimistic.
The take
Q2FY27 Revenue ₹345 Cr ( +23% YoY ) . New guidance — FY29 long term revenue target ₹2,000 Cr . New story: Direct Customer Engagement and Market Share Gai… .
Results
Q2FY27 revenue grew 23% YoY to ₹345 Cr with EBITDA up 9% YoY; gross margin stood at 34.2% and H1FY27 EBITDA margin was 11.2%.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹345 Cr | +23% | yoy · Q2FY27 |
| Revenue | ₹654 Cr | +23% | yoy · H1FY27 |
| Gross Margin | 34.2% | none · Q2FY27 · Impacted by steel & commodity price inflation | |
| EBITDA Growth | 9% | +9% | yoy · Q2FY27 |
| EBITDA Margin | 11.2% | yoy · H1FY27 · Slightly higher than last year | |
| Interim Dividend per share | ₹7.5 | none · Q2FY27 · Per equity share | |
| Short-term Borrowings | ₹28 Cr | point_in_time · H1FY27 · As of Sep-2026; up from ₹0.27 Cr in FY26 |
Guidance
Management targets reaching 12-13% sustainable EBITDA margin and 36-38% gross margin as price hikes pass through, while maintaining its long-term aspirational target of ₹2,000 Cr revenue by FY29.
What management committed to
- Sustainable EBITDA margin has to be between the 12% to 13% level and then push upwards from there. — 12%-13%, going forward
- Gross margin level is targeted at approximately in the region of at least 36%-38%. — 36%-38%, going forward
- [Ador Welding] is fairly on track towards reaching ₹2,000 crores of revenue by FY29. — INR2,000 crores, FY29
- Annual capex for the next 2 financial years (FY27, FY28) will be in the region of ₹60-₹65 crores to ₹70 crores per year before reducing back to ₹30-₹35 crores. — INR60-INR65 crores to INR70 crores, FY28
- Volume growth will remain in the double-digit / mid-teens region going forward into H2. — plus 10% double-digit region, H2FY27
Key themes
Topline momentum vs raw material margin squeeze
How the narrative shifted
- Raw Material Inflation and Margin Recovery: Management acknowledges Q2 gross margin compression due to steel inflation (up 7-8% QoQ) but insists pricing pass-through with time lag will restore margins to 12-13% EBITDA levels.
- Direct Customer Engagement and Market Share Gains: Supplementing existing dealer distribution by aggressively pitching directly to top 50-100 large industrial steel consumers to capture wallet share.
- Export Expansion and Geographical Diversification: Expanding beyond Middle East base (currently 80-85% of exports) into Europe and the US, viewing exports as a key multi-year growth engine.
- Product Mix Shift Towards Automation and High-End Tech: Driving incremental revenue via orbital welding, digital monitoring (WelDoS), high-performance consumables, and strategic partnerships like Liburdi and Hypertherm.
Operational commentary
- Volume growth was in the mid-to-high teens for the quarter, outperforming underlying industry growth.
- Investing in new consumables lines to modernize manufacturing base and scale capacity.
- Exports contributed 15-20% of revenue in H1FY27, with Middle East representing 80-85% of export sales; expanding into European markets and USA.
- Partnerships with Hypertherm (plasma cutting) and Liburdi Dimetrics (orbital welding) supporting higher-end equipment and automation offerings.
- Direct sales push targeting top 50-100 domestic customers to capture higher wallet share.
- Flare segment has been wound down and has no material revenue or P&L bearing.
Analyst Q&A
Q. Analyst asked for the current order book size across shipbuilding, defence, and nuclear sectors.
Declined to provide specific order book data, citing commercial confidentiality, while confirming robust traction and active inquiries in shipbuilding.
Q. Analyst asked for the exact percentage breakdown of raw materials (steel vs chemicals/electronics) and steel's share of costs.
Refused to give precise percentages citing competitor sensitivity, noting generally that steel and copper are major components and steel prices rose 7-8% QoQ.
Q. Analyst asked if gross margin dip in Q2FY27 represents the trough and whether H2 will see recovery.
Management confirmed that Q2 margin level was an unacceptable dip and price pass-throughs are underway to bring gross margins back to 36-38% and EBITDA to 12-13%.
Q. Analyst asked about the reason for the surge in short-term bank borrowings to ₹28 Cr from ₹0.27 Cr.
Explained that it was driven by trade finance (LCs/BGs) and strategic inventory build in steel amidst tight raw material supply and rapid growth.
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