Megatherm gave two capex numbers for this year. The CFO didn't explain the gap.
The induction furnace maker guided ₹20 cr for a new transformer shed early in the call, then agreed with an analyst that capex would be ₹5-10 cr for two years. The discrepancy matters for near-term cash flow.
What's new
- FY27 revenue guided at ₹425-450 cr, with exports rising to 20-25% of mix from 10-12% in FY26.
- Transformer order book stands at ₹80-85 cr; a fourth facility targeting ₹250 cr capacity by FY29 requires ₹20 cr capex.
- EBITDA margin is 10-12% now; management says 15%+ is achievable at ₹500+ cr scale from scale effects.
Themes from the call
Capex Clarity
Management's own-call capex contradiction (₹20 cr vs ₹5-10 cr) creates a cash flow modeling problem for the next two years.
Transformer Ramp
The transformer business has moved from approval delays to ₹80-85 cr in orders, but fresh orders are paused through August to clear backlog.
Margin Bridge
The gap to 15%+ EBITDA depends on marketing spend normalizing and spares (40-45% COGS) scaling alongside project work (80% COGS).
Guidance watch
- Capex: management gave two contradictory numbers (₹20 cr vs ₹5-10 cr) for the next 1-2 years within the same call.
- Revenue: FY27 target of ₹425-450 cr assumes Middle East war disruption is limited to 1-2 months.
- Long-term: 5-6 year target of ₹1,000 cr revenue and 4x EBITDA growth at a 20-25% CAGR.
Risk flags
- The capex number needed to build the fourth transformer shed is the same figure (₹20 cr) that management later contradicted.
- Middle East export orders worth ₹50-60 cr are delayed by war; guidance confidence depends on a 1-2 month disruption window.
- Front-loaded ₹10 cr in marketing and HR spend is depressing current EBITDA; the payoff timeline is not specified.
Key quotes
-
"Yes, we are making another shed for transformers. That will be somewhere around 20 crores of capex."
— CFO Satadru Chanda, early in June 2026 call -
"So for the next two years, capex will be 5-10 crores... Yes."
— CFO Satadru Chanda, agreeing with analyst projection later in June 2026 call
The brief
Megatherm's June call had a capex problem that management did not resolve. CFO Satadru Chanda first put the cost of a new transformer shed at 'around 20 crores'. An hour later, he agreed with an analyst that capex would be ₹5-10 cr for the next two years. Both numbers are in the official call record. One of them is wrong, and the gap matters: the ₹20 cr figure is the exact amount cited later for the fourth transformer facility targeting ₹250 cr capacity by FY29. If the real number is ₹5-10 cr, the facility timeline changes. If it's ₹20 cr, the two-year capex guidance is understated.
The rest of the story is a company in transition. Revenue is guided at ₹425-450 cr for FY27, up from ₹350 cr in FY26. The transformer business has a ₹80-85 cr order book post a six-month approval delay, but fresh orders are paused through August to clear the backlog. Spares at ₹70 cr (20% of turnover) carry 40-45% COGS versus 80% for projects, so mix shifts here drive the margin path toward the 15%+ target. That path requires marketing and HR front-loading to normalize. Management says it will.
The capex contradiction is a small number with a large signal. For a company asking the market to underwrite a five-year path to ₹1,000 cr, getting the current-year capex right on its own earnings call is table stakes. That it didn't is a flag on financial communication, not on the business itself.
The transformer story is real. The capex number on the same call was not.