This article first appeared on GuruFocus .
Release Date: November 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Pennar Industries Ltd ( BOM:513228 ) reported a strong revenue growth of 22.04% for Q2 2026, reflecting continued momentum across various growth vectors.
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The company's US subsidiary delivered strong double-digit growth in both revenue and profitability, with an expanded auto backlog setting the stage for sustained growth.
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The acquisition of Telco is expected to contribute significantly to sustained revenue growth in the coming months.
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The body in white division secured significant new orders from major clients like Hyundai and Ashok Leyland, with capacity expansions expected to robustly contribute to revenue.
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Engineering services, particularly structural engineering, continued to perform strongly, with expectations of healthy double-digit growth in revenue and profitability.
Negative Points
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The company faced labor supply constraints that impacted margin delivery in the PEB division, although these issues have now been addressed.
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Profitability and margins were slightly muted, with Q2 margins at 3.56% due to a shift towards higher-margin businesses.
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Working capital days increased to 76 days, primarily due to timing-related impacts and lower-than-expected revenue in certain divisions.
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The company incurred substantial acquisition costs related to the Telco acquisition, which affected margins in both Q1 and Q2.
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There was a decline in gross margins by 2% due to increased labor costs and other factors, although these are expected to improve in future quarters.
Q & A Highlights
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Q: Can you clarify the growth percentage for the PEB division and its contribution to the overall business? A: The PEB division grew by 30% and contributes about 45% of the company's revenue. While overall sales grew by 22%, the PEB division's growth was a significant contributor. However, we do not provide detailed segmental revenue breakdowns. (Respondent: Unidentified_3)
Q: Were there any acquisition-related costs impacting this quarter, and will they continue? A: Yes, the acquisition of Telco incurred substantial costs over two quarters, impacting margins. These costs are now fully accounted for, and no further acquisition-related costs are expected in Q3. (Respondent: Unidentified_3)
Q: What is the expected growth rate for the company over the next few years? A: We are confident of achieving a minimum of 20% profitability growth, driven by revenue growth and margin expansion. This is a sustainable target for the next few years. (Respondent: Unidentified_3)
Q: How did labor issues affect the company's performance, and what measures have been taken? A: Labor issues led to increased costs and impacted margins. We have resolved these issues by increasing labor costs and investing in automation. This will not affect future quarters, and we expect improved performance. (Respondent: Unidentified_3)
Q: What is the impact of the Telco acquisition on the company's US business, and how does it fit into the market trends? A: The Telco acquisition is expected to contribute over 100 crores annually. It positions us well in the US market, which is seeing growth in sectors like oil, gas, and data centers. We are confident in leveraging this acquisition for further growth. (Respondent: Unidentified_3)
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
