Tega Industries Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

5 Lance Dawber, Mehul Mohanka, Patrick Koley, Pratik Basu Roy, Ravi Joshi

Analysts

6 Ankur Periwal, Chirag, Nishita, Rushabh Doshi, Varun Jain, Vikas Gupta

Financials & KPIs

Geographic & Segment Commentary

Consumables (TEGA Legacy): Revenue grew 36% YoY to ₹3.96 billion with EBITDA margins at 24.1%, a 320 bps YoY improvement. Growth driven by sustained customer demand, operational efficiencies, and focus on value-added solutions (hybrid liners). Part of Q4 FY26 orders shipped in Q1 FY27, making the 36% growth rate not representative of a steady-state run rate; long-term guidance remains ~15% CAGR.

Equipment: Revenue declined 44% YoY to ₹358 million due to delays in customer clearances, with EBITDA broadly breakeven on operating leverage from lower volumes. Management remains confident in long-term prospects and is focused on strengthening project pipeline and order conversion despite the near-term softness.

Molycop: Contributed ₹12.9 billion revenue (one month consolidation) at ~13% EBITDA margin. June 2026 one-month adjusted EBITDA of $17.2 million was up 3% YoY, driven by higher ship volumes. Molycop maintains >50% market share in core regions (South America, North America, Australasia), with Africa identified as a growth region leveraging TEGA's strength. The business secured ~$235 million debt reduction at closing with net debt down to $672.5 million.

Company-Specific & Strategic Commentary

Molycop Integration & Synergies: Phased and disciplined integration approach targeting ~$20 million synergies over 2-2.5 years across SGA optimization, operational efficiencies, procurement, and combined scale benefits. Integration costs of ₹1.9 billion fully booked in Q1 FY27, with management confirming no further one-time costs expected.

Cross-Selling Strategy: Revenue ramp-up from cross-selling expected from Q3-Q4 FY27 as teams identify opportunities where TEGA and Molycop have complementary customer relationships across geographies. Same customers across both product lines (mill liners and grinding media) provide natural cross-sell opportunity.

Chile Plant: Construction on track with soft commissioning targeted for January 2027 and commercial production from March 2027, subject to local regulatory approvals expected within a two-month window post-construction.

Market Outlook: Global gold market expected to grow ~2.2% CAGR through FY30, copper demand ~4.8% CAGR, blended ~3% market growth. UNCTAD projects copper demand +40% by 2040, requiring ~$250 billion investment and ~18 new mines, driving demand for grinding media and mill liners.

Molycop Market Conditions: Copper prices >$14,000/tonne and gold ~$4,400/ounce support customer investment. Freeport Grasberg recovery progressing (blocks 2 and 3 at planned operating rates, full return targeted by end CY2027); Cobre Panama restart momentum building with stockpile processing approved April 2026.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Cross-Selling and Revenue Ramp-Up

• Question: On the synergy target of ~$20 million, is revenue ramp-up expected from cross-selling between TEGA and Molycop networks, and where will it come from? (Ankur Periwal, Axis Capital)
• Answer: Revenue ramp-up expected from Q3-Q4 FY27; teams are being brought together across markets to identify cross-sell opportunities where TEGA is strong in one geography and Molycop in another. Definitive numbers on cross-sell contribution will be available in a couple of quarters. (Mehul Mohanka)

Molycop Margin Stability and Seasonality

• Question: Are the reported Molycop volume, realization, and margin numbers steady-state, and is there any seasonality or one-off costs/benefits in the quarter? (Ankur Periwal, Axis Capital)
• Answer: Minimal quarterly seasonality historically, though the June-ending quarter (now Q1) has typically been the strongest; one-month results should not be extrapolated—better to review on a quarterly basis. Margins expected to remain relatively flat given contract structures tied to steel indices, which protect gross margins; Molycop internally tracks per-tonne margins rather than percentage of sales. (Patrick Koley)

Chile Plant and One-Time Costs

• Question: What is the commissioning timeline for the Chile plant, and will there be more one-time acquisition expenses? (Ankur Periwal, Axis Capital)
• Answer: Chile plant soft commissioning targeted January 2027 with commercial production from March 2027, subject to local regulatory approvals (expected within 2 months of construction completion). One-time costs of ₹190 crore (₹110 crore in Q1 FY27 plus ~₹75-80 crore in Q4 FY26) are complete—everything has been accounted for. (Mehul Mohanka)

Debt Position and Deleveraging

• Question: What is the total debt at TEGA and Molycop levels, and how will it trend by fiscal year-end? (Vikas Gupta, Wealth Guardian)
• Answer: Group total debt is ₹112 billion including ₹26 billion of redeemable preference shares; Molycop net debt at June 30 is $672 million. Molycop debt will fluctuate with bar payment timing (~80% of COGS), but net debt is expected to decline between now and year-end. (Ravi Joshi, Patrick Koley)

Molycop Capex and Volumes

• Question: What is Molycop's sustenance capex and volume growth outlook for the next two years? (Vikas Gupta, Wealth Guardian)
• Answer: Capex for the 10-month period is estimated at ~$28 million; normalized 12-month sustaining capex in the low-$30s million with possible expansionary opportunities. Molycop 12-month volumes (ended June 2026) were 1.204 million tonnes, slightly down YoY; 10-month volume expected to grow ~5% with EBITDA +4%. (Patrick Koley)

Steel Price Correlation and Realization

• Question: Molycop realization is ~₹118/kg—how does this move relative to steel prices, and what is the per-tonne margin target? (Varun Jain, Dolat Capital)
• Answer: ~85% of contracts include steel index-based pricing adjustments—revenue moves with steel prices, but margin per tonne is structurally protected. No per-tonne margin forecast is provided since steel prices vary by region; focus is on maintaining profit per tonne. (Patrick Koley, Lance Dawber)

Competition and Market Share

• Question: What is Molycop's market share by region, and how is the company positioned against increased Chinese competition in LATAM? (Varun Jain, Dolat Capital; Chirag, Centrum Broking)
• Answer: Market share exceeds 50% in core regions. Volume breakdown broadly tracks copper and gold production—South America (largest copper region) holds the largest volumes, followed by North America and Australasia, with Africa as a targeted growth region leveraging TEGA's strength. Chinese competition is a long-standing factor; Molycop's moat includes strategically located manufacturing (shorter lead times), strong technical support, and tailored customer service. (Lance Dawber)

Molycop Historical Performance

• Question: What were Molycop's revenue, volume, and EBITDA for the last full operating year? (Varun Jain, Dolat Capital)
• Answer: For the 12 months ended June 2026, volume was 1.204 million tonnes (vs 1.223 million tonnes prior year) with revenue slightly down; EBITDA was $191 million, up 11% from $172 million, driven by cost controls, better bar procurement, and SGA discipline. Formal long-term guidance for Molycop will be provided as integration progresses through the year. (Patrick Koley)

Consumables Guidance and Margin Sustainability

• Question: With 36% growth in Q1, is the 15% consumables CAGR guidance conservative? Are 20-23% EBITDA margins sustainable despite commodity cost inflation? (Nishita, Sapphire Capital; Chirag, Centrum Broking)
• Answer: The 15% long-term growth guidance is sustainable—Q1 benefited from Q4 orders shipped in the current period, making it not comparable. Margins are sustainable as the business successfully passes through cost inflation with a ~1-quarter lag; gross margins at 62% remain stable despite geopolitical conditions. Consolidated FY27 EBITDA margins expected ~15%. (Ravi Joshi, Mehul Mohanka)

Freight Costs and Currency Exposure

• Question: Are freight costs inflating for both businesses, and what currency risks exist from an Indian investor perspective? (Rushabh Doshi, Nirmiti Investment Advisors)
• Answer: TEGA has seen container prices rise across geographies but has pass-through clauses (~1-quarter lag). Molycop has hedged a portion of forward freight rates; no direct P&L impact seen. Molycop entities are USD-denominated except Spain and Australia; an active FX hedging program covers non-USD contracts immediately and local operating expenses appropriately, with no material historical FX impact on EBITDA. (Mehul Mohanka, Lance Dawber, Patrick Koley)

Non-Core Asset Divestment

• Question: Update on identified non-core assets for divestment to reduce debt? (Rushabh Doshi, Nirmiti Investment Advisors)
• Answer: Currently evaluating a couple of non-productive land parcels; proceeds will be used to pay down debt when realized. These divestments have no material impact on Molycop's EBITDA. (Mehul Mohanka, Patrick Koley)

Key Takeaway

Tega Industries delivered a strong Q1 FY27 with consolidated revenue of ₹17.2 billion and adjusted EBITDA margin of ~15%, marking the first quarter of Molycop consolidation (one month: June 2026). Legacy TEGA consumables grew 36% YoY with EBITDA margins expanding 320 bps to 24.1%, while the equipment business was soft (revenue down 44% YoY) on customer clearance delays. Molycop's June 2026 performance was directionally ahead of acquisition expectations, with synergies of ~$20 million targeted over 2-2.5 years and net debt reduced ~$340 million post-closing. Management maintains ~15% consumable revenue CAGR guidance and expects consolidated EBITDA margins of ~15% for FY27, with cross-selling revenue contribution expected from Q3-Q4. Key watch points include the Chile plant commissioning (targeted March 2027), equipment order conversion, Freeport Grasberg recovery (full capacity by end CY2027), and Molycop's deleveraging trajectory—with formal Molycop guidance expected over the coming quarters as integration matures.