Behari Lal Engineering Q1 FY27: ₹80 Crore Capex, Unit 3 Expansion and High-Value Product Push
Behari Lal Engineering Ltd. has outlined an aggressive expansion and product-mix strategy for FY27, with management targeting around ₹80 crore of capital expenditure, construction of Unit 3, expansion into higher-value metal rolls and engineering products, and a growing presence in the defence and aerospace segment.
The company’s Q1 FY27 earnings call also highlighted strong operating performance, with management focusing on increasing the contribution of high-value products rather than simply chasing volumes.
Q1 FY27 Financial Performance
Behari Lal Engineering reported strong year-on-year growth during the June 2026 quarter.
- Revenue from operations: ₹151.7 crore, up 18% YoY
- Sales volume: 22,095 tonnes, up 13.4% YoY
- EBITDA: ₹29.7 crore, up 23%
- EBITDA margin: 19.6%
- PAT: ₹19.2 crore, up 24.5%
- PAT margin: 12.7%
- EBITDA per tonne: approximately ₹13,457
- High-value products: 60.4% of revenue versus 55.7% a year ago
Management said the operating business performed even better when excluding other income, with operating EBITDA at ₹27.6 crore, up 20.6% YoY.
₹162 Crore Order Book Provides Near-Term Visibility
As of June 30, 2026, the company’s order book stood at approximately ₹162 crore, covering 13,138 tonnes.
Management highlighted that the order book is skewed towards high-value products. The order book realization works out to around ₹1.2 lakh per tonne, compared with approximately ₹93,000 per tonne of Q1 revenue realization.
This mix could support the company’s strategy of improving revenue and profitability without relying entirely on volume growth.
₹80 Crore Capex Planned for FY27
One of the key takeaways from the earnings call is the company’s expansion plan.
Behari Lal Engineering is targeting approximately ₹80 crore of capex in FY27.
The planned spending includes three major areas:
- IPO-funded expansion and equipment upgrades
- Unit 3 expansion funded through internal accruals
- Solar power plant funded through internal accruals
The company spent approximately ₹5 crore during Q1 FY27, leaving around ₹75 crore to be deployed over the remaining three quarters.
Unit 3 Expected to Start Operations in Q1 FY28
Unit 3 is currently under construction, with the company having already ordered most of the machinery.
Management expects the new facility to commence operations in Q1 FY28.
The exact capacity addition and project capex for Unit 3 have not yet been finalized and management said these figures will be disclosed once confirmed and reported to the exchanges.
Importantly, Unit 3 is planned as a foundry-focused facility, supporting production of metal rolls, ICDP rolls, HSS rolls, engineering castings and other foundry products.
Focus on ICDP and HSS Rolls
A major part of the expansion strategy is entering the market for ICDP (Indefinite Chilled Double Poured) rolls and HSS (High-Speed Steel) rolls.
Management said these products are currently largely imported into India, creating an import-substitution opportunity.
Unit 3 will include both vertical and horizontal centrifugal casting capabilities. Orders for the required machinery have already been placed, with production expected to begin when the new unit becomes operational.
The company believes India’s growing steel capacity could create substantial demand for these specialized rolls.
High-Value Products Could Reach 70% of Revenue
The company’s central strategy is shifting its product mix toward higher-value products.
High-value products accounted for:
- 47% of revenue around two-three years ago
- 57% in FY26
- 60.4% in Q1 FY27
Management is targeting approximately 70% high-value product contribution in the near future.
The company believes that increasing the high-value mix can result in stronger profit growth than revenue growth because these products carry better economics.
Management also highlighted that EBITDA per tonne increased to approximately ₹13,500 in Q1 FY27, compared with around ₹12,400 a year earlier.
Defence and Aerospace Could Become a New Growth Driver
Behari Lal Engineering is also building its presence in the defence sector.
Management said the company has already started receiving orders from government PSUs including Bharat Dynamics Limited and Nuclear Power Corporation of India, while some private-sector customers have also placed orders for supplies connected with defence customers.
However, the company cautioned that defence qualification cycles are lengthy. Products generally need to go through material supply, prototype development and approval before mass production.
Management expects meaningful defence-sector revenue to emerge from FY28, although it has not provided a specific revenue contribution target.
Engineering Castings and Thermal Power Opportunity
The company is also seeing stronger demand for engineering castings.
Management pointed to increasing demand from the power sector and said customers have provided order visibility extending to 2035.
The company recently produced a single-piece casting of approximately 22-23 tonnes for a thermal power customer.
It is also investing in CNC machining and other downstream capabilities so that castings can be supplied in a more finished, ready-to-use condition.
This forward integration could potentially strengthen the company’s position with large engineering OEM customers by providing testing, machining and other services under one roof.
Balance Sheet Remains Conservative
Despite the planned expansion, the company continues to operate with a relatively low level of debt.
As of June 30, 2026:
- Net worth: ₹325 crore
- Gross borrowings: ₹11 crore
- Cash and bank balances: ₹52 crore
- Debt-to-equity: 0.03x
- ROE: 23.6%
- ROCE: 27%
The company said its cash conversion cycle was 94 days at the end of June, broadly similar to 93 days at March.
IPO Proceeds to Fund Capability Expansion
Behari Lal Engineering completed its IPO after the quarter, raising ₹301 crore at an issue price of ₹285 per share, with the shares listing on August 19, 2026.
Of this amount, approximately ₹93 crore was fresh capital.
Management said around ₹56 crore of the fresh issue proceeds is earmarked for equipment and civil work at the facilities, while approximately ₹7 crore is planned for rooftop solar, along with debt repayment and general corporate purposes.
What Investors Should Watch
The Q1 FY27 earnings call points to several important operating indicators for investors to track over the coming quarters:
- High-value product mix: currently 60.4%, with a target of around 70%
- EBITDA per tonne: approximately ₹13,500 in Q1
- ₹162 crore order book: with a relatively high-value product mix
- ₹80 crore FY27 capex: ₹5 crore spent in Q1 and ₹75 crore targeted for the remaining three quarters
- Unit 3: expected to commence operations in Q1 FY28
- ICDP/HSS rolls: major import-substitution opportunity
- Defence: meaningful revenue targeted from FY28
- Engineering castings: increasing demand from power and industrial customers
- Balance sheet: debt-to-equity of just 0.03x as of June 30
Management’s Key Message
Management said investors should primarily judge the company on two metrics: high-value product share and EBITDA per tonne.
In Q1 FY27, these stood at approximately 60.4% and ₹13,500, respectively. The company said its fresh capital is being deployed toward capabilities intended to improve these metrics further.
Investor Takeaway
Behari Lal Engineering’s Q1 FY27 commentary indicates that the company is pursuing a margin-led growth strategy, supported by capacity expansion, product diversification and increasing exposure to specialized engineering products.
The immediate catalysts are the ₹80 crore FY27 capex programme, ₹162 crore order book and continued improvement in high-value product mix. Over the longer term, Unit 3, ICDP/HSS rolls, defence applications and higher-value engineering castings could become important growth drivers.
However, execution remains the key factor to watch, particularly the timely commissioning of Unit 3, deployment of the planned capex and successful qualification of new products for defence and specialized steel customers.
Disclaimer: This article is based on information and management commentary contained in Behari Lal Engineering Limited’s Q1 FY27 earnings call transcript. It is for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any security.