Synergy Green Industries Ltd Q2 FY26 Earnings Analysis

- Synergy Green Industries aims for 20%+ growth in sales/revenue (Page 11). - Capacity expansion planned from 30,000 tons to 45,000 tons soon, with the target to reach 85-90% utilization by Q4 FY26 (Pages 20, 22). - The company is preparing for a second phase of capacity increase to 100,000-120,000 tons progressively over FY26-27, involving a Capex of ₹400-500 crores (Page 11). - Confident of demand supporting 60,000 tons even now, with ability to pull business from diverse segments (Page 10). - Growth partly driven by diversification into non-wind sectors aiming for a 50:50 revenue mix with wind in the future (Page 10). - Integration of renewables (solar) to support capacity and cost efficiency (Page 9, 11). - New capacity ramp-up may affect margins minimally in short term but expected to contribute positively soon after (Page 20).

- Targeting capacity expansion from 30,000 to 45,000 tons with 85-90% utilization expected by Q4 FY26, supporting revenue growth. - Aiming for 20%+ growth in revenue and 18%+ EBITDA margins through blended wind and non-wind segments. - Planned capex of ₹187-200 crores ongoing, with a subsequent phase targeting 100,000–120,000 tons capacity, entailing ₹400-500 crore investment spread progressively. - Profitability supported by strategic cost savings including renewables (solar & wind) with payback periods of ~3-4 years. - Operating margins expected to improve due to better value addition in machining and non-wind segments, which carry relatively higher margins than wind. - Anticipated minor margin pressure during ramp-up phase (Q3-Q4 FY26) due to initial expenses of new capacity. - Debt-to-equity maintained below 1.5 to ensure sustainable growth without excessive leverage. - Overall, steady EBITDA margin around 20-25% anticipated at maturity.

- Ongoing Capex of ₹187-200 crores to increase capacity from 30,000 to 45,000 tons, including 20,000 tons machining and 10 MW solar; majority (80-90%) already ordered. - Additional ₹20-25 crores planned for further solar/renewables investment. - Plans to add another 4 MW wind capacity to complement solar for round-the-clock captive power. - FY26-27 Capex target: Progressive investment towards expanding capacity from 45,000 to 100,000-120,000 tons, estimated ₹300-400 crores initially, potentially topping up with another ₹150 crores later. - Funding strategy: Combination of internal accruals, borrowing with debt-equity ratio maintained below 1.5 (preferably close to 1), and potential equity infusion post achieving committed utilization and margin targets. - Maharashtra State Government incentive of ₹35-40 crores spread over 10 years for new facility Capex. - Capex payments partially pending accounting recognition as of Q1 FY26.

- The company plans future fundraising through a combination of internal accruals, equity infusion, and borrowing to fund upcoming Capex. - Equity infusion is planned at an appropriate time but only after fully utilizing the current capacity expansion from 30,000 to 45,000 tons and achieving target margins. - The management aims to keep the debt-to-equity ratio preferably closer to 1 and not exceed 1.5. - Current Capex commitments are mostly ordered, with payments ongoing. - The company is cautious about not stressing the balance sheet by raising excessive debt. - Next major Capex cycle (second phase to increase capacity to 100,000-120,000 tons) may require ₹300-500 crore, to be done progressively. - Additional equity infusion is part of the funding strategy but will be timed after seeing performance for 2 good quarters post current Capex completion.

- Current demand for capacity is strong, with existing orders built up beyond 40,000 tons. - Company is expanding capacity from 30,000 to 45,000 tons, confident of selling up to 60,000 tons. - No risk of market search after capacity build-up, as demand is already secured. - Orderbook aligned with capacity expansions, with schedules targeting Q3 and Q4 completions. - Delay of almost 2 months in project completion, but no impact on order fulfillment or outcome. - Large portion of Capex (187 crores) is already ordered, reflecting secured demand pipeline. - Company works with multiple OEMs and customers, maintaining diversity and mitigating volatility.