Short Analysis on an Engineering manufacturing company Tembo Global: Looking good for medium to long term
Mkt cap: 940 cr | TTM PE : 13.4x | ROE: 36.7% | Promoter Holding: 36.38%
(Technical chart suggests a reversal pattern. Buying at lower levels with heavy volumes)
Products & Service Offerings
- Tembo Global is an integrated engineering and EPC player manufacturing specialised metal products such as pipe support systems, fasteners, anchors, HVAC and structural fabrication solutions
- The company also operates a legacy textiles business focused on processing and supply of fibres and yarn, catering to domestic and export markets
- It has forayed into high-growth verticals including EPC infrastructure projects, solar power generation and defence manufacturing under the “Make in India” framework
Business Verticals
- Engineering & EPC: Core value driver with exposure to refineries, fuel farms, marine jetties, infrastructure and industrial fabrication; highest margins and scale benefits
- Textiles: Asset-light, working-capital-driven legacy segment supporting profitability and cash flows without incremental capex
- Defence: Early-stage but high potential vertical with land allocation from Maharashtra government and strategic global technology tie-ups
- Solar Power: 120 MW PPA signed with Maharashtra DISCOM, 25 year annuity style revenues expected post commissioning from FY27
Growth Triggers
- 6x capacity expansion at the Vasai greenfield facility, taking installed capacity from 18,000 MTPA to ~90,000 MTPA by Q4 FY26, enabling scale-led growth
- Strategic shift towards margin-accretive EPC, ERW pipes, defence products and solar power, improving business mix and profitability resilience
- Strong infrastructure, refinery, marine, fuel farm and renewable energy capex cycle driving sustained demand for engineering solutions
- International expansion via agency agreements and strategic partnerships (Middle East, USA, Europe), enhancing export opportunity and client diversification
Order Book
- Consolidated order book stands robust at ~₹1,335–1,450 crore as of Sept 2025, largely dominated by engineering and EPC projects
- Additional bidding pipeline (including L1) exceeds ₹2,150 crore, providing multi year revenue visibility
- EPC projects are largely LC backed with retention-linked cash flows, reducing counterparty risk
- Textiles order book stands at ~₹115 crore, providing stable cash generation with minimal capex requirements
Financials
- H1 FY26 revenue grew ~69% YoY to ₹493.5 crore, supported by strong execution in engineering and textiles
- EBITDA margin expanded to ~12.4% in H1 FY26 (vs ~7.9% last year), reflecting favourable business mix and operating leverage
- PAT more than doubled YoY in H1 FY26 to ~₹42 crore, with PAT margin improving to ~8.5%
- Return ratios remain strong with FY25 ROCE ~35% and ROE ~23.5%, despite elevated debt due to growth capex
Risks
- High working capital intensity due to EPC execution cycles and inventory build up, though partially mitigated by LC backed receivables
- Execution risk in timely commissioning of new capacities and scaling multiple new verticals simultaneously
- Dependence on infrastructure and government linked capex cycles could impact order inflows during economic slowdowns
- Defence and solar businesses are still in investment/gestation phase, with profitability visibility emerging over the medium term
PS: This is not a Buy/Sell recommendation. Kindly use this analysis for educational purpose only