Megatherm Induction Ltd Q2 FY26 – From Steel Melting to Investor Hearts Melting (Revenue ₹159 Cr, PAT ₹12 Cr, and a Transformer Business About to Light Up the Grid)

1. At a Glance

Ladies and gentlemen, gather around the furnace — Megatherm Induction Ltd (MIL) has once again fired up the capital goods scene, turning molten steel and solid balance sheets into something hot enough to melt investor pessimism (well, almost). As of November 2025, Megatherm’s market cap stands at₹438 crore, with astock price of ₹232— roughly 40% off its high of ₹387, meaning the market has been chilling while Megatherm’s transformers are literally heating up.

Thelatest half-yearly results (H1 FY26)showsales of ₹159 croreandPAT of ₹12 crore, up29% YoYin profit, proving that while exports cooled off, domestic orders kept the furnace burning bright. TheP/E ratio at 18.2xis lower than theindustry average of 28.9x, and withROCE at 21.1%andROE at 16.3%, Megatherm looks more like a disciplined metallurgist than a flashy speculator.

With anorder book of ₹430+ crore,low debt (₹35 crore, D/E 0.23), and an expansion drive that includes India’s largest furnace transformer facility at Kharagpur, Megatherm is cooking up an electrifying FY26. But the stock’s-27% return over three monthsshows investors are still waiting for that spark — maybe the upcoming CPRI-certified transformer line will do the trick.

2. Introduction

Let’s get one thing straight — this isn’t your typical steel story. Megatherm Induction doesn’t sell steel, it sellsthe machines that make the steel hot enough to become steel. Think of it as the DJ at the metal industry’s rave: without its induction furnaces, there’s no beat, no melt, no moolah.

Founded in 2010, the company has become the torchbearer of India’s capital equipment prowess, exporting to52+ countries— from Brazil to Bangladesh and France to Ghana. They’ve already installed3,000+ unitsglobally, and if each furnace could talk, it would probably say, “Doston, I’m the reason your car has an axle and your railways have wheels.”

But the stock market is a cruel judge. Despite31% profit CAGRover the last five years, the script has recently cooled faster than molten iron dropped in water. With the share down nearly 25% over a year, one wonders if investors have mistaken a growing transformer empire for a dull metal story. Spoiler: they haven’t seen the electric part yet.

3. Business Model – WTF Do They Even Do?

Imagine a company that doesn’t make the steel but makes the magic wand that turns raw scrap into molten value — that’s Megatherm.

Their core business lies indesigning, manufacturing, and installing turnkey steel melt shops, which include induction furnaces, ladle refining furnaces (LRF), continuous casting machines (CCM), and a range of power equipment. If you’re melting iron, aluminum, or even gold — these folks have a furnace for you.

And they don’t stop there. Megatherm also producesinduction billet heaters,heat treatment systems, andfume extraction systems(because you can’t have fumes and investors both choking at the same time).

Their clientele list reads like the who’s who of Indian metallurgy —Tata, SAIL, Shyam Steel, Shri Bajrang Power, Real Ispat, and Talbros— basically every steelmaker who’s ever wanted a more efficient melt.

But here’s the fun twist: they’re goingbackward integrated. From outsourcing components to buildingtheir own machining, fabrication, and plasma cutting shops, they’re controlling more of the value chain. So next time someone says “self-reliant India,” Megatherm’s CNC machine quietly hums in agreement.

4. Financials Overview

Let’s heat up the numbers:

Commentary:The top line simmered at ₹159 crore — slightly below March, but still up 7.5% YoY. Margins cooled a bit (EBITDA 10% vs 12%), but PAT held steady like a well-cast billet. The YoY growth shows resilience despite a flat global capital goods cycle.

In plain English: revenues are reheating slower than the furnace itself, but profits are glowing bright thanks to efficiency gains and a fast-growing spares business.

5. Valuation Discussion – Fair Value Range

Let’s run the math, auditor style (without burning the calculator):

a) P/E Method:

• Current EPS (FY25