Esab India Ltd Q4 FY26 Results Analysis: EBITDA Margin Compresses 201 bps, Revenue Grows 9.8%

Esab India Ltd's Q4 FY26 numbers came in mixed, with revenue of Rs. 395.75 Cr (+7.60% YoY) and PAT growth of -8.20% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

ESAB India delivered steady FY26 growth (revenue +9.8%, normalized PAT +10.4%) but Q4 showed margin compression (EBITDA -201 bps) from rising employee costs and working capital drag. With no quantifiable guidance to exceed and earnings quality concerns (CFO/PAT 0.87x, forex losses), the quarter offers limited high-alpha signals—improvement in working capital and stabilization of employee costs will be key for near-term performance.

Key Investment Insights

Key Positives

• FY26 revenue grew 9.8% to Rs.1,50,815 Lakh from Rs.1,37,347 Lakh in FY25.
• FY26 PAT grew 17.8% to Rs.20,669 Lakh (10.4% normalized) driven by underlying operating improvements.
• Raw material cost as % of revenue improved 166 bps for the full year (42.7% vs 44.4%).
• Net worth increased 18.9% YoY to Rs.42,938 Lakh, largely from retained earnings.
• Company remained virtually debt-free with D/E of ~0.01x.

Risk Factors

• Q4 EBITDA margin compressed 201 bps YoY to 15.86% from 17.87%, indicating late-year margin pressure.
• Employee costs rose 28.7% YoY in Q4 and 20.3% for FY26, significantly outpacing revenue growth.
• Working capital absorption increased: CFO declined 9.1% despite profit growth; CFO/PAT fell to 0.87x.
• Receivables grew 12.3% vs 9.8% revenue growth, implying collection days lengthened by 2 days.
• Unrealized forex loss of Rs.114 Lakh in FY26 vs gain of Rs.65 Lakh in FY25 added to earnings volatility.