OMKARA CAPITAL - DAILY NEWSLETTER 14th August 2026

MARKETS GUP-SHUP

It has been a great earnings season. One can clearly see the difference between structural winners and momentum stocks, as well as between structural earnings and short-term earnings.

What Solar Industries has achieved in its sector may be very difficult for any other explosives company to replicate. Solar’s market capitalisation is now close to Rs 2 lakh crore, and many of us only regret not owning such a great business.

Similarly, what Sansera, Happy Forgings and Craftsman have achieved in precision engineering cannot be replicated easily by peers. This is not only about percentage growth (on small base), but also about scale. In India, many companies can make Rs 100 crore of profit, but very few can structurally grow to Rs 1,000 crore PAT and beyond.

The only difference of opinion that stops us from investing in some of these names is P/E. There are no management issues, no balance-sheet issues, no earnings issues and no working-capital issues.

I have learnt that cheap is often expensive in the stock markets. A lot of money and energy gets wasted chasing cheap stocks, while we regret not investing and staying invested in businesses where P/E does not fully capture management quality, balance sheet, structural growth and much more.

We are not buy-at-any-price investors, but we are not buy-at-cheap-price investors either.

Sansera has several growth levers that should unfold over coming quarters. Happy Forgings’ new initiatives can add around Rs 2,000 crore of sales over the next 3-4 years—more than its current sales. Show me another company in India that has delivered 60% gross margins in this segment consistently for the last 15 years.

Tega is back to around Rs 250 crore of EBITDA per quarter, with acquisition-related costs now largely behind it. Following successful Molycop integration, the company can potentially deliver an EBITDA run rate of Rs 2,000 crore and PAT of Rs 900-1,000 crore in the next 2-3 years, while trading at only around Rs 12,500 crore market capitalisation. Sales can be around Rs 15,000 crore. That is size we are talking about.

VST Tilles proved that in a tough environment, right management puts heads down and just work. When analysts’ community was thinking about 10-20% sales de-growth, the co-showed growth instead. Co is sticking with Rs 3,000 crore revenue vision by 2030; domestic tractors 15,000–20,000 units, exports 5,000–6,000 units by FY30. TTM sales is Rs 1271 cr only.

Instead of burning our heads over too many names, my dream is to own 4-5 big winners or more hopefully for the next five years—businesses that can create meaningful wealth for me, you and our families.

EARNINGS SNAPSHOT

Solar Industries was the standout result, with PAT up 93%, defence revenue up 123%, order book at Rs 21,350 crore and FY27 revenue guidance retained at Rs 14,000 crore. Technocraft delivered a broad-based beat led by Drum Closures and Scaffolding, while Tega’s adjusted performance remains strong despite one-time Molycop acquisition costs. Travel Food Services, LG Electronics, V2 Retail and KRN Heat Exchanger reported healthy growth, with LG upgrading its FY27 outlook.

VST Tillers reported an in-line quarter, with strong power-tiller and weeder volume growth offsetting export weakness and input-cost pressure. Supriya Lifescience saw strong revenue growth but missed on margins due to Ambernath pre-commercialisation costs, while Premier Explosives was affected by dispatch delays and global supply-chain headwinds despite a record defence-heavy order book.

🟢 GREEN | STRONG EARNINGS

1. TECHNOCRAFT INDUSTRIES: Drum Closures and Scaffolding drive a strong all-round beat

M-cap: Rs 6,547 crore | CMP: Rs 2,888 | 52-week range: Rs 1,868-3,020 | P/E: 24.1x

Technocraft delivered a strong beat, with revenue of Rs 805 crore, up 27% YoY and 13% QoQ. EBITDA rose 59% YoY and 27% QoQ to Rs 178 crore, with margin expanding 440 bps YoY to 22.1%. PAT increased 68% YoY and 76% QoQ to Rs 138 crore. Drum Closures EBIT margin expanded to 43.4%, while Scaffolding revenue surged 31% YoY. DRDO-approved Joule-Thomson Cryocoolers add defence optionality.

Guidance: No formal guidance was issued. Management remains optimistic on Drum Closures despite US tariff headwinds, is confident on Scaffolding due to India infrastructure and affordable housing, and flagged short-term margin pressure in Engineering Services from AI investment.

Capex and PPT: No major Drum Closures capex is planned beyond maintenance in the near future. The aluminium-extrusion plant at Bidkin, Aurangabad is already commissioned and contributing to Scaffolding revenue and EBIT. Drum Closures holds around 36% global market share, the largest outside China, with volumes up 17% YoY to 199 lakh sets. ROCE expanded to 32% from 23% in Q1FY26. Techno Defence is exporting DRDO-developed Joule-Thomson Cryocoolers to global weapon manufacturers.

2. TEGA INDUSTRIES: Adjusted earnings remain strong; Molycop integration is the key catalyst

M-cap: Rs 12,543 crore | CMP: Rs 1,670 | 52-week range: Rs 1,473-2,130 | P/E: 77.2x

Tega reported strong adjusted earnings. Ex-Molycop EBITDA rose 42% YoY, with margin expanding to 22% from 19%. Reported group PAT was a loss of Rs 108 crore, entirely due to Rs 191 crore of one-time Molycop acquisition costs. Adjusted group EBITDA was Rs 264 crore, with margin at 15%, for one month of Molycop consolidation.

Guidance: Management did not raise guidance, but expects consolidated EBITDA margin to remain around mid-teens in FY27. Legacy consumables are expected to deliver around 15% long-term CAGR, while cross-selling ramp-up is expected in Q3-Q4FY27.

Capex and concall: Ex-Molycop capex is around USD 40 million, including the Chile plant. Molycop capex is USD 28 million for the 10-month FY27 period, normalising to low-to-mid USD 30 million annually. Molycop synergies are estimated at around USD 20 million over 2-2.5 years. Chile soft commissioning is expected in January 2027 and commercial production in March 2027, subject to local approvals. Equipment revenue declined to Rs 35.8 crore from Rs 64.3 crore YoY due to customer-clearance delays. Group debt is Rs 112 billion, including Rs 26 billion of preference shares.

3. TRAVEL FOOD SERVICES: Good headline growth; Middle East traffic softness affects LFL and margins

M-cap: Rs 18,360 crore | CMP: Rs 1,394 | 52-week range: Rs 1,035-1,471 | P/E: 46.2x

Travel Food Services reported revenue growth of 20.6% YoY to Rs 452 crore. Adjusted PAT rose 38% YoY to Rs 127 crore, aided by a Rs 13 crore GST write-back. EBITDA margin stood at 35.8%, down 308 bps YoY and 464 bps QoQ, as LFL growth of 4.2% YoY was affected by Middle East conflict-related traffic softness at certain airports.

Guidance and concall: No formal guidance was issued. Noida International Airport began operations with six outlets and one lounge on 15 June 2026, while APAC and Middle East lounge expansion remain growth levers. Indian air-passenger traffic is projected at 435-444 million in FY27. LFL growth excluding impacted markets was around 7% YoY. The network expanded to 541 Travel QSR outlets and 39 lounges across 21 airports, with 87 net new outlets added in 12 months and contract retention at 92.1%.

4. SOLAR INDUSTRIES: Defence growth, margin expansion and backlog support a major beat

M-cap: Rs 1,83,912 crore | CMP: Rs 20,324 | 52-week range: Rs 11,641-20,400 | P/E: 141x

Solar Industries delivered a strong beat, with PAT rising 93% YoY to Rs 653 crore, 26% above Nuvama consensus and 18% above Kotak estimates. Defence revenue grew 123% YoY to Rs 933 crore and contributed 26% of sales, versus 19% in Q1FY26. EBITDA margin expanded by around 290 bps YoY to 27.7%. Order book stood at Rs 21,350 crore, including Rs 18,000 crore of defence orders.

Guidance and capex: FY27 revenue guidance was retained at Rs 14,000 crore, implying around 42% YoY growth over FY26. The company deployed Rs 450 crore of capex in Q1FY27 against a full-year capex plan of Rs 2,050 crore. The new Dhule facility has been commissioned, Dholpur has been expanded and the Odisha facility is under development.

PPT: Defence backlog of Rs 18,000 crore provides 6-8 quarters of revenue visibility. Key near-term catalysts include the Pinaka ER order, 155 mm artillery-shell commercialisation and capacity ramp-up across explosives and defence.

5. LG ELECTRONICS INDIA: Premiumisation and scale drive beat; FY27 outlook upgraded

M-cap: Rs 1,07,131 crore | CMP: Rs 1,578 | 52-week range: Rs 1,300-1,749 | P/E: 58.7x

LG Electronics reported revenue of Rs 7,233 crore, up 15.5% YoY. EBITDA increased 26% YoY to Rs 904 crore, with margin expanding 106 bps YoY to 12.5%, while PAT grew 27% YoY. Revenue, EBITDA and PAT were 2%, 5% and 7% above estimates, respectively, according to Nuvama. Home Entertainment was the standout segment, with EBIT rising 49% YoY.

Guidance: Management now expects to surpass its earlier FY27 targets of mid-teen revenue growth and early double-digit EBITDA margin; no precise revised range was provided.

Capex and business update: Sri City capex is planned at around Rs 5,000 crore over five years, according to Jefferies. Compressor production is expected in December 2026 and RAC production in April 2027. Management cited premiumisation, exports to Asia, Middle East and Africa through Sri City, B2B and AMC scale-up as key drivers. Home Entertainment EBIT was led by large-screen premium TVs, while Home Appliances and Air Conditioners EBIT margin remained flat YoY at 11.5% despite commodity and forex headwinds, supported by around 13% RAC price hikes year-to-date and localisation.

6. V2 RETAIL: Strong store expansion and volume growth support a healthy quarter

M-cap: Rs 7,940 crore | CMP: Rs 217 | 52-week range: Rs 157-259

V2 Retail reported revenue of Rs 997 crore, up 57.73% YoY and 25.12% QoQ. Gross profit grew 52.25% YoY and 17.96% QoQ to Rs 285 crore, while gross margin was 28.58% versus 29.61% YoY and 30.32% QoQ. EBITDA increased 59.86% YoY and 27.80% QoQ to Rs 139 crore, with margin at 13.99%, up 19 bps YoY and 30 bps QoQ.

Adjusted PAT grew 69.70% YoY and 139.05% QoQ to Rs 41.85 crore. PAT margin improved to 4.20% from 3.90% YoY and 2.20% QoQ. SSSG stood at 7.5%, while volume growth was 56% YoY. The company opened 57 stores and closed one, taking the total to 381 stores. Sales per square foot per month was Rs 886 in Q1FY27 versus Rs 960 in Q1FY26.

🟡 AMBER | IN-LINE EARNINGS

7. VST TILLERS TRACTORS: Healthy farm-equipment volumes, but input inflation affects margins

M-cap: Rs 3,981 crore | CMP: Rs 4,601 | 52-week range: Rs 4,204-6,374 | P/E: 36.1x

VST reported an in-line quarter, with revenue growing 10.96% YoY to Rs 313 crore. EBITDA margin declined 42 bps YoY to 12.86% due to raw-material cost pressure, while adjusted PAT increased 9.52% YoY to Rs 48 crore. Power-tiller volumes grew 17.9% YoY and power-weeder volumes rose 56.7% YoY, offsetting a 11.9% YoY decline in tractor exports.

Guidance and capex: No formal FY27 guidance was provided. Management targets near-term growth of 16-20% in power tillers and 50-60% in power weeders. Its FY30 vision is Rs 3,000 crore revenue, domestic tractor sales of 15,000-20,000 units and exports of 5,000-6,000 units. A new production facility is expected to be required within around two years to support more than 30 tractor variants; no capex figure was disclosed.

Concall: BZ tractor production ramp-up and mid-product factory rollout beginning this month should drive sequential recovery, with substantial volumes expected in Q3-Q4. European logistics infrastructure is expected to be operational in Q3, while Stage 5 emissions compliance for below-25 HP products is due in October 2026. Inflation in steel, forging, aluminium, copper and rubber was the primary margin headwind, with EBITDA margin down around 45 bps YoY. The US expansion timeline has been scrapped.

🔴 RED | WEAK EARNINGS

8. SUPRIYA LIFESCIENCE: Strong revenue growth, but Ambernath pre-commercialisation costs crush margins

M-cap: Rs 6,547 crore | CMP: Rs 814 | 52-week range: Rs 546-1,086 | P/E: 33x

Supriya reported a weak result despite revenue growing 31% YoY to Rs 190 crore. EBITDA margin contracted 1,063 bps YoY to 25%, while PAT declined 31% YoY to Rs 24 crore. Employee and other costs related to Ambernath facility pre-commercialisation batch run-ups were the key drag. Capacity utilisation was 70% in Q1FY27 versus 74% in FY26.

Guidance and capex: Management targets six EU dossier filings in FY27, around two new launches each in Anaesthetic and ADHD, and 10 finished-dosage-product exhibits. No revenue or margin guidance was provided. Land acquisitions include 12,551 sq. mt. adjacent to Lote, 24,646 sq. mt. around 20 km from Lote for backward integration, and 80,000 sq. mt. at Isambe/Patalganga. Civil work has begun for Block F at Lote, while a new nasal finished-dosage line is planned. Rupee capex quantum was not disclosed.

9. PREMIER EXPLOSIVES: Dispatch delays and supply-chain headwinds hit earnings; backlog remains strong

M-cap: Rs 3,532 crore | CMP: Rs 657 | 52-week range: Rs 378-830 | P/E: 103x

Premier Explosives reported revenue of Rs 103 crore, down 27.8% YoY but up 15% QoQ. EBITDA was Rs 6 crore, with margin collapsing 896 bps YoY to 5.7%, while PAT declined 80.2% YoY to Rs 3 crore. Dispatch delays, elevated raw-material prices and global supply-chain headwinds affected performance.

The order book remains at a record Rs 1,393 crore as of August 2026, equivalent to around 3.59x FY26 revenue and 94% defence. Apollo Micro Systems’ Rs 1,550 crore promoter-stake acquisition is expected to close in Q3FY27.

Guidance and PPT: No formal guidance was provided, although management expects execution momentum to improve over coming quarters as supply-chain and global headwinds ease. Apollo Micro Systems’ open offer for an additional 26% stake at Rs 698 per share, worth around Rs 976 crore, remains subject to regulatory approvals.

Warm regards,
Omkara Capital Private Limited
www.omkaracapital.in

Disclaimer: This newsletter is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decisions.