Usha Martin (NSE: USHAMART) Q2 FY26 earnings: Will wire rope momentum shield margin strength as LRPC slows?

Usha Martin Limited (NSE: USHAMART, BSE: 517146) reported a solid performance in the second quarter of FY26, supported by strong wire rope demand, improved product mix, and disciplined capital management. The Indian specialty wire rope manufacturer saw both margin expansion and a jump in profit after tax from continuing operations, even as its low relaxation prestressed concrete steel strand (LRPC) segment faced headwinds due to extended monsoons.

For the three-month period ending September 30, 2025, Usha Martin Limited posted revenue of ₹907.6 crore, marking a year-on-year increase of 1.8 percent. Operating EBITDA rose 7.6 percent to ₹173.0 crore, reflecting margin improvement from 18.0 percent to 19.1 percent. Profit before tax increased 18.7 percent to ₹167.8 crore, while profit after tax from continuing operations grew by 16.7 percent to ₹127.6 crore.

This marks the company’s highest operating EBITDA since the strategic divestiture of its steel business. Management credited the achievement to operating leverage from favorable product mix shifts and the effects of its cost-optimization program, branded internally as “One Usha Martin.”

How did Usha Martin improve EBITDA margins despite weak LRPC revenue and seasonality?

Operating margins improved even as total revenue growth remained modest. The company’s EBITDA margin rose to 19.1 percent in Q2 FY26, up from 16.3 percent in the prior quarter and 18.0 percent in the year-ago period. This was achieved in part due to a significant drop in LRPC contribution, which tends to be lower margin. Revenue from LRPC fell sharply by 26 percent year-on-year to ₹64 crore, impacted by lower demand from construction and infrastructure projects during the monsoon season.

In contrast, wire rope sales remained resilient, growing 2.6 percent year-on-year to ₹678 crore. Volumes held steady at 28,000 metric tonnes in Q2 FY26, accounting for 56 percent of consolidated volumes. Wire revenue rose more robustly by 14.2 percent year-on-year to ₹91 crore, with segment momentum supported by increased customer adoption of value-added products.

Management stated that LRPC volume softness was a temporary factor, and highlighted its growing portfolio of application-specific wire rope solutions across crane, elevator, mining, and offshore use cases.

What does Usha Martin’s current financial health say about its strategic position?

The company continued to deleverage its balance sheet and closed Q2 FY26 with a net cash position of ₹111 crore, after repaying ₹157 crore in debt during the quarter using internal accruals. Gross debt stood at ₹181 crore as of September 30, 2025, down from ₹292 crore a year earlier.

Operating cash flow before tax in H1 FY26 reached ₹390 crore, which represented 123 percent of operating EBITDA for the same period. Capital expenditure stood at ₹103 crore, and free cash flow came in at ₹229 crore. The company reported a return on capital employed of 20.3 percent from continuing operations and a return on equity of 15.3 percent.

Usha Martin Limited’s debt-to-equity metrics improved significantly. Gross debt-to-equity fell to 0.06 times, while net debt-to-equity turned negative. These metrics signal reduced financial risk and ample headroom for growth capex or potential inorganic initiatives in the future.

How are investors responding to Usha Martin’s earnings and balance sheet improvement?

As of the end of September 2025, Usha Martin Limited’s stock was trading at ₹460.30, yielding a market capitalization of ₹14,027 crore. The scrip had rallied over 65 percent in the trailing twelve months, touching a 52-week high of ₹481.10. Institutional investors owned 26 percent of the company’s equity, while promoters retained a 41 percent stake.

Analysts tracking midcap industrials noted that Usha Martin’s clean balance sheet and focused wire rope strategy have helped the stock outperform peers in the smallcap engineering and industrials basket. Recent fund inflows from domestic institutional investors suggest that there is growing conviction around the company’s global expansion and cost leadership track.

Sentiment on the counter remains bullish post-results. Based on current technical and institutional positioning, the stock is trading at around 32 to 35 times trailing earnings. With expected growth in exports, elevated return ratios, and increasing contribution from value-added products, market observers consider Usha Martin Limited to be well placed for re-rating in the next two quarters.

How is Usha Martin leveraging wire rope demand and global diversification to drive growth in FY26?

The wire rope segment continues to be Usha Martin’s core business and strategic growth driver. In H1 FY26, the segment contributed 74 percent of overall revenues, up from 72 percent in the previous fiscal. Within wire ropes, 71 percent of revenue came from high-value use cases like cranes, elevators, mining, oil and offshore, and fishing industries.

Geographic diversification is another strength. In H1 FY26, India contributed 42 percent to revenue while international markets accounted for 58 percent, up from 55 percent in FY25. Europe remained the largest international contributor with a 28 percent share, followed by Asia Pacific, Middle East and Africa, and the Americas. This global mix has helped the company mitigate localized disruptions and extend its product footprint across customer verticals.

The company also continues to invest in technology-driven product development. Its global research center in Italy and its dedicated R&D facility in Ranchi focus on simulation-led design of application-specific wire ropes. These products are tailored to meet unique requirements in lifting, construction, and marine sectors.

How is Usha Martin’s management positioning the business for stronger performance in H2 FY26 and the medium term?

Managing Director Rajeev Jhawar stated that the company expects stronger performance in the second half of FY26 as its initiatives in product development, international marketing, and operational efficiency bear further results. He emphasized that the “One Usha Martin” program has helped sharpen execution capabilities and expand margins.

Management is particularly focused on capturing larger shares in global high-margin niches and has reiterated its commitment to innovation, customer responsiveness, and cost competitiveness.

While seasonality and input price volatility may pose challenges, the company believes its current financial flexibility and product readiness will allow it to navigate turbulence more effectively than in the past.

India Ratings reaffirmed its long-term issuer rating at IND A+ with a stable outlook in July 2025, further validating Usha Martin’s credit quality and governance standards.

Key takeaways: What investors should know from Usha Martin’s Q2 FY26 earnings

• Usha Martin Limited posted a 16.7 percent YoY rise in PAT from continuing operations to ₹127.6 crore, with 7.6 percent EBITDA growth and margin expansion.

• Wire rope segment remained strong with 2.6 percent revenue growth and 74 percent contribution to total sales; LRPC volumes declined sharply due to extended monsoon.

• Net debt turned negative as the company repaid ₹157 crore in debt using internal accruals, maintaining a cash-positive position and freeing room for capex.

• Return on capital employed rose to 20.3 percent and operating cash flow hit ₹390 crore, signaling capital discipline and robust business health.

• Stock closed Q2 at ₹460.30 with a 65 percent 1-year rally; analysts maintain positive outlook citing clean balance sheet, rising exports, and expanding high-value mix.

• International revenue rose to 58 percent of total sales in H1 FY26, supported by growth in Europe, Middle East and Asia Pacific.

• Management expects stronger H2 FY26, driven by new product launches, cost control, and expanded traction across application-specific wire rope markets.