Harsha Engineers International (HARSHA IN) – Q2FY26 Result Update – Steady Q2 driven by strong export rebound – HOLD

Harsha Engineers International (HARSHA) delivered a steady performance, with revenue rising 7.3% YoY and EBITDA margin improving 228bps YoY to 14.1%. The quarter benefited from strong export momentum, reflecting sustained recovery in industrial demand across Europe and other key markets. The Romania unit reported robust 38% YoY growth in Q2FY26, supported by a favorable product mix of finished goods. The operational greenfield facility, Advantek, is expected to bolster domestic prospects. Meanwhile, increasing wallet share from existing clients is expected to garner ~30% revenue growth in bronze bushings segment in FY26, while management maintains their cautiously optimistic outlook—guiding for high single-digit growth in consolidated business and low mid-teens growth in India-Engineering. Despite the momentary revival in Romania, we remain watchful on the subsidiary performance and the export demand which may impact mid-term consolidated financial performance of the company however, HARSHA’s long-term outlook remains positive given its 1) market leadership in bearing cages, 2) greenfield capacity expansion, and 3) multiple levers for growth viz. i) bearing cage outsourcing, ii) capex by global bearing players in India and iii) growing demand for bronze bushings. The stock is currently trading at a P/E of 20.2x/18.0x on FY27/28E earnings. We roll forward to Sep’27E and maintain our ‘Hold’ rating valuing the stock at a PE of 20x Sep’27E (21x Mar’27E) arriving at a revised TP of Rs407 (Rs402 earlier).