Equirus starts 'Long' on M&B Engineering; expects solid multi-year growth

Equirus Securities has initiated coverage on M&B Engineering (MBEL) with a ‘Long’ rating, citing strong structural tailwinds in the pre-engineered building (PEB) sector and the growing adoption of SSR systems. The brokerage believes that these factors will position MBEL for a robust multi-year growth trajectory.

 

Vaibhav Shah, Harshit Patel, and Sanyam Jain, research analysts at Equirus, project a compound annual growth rate (CAGR) of 23 per cent in revenue, 30 per cent in earnings before interest, taxes, depreciation, and amortisation (Ebitda), and 36 per cent in profit after tax (PAT) over FY25-28E, driven by MBEL's expanding capacity, enhanced solution offerings, and increasing export contribution.

 

 

The brokerage has set a target price of ₹515 for MBEL, based on 15x the Mar’28 earnings per share (EPS).

Post-IPO strengthens financial position

Notably, the company made its debut on D-Street earlier this year on August 06, 2025, after raising ₹650 crore through its initial public offering (IPO). Post-IPO, M&B Engineering, analysts believe, is set to remain debt-free, with all planned capex fully funded.

 

"Strong operating cash flows (avg. pre-tax CFO/Ebitda at 80 per cent over FY26E-FY28E) should deliver cumulative FCF of ₹200 crore," said the brokerage in its report.  ALSO READ | Muted Q3 likely, but volume gains and mix support Jindal Steel outlook

Tailwinds driving MBEL’s growth

According to the brokerages, India’s PEB industry has grown at an 8 per cent CAGR over FY19- FY25 to ₹21,000 crore and is set to reach ₹33,800 crore by FY30E (10 per cent CAGR). Post-Covid consolidation has reshaped the market – customers now favor financially strong and technically capable players – raising the top 8 players' share from 35 per cent in FY19 to 45 per cent in FY25 and likely 50 per cent by FY30E.

 

MBEL operates through Phenix (PEBs, structural steel solutions) and Proflex (SSR solutions). As the only AISC-certified Indian PEB manufacturer, it commands a clear edge in high-value export markets. Capacity is being scaled to meet demand, with Phenix rising from 103,800 MTPA to 123,800 MTPA by FY27E and 143,800 MTPA by FY28E, while Proflex adds 300,000 sqm to its 1.8 million sqm capacity.  Analysts estimate a 23 per cent consolidated revenue CAGR over FY25-FY28E, driven by a 27 per cent CAGR in Phenix and a 7 per cent CAGR in Proflex.

 

"With a ₹930.6 crore OB at the 2QFY26-end and ₹100 crore monthly inflows, MBEL is well placed to harness a strengthening demand cycle. We build a 23 per cent consolidated revenue CAGR over FY25-FY28E, powered by a 27 per cent CAGR in Phenix and 7 per cent in Proflex," said the brokerage.  ALSO READ | Manappuram, Muthoot zoom up to 82% in 2025; what's driving gold financiers?

Industry-leading margins to expand further

Equirus has highlighted that MBEL’s margins have strengthened steadily, supported by a favorable product mix, rising exports, and a sustained cost advantage. Proflex margins are expected to remain around 11 per cent, while Phenix margins are projected to expand due to:

 

Richer mix & execution: Phenix’s Ebitda has benefited from larger and more complex PEB orders, in-house engineering, higher-margin erection work, and disciplined sourcing.

 

Rising export contribution: Export margins for PEBs are typically 25-26 per cent, compared to 10-11 per cent domestically. Exports are expected to increase from 7 per cent in FY25 to 13 per cent and 17 per cent in FY26E and FY28E, respectively. With export realisations of ₹2,10,000 per MT versus ₹1,10,000 per MT domestically, the company’s margins will expand further.

 

Despite the narrowing of the cost gap with US prices, Phenix, analysts said, still enjoys a significant cost edge, pricing at $2,500-2,700 per MT compared to local prices of $4,000-5,000 per MT. Export Ebitda margins are expected to remain in the high teens.

Operating leverage ahead

Equirus also sees operating leverage kicking in as MBEL ramps up its Cheyyar plant utilisation post-commissioning in 3QFY25. This, analysts said, will lower freight costs across South India, adding to overall operating leverage. 

 

The brokerage expects MBEL’s Ebitda margins to rise to 12.9 per cent in FY26E, 14.3 per cent in FY27E, and 14.8 per cent in FY28E, driving a 30 per cent compound annual growth rate (CAGR) in EBITDA over FY25-FY28E.

  (Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)