GMM Pfaudler: Why is there glass inside the steel tank?

Small cap Process equipment 18 September 2026 · 50 min read

What the company does

GMM Pfaudler makes the big steel pots that drug and chemical plants cook in, lined with glass so acid cannot eat the steel, and the mixers, seals, filters, dryers, large alloy vessels and complete process plants that go around them. Then it looks after them: about 30% of revenue is services and spares. In FY26 it sold a record ₹3,524 crore and kept ₹52 crore after tax. It runs 20 plants on 4 continents with about 2,000 staff from Karamsad, a small town in Gujarat, and 72% of its revenue is earned outside India. The Patel family, which started it in 1962, owns 25.18%. The shares trade on the NSE as GMMPFAUDLR and on the BSE.

Summary

A Gujarat maker of acid-proof tanks that now earns mostly abroad. It makes steel tanks lined with glass, which keeps acid off the steel, for drug and chemical plants, and the rating agency Crisil says it makes 50% of the glass-lined equipment sold in India and in the Americas. It runs 20 plants on 4 continents with about 2,000 staff, and 72% of its revenue is earned outside India.
Sales are at a record, but the overseas plants now earn little. FY26 revenue was a record ₹3,524 crore, up 10%, yet profit after tax was only ₹52 crore, a margin of 1.5%. Since FY24, operating profit abroad fell ₹121.5 crore while India's rose ₹0.7 crore.
Orders are at a record, helped by defence and nuclear work. The order book, work won but not yet delivered, is at a record ₹2,289 crore. New industries such as defence and nuclear power won 42% of last year's orders, led by a ₹330 crore acid recovery plant for a European ammunition maker.
The business makes cash, but it owes more than its debt figure shows. In FY26 it brought in ₹389 crore of cash after tax, helped by bigger deposits from customers. The overseas staff pensions have a ₹335 crore gap between what was promised and what is set aside, and the company leaves it out of its ₹147 crore net debt figure.
One-off costs keep coming back, and past targets were missed. One-off charges added up to ₹165 crore in 3 of the last 4 years. The company promised ₹3,700 crore of revenue and ₹630 crore of EBITDA by FY25, EBITDA being profit before interest, tax and depreciation, and it ended up with ₹3,199 crore and ₹361 crore.
The fix has a new team and no numbers to hold it to. The Group CFO resigned on 15 September 2026, after the India business lost its CEO and its CFO. Management says it will aim for EBITDA of at least 15% of sales, against 11.4% in FY26, but the new plan it has promised has still not been given.

Why this company, why now

The share price and the profit have gone opposite ways.

The share fell to ₹738 on 11 June 2026, 3 weeks after the FY26 results. From there it climbed steeply through the summer. The At a glance card above has today's price.

GMM Pfaudler's share climbed steeply after its June 2026 low

GMM Pfaudler's closing share price on NSE, September 2025 to September 2026. It fell to ₹738 in June, 3 weeks after the FY26 results, and climbed from there.

₹ per share, closing price

11 June 2026: ₹738, 3 weeks after the FY26 results

NSE end-of-day prices · 15 September 2025 to 17 September 2026

The profits have not. FY26 revenue was a record ₹3,524 crore, up 10%. Profit after tax was ₹52 crore, a margin of 1.5%, against ₹171 crore 2 years earlier. FY26 earnings were ₹12.86 a share, so a share price of ₹1,286 is 100 times that.

Revenue is at a record. Profit is less than a third of two years ago.

What the market believes. The market is buying a turnaround. The order book is at a record ₹2,289 crore. The company has closed a plant in Scotland and one in Hyderabad, cut nearly a third of the wage bill at its German plant, and says a 15% EBITDA margin is the minimum it will aim for, against 11.4% last year. EBITDA is operating profit before interest, tax and depreciation. Six brokers publish on the company; their notes are listed under Sources, and none of their ratings, targets or estimates is used here.

Where the filings differ from that story. One-off charges amounting to ₹165 crore keep coming back, in 3 of the last 4 years. It has set targets and missed them. The overseas plants, 72% of sales, earned ₹4.40 on every ₹100 of sales last year. And in 20 months the company has lost both its finance chiefs, its India head and its head of the overseas business. The latest to go, the Group CFO, resigned on 15 September 2026. The questions are whether the turnaround is real, and what it costs to buy.

History

In 1884 Caspar Pfaudler, a German brewmaster in Rochester, New York, found the fix for acid eating beer vats: melt a layer of glass onto the inside of the steel. The steel gives the pot its strength. The glass keeps the acid off the steel and the steel out of the product. The company he started still sells these pots, which the industry calls glass-lined reactors.

1962. Gujarat Machinery Manufacturers starts in Karamsad.
1987. Pfaudler of the US takes 40% of it.
2015. Tarak Patel, son of chairman Ashok Patel, becomes managing director.
2020. The roles flip. The Indian company buys 54% of the whole Pfaudler group from the German private equity fund DBAG for about USD 27 million, with the group's own debt attached. Revenue goes from ₹591 crore in FY20 to ₹2,541 crore in FY22.
2021 to 2022. It buys De Dietrich's small glass-lining plant in Hyderabad, "about three years" before February 2025, and the Vatva plant of the bankrupt HDO Technologies, once Hindustan Dorr-Oliver, at an insolvency auction for ₹58 crore. This is the heavy engineering business.
September 2022. It buys the other 46% of Pfaudler for ₹344 crore from 2 promoter-group companies, paying partly in cash and partly in new shares. The same month it holds an Investor Day and promises ₹3,700 crore of revenue and ₹630 crore of EBITDA by FY25.
December 2022 and August 2023. DBAG sells out of the Indian company, some at about ₹1,700, the rest when ChrysCapital buys 9.9%.
FY25. The Leven plant in Scotland and the Hyderabad plant close. Revenue falls 7%.
December 2024. It buys 51% of a Polish metal fabricator for ₹25 crore.
FY26. Job cuts in Germany, 2 more acquisitions, a record order book, and profit of ₹52 crore.
2026. A new Group CEO from inside the family in May, and the Group CFO's resignation in September.

Value chain

How a GMM Pfaudler reactor is made, sold and comes back for relining

A reactor starts with the customer. A drug or chemical company's plant engineer decides what will be cooked, at what temperature and in what acid, and writes the specification. GMM Pfaudler designs the vessel to that specification, builds it in one of its plants, lines it, tests it to the pressure-vessel codes the customer's country requires, and delivers it. For a whole plant, such as an acid recovery system, it also engineers the process and installs the equipment, over years rather than months.

The customer pays in stages. Large systems come with a deposit on signing, 30% in the case of the defence order, and at March 2026 the company was holding ₹427 crore of customer money for equipment not yet delivered.

Then the vessel comes back. A reactor lasts 7 to 9 years, then needs a new glass lining, a new stirrer, new seals. That is why about 30% of GMM Pfaudler's revenue is services and spares, and why customers rarely switch.

Power sits in 2 places. In a normal year it sits with the maker: Crisil says GMM Pfaudler makes 50% of the glass-lined equipment sold in India and in the Americas, 40% of it in Europe and 20% in China, and its annual report says its equipment is "trusted by over 90% of the world's top chemical companies". In a downturn it moves to the customer: when chemical companies stopped spending in 2024, discounts in India's glass-lined market went up "by about 10% to 15%". In nuclear work the rules are set by a third party: Nuclear Power Corporation of India (NPCIL) decides who may supply what, and the N stamp certificate decides who may make the parts a reactor's safety depends on. GMM Pfaudler does not have one.

Products and segments

From the June 2026 quarter the company reports 4 divisions.

Four divisions, one quarter: what each one sold and won

Glass-lined equipment is the core, and the main business of the first division, Corrosion Resistant Technologies. The plants are in Karamsad in Gujarat, Rochester in the US, Waghäusel in Germany, Italy, Brazil and China. In FY26 Karamsad, which now does all of India's glass-lined work, was full: Tarak Patel said in November 2025 that it had a 5 to 6 month backlog and was running 3 shifts. The plants abroad were running at 50% to 70%.

Edlon is the other business in that division: a small company in Pennsylvania that lines tanks and pipes with the plastic best known as Teflon, for factories where even a speck of metal would ruin the product, mostly makers of computer chips. "We work with Micron, we work with Intel," Tarak Patel said in May 2026. Its sales are about USD 25 million a year, a number management has quoted since May 2024, so the growth has stalled. Profit has fallen every year since FY24. It still matters more than its size, because the rest of the group earns so little: Edlon's profit was equal to 48% of the group's in FY25 and 37% in FY26, on about 6% of the revenue.

A US unit a sixteenth the size earns over a third of the profit

Mixers, seals, filters and dryers are the second division, built mostly from small acquisitions: Mixel in France, MixPro in Canada, SEMCO in Brazil, Mavag in Switzerland. Together the mixing business is about USD 65 million a year.

Heavy engineering is the Vatva plant near Ahmedabad. It makes very large alloy reactors, columns and pressure vessels for nuclear, power and refinery projects. It did about ₹300 crore of revenue in FY26 and can do ₹600 to 700 crore.

Process systems sells a whole plant rather than a piece of it, for example a system to recover acid from waste. The biggest order in the company's history came here, from a weapons maker.

By type of sale, FY26 revenue was ₹2,036 crore of equipment, ₹437 crore of systems and ₹1,036 crore of services and spares.

Which one earns the margin. The company does not report profit by division. What it does report says the money is in India and in Edlon: India is 28% of revenue and made half the operating profit; Edlon is about 6% of revenue and over a third of the profit.

Which one management is pushing. The new industries, defence and nuclear first, the heavy engineering plant, which it says can double or triple "from this very site", and Poland, where the cheap steel fabrication now sits.

How the company makes money

Equipment is sold per order. A customer orders a reactor, pays a deposit, and the order sits in the backlog until it is built and shipped, which for the new orders is mostly 10 to 12 months. Systems are sold per project and take years: the defence plant takes 4 years to deliver. Services and spares are sold when a vessel comes back for relining, on a cycle of 7 to 9 years, and are the steadiest third of revenue.

So the arithmetic is: orders won this year and last, less what has been delivered, equals the backlog; the backlog turns into revenue at the pace of the plants. In FY26 the company won ₹3,714 crore of orders, 20% more than the year before against ₹3,524 crore of revenue, so it booked ₹1.05 of orders for every ₹1 it billed.

There is no revenue per unit. The company does not disclose how many vessels it makes, and a reactor for a Hyderabad peptide plant and a 4-year acid plant for an ammunition maker are not the same unit.

Who pays: the customer, directly, in every division. The only government money in the business is NPCIL and the contractors it picks.

Customers

The mix has changed. Before the Pfaudler deal, about 80% of orders came from chemical and pharma companies. Now it is about 55%, with the rest from defence, nuclear, oil and gas, mining, water and semiconductors.

Named customers. Micron and Intel at Edlon. Nuclear Power Corporation of India in heavy engineering. A European weapons maker the company is "not permitted to disclose the name of". In chemicals, the annual report's "over 90% of the world's top chemical companies", none named.

Concentration. The segment note has no major-customer line, which the segment-reporting standard requires whenever a single customer is a tenth or more of revenue, so no customer is that large. Crisil: a "near monopoly in the large vessel segment", "intense competition in the small vessel segment", and the company has been "servicing around 70% of its top customers for more than 20 years". The one order that can be sized is the defence contract: it was ₹355 crore of the ₹1,004 crore won in the June 2025 quarter, a third of a quarter's intake from 1 buyer.

Why they buy here, and for how long. A customer that has a Pfaudler reactor comes back for its relining for the life of the plant. That is the 30% of revenue in services. Chemicals have been weak for 2 years, in India and more so in Europe. Tarak Patel, May 2026: "Europe Chemicals is definitely slow. You know BASF, Bayer, you hear of people shutting down facilities." In the June 2026 quarter India's drug makers were ordering again: 2 large peptide plant orders came from Hyderabad, the molecule behind the new weight-loss drugs, the US sent pharma orders, and even China "has also come back with good orders". Indian chemicals are still flat.

Bad debts. Of ₹502 crore of gross receivables at March 2026, ₹23.2 crore carried a "significant increase in credit risk" and ₹4.3 crore were credit-impaired; the allowance for doubtful debts and liquidated damages was ₹36.7 crore. Terms are 30 to 60 days. Sales to related parties were 7.82% of the standalone company's sales, mostly to its own overseas units.

Complaints. 505 customer complaints in FY26, against 398 the year before, with 5 open at year end. In the 2024 downturn, Tarak Patel said, "four or five other customers who were buying from our competitors" came back after trying cheaper equipment; in August 2026 he said "the big Hyderabad players are expanding".

Contracts and tenders

The defence contract. On 19 June 2025 the company told the exchanges that its German unit, Pfaudler Normag Systems, had won a contract to "design, engineer and supply complete end-to-end acid recovery equipment & systems" for "a leading European manufacturer of light and medium weapons, ammunition, and tools for the defence and civilian sectors". It is worth EUR 33.2 million, about ₹330 crore, takes 4 years to deliver, and came with 30% paid on signing. The scope is the whole plant, not a vessel.

The nuclear work. NPCIL is splitting its orders, and GMM Pfaudler will supply both NPCIL and the contractors NPCIL picks to design and build each station: "a continuous opportunity over the next 5 years", Dhananjay Bajpeyee, who runs heavy engineering, said in November 2025. The largest nuclear order so far is worth about ₹130 crore, or roughly USD 15 million. None of these orders has been filed with the stock exchanges: since April 2023 the company has made hundreds of filings, and only one reports an order win, the European defence contract. The qualification to bid came with the HDO purchase, whose approvals Bajpeyee said were being passed on to GMM; Tarak Patel said the company has been "working quite hard to get our names registered". That is not the same as being registered.

Contract length is getting shorter. Gregory Gelhaus, the Group CEO, said in August 2026 that nearly 30% of the June 2025 quarter's intake was multi-year projects, while the current book is mostly projects of 10 to 12 months. That is good for FY27 revenue. It also means the backlog needs topping up faster.

Bans and refusals. In FY23 the company wrote off stock after an export licence was refused, part of a ₹21.6 crore one-off charge. No tender ban appears in the documents read.

The pipeline. In November 2025 Patel said the company was chasing a similar acid plant in Eastern Europe, worth "about 10 million", spoke of "another very large contract" under discussion, and of US projects where the customer had already signed for the design work. None of those has been announced as won yet.

Suppliers and inputs

Materials are the biggest cost: ₹1,395 crore in FY26, 40% of revenue. The inputs are steel, alloys for the heavy vessels, and the glass that is melted onto the steel. Energy matters because lining is done in a furnace: asked about the March 2026 quarter, Tarak Patel pointed to higher costs from gas and metal prices. Power and fuel cost ₹87 crore and freight ₹66 crore.

The standalone company bought from 711 trading houses in FY26; 17.74% of its purchases came through trading houses and the top 10 of those supplied 50.85% of that. Purchases from related parties were 1.84%. Its foreign exchange outgo, imports included, was ₹69.7 crore against earnings of ₹181.3 crore. Suppliers are paid in 58 days. The one supply chain the company talks about is its own: the Polish plant now makes the steel parts that Germany, France and Switzerland used to make, is already running full, and needs 2 more sheds.

Whether input costs pass through: not fully, in a weak market. Discounts rose "by about 10% to 15%" in 2024 and the CFO still spoke of "continued pricing pressure" in August 2026.

Operations and capacity

Karamsad, Gujarat. All of India's glass-lined work since Hyderabad closed. Full, on 3 shifts, with a 5 to 6 month backlog in November 2025.
Vatva, near Ahmedabad. Heavy engineering, 11.9 acres and 7 manufacturing bays, about ₹300 crore of revenue in FY26, capacity for ₹600 to 700 crore without more spending.
Hyderabad. Bought in 2020, closed in early 2025, land sold for ₹58.9 crore in February 2026.
Waghäusel, Germany. Kept, with 35 people let go, nearly 30% of the German wage bill.
Leven, Scotland. Stopped making glass-lined equipment in FY25.
Poland. Steel fabrication for Europe, 51% owned, already full. Permits applied for "building number three and four", which would triple the site.
Rochester (US), Italy, Brazil, China. Glass-lined plants; the overseas plants ran at 50% to 70% in 2025. Switzerland was restructured after losing money in FY25, China had costs taken out.
Edlon, Pennsylvania. Two sites since it opened a second in Coatesville in FY24.

Certificates. The website lists ASME U, U2, R, S and NB stamps, for ordinary pressure vessels and boilers. There is no N stamp, the certificate for parts a reactor's safety depends on.

Spending already contracted. Capital contracts signed but not yet paid for were ₹240 crore at March 2026, against ₹146 crore a year earlier, 3 times the ₹78 crore spent on plant in FY26.

Dates promised and delivered. The Hyderabad closure was approved in December 2024, done in early 2025, and the land sold 14 months after approval. The German savings, ₹45 crore a year once fully in place, begin in FY27. The Investor Day with a 3-year plan, promised "in the next few quarters" in May 2024, has not been held.

Geography and currency

GMM Pfaudler splits its results into India and overseas. In FY26 overseas brought in ₹2,548 crore of revenue and India ₹976 crore, yet profit before interest and tax was almost the same: ₹113 crore from India, ₹112 crore from abroad. Overseas also holds four fifths of the group's assets.

India is 28% of revenue and half of the operating profit

Half the staff work abroad, including 301 in Germany and 246 in the US. The pensions owed to overseas staff are in euros and pounds. The group's loans run between its own companies in different currencies: a loan between the German and Luxembourg companies creates currency exposure, and restating such loans cost ₹11 crore in FY26, ₹20 crore in a single quarter of that year. The company reports the same defence order in euros, dollars and rupees, and the figures do not agree (the 5 figures are under Operating metrics).

Cost structure

₹100 of sales leaves ₹11 of EBITDA and ₹1.50 of profit

Of every ₹100 of FY26 sales, ₹40 went on materials, ₹28.60 on staff, ₹3.40 on contract labour, ₹17 on other expenses, leaving ₹11.40 of EBITDA. Then ₹4.50 of depreciation, ₹3.50 of finance cost, and a tax bill that took 49% of what was left.

Fixed against variable. Materials move with sales. Staff do not: half of the about 2,000 employees are abroad, where wages are high, and a reactor built at Waghäusel costs far more than the same reactor built in India. That is why the company is moving work to Poland and India, and why letting go of 35 German workers saves as much as ₹45 crore a year. Among other expenses, legal and professional fees were ₹96 crore. In India the shop floor is contract labour: 1,960 of the 2,141 workers were not permanent at March 2026, against 633 employees of the company's own, which keeps that cost variable.

Operating leverage. Revenue rose 10% in FY26 and EBITDA 11%, from ₹361 crore to ₹403 crore: barely more than sales, because the plants abroad were running at 50% to 70% and discounts had not come back.

Interest eats 30% of EBITDA. Finance cost was ₹123 crore against EBITDA of ₹403 crore. Only ₹74 crore of that is interest on loans. The rest is the ₹11 crore loss on restating loans between group companies, a ₹13 crore fair value loss and ₹10 crore on leases.

Pricing power

In the glass-lined business the price holds when plants are full and gives way when they are not. When the chemical slowdown hit in 2024, discounts in India went up "by about 10% to 15%". They have only partly come back. Management said in August 2026 that "with the market improving, pricing is also improve", but the June quarter EBITDA margin was still 10.1% and the CFO blamed "continued pricing pressure".

The company will not name its competitors. Analysts on its calls have pointed to a "number three player from Hyderabad" that had "become aggressive with pricing". For nuclear and defence work the price is set in a tender, and the company says only that heavy engineering is "slightly different in terms of the processes, margins profile".

What protects the price is the installed base: a plant with Pfaudler reactors comes back to Pfaudler for relining. What limits it is a customer who can wait, as the chemical companies did for 2 years.

Seasonality and cyclicality

The business rides the capital spending of drug and chemical companies. When they stopped spending, the backlog fell from ₹2,247 crore in December 2022 to ₹1,625 crore a year later, FY25 revenue fell 7%, and the glass-lined business "has now gone through a really tough time over the last two years", Tarak Patel said in August 2026. The backlog has climbed since June 2025, with 1 small dip, and the June 2026 quarter was the first that looked different in India.

The order book shrank for two years. It is now at a record.

The 5 quarters in the chart below show no clear season. The March 2026 quarter was the largest by revenue and the weakest by margin, for reasons management gave as a large heavy engineering order shipped in the quarter that weighed on margins and gas and metal prices, not the calendar.

Growth drivers

Demand is turning, in 3 places at once. India's drug makers are ordering again: 2 have ordered whole systems for making peptides, and Karamsad is running 3 shifts with a 5-6 month backlog. Orders have come back in the US and, to management's surprise, in China. Indian chemicals are still flat and Europe's are shutting plants.

Then there are 2 industries GMM Pfaudler had no place in 3 years ago. It is building the ₹330 crore acid recovery plant for a European ammunition maker, its largest order ever, and has begun supplying heat exchangers and pressure vessels to NPCIL. With oil, gas and mining, these new industries won 42% of last year's orders. Management saw it coming: in May 2025, a month before the order, Tarak Patel said Europe wanted to spend on defence, "and we definitely have a place there".

The capacity to grow into is already built: heavy engineering at ₹300 crore against ₹600 to 700 crore possible, and Edlon, which in May 2026 had just won an order worth USD 8 to 9 million, about a third of a year's sales, and is making sealed cabinets lined with the same plastic for the US nuclear industry.

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