Happy Forgings Limited — Q3 FY26

Happy Forgings Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=8jozRZ23vMk Published: 3 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Q3 and 9month FI26 earnings conference call of Happy Forgings Limited. This conference call 0:11 11 seconds may contain forward-looking statements about the company which are based on the beliefs, opinion and expectations of the company as on date of this call. The 0:20 20 seconds statements are not the guarantees of future performance and involve risk and uncertaintities that are difficult to predict. As a reminder, all participant 0:29 29 seconds lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:37 37 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that 0:46 46 seconds this conference is being recorded. I now hand the conference over to Mr. Ashish Kar, managing director, Happy Fings Limited. Thank you and over to you, sir. 0:57 57 seconds Thank you. 0:59 59 seconds Good morning everyone and thank you for joining us today for the quarter 3 FI26 earnings call of Happy Forgings Limited. 1:07 1 minute, 7 seconds Along with me I have Mr. Pankage Kumar our CFO and strategic growth advisers our investor relations 1:14 1 minute, 14 seconds advisers. I trust everyone had the opportunity to review the quarter 3 and 9 months FI26 financial results and 1:21 1 minute, 21 seconds investor presentations which are now available on the exchanges. 1:26 1 minute, 26 seconds I am delighted to share that we continued with a strong growth trajectory in the third quarter and nine months of fiscal year 26 2026 1:35 1 minute, 35 seconds delivered a robust operating and financial performance in quarter 3 and 9 months F26 the revenues continued to scale up and profitability showed a 1:44 1 minute, 44 seconds clear improving trend. We have successfully navigated a period marked by softening steel prices, a challenging macro environment, including weak global 1:52 1 minute, 52 seconds demand and geopolitical events while maintaining a positive growth momentum, improving profitability and further strengthening our balance sheet. 2:01 2 minutes, 1 second Importantly, during this period, we have invested meaningfully to build capacity and lay the foundation for future growth 2:09 2 minutes, 9 seconds and we have done so without straining the balance sheet. This was enabled by our robust business model, efficient working capital management resulting in 2:17 2 minutes, 17 seconds strong cash generation, allowing us to fund growth initiatives while preserving financial strength and flexibility. 2:25 2 minutes, 25 seconds For the third quarter, the company delivered an all-time higher performance across revenue from operations, gross profit, AITA, and PAT. And we achieved 2:34 2 minutes, 34 seconds the highest ever PAT margin during the quarter. 2:38 2 minutes, 38 seconds Profitability growth outpaced the revenue growth with PAT increasing to 22.3% year-on-year. This was driven by 2:45 2 minutes, 45 seconds robust value added as reflected in higher gross margin and operational efficiencies. 2:52 2 minutes, 52 seconds For the 9-month period, revenue touched 1122 crores with a PAT of 218 crores, demonstrating a resilient and a 3:00 3 minutes consistent prof per performance given the macro environment. Importantly, the sequential improvement witnessed in Q3 3:08 3 minutes, 8 seconds over Q2 reinforces the growth momentum in the business. And if this trend continues in quarter 4, it positions us well for a strong close in FI26. 3:19 3 minutes, 19 seconds On the margins front, I would like to highlight that our beta margins reached a new high of 30.8% in the quarter and for the 9 months period crossed 30%. 3:28 3 minutes, 28 seconds While this represent a meaningful improvement over last year, margins can vary from quarter to quarter as raw material prices, capacity addition and 3:36 3 minutes, 36 seconds business mix evolve. Our focus remains on maintaining beta margins with a substantial range with a sustained range between 29 to 31% over the medium-term. 3:47 3 minutes, 47 seconds Coming to our operational performance in Q3, we recorded a healthy year-on-year volume growth of approximately 14% driven by a strong uptick across 3:56 3 minutes, 56 seconds domestic CV, farm, and industrial segments as well as the passenger vehicle segment 4:04 4 minutes, 4 seconds overall contributed meaningfully. Realizations remain broadly stable and rangebound even as raw material prices softened 4:12 4 minutes, 12 seconds during this period. Going forward as higher value ad segments scale up we expect realizations to improve 4:20 4 minutes, 20 seconds from a ge ge geographic perspective domestic business delivered strong mid- teens year-on-year growth during the quarter driven by healthy demand across 4:29 4 minutes, 29 seconds our core segments especially commercial vehicle farm equipment direct exports remained subdued during the quarter reflecting both ongoing weakness in 4:37 4 minutes, 37 seconds certain end markets and tariffed uncertaintities. 4:42 4 minutes, 42 seconds In addition, changes in incot terms for select customers during the period resulted in a reclassification of certain revenues from direct exports to 4:50 4 minutes, 50 seconds deemed and indirect export categories which also contributed to the apparent decline in direct export share. However, when viewed on a broader and more 4:58 4 minutes, 58 seconds meaningful basis by combining direct, deem and indirect exports which together account for roughly 1/4 of our finished whip sales. Export market dependent 5:07 5 minutes, 7 seconds revenues were largely flat on year-on-year basis. Importantly, this combined export linked revenue pool recorded a modest sequential increase 5:16 5 minutes, 16 seconds indicating early signs of stabilization rather than further deterioration. 5:21 5 minutes, 21 seconds Following the recent announcements around India, US tariffs and other trade agreements, we are closely tracking developments and await further clarity on the fine prints for these agreements. 5:31 5 minutes, 31 seconds Directionally, we view these developments are positive for long-term economic growth and industry opportunities. In parallel, some OEMs in 5:39 5 minutes, 39 seconds CV and farm equipment segments have marginally revised their outlook for calendar year 2026 compared to the guidance issued in quarter 3 calendar 5:48 5 minutes, 48 seconds 2025 with industry growth expectations now indicating stability to modest low singledigit growth. 5:56 5 minutes, 56 seconds Against this fact outlook for export business hence appears more constructive as compared to the previous quarter which could support a gradual recovery 6:04 6 minutes, 4 seconds and growth in our existing export link business. Moving to our industry segment highlights for quarter 3 of 26. 6:13 6 minutes, 13 seconds Our diversified portfolio remains a cornerstone of our strategy. This balanced exposure allows us to effectively derisk while fully capturing 6:22 6 minutes, 22 seconds the robust secular growth in the domestic and international markets. 6:26 6 minutes, 26 seconds Commercial vehicle contributed 30 37% to our operating revenue in 9 months 26 period. The segment continues to be the highest contributor during the quarter. 6:37 6 minutes, 37 seconds The combination of the GST rate cut improving affordability and healthy infrastructure demand mainly supported a meaningful pick up in the industry 6:45 6 minutes, 45 seconds volumes. Also, domestic CV dispatches saw an uptick supported by sustained freight activities 6:54 6 minutes, 54 seconds with improving lead indicators in the domestic market such as supportive policy measures and sustained infrastructure activity. We are 7:01 7 minutes, 1 second optimistic about the segments to sustain a strong demand visibility and positive momentum positioning us well for 7:08 7 minutes, 8 seconds continued growth. However, the broader global backdrop remains soft with major markets in North America and Europe yet to show meaningful recovery momentum. 7:19 7 minutes, 19 seconds Farm equipment contributed 31% to our total operating revenue in 9 months 26. 7:24 7 minutes, 24 seconds The domestic tractor industry demonstrated growth supported by favorable monsoons and karif agriculture output. Industry volumes grew on the 7:32 7 minutes, 32 seconds back of strong rural demand and improved cash flows. Looking ahead in 27, industry demand is expected to remain stable, supported by normal monsoon 7:40 7 minutes, 40 seconds assumptions, steady farm incomes and sustained mechanism trends to agriculture. 7:46 7 minutes, 46 seconds As for the outlook released by some OEMs, the European and US farm equipment markets are expected to remain broadly stable or rangebound in calendar year 2026. 7:56 7 minutes, 56 seconds Industrials contributed 50 15% to our overall operating revenue in 9 months 26. The segment delivered a stable 8:04 8 minutes, 4 seconds performance in the quarters supported mainly by demand across power generation renewables such as wind, railways, oil and gas and digital infrastructure. 8:13 8 minutes, 13 seconds Overall, the outlook for this segment is positive given the rapid expansion of India's data center ecosystem, solar and grid capacity additions, rail 8:21 8 minutes, 21 seconds modernization and maintenance cycles that are likely to continue support autoflows. 8:28 8 minutes, 28 seconds of highway contributed 12% to our operating revenue made broader category weakness. The domestic offway segment 8:35 8 minutes, 35 seconds saw softer yearon-year basis. Slower project awards particularly in roads and highway and other infrastructure 8:43 8 minutes, 43 seconds segments along the land acquisition approval related delays moderated the pace of project execution. This impacted equipment demand during the period. 8:52 8 minutes, 52 seconds Industry conditions in Europe and US remained challenging during this period. 8:57 8 minutes, 57 seconds Passenger vehicles contributed 5% to our total revenue in 9 months 26. 9:04 9 minutes, 4 seconds The passenger vehicle segment continued to perform well and now contributed close to a mid singledigit share of revenues. We have strong visibility on 9:13 9 minutes, 13 seconds incremental business in this segment and expect this contribution to scale meaningfully in the next mix over the next few years. 9:25 9 minutes, 25 seconds We increased our machining capacity to 68,000 tons, an addition of 9,800 metric tons in quarter 3, FA 26. This expansion 9:34 9 minutes, 34 seconds is in anticipation of the upcoming demand. Further, we will strengthen our forging capacities by commissioning a new 10,000 ton press in quarter 4 F26 9:43 9 minutes, 43 seconds and the 4,000 ton press in H1 Fi 27. To improve our cost efficiency and support our ESD commitments, we have signed a 9:50 9 minutes, 50 seconds long-term lease for 80 acres of land to develop a captive solar power plant. We anticipated the benefit of this 9:57 9 minutes, 57 seconds investment to start coming in partly in FI28 and fully thereafter. Furthermore, we are on track with our heavy component 10:05 10 minutes, 5 seconds related capex which is progressing well as per the schedule. Looking ahead, we expect domestic demand momentum to 10:12 10 minutes, 12 seconds continue as global trade dynamics evolve. We hope that export pressures will also subside paving the way in in a 10:20 10 minutes, 20 seconds for a measured turnaround in our international markets. We have visibility of new and incremental peak annual business of approximately 800 10:28 10 minutes, 28 seconds crores expected to commence from FI27 onwards which will scale up over the next two to three years. This includes 10:35 10 minutes, 35 seconds incremented revenues from heavy component capex lines. The addition of this business will further strengthen our diversification efforts. A large 10:44 10 minutes, 44 seconds part of the upcoming business is linked to industrial and passenger vehicles with nearly twothirds oriented towards export markets. 10:52 10 minutes, 52 seconds Consequently, the contribution of industrials, PV and export dependent segments is expected to increase meaningfully in the overall mix and have 11:01 11 minutes, 1 second a positive impact on the revenue diversification and profitability as well. I'll now invite our CFO Mr. the pankage guaran goal to share a detailed 11:09 11 minutes, 9 seconds breakdown of our financial drivers and offer further analytical color on our quarter 3 and 9 months performance. 11:19 11 minutes, 19 seconds Thank you. I hope I am audible to all of you. Good morning everyone. Let's now dive into the key financial metrics that 11:27 11 minutes, 27 seconds defined our performance for the third quarter and 9 months period of FY26. 11:32 11 minutes, 32 seconds We recorded revenue from operation of 391 cr for Q3 FY26 and 1122 cr for 9 month FY26. 11:41 11 minutes, 41 seconds This represents a Y expansion of 10.4% and 6.2% for the quarter and 9 months period respectively. We register a Y 11:50 11 minutes, 50 seconds volume growth of 13.8% in Q3 FI26 and 7.6% for 9 month FY26. The relations 11:57 11 minutes, 57 seconds were marginally lower for both QC and primary due to changes in product mix and lower prices. Gross profit reached 12:06 12 minutes, 6 seconds 230 cr in QC and 66 and 663 cr for 9 months reflecting an uptick of 12.2% and 12:14 12 minutes, 14 seconds 8.5% YUI respectively. This performance anchored healthy gross margins of 58.9% for the quarter and 59.1% for 9 months. 12:26 12 minutes, 26 seconds A beta clocked in at rupes 120 cr for Q3 and 337 cr for 9 months FY26 making a 12:32 12 minutes, 32 seconds yearonear surge of 18.7% and 10.8% respectively. Consequently, a beta margin settled at 30.8% and 30.1 12:41 12 minutes, 41 seconds respectively as a result of operation operating leverage. Profit after tax stood at 79 cr for the quarter and 218 cr for 9 month FY26. 12:51 12 minutes, 51 seconds This reflects a significant value growth of 22.3% for quarter 3 and 11.8% for 9 month on 12:58 12 minutes, 58 seconds an adjusted basis with pat margins holding form at 20.2% and 19.4% for Q3 and 9 months respectively. I would also 13:07 13 minutes, 7 seconds like to clarify that we have we have no financial impact from the new labor codes transition as our current provisions and practices are already 13:15 13 minutes, 15 seconds fully compliant with the updated regulations. Our balance sheet remains a core strength of the organization through focused working capital 13:23 13 minutes, 23 seconds management. We have maintained stability relative to working capital levels of H1 FY26. This reduced our working capital intensity combined with our expanding 13:32 13 minutes, 32 seconds margin profile has translated into robust cash flow conversions. thereby resulting in a 315 cr in cash flow from operation for the 9 month by 26 period. 13:42 13 minutes, 42 seconds Our treasury equation has further strengthened with total liquid assets now exceeding 400 cr. This provides us with a significant buffer and the 13:50 13 minutes, 50 seconds financial flexibility to fund our growth initiatives from internal approvals. We continue to invest for the future. Our ongoing capex program is progressing as 13:59 13 minutes, 59 seconds per schedule with 300 cr deployed in the first nine months of the year. We expected our total capex for FI26 to be 14:07 14 minutes, 7 seconds in the range of 400 to 500 fold. All of which aimed at augmenting our high growth capabilities and enhancing long-term value for our stakeholders. 14:16 14 minutes, 16 seconds With that, we are ready to commence the question and answer session. I will turn it back to the moderator to invite the first question. 14:24 14 minutes, 24 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 14:33 14 minutes, 33 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 14:42 14 minutes, 42 seconds question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 14:58 14 minutes, 58 seconds The first question is from the line of Pit Patani from Incred AMC. Please go ahead. 15:05 15 minutes, 5 seconds Thank you for the opportunity sir. I only had one question on the line of cross margin. Uh we have seen the improvement YI on the grass margin 15:14 15 minutes, 14 seconds despite raw material headwinds. What has led to such improvement and what do we expect going forward? Thank you. 15:25 15 minutes, 25 seconds So thank you. 15:27 15 minutes, 27 seconds So uh gross margin improvement trend uh has improved over the last uh uh you 15:34 15 minutes, 34 seconds know several years. It is improving yearon year. It's largely on account of the product mix changes which is 15:41 15 minutes, 41 seconds happening and whereas the new product introduction is at better realization rate which is kind of improving the 15:49 15 minutes, 49 seconds overall average for the realizations and this is despite the falling raw material prices that has happened in the last one 15:56 15 minutes, 56 seconds and a half two years. uh going forward we expect this momentum to continue 16:02 16 minutes, 2 seconds uh as well on a medium-term basis as our export share will improve and also the industrial business will improve going forward. 16:13 16 minutes, 13 seconds Uh just a follow up on that the realization if I can see that this quarter it was 3% down year on year and 16:21 16 minutes, 21 seconds despite we have seen gross margin improvement so if you could just highlight that There's a fall in steel prices as well. 16:30 16 minutes, 30 seconds So you're seeing the total uh uh uh realization base. But if you see the raw material price, the raw material price 16:37 16 minutes, 37 seconds was fall was uh even more than that. And uh secondly, it's because of the changes uh uh in the product mix. 16:50 16 minutes, 50 seconds uh can you just name what are the top raw materials which have been used uh along with the percentage of the contribution to the overall raw material base. 16:59 16 minutes, 59 seconds So we largely consume alloy steel and uh alloy steel grades like 15 41 20 mm CR5 17:06 17 minutes, 6 seconds or chrome only grades and carbon steel grades largely used uh for automotive requirements and wind requirements. So 17:14 17 minutes, 14 seconds this is the base that we consume and we also consume some bit of stainless steel in our Thank you sir. I'll join back in the queue. 17:28 17 minutes, 28 seconds Thank you. The next question is from the line of Mi Bora from Aquir. Please go ahead. 17:36 17 minutes, 36 seconds Yeah, thank you for taking my question. 17:38 17 minutes, 38 seconds So sir just one clarification on capeex that what would be the 9month capex that we have already incurred and some projection for the f27 kex number as well. 17:48 17 minutes, 48 seconds Sure. 17:53 17 minutes, 53 seconds So we have already completed a capex of almost 300 crores in 9 months uh uh this financial year and the expected uh the 18:01 18 minutes, 1 second expectation for next year is close to 400 crores uh excluding solar project including solar it will be close to 480 crores. 18:10 18 minutes, 10 seconds Okay. All right. Okay. Uh the uh next one is uh basically we saw a good decent growth in the industrial segment here 18:17 18 minutes, 17 seconds which you mentioned in opening remarks was driven by the domestic part of it but can you throw some more light on what kind of components are we basically 18:26 18 minutes, 26 seconds giving into the railway segment which you mentioned here and some more light on the components in the industrial. 18:34 18 minutes, 34 seconds So railway is uh is a very small segment for us. We produce piston pins for local application where we are import 18:42 18 minutes, 42 seconds substitutes and uh in within industrial uh we supply crankshafts as well as wind pinions. The 18:49 18 minutes, 49 seconds large crankshaft goes for heavy genetic applications and the wind pinions are for wind gearboxes. 18:57 18 minutes, 57 seconds Right. Okay. Okay. Okay. And uh so lastly on the order book front which you have mentioned around 800 odd kores 19:06 19 minutes, 6 seconds which also includes the heavy engineering part but here are we seeing some incremental orders like previously I think we had mentioned a confirmed 19:13 19 minutes, 13 seconds order of 100 odd kores do we see any more confirmation here in the heavy engineering segment. 19:20 19 minutes, 20 seconds So on the heavy engineering particularly on the large crankshaft family we have close to 180 crores of uh uh signed 19:28 19 minutes, 28 seconds orders uh right now and uh going forward we are waiting for uh the capacity to come in place but we 19:36 19 minutes, 36 seconds are already in discussion with several OEMs for this project but as the timelines are very close by 19:43 19 minutes, 43 seconds so I think the real marketing will start around June July because we expect equipments to reach in the plant and 19:50 19 minutes, 50 seconds that will be the time when you know we can actually demonstrate our capabilities once the infrastructure is built. 19:57 19 minutes, 57 seconds So uh when do we expect that plant to be utilized at a fair level like will it be in FI28 or 29? 20:08 20 minutes, 8 seconds So some bit of utilization will start coming from FI 28 largely from FI 29. 20:15 20 minutes, 15 seconds Okay. Okay. Okay. That's all from myself. Thank you. 20:21 20 minutes, 21 seconds Thank you. The next question is from the line of Joseph George from IFL. Please go ahead. 20:31 20 minutes, 31 seconds Hi, thank you. I have uh two questions. 20:33 20 minutes, 33 seconds One is uh when I look at your capacity numbers that are given in the PPT. Uh your forging stand at 127K and machining 20:41 20 minutes, 41 seconds stands at 68K. Could you give give us a sense of where these numbers will end at the end of FI27? 20:49 20 minutes, 49 seconds Yes. So FYI27 will be looking at forging capacity of uh 1 lakh 50,000 tons and 20:57 20 minutes, 57 seconds machining capacities around 82,000 tons. 21:03 21 minutes, 3 seconds Okay. And this obviously doesn't include much of the heavy um uh uh engines capacity uh or heavy component capacity. 21:12 21 minutes, 12 seconds No, no, that will probably that will come in a penalty and when when that will end closer 200,000 in 21:21 21 minutes, 21 seconds terms of forging around 180,000 on the foring side and around 21:28 21 minutes, 28 seconds around 90,000 in terms in the in terms of commission cost. 21:34 21 minutes, 34 seconds Understood. Thanks. The second question that I had was on gross margins. 21:37 21 minutes, 37 seconds mentioned that um um you know you your initial comments had reference to raw materials etc. What I want to understand 21:44 21 minutes, 44 seconds is uh isn't the price of steel a complete pass through um uh under your contracts with your customers? That is 21:52 21 minutes, 52 seconds one and second is we have seen currency moving all over the place be it uh you know euro INR, USD INR. What are the implications for these currency movements for your profitability? 22:05 22 minutes, 5 seconds So I'll uh take with the 22:13 22 minutes, 13 seconds So uh steel is a pass through in most of the cases you can say almost uh 85% of the business steel is a pass through but 22:22 22 minutes, 22 seconds there is a lag of uh 1 month and in export there is a lag of one quarter but scrap is not pass through. So whatever 22:30 22 minutes, 30 seconds scrap gain or uh uh loss comes that goes directly in the vita. So if you see last year till December we have seen scrap 22:39 22 minutes, 39 seconds prices falling and uh going forward we see scrap prices improving as well. So the new contracts probably will get 22:46 22 minutes, 46 seconds signed now for the scrap prices will be at a better realizations better prices as it has started to move upwards. But 22:54 22 minutes, 54 seconds on the steel side it is a pass through for us and on the domestic side it has passed with a one month lag and we have sufficient inventories to actually cover that. 23:05 23 minutes, 5 seconds With regard to uh forex uh forex in some of the contracts is a pass through mechanism and in some of the contracts 23:12 23 minutes, 12 seconds is a long-term agreement where we uh hedge our currency on a long-term basis. 23:18 23 minutes, 18 seconds So we work work on both contracts both type of contracts but largely on the open contract we we follow a hedge 23:25 23 minutes, 25 seconds policy. Right now there is no significant. Okay. How long are your hedges? 23:32 23 minutes, 32 seconds Typically duration uh it is typically for one one and a half years looking forward. 23:40 23 minutes, 40 seconds Understood. Understood. Thank you. That's all I had. 23:47 23 minutes, 47 seconds Thank you. The next question is from the line of Sahil Sangui from Monach Network Capital. Please go ahead. 23:55 23 minutes, 55 seconds Yeah, good morning sir and uh good to see the numbers improving. Uh congratulations on that. Um uh also on u 24:03 24 minutes, 3 seconds u holding a very strong margin number like I have two set of questions. One if you can give me the split of u what was 24:10 24 minutes, 10 seconds the uh growth in the domestic market and uh the growth or degrowth in the export market if you can split that in whatever manner possible revenue volumes. 24:22 24 minutes, 22 seconds Okay sure. So uh uh roughly 55% of our 24:29 24 minutes, 29 seconds revenue comes from domestic CV and domestic farm business. So where in terms of uh value we have grown by 24:38 24 minutes, 38 seconds almost uh 22% you can say on an average in terms of value in terms of volume% better 24:46 24 minutes, 46 seconds yes on the domestic CV and farm which is around 55 57% of our revenues whereas on 24:54 24 minutes, 54 seconds the offway side we have witnessed a degrowth uh both uh domestic as well as international and we have one large 25:01 25 minutes, 1 second cluster where we have seen is uh uh you know actually uh dipping on the CV export side we have seen a 25:09 25 minutes, 9 seconds weakness where there's a degrowth to the level of almost uh 10 12% both in Europe as well as in the US market and uh the 25:17 25 minutes, 17 seconds regrowth is more on the US uh uh uh business on the CV side on the farm export is very small percentage uh it's 25:25 25 minutes, 25 seconds a new vertical where we have seen growth and uh on the PV side we have seen on the domestic as well as export side 25:33 25 minutes, 33 seconds growth of almost 37% yearonear. So that is uh something which is ongoing. So largely on the degrowth side it's off 25:41 25 minutes, 41 seconds business which where we have seen a degrowth and the CV export business uh uh uh which has where we have seen this deg growth. 25:52 25 minutes, 52 seconds Uh right sir and this is very elaborate. 25:55 25 minutes, 55 seconds My second question is to understand uh what happens to the new orders next year uh especially on the export front if uh 26:02 26 minutes, 2 seconds the demand remains subdued. So uh we have a very strong uh u new new order uh book as such. But uh what kind of 26:11 26 minutes, 11 seconds visibility do we have of the these orders getting converted uh at the right time? Um anything you can explain on that? 26:21 26 minutes, 21 seconds So on the export side uh uh we have uh largely three programs on uh uh and 26:28 26 minutes, 28 seconds largely for us uh which is for the industrial sector for gen 6 which we have already started 26:36 26 minutes, 36 seconds ramping up and we have a visibility for the entire year. uh thanks to the tariff situation that you know uh the numbers 26:42 26 minutes, 42 seconds are very clear now on the EV business we are already ramping up already started the ramp up uh in December started from 26:50 26 minutes, 50 seconds December on the EV export business which is indirect uh uh exports to North America and the third large order that we have 26:59 26 minutes, 59 seconds is for the uh for the PV sector export uh uh uh over there as well the visibility is there that we have to 27:06 27 minutes, 6 seconds build stocks uh uh uh in US warehouses in September. So we'll start ramping up from May June onwards on that business 27:14 27 minutes, 14 seconds as well and that is not related to CV that's a PV program where volumes are established and not much of a variation 27:22 27 minutes, 22 seconds is seen as of now in terms of volumes for that. So that's the visibility we have on all these three projects and we 27:29 27 minutes, 29 seconds expect export percentage to improve meaningfully from second quarter of next financial year. 27:37 27 minutes, 37 seconds Got it. Got it. Very helpful. Thank you, sir. All the best. Thank you. 27:43 27 minutes, 43 seconds Thank you. The next question is from the line of Akash from NVA FM. Please go ahead. 27:52 27 minutes, 52 seconds Yeah. Uh thanks for taking my question. 27:55 27 minutes, 55 seconds uh uh so just wanted to understand uh from very quarterly on quarterly perspective 28:03 28 minutes, 3 seconds uh I think we have seen a realization dip by almost 5%. 28:09 28 minutes, 9 seconds Uh so just wanted to understand uh and due to which we have also seen a kind of gross margins dipping on a sequential 28:16 28 minutes, 16 seconds basis. Just wanted to understand I mean uh which uh what you can say which segment is a margin driver for us or 28:24 28 minutes, 24 seconds which segment has basically fallen off due to which uh we have taken a hit on our margins is what what I wanted to understand. 28:38 28 minutes, 38 seconds So I am uh just not clear with your question. Can you just repeat once again? You are asking uh that realization. Can you just come once again? 28:48 28 minutes, 48 seconds Yeah, sure. So, uh, sir, we have seen our realizations dip by almost 5% on a sequential basis. I don't think steel 28:55 28 minutes, 55 seconds prices have uh fallen much on a quarter basis. 28:59 28 minutes, 59 seconds Yeah. So, what I wanted to understand which segment is basically hitting us in terms of uh gross margins and realizations. 29:09 29 minutes, 9 seconds So, basically uh it's not uh it has not gone down. You can say that because of the product mix changes we are seeing 29:16 29 minutes, 16 seconds this largely on account of increased uh sales on the forge products to the tune of almost one and a half 2% we are 29:24 29 minutes, 24 seconds seeing this on the other side again there are the cost is also less because of uh uh uh more of force product sale 29:32 29 minutes, 32 seconds and uh that has also resulted in improvement in margin and that has happened because of the product mix even though there is a realization change is 29:40 29 minutes, 40 seconds there but you if you look at the cost sequentially cost has also gone down. 29:47 29 minutes, 47 seconds Yeah. So that's what I want to understand that for the products mix part uh basically we have a higher set 29:54 29 minutes, 54 seconds of realizations and margins uh in this segment is it industrial CV and that basically is an industrial export business which 30:02 30 minutes, 2 seconds has picked up which is largely very heavy components that we are exporting which are largely on a forge nature of products where the realization is not uh 30:12 30 minutes, 12 seconds similar to crankshafts is uh uh is less than that over there there is an increase but yes relatively the cost is not the same. So at least sequentially 30:20 30 minutes, 20 seconds if you see there is cost increment has not happened but uh uh even despite of that there is an improvement in overall margin. 30:29 30 minutes, 29 seconds Understood and uh sir uh I think uh to an earlier participant question you explained with the volume growth across all segments except for industries. So 30:38 30 minutes, 38 seconds on a Y basis industry has seen how much growth volume growth. Just a sec. 30:57 30 minutes, 57 seconds So round volume growth on industrial is around 2%. 31:04 31 minutes, 4 seconds Understood. And my last question will be for uh FI27. I think we are installing a 10 10,000 ton forging press in this 31:12 31 minutes, 12 seconds quarter. Uh so I would like to understand what for which components which segment are we installing that and 31:19 31 minutes, 19 seconds uh basically what new programs are in place or or new orders will start for us incrementally in FI27 31:27 31 minutes, 27 seconds uh for and for good segments. Yeah, that's it. 31:32 31 minutes, 32 seconds So we have already started ramping up on some of the industrial uh uh businesses on this line and this will contribute on 31:40 31 minutes, 40 seconds the industrial as well as on the CV side and uh we've started ramping up from our 8,000 ton press line and uh uh we expect 31:49 31 minutes, 49 seconds to reach peak capacity utilization on 8,000 ton uh very soon and that is the reason this 10,000 ton press line was 31:55 31 minutes, 55 seconds planned. So the incremental volumes on the industrial side as well as on the CV side that we are looking from uh some of 32:04 32 minutes, 4 seconds our customers on the domestic business will clearly come out of this press line. 32:14 32 minutes, 14 seconds Understood. Thank you. I'll come back in. 32:18 32 minutes, 18 seconds Thank you. The next question is from the line of Nitan Agarwal from GM Financial. Please go ahead. 32:25 32 minutes, 25 seconds Yeah. Thanks for the opportunity and congratulation of great set of number. I just wanted to have your thoughts about the recent uh deal with the US uh some of the components for under 232 section. 32:37 32 minutes, 37 seconds So where are we what kind of a duty uh you know uh are we expecting on our products exported to the US market? I know uh lot of clarity is required what 32:47 32 minutes, 47 seconds is but wanted to know yourself will it be zero under 232 section or 18% uh kind 32:53 32 minutes, 53 seconds of a duty so uh it is still not clear see in most 33:01 33 minutes, 1 second of the cases uh the duty is paid by our customer so we have not kept it in our scope and it also depends how they are 33:09 33 minutes, 9 seconds uh importing it and how they are getting it cleared you know prior to this situation because they cannot change that uh terms 33:17 33 minutes, 17 seconds if they are importing under certain clause. So different customers are importing and you know getting it cleared in a different manner. So it's 33:26 33 minutes, 26 seconds very difficult to say yes there are definitely ways and means to get it cleared in an 18% as well but we are 33:33 33 minutes, 33 seconds aware that you know uh uh not many are doing that right now. 33:39 33 minutes, 39 seconds So we we still have to see that uh you know how there will be more clarity coming in on this I think you know in 33:46 33 minutes, 46 seconds next 1 month's time but it's not in our okay so uh just one more question uh on 33:52 33 minutes, 52 seconds that as well uh so if uh we are coming to 18% of duty do we get an competitive advantage to uh you know uh companies 34:01 34 minutes, 1 second which are based out of China so do we get additional business from us any sense on that 34:08 34 minutes, 8 seconds uh You are right India will be at a advantageous position you know if you compare it with China as well as Brazil because a lot of 34:17 34 minutes, 17 seconds uh uh forge and machine components of this size are actually coming out of Brazil in the US markets. Brazil today 34:23 34 minutes, 23 seconds is at 50% and so is China. So India uh will get the benefit of this and on one 34:31 34 minutes, 31 seconds of the industrial projects uh which the supply chain is in China. So we will be seeing you know business uh increasing in this part. 34:42 34 minutes, 42 seconds Okay. Okay. That's really helpful. That's it from my side. Thank you. 34:47 34 minutes, 47 seconds Thank you. Participants who wish to ask a question may press star and one on the touchstone telephone. The next question 34:55 34 minutes, 55 seconds is from the line of Anik Matre from Mutila Los Securities. Please go ahead. 35:02 35 minutes, 2 seconds Hi sir, good morning. Uh thank you for the opportunity. Uh just quickly on the uh you had indicated incremental order 35:09 35 minutes, 9 seconds of 8 billion. Uh by when do you expect to reach this number? So good morning. 35:18 35 minutes, 18 seconds almost uh uh 80% of the business 80 85% of the business uh is to be delivered in the next two years and accordingly uh 35:27 35 minutes, 27 seconds the the ramp up and capacities are planned for those businesses and regarding the higher horsepower which is 35:34 35 minutes, 34 seconds around 180 crores out of this 800 crores which will come some bit of it will come in 28 and balance will go in 21 35:43 35 minutes, 43 seconds and last you can see around 620 crores of the business is across Ross the other range of sectors uh which will be 35:50 35 minutes, 50 seconds delivered which will start ramping up and start uh you know executing these uh numbers uh in next uh uh you know 18 to 20 months. 36:02 36 minutes, 2 seconds So by FI28 we should expect 80 85% of this 8 billion uh to be executed. 36:09 36 minutes, 9 seconds Yes. 36:11 36 minutes, 11 seconds Understood. Got it. The other question I had sir was on your again uh from a uh margins perspective uh basically uh you 36:19 36 minutes, 19 seconds had indicated that for Q2 or FI27 exports will start ramping up right uh and uh I mean as a general thumb rule we 36:27 36 minutes, 27 seconds understand exports will be higher margin. So is it fair to assume that margins can continue to gradually inch up as our mix improves uh in the coming years. 36:37 36 minutes, 37 seconds So Anikit as we are already at a very strong range of numbers uh definitely some improvements will 36:44 36 minutes, 44 seconds come so we can say that you know we we'll be rangebound 28 to 32%. And also 36:52 36 minutes, 52 seconds on the realization bit and uh you know as we'll be start exporting yes some improvements will happen over there as well. Scrap prices also we are seeing 36:59 36 minutes, 59 seconds improvement which will also drive uh uh you know some improvements over there. 37:04 37 minutes, 4 seconds And thirdly, you know, with regard to the solar project which is coming up, we expect uh you know uh uh uh that to also 37:12 37 minutes, 12 seconds improve our power cost uh starting from third quarter uh because it'll roughly generate around power almost 25 to 30 W per. 37:24 37 minutes, 24 seconds So the solar project itself I guess uh should be about a 50 base point if I'm understood. 37:33 37 minutes, 33 seconds An can you repeat? You were not clear. 37:36 37 minutes, 36 seconds No sorry I I was asking about the solar project. What kind of benefit can we expect from the uh in terms of a margin once it's fully operational? 37:44 37 minutes, 44 seconds So we expect to reduce our power cost by 25 to 30 crores perom. 37:52 37 minutes, 52 seconds So which is a substantial cost reduction that we'll be seeing on our power bill on an annualized basis. 38:01 38 minutes, 1 second Understood. And how much steel prices uh I mean we are hearing steel prices are again inching up. Uh are we seeing though that uh in our uh grade of steel that we use for our uh ram as well. 38:13 38 minutes, 13 seconds So the alloy steel market uh uh actually uh uh the settlement happens with a lag and sometimes the settlement happens 38:21 38 minutes, 21 seconds with a retrospective date. So large OEMs like Tata Motors actually decide on this alloy steel pricing. It is not like the 38:29 38 minutes, 29 seconds daily price movement that happened on the daily price movement levels on the ingots and also on the TMD rates. It is already clear on the charts that the ste 38:37 38 minutes, 37 seconds prices have started moving up also on the scrap prices. So we can say that yes the the the settlement that will happen 38:46 38 minutes, 46 seconds will also drive the loy steel prices but as of now it is not settled. So when the settlement happens it could be 38:54 38 minutes, 54 seconds retrospective that happens from 1st of Jan but uh yes definitely the it looks like that the cycle is now started even 39:03 39 minutes, 3 seconds on the commodity side which will probably uh you know be there for next 12 to 15 months 39:10 39 minutes, 10 seconds and and uh so what is the kind of increase we are seeing for our grade of products first? 39:18 39 minutes, 18 seconds So it is still not settled. It could be in a range of 3 to four rupees a kg. But it all depends on the primary steel 39:26 39 minutes, 26 seconds producers and data motors to settle it because once it is settled it is settled for at least one or two quarters because the changes will not happen in between 39:35 39 minutes, 35 seconds but roughly you can say three to four is expected to go up that can happen from 1st of April or some bit of it can pass on from 1st of Jan that's not clear. 39:46 39 minutes, 46 seconds Understood. Just my final question on exports. Uh uh I understand uh about just correct me if I'm wrong about 50% 39:53 39 minutes, 53 seconds of our exports mix comes from CVS right and roughly just about 1% from uh farm equipment. Uh could you help us understand what is the mix for 40:01 40 minutes, 1 second industrial exports and OV exports and TV exports? Sorry. Yeah. 40:23 40 minutes, 23 seconds uh if I'll combine direct and indirect uh so 3% is off highway exports 8% is 40:30 40 minutes, 30 seconds industrial exports and 4% is farm equipment exports 40:38 40 minutes, 38 seconds and CV is around 10 to 12%. 40:47 40 minutes, 47 seconds How should the passenger vehicles? 40:51 40 minutes, 51 seconds Passenger right now is very small. We have just started uh from December onwards. It is just 1% right now. So we 40:58 40 minutes, 58 seconds expect this percentage to improve going forward. 41:03 41 minutes, 3 seconds Got it. That's it from my side. Thank you and all the very best. Thank you. 41:09 41 minutes, 9 seconds Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Vijay Pande from Dwama. Please go ahead. 41:21 41 minutes, 21 seconds Hi sir, thank you for taking my question and congratulations for a good set of numbers. 41:27 41 minutes, 27 seconds Uh couple of questions I just wanted to understand if you can uh tell us uh that 41:33 41 minutes, 33 seconds order pipeline of 800 crores. So what would be the bifocation in terms of industrial 41:41 41 minutes, 41 seconds commercial vehicle or highway and passenger vehicle? 41:50 41 minutes, 50 seconds Yes, just give me a minute. 42:10 42 minutes, 10 seconds So it is roughly around 24% coming from passenger vehicle, 27% coming from 42:16 42 minutes, 16 seconds commercial vehicle, 44% from industrial and 4% from farm equipment. 42:24 42 minutes, 24 seconds Okay. Uh okay. Uh secondly, so the recent uh recently the Walpu India 42:32 42 minutes, 32 seconds conference call on the earnings release they have increased the guidance for calendar year 26. 42:40 42 minutes, 40 seconds So just wanted to understand small trucks. I just want to understand how do you see the outlook? So are you seeing 42:49 42 minutes, 49 seconds some improvement in Europe and US market on the CV side 42:57 42 minutes, 57 seconds because some of the agents are increasing their guidance uh especially for Europe 43:07 43 minutes, 7 seconds on the guidance side uh you know when we have reviewed there's a slight improvement but they are showing 43:18 43 minutes, 18 seconds Okay. You see your heavy duty we are seeing close to 10%. 43:24 43 minutes, 24 seconds 10,000 units change percentage and any improvement on the north 43:34 43 minutes, 34 seconds roughly around 10,000 yes roughly around 5% uh uh forecast increase is there for uh Europe for CV for next year for this 43:44 43 minutes, 44 seconds year sorry this calendar year so are we seeing that in har orders also 43:51 43 minutes, 51 seconds or how sales also Like see sir uh there we maintain minmax levels for European OEMs 44:00 44 minutes and uh we still have to see that movements coming in because there will be inventory which you know which we are 44:09 44 minutes, 9 seconds kind of reducing because of last year once we see that uptick we'll be see but right now uh on the CV side till uh the 44:18 44 minutes, 18 seconds numbers that we have till June uh uh with us reflects Slight improvement but not much of an improvement we are seeing 44:25 44 minutes, 25 seconds over there but definitely yes over last year we see some improvement on those numbers as well 44:34 44 minutes, 34 seconds on the off highway side we are seeing on off high five highway side and industrial side we are seeing some improvements uh you know we have the 44:42 44 minutes, 42 seconds forecast for the entire year which definitely shows a better number 44:49 44 minutes, 49 seconds thank you uh that's pretty helpful uh So the uh the new KEX uh so that plant uh that will become operational in FI28. 45:01 45 minutes, 1 second So what will be the forging and machining capacity for that? 45:10 45 minutes, 10 seconds Yes. 45:12 45 minutes, 12 seconds So forging capacity will improve from 150,000 tons to 180,000 tons. So roughly 45:19 45 minutes, 19 seconds increment of 30,000 tons in terms of uh the forging capacity and in phase one as 45:26 45 minutes, 26 seconds uh there are two large machining lines planned. So FI28 there is first machining line will come which will add 45:34 45 minutes, 34 seconds additional 5,000 tons of machining capacity and FI 29 there is another machining capacity which is planned. So roughly 10,000 tons of machining 45:42 45 minutes, 42 seconds capacities will also increase by upper 28 and 29 combined or 10,000 each 45:51 45 minutes, 51 seconds a year. No, sorry. 5,000 tons each because these for the particularly for large high horsepower crankshaft, but we 45:58 45 minutes, 58 seconds also plan to sell semi-achined products or other machine products which are not in crankshaft applications especially on 46:05 46 minutes, 5 seconds the wind side which are in discussions and relatively the capex for those programs will not be uh same will be 46:13 46 minutes, 13 seconds much lesser the machining capex will be you know coming at lesser price. 46:18 46 minutes, 18 seconds Sure. Thank you. Thank you. Uh all the best for upcoming courses. Thank you. 46:26 46 minutes, 26 seconds Thank you. Participants who wish to ask a question may press start and one. The next question is from the line of MLS Sha from Phantomat Financial Services. 46:38 46 minutes, 38 seconds Please go ahead. 46:40 46 minutes, 40 seconds Yes sir. Thank you for the opportunity and congratulations for a very strong performance particularly record high 46:48 46 minutes, 48 seconds margins in this tough business environment. 46:51 46 minutes, 51 seconds Sir I have uh two questions. First one is on US side considering the of course 46:57 46 minutes, 57 seconds it's too early but in last few days this revised duty structure are you getting 47:04 47 minutes, 4 seconds any uh sense or any initial discussion with a very high level of inquiries or very strong traction. 47:15 47 minutes, 15 seconds Uh so ML a lot of uh uh you know the inquiry flow was already there but yes the decision- making was not happening 47:23 47 minutes, 23 seconds the last 6 8 months everything was stuck particularly on the farm side where they are seeing relative weakness and the 47:30 47 minutes, 30 seconds idea was uh to cut cost for the North American OEMs. So over there we have started our discussions and again on the 47:38 47 minutes, 38 seconds PV side for our existing customer base uh uh where we already have programs we are in discussions for southern and 47:45 47 minutes, 45 seconds other activities also. So definitely interactions have started uh now and we are hopeful that the conversion of business will also happen in this year 47:54 47 minutes, 54 seconds could be much faster and assuming that uh latest revised duty 48:01 48 minutes, 1 second structure remains there and considering all our peers are sizable in terms of 48:08 48 minutes, 8 seconds the US contribution where do you see our US revenue two or three years down the line as a percentage of overall business. 48:23 48 minutes, 23 seconds So ML uh uh on uh so right now we are around 7 to 8% on direct and indirect 48:30 48 minutes, 30 seconds business to us. This will definitely uh you know inch up to 15 to 16% going forward 48:38 48 minutes, 38 seconds and uh uh the meaningful increase will come from PV uh and uh PV programs that we already 48:46 48 minutes, 46 seconds have uh and for which we are plan to ramp up very soon and also on the industrial side which will come at a medium-term basis. 48:55 48 minutes, 55 seconds Yeah. What's sir? Actually the CV cycle seems to be bottoming out in globally now after almost one and a half two years slowdown. So don't you think CV 49:04 49 minutes, 4 seconds would be bigger trigger compared to FBS or farm? So these are completely based on the new project bins 49:13 49 minutes, 13 seconds and the new orders which we have and uh uh on the CV side we we don't have much of a business in North America right now 49:22 49 minutes, 22 seconds and uh uh we still have to see but right now on the CV side there are excess inventories which are in place. So the 49:30 49 minutes, 30 seconds the flow of uh new businesses on the CV side is very less post this correction probably we'll have 49:38 49 minutes, 38 seconds to see because uh definitely there'll be shift from China and uh we can see more opportunity on the CV side as well. 49:48 49 minutes, 48 seconds So lastly one clarification on this uh solar project as you said next year Q3 it will become operational. 49:55 49 minutes, 55 seconds So when can we expect fully operational that 2530C cr benefit on annualized basis? Would that be from Q3 Q4 next year or it will take another year or so? 50:08 50 minutes, 8 seconds No once the facility is started uh methology we can reach the idle generation levels within 10 15 days just 50:15 50 minutes, 15 seconds that October to February or you know mid Jan period is a winter period in uh in 50:23 50 minutes, 23 seconds North India where generation is relatively lesser but yes you can see that uh we can start producing peak 50:31 50 minutes, 31 seconds units from midFebruary onwards on the plant and it'll kind of peak out you know because summer months will 50:38 50 minutes, 38 seconds definitely have uh higher units but yes honor and the plant once the plant is operational then within 10 15 days you can reach up to the optimum generation 50:46 50 minutes, 46 seconds capacity yes sir and this and this is the entire is for captive use 50:53 50 minutes, 53 seconds yeah and related to that in fi 28 or 29 this solar would be how much portion of the overall contribution of power 51:00 51 minutes requirement fi 28 because fi 28 we expect the entire 51:08 51 minutes, 8 seconds uh utilization for this uh to come. And uh 51:24 51 minutes, 24 seconds hello. Hello. 52:00 52 minutes Hello. 52:28 52 minutes, 28 seconds Hello. Hello. 1:05:14 1 hour, 5 minutes, 14 seconds Hello. Hello. 1:05:29 1 hour, 5 minutes, 29 seconds Management, I'm audible. Uh, yes, Mark. 1:05:34 1 hour, 5 minutes, 34 seconds Uh, so sorry for the inconvenience caused. 1:05:37 1 hour, 5 minutes, 37 seconds Hello Mark. What happened? 1:05:40 1 hour, 5 minutes, 40 seconds Uh the team is looking into it ma'am. Uh so they will give you a clear response on what exactly happened. What I'll do is uh I'll just wait for a couple of 1:05:49 1 hour, 5 minutes, 49 seconds minutes. The participants are yet joining into this call. 1:05:53 1 hour, 5 minutes, 53 seconds Okay. Uh so Vikas should we like just give closing remark and say that there was some technical issue and we can take questions offline. 1:06:02 1 hour, 6 minutes, 2 seconds Yes, I think uh that's what we will do. 1:06:04 1 hour, 6 minutes, 4 seconds It's already 11. I think most of the participants have already left. So let's announce uh uh for the closure and request to send 1:06:12 1 hour, 6 minutes, 12 seconds closing remark and close it. I think we'll reach out separately to people then. Yes sir. Yes. 1:06:18 1 hour, 6 minutes, 18 seconds So what I'll just give the hand over to you sir and then you can just give your closing remark. So Mr. Ashish. Yes. Yes. Yes. Okay. 1:06:27 1 hour, 6 minutes, 27 seconds As there are no more further questions from the participants. I now hand the conference over to sir Ashish G for the closing comments. 1:06:37 1 hour, 6 minutes, 37 seconds Uh thank you and uh sorry participant for the technical issues. Uh to conclude our requirements through quarter 3 and 9 1:06:44 1 hour, 6 minutes, 44 seconds months of FI26 reinforces the strength of our core fundamentals and our growth strategy in a dynamic landscape. Our focus remains 1:06:52 1 hour, 6 minutes, 52 seconds on leveraging advanced engineering capabilities and operating scale to deliver consistent outcomes. Looking ahead, continued investments in capacity 1:07:00 1 hour, 7 minutes and deeper customer integration will drive sustained long-term value creation. We thank you for the continued trust in Happy Foring Limited. It's a 1:07:08 1 hour, 7 minutes, 8 seconds privilege to have you to join us for an insightful discussion. We believe to have addressed your query satisfaction. 1:07:15 1 hour, 7 minutes, 15 seconds However, we welcome any further engagement through an IR team. Should you have any follow-up questions, please reach out to SGA, our investor relation 1:07:24 1 hour, 7 minutes, 24 seconds partners. Thank you for joining us today. 1:07:27 1 hour, 7 minutes, 27 seconds Thank you. On behalf of Happy Forgings Limited, that concludes this conference. 1:07:31 1 hour, 7 minutes, 31 seconds Thank you for joining us. You may now disconnect your lines.