Sundram Fasteners Limited — Q4 FY26

Sundram Fasteners Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Gryp8jnnn_4 Published: 8 days ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to Sundaram Pasina FQ FI26 post 0:08 8 seconds results call hosted by Aend Spark. As a reminder, all participant lines will be in the listen only mode and there will 0:16 16 seconds be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please 0:24 24 seconds signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being 0:32 32 seconds recorded. Anna conference sir Ram s from Aendes Park. Thank you and over to you sir. 0:41 41 seconds Thank you Iikra. Good morning everyone. 0:43 43 seconds Ramir from Aendes Park. uh appreciate everybody logging in into this 4Q earnings call of Sunundes 0:50 50 seconds from uh the management team uh you know we pleased to host Mr. Bilip Kumar CFO Mr. Batutan executive vice president 0:58 58 seconds marketing and Mr. Ganesh vice president finance and projects I now hand the call over to Mr. Bilipkumar CFO for his 1:06 1 minute, 6 seconds opening remarks post which we'll begin the Q&A over to you Bip G. 1:12 1 minute, 12 seconds Yeah, thank you Ram and good morning and welcome to our discussion on the annual results of fastness for the year ended 31st March uh 2026. 1:24 1 minute, 24 seconds From uh the year end perspective uh we've recorded uh 7% plus growth moving 1:31 1 minute, 31 seconds from 5,231 crores to 5,612 crores. The uh raw metal prices have been uh fairly 1:40 1 minute, 40 seconds stable for us though we experienced uh inflation in nickel aluminium in uh 1:48 1 minute, 48 seconds especially after the west Asia conflict uh started. 1:52 1 minute, 52 seconds The all other cost the conversion costs I will get into bit of details but have been fairly stable. 2:00 2 minutes The depreation has been in line with our uh capitalization and profit uh before exceptional items 2:09 2 minutes, 9 seconds has grown from 668 crores to 749 which is a 12% uh growth 2:16 2 minutes, 16 seconds and we benefited from a bit of operating leverage. 2:22 2 minutes, 22 seconds uh the two overseas subsidies the UK and China especially China has done very well despite uh difficult market 2:30 2 minutes, 30 seconds conditions there the construction segment has recovered and the valuation exercise was positive 2:37 2 minutes, 37 seconds for us and in the earlier years in line the accounting standards we had made an impairment provision which uh we have 2:45 2 minutes, 45 seconds reversed now completely which uh which is an exceptional item as most of companies did in Q3. Uh we had made a 2:54 2 minutes, 54 seconds provision under the new labor code for gratitude liability for the past service which was about 11 crores. Uh net of 3:02 3 minutes, 2 seconds that after making these adjustments profit before tax increased from 680 to 167. 3:10 3 minutes, 10 seconds The tax provisions have been in line with the effective tax rate has been line with the uh earlier years and 3:17 3 minutes, 17 seconds slightly lower depo tax provision because of uh the gratuty liability 3:24 3 minutes, 24 seconds and uh after the adjustments for the actual valuation and uh MTM provisions 3:32 3 minutes, 32 seconds for some of the investments as you know the stock market uh had a fall and and some of The investments which we had 3:41 3 minutes, 41 seconds made. The market capitalization became lower and uh the profit uh after tax was 3:49 3 minutes, 49 seconds 580 crores which is the highest in the history of the company and uh after adjustments for MTM uh we reported 576 3:58 3 minutes, 58 seconds crores compared to 57 crores. 4:03 4 minutes, 3 seconds Now coming specifically to the quarter uh and as well as the annual performance 4:10 4 minutes, 10 seconds the OE segment has been very strong for us. Retail especially compared to the 4:16 4 minutes, 16 seconds corresponding quarter has recorded uh close to 20% increase. 4:22 4 minutes, 22 seconds the exports uh moderated uh because despite the rupee depreciation in dollar 4:29 4 minutes, 29 seconds terms uh it moderated but in Q4 I'm happy to report that we entered into the 4:37 4 minutes, 37 seconds positive territory and uh we had growth compared to the previous I mean corresponding quarters both in dollar 4:45 4 minutes, 45 seconds terms uh as well as in rupee terms because rupee weakened by 4%. 4:51 4 minutes, 51 seconds And uh in terms of growth trajectory as far as exports is concerned I think we are back to uh FI25 5:00 5 minutes and uh in line with our budgets last year was more oneoff uh because of the 5:07 5 minutes, 7 seconds tariff which again uh is easing up a bit with customers having reimbured major 5:15 5 minutes, 15 seconds portion of the tariff. Also as you know the reciprocal of duty is down to 10%. 5:23 5 minutes, 23 seconds But I must tell you that uh under the trade expansion act for critical materials such as aluminium and steel uh the cat. 5:34 5 minutes, 34 seconds We also benefited from uh rupee weakness uh this quarter. We have taken the 5:41 5 minutes, 41 seconds benefit of exchange gains in the quarter and the company reported,529 crores including other income which 5:49 5 minutes, 49 seconds again crossed 1,500 crores uh for the first time and uh the uh contribution 5:57 5 minutes, 57 seconds which is the difference between the revenues and uh the variable expenses have expanded by about 150 basis points. 6:07 6 minutes, 7 seconds uh mainly because raw metal prices have been stable and some of the one-time expenditure which we had in Q4 of last 6:15 6 minutes, 15 seconds financial year uh were not there this year and subcontract expenses has always been a function of product mix uh which 6:23 6 minutes, 23 seconds has come out favorably this quarter. the power and fuel thanks to company's investments and judicious procurement 6:32 6 minutes, 32 seconds from power exchange where the clearing prices were lower and uh the investments in harbor has helped us to re in the 6:39 6 minutes, 39 seconds cost and I believe we have managed the tariff well I said uh we've got a fair share of 6:47 6 minutes, 47 seconds reimbursement uh from the customers the fixed costs have remained stable and the 6:55 6 minutes, 55 seconds aid uh for the quarter was 260 crores at 17% compared to 15.6% 6% uh in the 7:03 7 minutes, 3 seconds corresponding quarter and the after the exception items before the exception items we crossed uh PBT of 7:12 7 minutes, 12 seconds 200 crores uh for the first time and after the exceptions it's 231 crores PBT 7:19 7 minutes, 19 seconds and after tax 180 crores uh for the entire year and uh our subsidies uh have also 7:28 7 minutes, 28 seconds performed reasonably well both uh the previous rupathas. Now we are again at a strong year terms of profitability 7:38 7 minutes, 38 seconds and uh like I mentioned uh China has done well for us which helped in the valuation of investments and reverse of 7:45 7 minutes, 45 seconds investment impairment. The UK subsidy uh the markets moderated a bit in the uh 7:54 7 minutes, 54 seconds price sensitive intraensitive commercial vehicles market in the UK. 8:00 8 minutes We expect interest rates to be cut this year and things to improve uh in the UK also. 8:09 8 minutes, 9 seconds And overall I think my marketing colleague will explain I think the outlook looks uh very strong. We have started April well and uh I will pause here. We happy to take the questions. 8:20 8 minutes, 20 seconds Thank you. 8:23 8 minutes, 23 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 8:31 8 minutes, 31 seconds star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you 8:37 8 minutes, 37 seconds may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will 8:46 8 minutes, 46 seconds wait for a moment while the question cue assembles. 8:56 8 minutes, 56 seconds The first question is from the line of Sukrit D. Patel from ISAT in Private Limited. Please go ahead. Uh good morning to the team. I have two questions. My first question to Mr. 9:07 9 minutes, 7 seconds Bakan is uh just want to understand how are you uh going to position Sundaram partners to capture evolving demand in 9:14 9 minutes, 14 seconds automotive components and global manufacturing while maintain while mitigating risks from electrification supply chain disruptions and competitive 9:24 9 minutes, 24 seconds pressures and what strategic levers will differentiate the company from its peers in the coming quarters that's my first question and that's my second question 9:32 9 minutes, 32 seconds thank you very much good Morning. See as you are aware 9:39 9 minutes, 39 seconds Sundum passenas in all its uh various uh verticals uh the six verticals main 9:46 9 minutes, 46 seconds verticals that we have are uh certainly uh leaders in the preferred choice and the as far as the IC segment is 9:53 9 minutes, 53 seconds concerned and during the past five six years we've also backed quite a lot of orders on the EV segment uh more in the 10:00 10 minutes export uh uh where there was seem to be some traction in the past but now that has receded a bit. There's a push back 10:08 10 minutes, 8 seconds and the export segment in the export segment the EVs are getting a bit postponed and the demand is also downsized. That notwithstanding because 10:16 10 minutes, 16 seconds of our leadership in the uh IC segment I think uh we are back to the normal uh near normal condition as 10:25 10 minutes, 25 seconds far as the export segment is concerned and uh as far as our exports is concerned again our exposure is also towards the high uh heavy engines of the 10:34 10 minutes, 34 seconds high horsepower ranges wherein uh those continue to be IC and there's not going to be any immediate threat on electric 10:42 10 minutes, 42 seconds uh electrification in those segments like car generation or marine or other segments. As far as the domestic market is concerned, as you know, we are 10:50 10 minutes, 50 seconds leaders in the domestic segment and domestic segment is a progressive growth on the EV not much of a uh this thing. 10:57 10 minutes, 57 seconds Not with that notwithstanding, they've also backed quite a few orders on the EV segment as well with major OEMs in 11:04 11 minutes, 4 seconds India. So that said, I think uh the threat from electrification is not going to impact us and we are well placed to 11:11 11 minutes, 11 seconds handle that. And as far as the strategic levers are concerned, I think we are a deming company number one. Number two, 11:18 11 minutes, 18 seconds our focus towards uh quality and the uh brand equity is keeping us in goodstead and we are certainly the uh to go choice 11:27 11 minutes, 27 seconds for all the customers, first choice for all the customers in many of the product developments. That's why our order books are full today. Uh and also we are 11:35 11 minutes, 35 seconds receiving quite a few new orders and our development teams are busy doing that. 11:41 11 minutes, 41 seconds Thank you. My second question to Mr. uh Jill Kumar is uh with revenue growth supported by exports and domestic OEM 11:48 11 minutes, 48 seconds demand, how is capital allocation being prioritized between capacity expansion, technology investments and shareholder 11:57 11 minutes, 57 seconds return and what structural cost efficiencies are being implemented to protect the margins amid uh you know rising raw material and energy cost. 12:07 12 minutes, 7 seconds Thank you. 12:11 12 minutes, 11 seconds we on uh the uh shareholder return as a policy we've been distributing 30% of 12:17 12 minutes, 17 seconds the profit after tax consistently. So that is the uh shareholder from return perspective 12:26 12 minutes, 26 seconds from uh cost efficiency uh the the raw metal prices have been 12:33 12 minutes, 33 seconds stable and if there are increases either way or or uh if there is a reduction we 12:40 12 minutes, 40 seconds have a contractual obligation to pass it through to the customers. So we either charge them or uh give them a credit 12:48 12 minutes, 48 seconds note. And uh in the after market we have the ability uh depend take into account competitive 12:56 12 minutes, 56 seconds pressures to calibrate the prices uh market prices and in the export segment 13:03 13 minutes, 3 seconds we are not under an obligation to make a pass through. So if uh market prices are benign uh we benefit from uh the lower 13:12 13 minutes, 12 seconds property prices and uh you don't pass it. As far as capital allocation is concerned uh Sudhrum has been investing not less than 300 crores year on year. 13:23 13 minutes, 23 seconds Typically 25 to 30% is for uh replacement. 13:28 13 minutes, 28 seconds The balance uh 70% would be driven by customer requirements uh across all our plants taking into 13:37 13 minutes, 37 seconds account the current operation efficiency uh we allocate capital for uh revenue growth purposes. 13:47 13 minutes, 47 seconds Thank you and best wishes. Thank you sir. 13:53 13 minutes, 53 seconds Thank you. Next question Sha from Burgle PMS. Please go ahead. 14:01 14 minutes, 1 second I am audible. Yeah, you are audible. 14:06 14 minutes, 6 seconds Uh sir, my question is on the non-auto side. You mentioned that you are entering into the railways and defense. 14:14 14 minutes, 14 seconds So in what product category are we entering into the regular and defense and what is the road map that you have 14:22 14 minutes, 22 seconds for the non-oper side of the business and also how is it different from the business which we are doing in terms of 14:30 14 minutes, 30 seconds cash flow profitability and uh working capital bases 14:38 14 minutes, 38 seconds on the non-auto side while uh we are uh strate strategically using uh wind 14:46 14 minutes, 46 seconds energy fasteners and aerospace fasteners. Apart from that, we have also looked at fasteners for railway 14:52 14 minutes, 52 seconds application which we have been uh knowizing through our uh retail partners 15:00 15 minutes and uh with the advent of uh our highspeed uh train and uh the the 15:06 15 minutes, 6 seconds quality requirement uh set out by the railway board and authorities. I think they are happy to work with the company 15:14 15 minutes, 14 seconds like Sundaram Fastner and there we see a large headroom for growth by direct participation and this calls for us uh 15:24 15 minutes, 24 seconds uh know getting qualified through the standard uh requirement mentioned by the railway team in terms of uh the know 15:33 15 minutes, 33 seconds standards whatever they have set out and uh in terms of order visibility while we 15:41 15 minutes, 41 seconds are participating ating in multiple tenders and I think the current hit rate I would say it's about 20% and we are 15:48 15 minutes, 48 seconds confident of uh taking up the hit rate and uh the visibility where we are doing roughly about two to uh 3 crores per 15:57 15 minutes, 57 seconds month and I think we see a visibility of it taking up to 100 crores that is on the railway side a difference I would 16:05 16 minutes, 5 seconds say with all the participation through startup programs I think it is still in the nent stage while we are working on 16:13 16 minutes, 13 seconds multiple platforms. But the the aerospace fastness is uh really taking off and we have also invested to grow 16:23 16 minutes, 23 seconds along with the customer like where we supply for either General Electric or the domestic players like uh Hindustan 16:31 16 minutes, 31 seconds aeronautics as well as Skyroot. Those are some of the key customers with whom we are working and wind energy fasteners where we have had expansion and now we 16:40 16 minutes, 40 seconds are in the next phase of expansion for the project to take it up from uh say 30 35 crore level to 50 cr per month level. 16:48 16 minutes, 48 seconds So these are the levers which we are working on the non-auto. Apart from that our aftermarket participation for industrial application 16:57 16 minutes, 57 seconds it is uh quite uh wide and large. So these are the headrooms on the non-auto side which we are working. 17:05 17 minutes, 5 seconds Just to add to what my colleague said uh see overall our non-auto exports is around 35% in in our product mix non- is 17:13 17 minutes, 13 seconds 35% including tractors and uh to add uh to your specific question on this uh defense. Uh currently we are in areas of 17:21 17 minutes, 21 seconds pumps and machined castings but we find a lot of scope for our other verticals as well. uh and we are uh working with 17:28 17 minutes, 28 seconds the defense agencies uh to uh proceed there as well. Okay. So just a follow up on this one. 17:36 17 minutes, 36 seconds So how would this be uh different from in terms of cash flow and let's say profitability versus the auto business 17:45 17 minutes, 45 seconds which we are doing and also uh since we it is 30% of our revenue and we are 17:52 17 minutes, 52 seconds planning it to take towards 50% of our revenue. So uh aerospace would be the major contributor or everyone would be equal contributor going ahead. 18:03 18 minutes, 3 seconds No, it'll be an equal participation from all the segments and uh with respect to 18:09 18 minutes, 9 seconds the profitability I think uh uh it's slightly know 100 to 200 basis points 18:17 18 minutes, 17 seconds above our automotive because we are working on participation in exports as well as domestics and uh the lead time 18:25 18 minutes, 25 seconds with respect to uh supplies and the working capital cycle is slightly shorter when we serve to the domestic 18:33 18 minutes, 33 seconds market. So thereby the cash flow and the profitability are at much better pace in the non-lo segment. 18:46 18 minutes, 46 seconds Okay. And uh since we were talking about uh export so we had 30% of our revenue 18:53 18 minutes, 53 seconds coming from export and you had mentioned in a call that we have plans to take it to 50%. 19:00 19 minutes So uh like any update on that and what steps have we taken towards that journey? 19:08 19 minutes, 8 seconds While that is an aspiration and in terms of uh the tariff related impact while 19:15 19 minutes, 15 seconds the exports did have a drop but the the new customer new program addition I 19:22 19 minutes, 22 seconds think we are seeing visibility for it to come back to its original level of 30 35% and from there on with our uh know 19:31 19 minutes, 31 seconds participation in other geographies and uh product range we should see better numbers 19:39 19 minutes, 39 seconds Okay. So now uh next question is uh that you have customers with whom you have 19:46 19 minutes, 46 seconds relationship of let's say 10 to 15 world and you mentioned that you are adding new customers. So my question is in 19:55 19 minutes, 55 seconds which segment are you adding these customers and how many have we added in the last four to five years? If possible could you name them? 20:05 20 minutes, 5 seconds See in terms of new customers while while we are onboarding some on the non-o especially on the consumer durable 20:14 20 minutes, 14 seconds like day and we are working with few others I would say even on the existing customer we drive more on cross-selling 20:22 20 minutes, 22 seconds where we have been supplying through supply chain partners we work with our OEMs and then try to get into their 20:30 20 minutes, 30 seconds direct supply chain I think those are the success stories which has helped in terms of growing the exports. See as 20:37 20 minutes, 37 seconds far as the uh areas uh what you're asking is concerned in our fasteners uh machined castings gears as well as 20:45 20 minutes, 45 seconds centered parts we are engaging with new customers uh in different geographies uh not only North America where currently 20:52 20 minutes, 52 seconds we have quite a good base but we are also looking at European customers and we have seen some uh business come to 21:00 21 minutes fruition and we are expecting some to come uh in the near future as well. 21:07 21 minutes, 7 seconds Okay. So my uh last question is uh how often do our parts get replaced in a 21:15 21 minutes, 15 seconds vehicle because I wanted to understand whole aftermarket segment as it is a 21:21 21 minutes, 21 seconds higher margin and higher uh let's say um ratio higher profitability ratio for a 21:30 21 minutes, 30 seconds for aftermarket segment. So how often do the parts get replaced? 21:39 21 minutes, 39 seconds It depends on the functionality of the part. Uh whereas uh if you take uh for example the pumps that we supply to the 21:47 21 minutes, 47 seconds market, water pumps and oil pumps. uh oil pump is almost a fit and forget part whereas the water pumps get replaced uh 21:54 21 minutes, 54 seconds maybe once in two two and a half years in a truck and once in four years in a car and uh once in two years in a 22:02 22 minutes, 2 seconds tractor. So depending on the usage and the ruggedness of the atmosphere so it affects the uh replacement that's how 22:09 22 minutes, 9 seconds pumps get replaced. Similarly fasteners also have a periodicity of uh somewhere around uh 2 to 3 years depending on the 22:17 22 minutes, 17 seconds function. If it is an engineer or a chassis passenger. So depending on that there are various cycles on which they get replaced. 22:25 22 minutes, 25 seconds Okay. Thank you so much. I'll get that in the queue. Thank you. 22:31 22 minutes, 31 seconds Thank you. Next question is from the line of Priani from Incred in Incred. Please go ahead. 22:41 22 minutes, 41 seconds Thank you for the thank you for the opportunity sir and congratulations for good set of number. Uh sir I would like to know about this I would like to know 22:48 22 minutes, 48 seconds about the segment mix and segment wise growth which we have achieved achieved in XY 26 and also what kind of growth we 22:56 22 minutes, 56 seconds aspire in coming two years and what would be the growth driver for the city and if there is any order book for the city. Thank you. 23:04 23 minutes, 4 seconds Yeah I I think I will address the revenue mix. I think the we are leaders in fasteners. So fasteners continue to 23:14 23 minutes, 14 seconds be in the range of 40 to 42% of our overall revenue. Followed by pumps and assemblies, caps and machined assemblies 23:22 23 minutes, 22 seconds which is in the range of 25 to 27 and followed by cold extruded and center metal components of around 15%. and hot 23:32 23 minutes, 32 seconds and machine components constute 12% and balance from other business segments like radiator caps and others. So this 23:41 23 minutes, 41 seconds is on the segment wise mix of revenue which we have witnessed in 2526 23:47 23 minutes, 47 seconds and with respect to growth while uh know for the current year in our CFO mentioned that we are at 7% I think our 23:56 23 minutes, 56 seconds aim is to have a double digit growth in the coming uh two years. So that is what we are working on. 24:07 24 minutes, 7 seconds So what what would be segment wise or industry wise order which you ask if you can mention about non-auto 24:14 24 minutes, 14 seconds TV while while while we have growth coming in from both 24:21 24 minutes, 21 seconds automotive driven by the know various segments in which we participate and uh 24:28 24 minutes, 28 seconds the drive on non-auto I think the the fair share of the mix would be in the same uh know range with absolute amount growing in each of the segment. 24:39 24 minutes, 39 seconds If you look at if you look at the uh somewhere around 13 to 20% growth 24:49 24 minutes, 49 seconds between these segments 13% in the OE 15 in the retail and 20 in the export amounting to about 15% growth overall. 24:56 24 minutes, 56 seconds Uh that's how we look at these segments. 25:00 25 minutes Thank you sir. And if you could uh break up industry-wise growth for F5 real estates like what kind of growth we had we had in passenger vehicles what kind 25:08 25 minutes, 8 seconds of growth we had in commercial or non-utora industrial personal etc. 25:17 25 minutes, 17 seconds No, I think in each of the segment we surpassed the industry add some number. 25:27 25 minutes, 27 seconds Yeah. 25:32 25 minutes, 32 seconds Please share your email ID. We'll give you the information. 25:38 25 minutes, 38 seconds Sure. I will uh and another would be on the Hello. 25:45 25 minutes, 45 seconds Yeah, please go ahead. Yeah, another would be on the same industry wise growth drivers which we have like what kind of new products which we are having 25:54 25 minutes, 54 seconds in passenger segment what kind of new segment we are having in uh commercial segment and uh outlook on vin shop you 26:02 26 minutes, 2 seconds mentioned in two points back that we have an order book how it is it how it is ramping up let me let me answer you see last year I 26:10 26 minutes, 10 seconds think we had about a uh 7% growth in the 25 the industry growth was 7% in the 26 for the commercial vehicle segment and 26:19 26 minutes, 19 seconds uh 5 to 7% somewhere around 6% on the passenger vehicle segment and 22% on the tractor uh growth. This was the broad growth of the industry and as Ganesh Mr. 26:30 26 minutes, 30 seconds Ganesh said we surpassed the uh industry growth in all these segments last year 26:36 26 minutes, 36 seconds and this year while uh due to various geopolitical constraints the uh market 26:43 26 minutes, 43 seconds analysts and others have uh pegged the growth of the commercial vehicle segment and the passenger vehicle segment at 4 to 6%. And the tractor segment has flat 26:53 26 minutes, 53 seconds to 2%. We are looking at a growth of at least uh 3 to four percentage points more than the industry segments. We'll 27:00 27 minutes be uh outperforming the industry uh by minimum 2 to 3% in all the segments. 27:05 27 minutes, 5 seconds Percentage points I mean not person percentage points. So that's how we look at the industry and uh we are looking at 8% growth in the commercial vehicle 27:13 27 minutes, 13 seconds segment and 10% in the passenger vehicle segment and probably 6 to 7% in the tractor segment. That's how we look at the industry this year going forward. 27:22 27 minutes, 22 seconds And what would be the growth driver? 27:26 27 minutes, 26 seconds Basic demand is one growth driver. Then uh the new customers that we acquire is the second uh and the third is our uh 27:36 27 minutes, 36 seconds for the past 3 four years in the passenger car segment. there has been a L on the small car side uh where our 27:43 27 minutes, 43 seconds participation was traditionally higher and that has come back uh uh to after the last year's uh GST correction and 27:51 27 minutes, 51 seconds the uh income tax release that was given uh last year uh the small car segment has also come back uh with the bank. So 28:00 28 minutes in all these we have dicity and of course uh we are also having increased share for example with this geopolitical 28:09 28 minutes, 9 seconds uh problems coming before uh many small players are not able to sustain and supply to our customers. So there is we see some scopes of share increases also 28:18 28 minutes, 18 seconds there have been instances of share increase already but we are uh progressing on that as well. Uh thank you sir. It was very helpful. 28:27 28 minutes, 27 seconds And on the last side if you could mention how has our raw model basket has changed uh 28:33 28 minutes, 33 seconds with respect to Q3 Q3 of FY26 and was there any impact in our numbers in quarter 4 and what kind of impact you 28:41 28 minutes, 41 seconds see in next two quarters due to raw material inflation. 28:46 28 minutes, 46 seconds No, I think in the opening remark itself it was covered stating that in terms of 28:53 28 minutes, 53 seconds raw material we have been more or less uh stable and we have not seen any 29:00 29 minutes significant uh inflation and that is the outlook we have for the 29:07 29 minutes, 7 seconds coming quarter as well and wherever there are increases say either in aluminium, nickel or copper it is 29:15 29 minutes, 15 seconds progress had it is indexed and we have a pass through mechanism. 29:23 29 minutes, 23 seconds Thank you sir. Thank you. 29:29 29 minutes, 29 seconds Thank you. Before we take the next question, a reminder to all the participants if you wish to ask a question please press star N1. 29:39 29 minutes, 39 seconds Next question is from the line of Lakshmi Narayan from Tunga Investments. Please go ahead. 29:46 29 minutes, 46 seconds Yeah. Uh, thank you. I'm audible, right? 29:54 29 minutes, 54 seconds I'm sorry, sir. Can you please use your handset? Yeah. 30:01 30 minutes, 1 second Uh, we are not able to hear you sir. 30:06 30 minutes, 6 seconds We have lost the connection for the current participant. So we will take the next question which is from Shahil Changi from Wat Network Capital. Please go ahead. 30:17 30 minutes, 17 seconds Hey, good morning and congratulations for a really good set of improved numbers this quarter. Am I audible sir? 30:25 30 minutes, 25 seconds Yeah, you're audible sir. 30:27 30 minutes, 27 seconds Yes. Yes. So my first question is um um if you can give some understanding of how the export markets are looking um 30:36 30 minutes, 36 seconds major reasons for your uh better performance in the export market. I understand you have mentioned in the press release that classic trucks sh saw 30:44 30 minutes, 44 seconds good demand but um how how sustained momentum is this and what do you see for 30:51 30 minutes, 51 seconds the next two three quarters uh depending on the kind of production schedules you've received um if you can also break it down according to the CV and 30:59 30 minutes, 59 seconds passenger vehicle orders uh that would be helpful yeah uh [clears throat] see export uh 31:09 31 minutes, 9 seconds market last year. Last year was a bit of a big problem for us because the initially started with the tariff issues 31:16 31 minutes, 16 seconds and then the geopolitical crisis. Uh and uh as far as the North American market is concerned where the classic tricks 31:23 31 minutes, 23 seconds the bell weather of the economy were not doing well. Uh there was a lot of uh anxiety and lack of clarity on the uh 31:32 31 minutes, 32 seconds EPA 27 norms also that are to kick in in January 27. So on top of all this uh the decisions were getting the decision to 31:40 31 minutes, 40 seconds buy fleet was getting postponed and uh the demand was really low. Uh but with 31:47 31 minutes, 47 seconds the clarity emerging on the class A trucks uh first the latest final it is going to uh be enforced from 1st of 31:56 31 minutes, 56 seconds January 27. uh though there are some uh uh issues that the industry is negotiating with the uh environment 32:04 32 minutes, 4 seconds protection agency on the warranty aspects uh it is to kick in and with also a lot of uh uh turbulence getting 32:12 32 minutes, 12 seconds settled on the uh tariff side uh the the situation is now slowly limping back to 32:18 32 minutes, 18 seconds normal and with this EPA declaration we also see some mild pre uh by uh having 32:25 32 minutes, 25 seconds started so the classic uh segment is looking up now uh while the uh demand is 32:32 32 minutes, 32 seconds uh considerably higher. In fact, if you take the first quarter that is Jan from March, first quarter of the North American uh industry, Jan from March, 32:42 32 minutes, 42 seconds the class A truck preliminary orders were almost doubled that of the year ago period. uh while the retail segment has 32:49 32 minutes, 49 seconds still not picked up because there's always going to be a lag between the two and uh so this year uh the class A trucks are expected to perform at least uh 10 to 15% better than the last year. 33:00 33 minutes So that is one thing and which is uh helping us uh increase our demands and as far as other major customers are concerned um for example uh major 33:10 33 minutes, 10 seconds customer like Kmen uh has indicated a good growth in all the segments uh the uh we participate in the high horsepower segment the mid-range segment as well as 33:18 33 minutes, 18 seconds the heavy duty segments in all these segments uh in the high horsepower because of the data center requirements continuing to be uh good uh they are 33:26 33 minutes, 26 seconds projecting about a 25% growth and the heavy duty segment also So we are looking at upwards of 15% growth. Um and 33:34 33 minutes, 34 seconds on the mid-range segment where the initial uh guidance was flat uh now they 33:41 33 minutes, 41 seconds are looking at at least a 2 to 3% growth quarter over quarter. So that's how the uh basically the truck segment and the 33:50 33 minutes, 50 seconds power segment power generation segment is looking at and coming back to the other customers like General Motors and Stellantis. Yes, the EV platforms have 33:59 33 minutes, 59 seconds had a definite setback. So they have downsized their EV projections by 50%. 34:05 34 minutes, 5 seconds While uh Stellantis has also postponed the program, General Motors is continuing with the program at a downside level. But the IC segment has 34:14 34 minutes, 14 seconds uh springing back to normaly and with all their pipeline inventories also getting expo exhausted. We are seeing 34:22 34 minutes, 22 seconds near normal uh rebound of the demand with General Motors and talented as 34:28 34 minutes, 28 seconds well. So overall we hope this uh year exports to be much better than the last year and that's why we are looking at a growth of about uh 15 to 20% this year. 34:40 34 minutes, 40 seconds Right. That's very elaborate. Thank you so much. Uh my second question would be as a followup to this one that how do we 34:47 34 minutes, 47 seconds see our EV orders uh which were roughly about 4,000 crores now ramping up? I mean uh do we see it starting in FI27 34:56 34 minutes, 56 seconds and um um how do you see the ramp up happening orders from US 35:03 35 minutes, 3 seconds to no with respect to the US EV orders while there has been a slight uptick it 35:11 35 minutes, 11 seconds has not reached its uh potential whatever we have envisaged but with respect to specific on either Salantis 35:19 35 minutes, 19 seconds or General Motors with respect to the eyes and PV we are seeing an uptick. I think the the the full ramp up would 35:26 35 minutes, 26 seconds happen by 27 but definitely we are seeing uh uh better numbers compared to what it was in 2526 and that is one of 35:35 35 minutes, 35 seconds the reason for us to know have a confident or positive number with respect to export growth in 26 27. 35:45 35 minutes, 45 seconds Sure sir. Uh secondly sir um uh if we had to look quarter on quarter uh there is a d within the gross margins um which 35:54 35 minutes, 54 seconds is also kind of transpiring in the margins. So um um apart from the nickel and um um employment cost inflation that 36:02 36 minutes, 2 seconds you reported anything else has um affected our gross margins nothing specific because if you're 36:11 36 minutes, 11 seconds looking at uh gross margin of let us say uh Q3 or Q2 like I said after the West Asia conflict broke out there has been 36:18 36 minutes, 18 seconds an inflation in uh the RM and uh materials to some extent and uh So it 36:26 36 minutes, 26 seconds has got slightly compressed but I think if you see the overall year and uh it has been quite okay. 36:36 36 minutes, 36 seconds And lastly uh on the railways I just wanted to confirm the numbers that were given by you I mean given by uh one of 36:43 36 minutes, 43 seconds the uh speakers I think we said that there is roughly a 2 to three cr kind of monthly run rate that we're working I mean uh working with in revenues and 36:52 36 minutes, 52 seconds this has the potential to ramp up to roughly 100 crores monthly. Is that correct? 36:57 36 minutes, 57 seconds No that is 100 crores peranom. So from a 2 to 3 cr level level the run rate would be at say 8 to 10 crores. That is what we are envisaging. 37:08 37 minutes, 8 seconds And this this can happen this year itself. 37:13 37 minutes, 13 seconds No but on an annualized basis we are looking at this number but I think by Q3 Q4 we should be able to look at this. 37:24 37 minutes, 24 seconds Okay. Okay. Thank you. 37:29 37 minutes, 29 seconds Thank you. Next question is from the line of Lakshmi Narayan from Tunga Investment. Please go ahead. 37:37 37 minutes, 37 seconds Uh sorry hope I'm audible. Yeah sir. Yes sir. 37:41 37 minutes, 41 seconds Yeah. Hi. Uh so I'm just trying to reconcile uh you know longer period growth. If I look at from March 23 to 37:49 37 minutes, 49 seconds March 26, I think we have grown around like 11% or 12% and the increase the currency has depreciated by around 14% 37:58 37 minutes, 58 seconds while uh steel prices have actually gone up by around 18 19%. And automotive industry as well as industrial growth 38:05 38 minutes, 5 seconds has actually also has has actually gone up uh on a point-to-point basis. right now. uh I just want to understand uh how 38:13 38 minutes, 13 seconds to exchange this divergence between our uh uh growth which I think would be around 11% or 12% in these periods 23 to 38:21 38 minutes, 21 seconds 26 and and also uh uh can provide some color on the internal benchmark you use to measure success and uh is the 38:30 38 minutes, 30 seconds management uh how the last three years performance uh had uh looks I mean when 38:36 38 minutes, 36 seconds the management looks at it uh how the uh the last 3 years performance has actually met or uh uh exceeded 38:45 38 minutes, 45 seconds management expectation given the context that we have grown at x% while uh currency has depreciated and the metal prices have increased and also the 38:53 38 minutes, 53 seconds industry and the GDP has actually increased uh right so I just want to understand how the management thinks about it 39:00 39 minutes the management uh looks at it uh as the minimum growth that we should target is 39:09 39 minutes, 9 seconds uh let us say uh at least a nominal GDP and plus 2% that is one way of looking 39:15 39 minutes, 15 seconds at it or 2x of uh GDP roughly uh around 12 to 13% is what the how the business 39:25 39 minutes, 25 seconds plans are formulated capital allocations are made and all discussions revolve around that kind of a scenario the 39:32 39 minutes, 32 seconds actual markets there may be challenges and somebody may scale back EV program 39:39 39 minutes, 39 seconds or the tariffs having been disrupted last year and these things can have an 39:46 39 minutes, 46 seconds impact on the growth in general. But coming specifically to the RM or 39:53 39 minutes, 53 seconds material prices like I said they have been fairly uh stable for us and uh 40:00 40 minutes we've been able to uh get a better price advantage or we maximized L0 procurement 40:09 40 minutes, 9 seconds and also got reasonable uh uh the volume discounts uh based on our procurement 40:16 40 minutes, 16 seconds and special discounts. So we've been able to keep the prices uh lower though there's a threat of some inflation 40:24 40 minutes, 24 seconds creeping in in the AR prices. As far as uh exports are concerned like I said in my opening remarks uh in the for the 40:33 40 minutes, 33 seconds quarter it has entered into the positive territory both in dollar terms and if I analyze that it looks quite strong and 40:41 40 minutes, 41 seconds going back to FI 25 levels but overall uh for the entire year uh the 40:49 40 minutes, 49 seconds notwithstanding the rupee depreciation we've had about 8% uh deg growth but that I would think uh is more of oneoff 40:58 40 minutes, 58 seconds for uh the reasons which we all know and uh uh taking a lot of confidence from Q4 and the the way we have started the 41:07 41 minutes, 7 seconds month of April this year looks to be quite strong got it I think it's looking at slightly 41:14 41 minutes, 14 seconds longer because last year has been etc so that's why I used 23 as a as a baseline 41:21 41 minutes, 21 seconds and then looked at three years and uh wherever both have seen the divergence from even the metal inflation and even 41:29 41 minutes, 29 seconds the currency depreciation as though we are beneficiary of both uh in terms of profine as well as uh you know I think 41:37 41 minutes, 37 seconds that's where I am thinking of has to you know from the eyes of management has the last three years been better for your 41:44 41 minutes, 44 seconds budgets or it was uh under uh underwhelming to your budgets or your your own uh business plans when you 41:52 41 minutes, 52 seconds actually did it in 23 and looked at the next three years I think from your point of view what are the benchmarks and how 41:59 41 minutes, 59 seconds you think you have actually performed uh that's my question no I I answered that question by telling 42:06 42 minutes, 6 seconds you that uh we target uh as far as growth is concerned and either it is nominal GDP or 2x of GDP is why it's 42:15 42 minutes, 15 seconds said 12 to 13% is the overall growth we would like to have and taking especially this this year the that growth has come 42:24 42 minutes, 24 seconds in OE as well as in retail. It has not happened in export. But if you take a threeear time frame and where we had 42:32 42 minutes, 32 seconds made lot of investments and uh we backing of certain customers and products, it has not taken off in a manner which we would have desired. But 42:41 42 minutes, 41 seconds I think these are cycles and uh like I said uh last year was uh though it started on a pessimistic mode the month 42:48 42 minutes, 48 seconds of April itself with the reciprocal duty and uh ended with the conflict but uh 42:55 42 minutes, 55 seconds the after the GST2 rationalization and uh markets have boomed and we are seeing that momentum cutting in the current year also. Got it. Perfect. 43:07 43 minutes, 7 seconds Thank you so much. Very exciting. Thanks. 43:14 43 minutes, 14 seconds Thank you. As there are no further questions from the participants, I would like to hand the conference over to the management for closing comments. 43:25 43 minutes, 25 seconds Yeah. Nothing uh specific. I think uh most of it was covered in the opening remarks and uh the questions uh were uh 43:34 43 minutes, 34 seconds deep and many of them were insightful and uh we maintain that the outlook looks quite strong from a domestic 43:42 43 minutes, 42 seconds market perspective and the there's also a strong traction in the export market as well. 43:51 43 minutes, 51 seconds Thank you. Thank you. Thank you. 43:55 43 minutes, 55 seconds Thank you very much on behalf of Aventus Spark. That concludes this conference. 44:00 44 minutes Thank you also for joining us today and you may now disconnect your line.