Earnings Call Transcript - XNSE:PRITIKAUTO 2026-11-11

Operator

Ladies and gentlemen, good day and welcome to Q2 and H1FY27 Conference Call of Pritika Auto Industries Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Jai Jain from AdFactors PR. Thank you, and over to you, sir.

Jai Jain, Head of Investor Relations

Thank you, Nadim. Good morning, everyone, and happy Diwali. Welcome to the Q2 and H1 FY27 earnings conference call of Pritika Auto Industries Limited. Today, from the management side, we have with us Mr. Harpid Singh Iqbal, Chairman and Managing Director, Mr. Najinder Kumar Pyagi, Director, Finance and Chief Financial Officer, and also the Ad Factor's IR team. We will begin the call with the opening remarks from the management, after which we shall open the forum for Q&A session. I must remind you that this conference may include forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the management as on the date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now hand over the conference to Mr. Harfit Singh Nibbar for his opening remarks. Thank you and over to you, sir.

Harpreet Singh, Chairman

Thank you, Jay. Good morning, everyone. Thank you for joining us today for Pritika Auto Industries Limited's Q2 and H1 Financial Year 27 earnings conference call. First of all, on behalf of the entire Pritika Auto Industries family, I would like to extend my warm wishes to all our investors, analysts, and stakeholders on the occasion of Diwali. I wish you and your families a very happy Diwali and a prosperous new year. I have with me on the call today Mr. Narendra Kumar Chaygi, Director, Finance and CFO, and our Investor Relations team from AdFactors PR. We have already shared our financial results, investor presentation, and media release with you. I hope you have had an opportunity to go through them. I would like to begin with a brief overview of our business and the developments during the quarter. Prithik Auto Industries has built a strong presence in the manufacturing of machine castings and automotive components over the last five decades. Since our inception in 1974, we have steadily expanded our manufacturing capabilities and product portfolio, and today we are among the leading manufacturers of sector components in India. Our manufacturing facilities across Punjab and Himachal Pradesh have combined a style coverage of 72,000 metric tons per annum. We manufacture a wide range of components including axle housings, wheel housings, hydraulic lift housings, differential carriers, brake housings, cylinder blocks, and crankcases. Our integrated manufacturing capabilities from casting to machining allow us to supply ready-to-use components to some of the leading OEMs in the country. Coming to our operational performance, we have maintained healthy momentum during the first half of financial year 27. Our production volume for Q2 FK27 stood at 15,665 metric tons compared to 12,881 metric tons in the corresponding quarter last year, resisting a growth of approximately 22%. For the first half, production volume reached 30,000 metric tons as against 25,267 metric tons. In the H1 financial year 26, reflecting a growth of nearly 19%. This growth has been supported by healthy demand from our existing customers, better execution of ongoing programs, and continued ramp-up of our manufacturing operations. We have been working towards improving throughput utilization across our facilities while maintaining quality and delivery standards expected by our customers. On the customer front, our relationship with established OEMs continues to remain an important strength of the business. We have built a long-standing association with customers such as Mahindra & Mahindra, Mahindra Savraj, TAFE, Escorts Kubota, CNH Industrial, and other leading manufacturers. During the quarter, we continue to receive repeat and incremental business from our customers including Mahindra & Mahindra, Mahindra Savraj, CNH, and Escorts. I would also like to highlight an important development on the export front. Our subsidiary, Prithika Engineering Components Limited, has secured a high-value export order of approximately 12 cores per annum from a prominent precision engineering manufacturer based in Italy. Under this order, we will manufacture and supply specialized engineering components. This is an encouraging development for us as it demonstrates our ability to meet the requirements of international customers for high precision components. Our capabilities in metallurgies, advanced CNC and SMC machining along with specialized quality processes such as 3D precision scanning have played an important role in supporting this opportunity. We see this arrangement as a step towards building a stronger presence in international supply chains and developing opportunities for repeat business. Another development worth mentioning is the progress of our earlier announced order from K1 USA. We are pleased to inform you that the product has now received customer approval and regular production is expected to commence in year 27-28. This is an important milestone in our efforts to strengthen our international customer base. Alongside these developments, we continue to work on new product opportunities and deeper engagement with existing customers, which we believe will support our growth over the coming years. On the broader business front, we are also working towards increasing the contribution of exports and expanding our presence in segments beyond our traditional tractor business. Our manufacturing infrastructure and engineering capabilities provide us with an opportunity to address requirements across commercial vehicles and industrial applications. At present, approximately 7% of our business are contributed from CV segment and we see an opportunity to gradually increase our presence there. We are also continuing to evaluate opportunities for geographical diversification and new product development while remaining focused on our core customer relationships. I would also like to share an important development concern about sustainability and cost efficiency initiatives. In August 2026, Prithika Engineering Components Limited on behalf of Prithika Group signed a memorandum of understanding with Spark Grid Private Limited for supply of solar power at a competitive tariff period for over 25 years. This arrangement is expected to generate savings of approximately Rs. 110 crore for the group over the tenure of the agreement. Prithika Engineering Components Limited and Metacasting Limited are expected to benefit from approximately 70 crore of these savings, while Prithika Auto Industry Limited is expected to benefit from the balance. As part of the proposed arrangement, a special purpose vehicle will be established for a solar power project in which Prithika Engineering Components Limited is expected to hold 26% equity stake on behalf of the group, subject to applicable approvals and documentation. Better long-term visibility on energy costs, improve competitiveness, and support our broader sustainability objectives. Looking ahead, our focus remains on building a larger and more efficient manufacturing platform. We continue to work towards our long-term target of achieving installed capacity 1 lakh metric tons by year 2028. Our approach to expansion will remain disciplined, with investment directed towards capacity creation, new product development, and improving manufacturing efficiency. We will also continue to focus on value added products, export opportunities and increasing our share of business with existing and new customers. From an industry perspective, we remain constructive on the medium to long term outlook for the tractor and automotive components industry. Demand for tractor continues to be supported by agriculture mechanization, government initiatives and underlying rural demand. At the same time, infrastructure development and increasing requirements in the commercial vehicle segment provide the opportunities for the broader customer industry. We are conscious of the changes taking place across conventional electric and hybrid mobility platforms, and we believe that our engineering and manufacturing capabilities will allow us to address evolving customer requirements over time. As we move into second half of financial year 27, our priorities will be to sustain the momentum in the production volumes, improve capacity utilization, strengthen our export business, and work towards gradual improvement in margins. Cost optimization, operational efficiencies, and disciplined working capital management will continue to receive management attention. We will also remain selective in pursuing new opportunities with a clear focus on sustainable growth and returns from the investments we make. With our established customer relationships, integrated manufacturing capabilities, and expanding opportunities in domestic and international markets, we believe Prithika Auto is well positioned to take next step in the growth journey. With that, I would now like to hand over the call to Mr. Narendra Kumar Tyagi, our CFO, to take you through the financial performance for the quarter and half year ended September 30, 2026.

Narendra Kumar Tyagi, CFO

Very good day to everyone. Coming to our financial performance for the quarter ended, September 30, 2026, on a consolidated basis, the company reported net revenue from operations of 153.19 crore, compared to 116.45 crore in Q2 FY26, resisting a year-on-year growth of 31.55%. This growth was primarily supported by higher production volumes, healthy demand from our key OEM customers, and continued execution of existing programs. Ebitda for the quarter stood at 21.21 crore compared to 18.61 crore in corresponding quarter last year, reflecting a growth of 13.97%. Ebitda margin for Q2 financial 27 stood at 13.85%, compared to 15.99% in Q2 FY26. While margins continue to be impacted by elevated input costs, And the evolving product mix, we have seen an improvement on sequential basis, with EBITDA margin increasing from 13.45% in Q1 FY27 to 13.85% in Q2 FY27. Profit before tax for the curators stood at Rs. 9.55 crore compared to 8.62 crore in Q2 FY26. Profit after tax increased to 7.43 crore, edge against 6.61 crore in corresponding quarter last year, resisting a growth of 12.41%. Basic earning per share for the quarter stood at 0.39%. Coming to the half-year performance, consolidated net revenue from Operations for H1 FY27 stood at Rs. 298.16 crore compared to Rs. 231.06 crore in H1 FY26, representing a growth of 29.04%. EBITDA increased by 12.93% to Rs. 40.72 crore compared to Rs. 36.05 crore in the corresponding period last year. EBITDA margin stood at 13.66% as against 15.6%. 6.0% in S1 for FY26. Tax for the first half was 17.80 crore compared to 16.46 crore in the corresponding period last year. Profit after tax increased by 14.52% to 14.55 crore compared to 12.70 crore in H1 FY26. EPS for half-year student, 77 also. For now, we have delivered healthy growth in revenue and profitability during the first half of the 5527. Going forward, our focus will remain on cost management, improving operational efficiencies, maintaining financial discipline, and ensuring that our investment contribute meaningfully to company long-term performance. That's all from my side. We can now open the floor for questions and answers. Thank you.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jimit Mehta from Mehta Investments. Please go ahead.

Jimit Mehta, Analyst — Mehta Investments

Hi, sir. Good morning. Am I audible?

Harpreet Singh, Chairman

Yeah, yeah, you're audible.

Jimit Mehta, Analyst — Mehta Investments

Okay, first of all, thank you for this opportunity. So, my first question is on the growth potential. So, how does the management view the growth potential of the export business over the next two to three years, and what target contribution for an export does the company aim to achieve as a percentage of the overall revenue in the medium term?

Harpreet Singh, Chairman

See, exports has a lot of potential. Especially in Europe and USA. Now recently, we have got a very good order from Europe, Italy, and it's just a first step. And we expect that this 12 core, which is a proposed order for 12 core per annum, which we can easily make it in the next three years, it can easily go to around 40 to 50 crores. That is the potential, that is the size of the inquiry. I mean, what we expect in the next 3-5 years, export should contribute minimum 10-15% of our...

Jimit Mehta, Analyst — Mehta Investments

Okay, sir. My second question will be on the presence in the tractor components. So, how is the company progressing with its diversification strategy across the automotive and the industrial applicant, and which segments are expected to emerge as a key contributor to the incremental growth of the company?

Harpreet Singh, Chairman

See, at present, we are primarily into tractors. And tractors also, we are now diversifying. We were early into small and medium castings. Now we are diversifying into large castings. So that is one. And other areas which we are trying to diversify into go into the construction equipment. We are already going to give it to Ace. Then we have recently added Q on India. And then we are adding, there are a few more new. to customers with which we are in the discussion to add construction and material and equipment to our portfolio.

Jimit Mehta, Analyst — Mehta Investments

Okay, sir. So, on that, on a follow-up question. So, what specific initiatives, product offering, and the customer acquisition opportunities are you all pursuing to increase the contribution?

Harpreet Singh, Chairman

You, since recently, around three years back, we added a new technology, lost home casting. So, that has given us a lot of advantage in large castings, and some critical castings, I mean, which are still being imported from China. So, recently, last year, we developed... I mean, rather this year only we developed one large casting around 530 kgs as the iron casting, which was being imported from China only. Only China was manufacturing that. So we were the first one in India to develop that casting. And now for the similar components, we have got very good inquiry from other potential customers for those kind of products. So, LST was a new technology for us, for India also, for us also, and that has given us a very good advantage over our competitors.

Jimit Mehta, Analyst — Mehta Investments

Okay, sir, understood. One last question from my side. One of our subsidiaries, Pratika Engineering Components, has secured a significant order from an Italian precision engineering manufacturer.

Harpreet Singh, Chairman

Yeah.

Jimit Mehta, Analyst — Mehta Investments

Could you please throw some light on it?

Harpreet Singh, Chairman

See, we were in discussion with this customer for last almost 7-8 months. So they had visited us in January, then we went and met them in March, then we were in discussion with them. So this is a heavy casting component for application in tractors in Italy. And this initialization is a small order of 12 crores. And this will be the potential to grow up to 40 to 50 crores in the next three years.

Jimit Mehta, Analyst — Mehta Investments

Okay, so I understood. Thanks for answering my question and all the rest for the future.

Operator

Thank you. Next question is from the line of Mrunar Shah, an individual investor. Please go ahead.

Harpreet Singh, Chairman

Hello.

Mrunar Shah, Analyst — Individual Investor

Yes, so I just have two questions. So, first question is, the company has highlighted various opportunities arising from high and extra load capacity for commercial vehicles, infrastructure spending, and railway modernization. So, how is the company positioned to capitalize on this opportunity, and what is the timeline, expected timeline for this segment to call the revenue?

Harpreet Singh, Chairman

Yeah, as far as railways are concerned, we are very seriously working on that last one and a half year. So our whatever capex was required, it is almost complete. We are developing two or three components for railways, which we plan to give for trials to railways. We are going through the RDSO route. By, say, by January or February, and then after trial and testing, we expect that to give some, start supplying something from H2 of financial year next year from, say, September, October of next year from 27-28. So that is our target for railways. For heavy commercial vehicles, we are already supplying to a show client, and we are increasing our product portfolio over there, and increasing the volume of our existing products also. That is our basic...

Mrunar Shah, Analyst — Individual Investor

Okay, great. And also, the company has invested in large-home casting technology through meta-casting. So, what advantage does this technology offer in terms of product complexity or customer acquisition or manufacturing efficiency?

Harpreet Singh, Chairman

Yeah, this casting is… See, normally, if you understand… Casting is green sand molding, whatever… This is a different technology. This is not a new technology for globally. It was a technology which was developed in late 70s in Europe. In the 80s and 90s, they developed it, and in the 90s, the foundry started closing down, and in the 90s, this technology was adopted by China. Then China mastered this technology, and ours was the second foundry with this technology in India. This technology is new to, as of now, it is new to India. There are very few, I mean, foundries working on this, and none is at our scale, and this gives an advantage. That you can, whatever you can, green sand is a very large capex. So this at a lesser capex, you can produce same quality of castings at a cheaper cost.

Mrunar Shah, Analyst — Individual Investor

So, and my follow-up question is, are there any opportunity to expand the contribution of the same to overall business?

Harpreet Singh, Chairman

Yes, not to other, this technology is suitable only for critical castings and large castings. Not for normal products, for low-value products.

Mrunar Shah, Analyst — Individual Investor

Okay, thank you. That answered my question. Thank you.

Harpreet Singh, Chairman

Thank you, Munar.

Operator

Thank you. Next question is from the line of Janisha from SK Investment. Please go ahead.

Janisha, Analyst — SJ Investment

Hello, good morning. So, I had a couple of questions. First is, what is the expected utilization and return profile of the investments being made towards the capacity expansion and manufacturing infra?

Harpreet Singh, Chairman

Pardon? I didn't get your question. What is the? Hello.

Janisha, Analyst — SJ Investment

I wanted to know, hello, am I audible?

Harpreet Singh, Chairman

Yeah, yeah, you're audible.

Janisha, Analyst — SJ Investment

Yeah, I just wanted to know the expected capacity utilization and the return profile of the investments that have been made.

Harpreet Singh, Chairman

See, capacity utilization, as far as we are concerned today, for our green sand, we are working almost at 90% capacity, and for our LFC, we are yet at 50% capacity. So that is our capacity. In green sand, we are making an investment. We are increasing our capacity by 650 tons per month. So that is what our expansion is presently going on. That is roughly, yeah, adding around 7800 tons to our existing capacity, which will be ready by, say, end of this month.

Janisha, Analyst — SJ Investment

Okay, and Pritika Engineering Components Ltd. has secured the Italian export order and received product approval from Keyon USA. So, how significant is the subsidiary expected to become in the overall consolidated business?

Harpreet Singh, Chairman

At present, if we see capacity-wise, it is almost... I mean, if I say subsidiary Preeti Ka Engineering is of the at-run capacities, We are expected to grow, engineering should grow to around 30-35% in coming one, one and a half year.

Janisha, Analyst — SJ Investment

Okay, and lastly, it is on the balance sheet front, like the consolidated net debt-to-equity ratio is at 0.67 in FY26. So, with the planned capacity expansion and grieving production requirements, how is it going to be further?

Harpreet Singh, Chairman

It will mostly be a combination of debt and equity. Debt position is comfortable, debt equity is comfortable. Some, some, I mean, major part would be debt only and some part would be equity.

Janisha, Analyst — SJ Investment

So, the next debt to equity is expected to increase in future?

Harpreet Singh, Chairman

Yes, yes.

Janisha, Analyst — SJ Investment

Okay, okay. Thank you.

Operator

Thank you. Next question is from the line of Vikrant from RK Advisory. Please go ahead.

Vikrant, Analyst — RK Advisory

Thank you for the opportunity. I'm audible?

Harpreet Singh, Chairman

Yeah, you're audible.

Vikrant, Analyst — RK Advisory

So, my first question is, sir, are other expenses increased from 28 crore in Q2F per 26 to roughly around 34 crores in Q2F per 27? So, could management provide a breakdown of the key cost components driving this increase and indicate whether these expenses are expected to moderate in the coming quarters?

Harpreet Singh, Chairman

The other expenses, what they have increased is it is in line with the percentage-wise, it is okay. I think it is the same. It is in line with the increase in sales.

Vikrant, Analyst — RK Advisory

Okay, got it. And another question is on the interest expense side, that interest expenses increased to 6.33 crores in Q2F per 27, which was around 5.60 crores in Q2F per 26. So, what are the key factors contributing to this increase?

Harpreet Singh, Chairman

You are saying that interest has increased. But percentage-wise, it is same, Vikrant. Percent-wise, it is roughly around the same percentage what it was in the... Last quarter, and it has come 25, it has reduced, it has reduced, as a percentage.

Vikrant, Analyst — RK Advisory

Got it. Andersud, sir. Thank you.

Harpreet Singh, Chairman

It is in line with the growth only.

Vikrant, Analyst — RK Advisory

Andersud, andersud.

Operator

Thank you. Next question is from the line of Poonam Jain from Jain Investments. Please go ahead.

Poonam Jain, Analyst — Jain Investment

Oh, hello, am I audible?

Harpreet Singh, Chairman

Yeah, yeah, you're audible, Puno.

Poonam Jain, Analyst — Jain Investment

The company has highlighted its advanced CNC machining infrastructure radiography and 3D precision scanning capabilities as key differentiators for international customers. So, how do these capabilities position Prithika against established global component manufacturers, and what opportunities are being explored to secure similar engagements?

Harpreet Singh, Chairman

See, now the facilities what we have, we have a very right mix of Indian and Japanese machines, so that we can cater to both the domestic and international market. And Infrawise, we are in line with all the established manufacturers, all global manufacturers, whatever. We have seen the supplier base of big customers in Italy also, in Germany also. So our infrastructure is almost at par with them. And with the balanced uses of Indian and Japanese machines, we make the manufacturing very, very cost effective for our customers. And with our, I mean, backward integration for foundry, so we've become a single source for casting and machining, which are very, very less in Europe and USA both. I mean, there are hardly any manufacturers which have both casting and machining at one place. So for that, that gives us a lot of advantage over, I mean, our competitors in maybe Europe or USA. What we are getting, we are getting because of that only, because we are a single source for casting and machining.

Poonam Jain, Analyst — Jain Investment

Okay, okay, got it. So, my next question is, with the Keon USA product approval, now we received and regular production is expected to commence in FY27. So, what are the next milestones before commercial supplies begin?

Harpreet Singh, Chairman

The next milestone is, I mean, once they have this product, this is a new platform for them. So, which goes into production next year, and as in when we, I mean, it is programized, we will get the orders for that. And we hope in next two to three years, this becomes one of our, QN USA becomes one of our major customers. And it also becomes a strapping block for the U.S. market, which itself is a very huge market for machine castings.

Poonam Jain, Analyst — Jain Investment

Got it, got it. So, the last question from my side would be that the company continues to receive repeat and incremental business from established OEM customers, including M&M Swaraj and CNH Industrial. So, are these relationships translating into additional product programs or higher wallet share?

Harpreet Singh, Chairman

Yes, yes, yes. So, I mean, we are still developing new components for our existing customers also, whether it is TAFE, whether it is Mahindra, whether it is CNH, whether it is SCOTS, so, I mean, we have very, very strong relations with our customers. I mean, you see, with M&M, it is almost 22 years. TAFE, it is 28 years. So we have a...

Poonam Jain, Analyst — Jain Investment

Okay, okay. Got it, sir. Thank you for answering, and all the best for the future.

Harpreet Singh, Chairman

Thank you, Poono.

Operator

Thank you. Next question is from the line of Mayuresh Rawat from Invest4Adio. Please go ahead.

Mayuresh Rawat, Analyst — Invest4Adio

Hello, good afternoon, sir. Thanks for the opportunity. Sir, the company has outlined a target of increasing the installed capacity around 1 lakh metric tons by around 2028, right? So, could you please provide an update on the expansion roadmap, including the proposed phasing and everything?

Harpreet Singh, Chairman

Special roadmap is that we plan, I mean, we are adding another 8,000 tons, 7,800 tons immediately, which capacity would be ready by end of this month. So this will take our capacity to 80,000. And we plan to add another 24,000 tons by, say, March 2028 for that which we are, I mean, process of acquiring a land. And maybe next year would be the construction period for that. And that is our target. By end of 2028, we should have 1 lakh tons of installed capacity.

Mayuresh Rawat, Analyst — Invest4Adio

Calendar year 2028, right?

Harpreet Singh, Chairman

Yeah, 2028.

Mayuresh Rawat, Analyst — Invest4Adio

Okay. And, sir, as production volumes are scaling up, so what operational efficiency and economic scales are contributing to margin improvement if any specific automation or mechanism or cost optimization initiatives are underway?

Harpreet Singh, Chairman

Yeah, see, we, I mean, you know, foundry is a labor-intensive industry. So, we have now started the mechanization of inner foundry also. Fattling is one of the bottleneck areas, and we are procuring some machines for fattling automation, that is one. Then secondly, in machine shop, we are going for robotics and gantry, wherever it is possible, wherever it is high volume, we are going for robotics and gantry application to reduce the manpower cost.

Mayuresh Rawat, Analyst — Invest4Adio

Okay, okay, and... Across our five manufacturing facilities, are we planning any capacity increase in the existing facility or are we going to establish new manufacturing facilities?

Harpreet Singh, Chairman

We are in process of expanding our facility in Prithika Engineering, which is under expansion, and which I told you will be ready by this month end. And then other than this expansion would be a green field where it will be a new.

Mayuresh Rawat, Analyst — Invest4Adio

Okay, that's it for myself. I'll join back the queue. Thank you.

Harpreet Singh, Chairman

Thank you. Thank you.

Operator

Thank you. A reminder to all the participants, anyone who wishes to ask a question may press star and 1 on their touchtone telephone. Next question is from the line of Janil Patel from AVI Advisors. Please go ahead.