Sharda Motor Industries Limited (SHARDAMOTR) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q4 F526 Sharda Motors Ltd. Post Results Conference Call hosted by Equius Securities. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance in the conference call, please signal an operator by pressing star, then zero on your touchtone phone. I now hand the conference over to Mr. Mir Vora from Equusis Securities. Thank you and over to you.

Yeah. Thank you, Steve. Welcome, everyone, to the Q4FY26 post-results conference call of Sharda Motors Limited. From the management team, we have Mr. Ashim Lailan, Group CEO, Mr. Ashwini Maeshwari, Deputy Managing Director, and Mr. GD Thakar, Group CFO. So, without further ado, I now hand over the call to the management for the opening remarks. Over to you, sir.

Thank you very much, Mihir. Thanks a lot. My name is G.G. Tucker, and I thank everyone for joining the call today. I extend a warm welcome to all the participants on today's call. As Mihir just mentioned, I am joined by our group CEO, Mr. Ashim Relan, Deputy Managing Director, Mr. Ashwani Maheshwari, and Chief Manufacturing Officer, Mr. K.K. Sharma. I trust you have had the opportunity to review our quarter 4 and 12 monthly results and investor presentation, which are available on stock exchanges, as well as on our website. Before I move to the financials, let me briefly touch upon the Indian automobile industry's performance during last quarter, that means quarter 4. During that quarter, the Indian automobile industry continued to witness road-based growth across all major vehicle categories. This robust performance was supported by improved affordability following the GST rate reduction, enhanced purchasing power from personal income tax relief, and lower financing costs due to successive repo rate cuts. The Reserve Bank of India. Demand momentum remained healthy across all major vehicle categories, reflecting a balanced mix of urban as well as rural consumption. Passenger vehicle segment posted strong production numbers of 15,71,000 units in quarter four of FY2526, registering a growth of 11.3% compared to Q4 of same period last year. The segment also clocked production numbers of 55,39,000 units in 25-26, posting a growth of 9.4% as compared to previous financial year. While, light commercial vehicle production grew by over 15.8%, reaching 2,08,000 units this quarter, and by 11.2%, reaching 7,12,000 units in FY26. In quarter 4 of FY26, Three-wheeler posted Q4 production of 3,45,000 units with a growth of 32.4% as compared to same quarter last year. This segment also posted strong production numbers in financial year 2026 at 13 lakh units, registering a growth of 23.9% as compared to last financial year. FY2526 has been a landmark year for the Indian automobile industry underpinned by a series of structural policy reforms that strengthened demand fundamentals and boosted consumer confidence. Consequently, the industry remains optimistic about continued growth across all vehicle categories in financial year 27. Building on the strong domestic momentum seen in the latter half of FY26. However, uncertainties stemming from the West Asia conflict, including volatility in crude oil and commodity prices, elevated exchange rates and disruptions to shipping routes, continue to pose risk. A stable geopolitical environment will be crucial for sustaining industry confidence and supporting further growth next year. Let me now walk you through the operational and financial performance for the quarter and year ended 31 March 2026. For quarter four, on a consolidated basis, the company reported revenues of 971.8 crores, representing a YOI growth of 30%. Gross profit for the same period stood at Rs 216.1 crores, a growth of 13% YOY, gross profit remains the better indicator of underlying operating performance, and growth was better than industry trends for this period. came in at INR 112.9 crores, reflecting YOI growth of 12% with EBITDA margins at 11.6%. Profit before exceptional items for the quarter stood at Rs. 119.6 crores after factoring in our share of profits from joint ventures and associates. In the corresponding quarter last year, profit before tax was Rs. 110.6 crores. Profit after tax for the quarter was Rs. 89.4 crores. For the 12 months ended 31st March 2026, total revenues stood at Rs. 3,396.8 crores, marking a growth of 20% over the same period last year. Gross profit for the period was Rs. 802.8 crores, up 8% YOY again, again in line with the industry growth. Abidda for 12-month period stood at 419.1 crores, up 6% YOY. Profits before taxi. For 12 months worth Rs. 459 crores, which included exceptional gain of 22.41 crores on sale of one of the idle industrial parcels in quarter 1 FY26 and an exceptional loss of Rs. 4.26 crores towards impact of new labour costs in quarter 3 and quarter 4 of financial year FY26. Compared to this, profit before tax was Rs. 420 crores in the 12-month last year. Profit after tax for the 12-month period stood at Rs. 345.4 crores as against Rs. 314.9 crores in the corresponding period last year. Now, I hand over to Mr. Ashwani Maheshwari, Deputy Managing Director of the company, for key business updates. Thank you.

Thank you very much for the financial updates. A very good evening, everyone. This is Ashwani Maheshwari. I extend a warm welcome to all participants on the call. I will take you through the key business updates for the quarter and our operating priorities as we move into FI 27. The global operating environment remains dynamic, particularly with the developments in West Asia. The key impacts remain group price volatility. Availability of critical parts and workforce availability across global supply chains. So far, the automotive industry has managed these factors very well. However, the situation remains dynamic and we continue to monitor it closely. We at Sharma also remain resilient due to our largely India-centric manufacturing footprint and our backward integration across tubes, stampings, fabrication, and assemblies. Our operations are largely linked to customer-managed supply chains, and our operations remain aligned with customer production schedules. At the same time, the current global environment is accelerating a few favorable long-term themes for India. Customers in Europe and the US are increasingly focused on supply chain diversification and China plus-one sourcing. This is positive for Sharada, given our capabilities across emission systems, thermal management components, light-weighting products, temperature-control tubes, heat shields, and other global business adjacencies. Regulatory developments also continue to support our strategy. On PS7, we have started readiness work by benchmarking European developments and engaging with customers on future system requirements. 6.3 or WLTP, applicable from 1st of April 2027 for vehicles below 3.5 tons gross vehicle weight, is a more real-world representative test procedure and is expected to increase focus on catalyst efficiency, thermal management, and durability. On 10.05, a revised draft GANET notification has been issued, and the road map is now proposed. Across tractor kilowatt categories, while the near-term domestic opportunity now is on mufflers and integrated mufflers, the technology work already done is helping us in business development discussions, particularly in agri-tractor and export-linked opportunities. Chapter 3 is another important development. These norms applicable from April 27 to March 2032. The framework also supports hybrids, CNG, ethanol, flex fuel vehicles, light weighting, and other fuel efficiency technologies. Cafe 3 is most likely to be a combination of EVs, hybrids, CNG, flex fuel, and vehicle efficiency improvement. Except for pure EVs, all other powertrains continue to require engineered emission systems. Moving on to our light weighting vertical, this continues to be one of our key growth pillars. The structural drivers for light weighting continues to get stronger. OEMs would balance fuel efficiency, CO2 reduction, EV range, and safety amongst others. We have already started building our light weighting and powertrain agnostic portfolio, including existing supplies to EV platforms of key OEMs. CAPE 3 further supports this direction as OEMs will increasingly focus on weight reduction, efficiency, and platform optimization. During FY26, we have done steady execution across the previously announced programs. SOP's schedule for FY26 has started as per customer plans, and the ramp-up is progressing in line with customer schedules. The right-waiting FI26 market share has increased to approximately 14% and is expected to rise further in FI27 and FI28 based on the orders already booked. This vertical already comprises of approximately 10% of our gross sales and will continue to be the growth engine for the future and be a large contributor. Further, the Bongi TLA. has added to our content per vehicle offering with subframes and torsion beams. These will be the next product segments that will add to light weighting vertical growth. From a progress perspective, customer discussions and RFQ activities are underway across OEMs. In control arms and links, the focus is on scaling existing programs and increasing platform participation. In torrent beams and frames or sub-frames, The current phase is around platform design standardization, capability building, and customer engagement. These are relatively longer gestation products with higher engineering and validation requirements. Therefore, commercial scale-up will happen progressively over multiple quarters. In addition, we are in active discussion with other lightweighting technology partners for TLA-JVs, which will add to our product offerings in the future. Moving on to exports business, exports remain a strategic growth priority for us, with focus on North America and Europe. Our focus products include CV emission components, engine, and genset emission components, tractor emission components, temperature control tubes, heat sheets, and emission HSMCs. Very happy to announce that during the quarter, we received an order from a leading global agriculture equipment OEM for supplies to Europe. This is a strategically important entry into the global agricultural equipment segment. It is the first order with this customer and the customer has a large addressable wallet for products where Sharda has relevant capability. Successful execution of this order will help us build a meaningful order book with this customer over a period of time. This current order has an annual value of approximately USG 2 million and a lifetime value of approximately USG 10 million with the SOP scheduled from Q1 FY28. We have also received an order from an existing customer, a large US-based heavy industry emission company. The supplies for this OEM export order in India. This is a test order but of strategic importance. As this gives us entry into another U.S. C.O.E.M. Our previously announced export order with the North American engine and genset manufacturer remains aligned to customer schedules. SOPs moved from Q2 to Q3FI27 with gradual ramp-up based on customer schedule requirements. We continue to see healthy RSPU pipeline supported by a dedicated export focus team. The broader localization China plus one and supply chain diversification teams in Europe and the U.S. remain positive for our global business strategy. Now moving on to emission systems and adjacencies. Our core emission business remains steady and strategically important. We continue to maintain strong quality and delivery performance while also preparing for the next phase of regulatory requirement including BS7 readiness. In emission adjacencies, the successful SOP of temperature control tubes for one of the largest off-highway manufacturers in India is an important milestone. The program has commenced and is ramping up as per customer schedule. This strengthens our position in thermal management adjacencies and creates a platform to build further business in temperature control tubes, heat sheets, and related products. Coming on to infrastructure, the facility is progressing as per plan. The facility is being set up closer to customers' manufacturing location and is expected to improve logistics, responsiveness, and customer alignment. The capacity will be modular and scalable, and the plant will support existing business as well as future opportunities in emission and lightweighting products in North India. The Charcon 3 Lightweighting Plant has started SOP and is gradually ramping up. Capacity deployment continues to be modular and align with customer-backed On R&D, we continue to invest in people, testing, simulation, validation, and product development. During Q4FI26, we filed two more patents. With this, the total number of patents filed stand at 22, and total awarded patents stand at 4. Our R&D efforts are focused across emission and thermal management, light weighting and suspension, and global business products. These capabilities are critical. As we move towards higher technology content and a greater system level participation. On M&A, our approach remained disciplined but active. The current global disruption and supply chain realignment can create opportunities for well-capitalized India-based players. Sharda has a strong balance sheet which gives us flexibility to deploy capital where there is strategic fit, customer and technology relevance. We will remain disciplined on valuation and ROC potential. On technology partnership, we continue to evaluate opportunities in powertrain, agnostic products, light weighting, and structural components and processes. China and Korea remain important markets because of their capabilities in EV platforms, hybrid platforms, chassis systems, suspension technologies, and advanced light weighting. Moving on to FI-27 outlook, the production plan and the preparations from OEMs. Indicate a steady demand. Our growth contributors include full-year revenues from earlier light-weighting suspension orders, partial revenue from FI26 light-weighting suspension orders with SOP in FI27, CV adjacency impact, North American export ramp-up, and other export orders, and, of course, the supportive OEM volume outlook with SIAM projections on industry growth. Our focus remains clear. Disciplined execution, timely SOPs, customer duties, ROC discipline, and continue building a more diversified, power-train agnostic, and globally relevant Shradha motor. Thank you so much. With this, we can open the floor for Q&A.

Thank you. 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 withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Preet Pitani with Incred EMC. Please go ahead.

Thank you for the opportunity, sir. My first question would be on the line of data which you give on annual basis. First is your revenue industry split like TV, TV, or flyway, and other. And also if you could mention what was your export for this year.

for our data or you're talking about the CIM, PV, CV data?

No, no, no. For our data. Like last year, it was 55, 40, 55 PV, 45 CV. What will be the data for this year?

Okay, sure. Yeah. Thank you for this question. So, our CV emissions contribution is 44% for this financial year and PV emissions contribution is 43%. All highway, gensets, and exports together currently contribute 1% because these are growing. Suspension contributes 9%, 2% from supply chain vertical, and 1% from miscellaneous. So this is the breakup of overall revenues of financial year FY26.

And second question would be on the growth of F526. Like you mentioned that last year we had suspension business of around 9% and this year also it is of around 9%. Our top line growth in emissions, we have that raw material due to which our top varies. I believe there is no such portion as in suspension. We have seen 20% suspension. And if we remove this 20% growth from the subscription, this business has grown at around 6 to 7%, whereas underlying PV and LCV industry has grown at 9 and 15%. So why did we underperform the industry? Was there any specific reason? Or are we losing market share? If you could give some insight on the same.

So... I think one primary question is that why the suspension percentage still remains around 9% to 10% of our total sales. Now, in FI26, Lightweighting has seen a decent growth in absolute value as compared to FI25, and so is the value market share. As we said, the value market share has further gone up from 12.5% to 14% on a full year basis. The data which is shared is including Catalyst. And hence, because of the increased catalyst price this year, is leading to the number not showing in the tool fees. So on a value-added sales basis, the light-weighting vertical has increased in percentage of sales. And of course, as we said that going forward in FI 27 and FI 28, based on the order book, this percentage will certainly go up.

No, sir. I think there was some misunderstanding. I have asked that. Yeah, I understand that suspension business has grown at a good pace. We have added from 12.5 to 14%. If we remove the suspension business, our gross profit growth comes at around 6 to 7%. Whereas underlying industry has grown around 9% for PE and 15% for LCB. So why we have underperformed the underlying industry? Was there any specific one-offs or did we lose any market share? If you could call out on this thing.

Sure. I think this is very clear now. So, as far as growth... Profits, growth. Versus industry's growth of roughly 10%. And on annual basis, our gross profit growth was 8%, which is largely in line with the industry, which we serve. One of the key customers of the industry, which we don't serve, if we exclude that, the overall industry growth was around 8%, and our growth is also on similar lines. Now, in terms of how it compares with the overall growth, excluding... Suspension, so suspension as Mr. Ashwani Maheshwari just mentioned, continues to be broadly at the same level as it was last year. So if you look at it from that perspective, Our gross profit growth, therefore, has been consistent with the industry growth. So there has not been any leakage of any form in terms of customers or margins. It has been consistent as it was last year and broadly in line with the industry.

Sure, sir. Sir, if you could just on this data, if you could brief, apart from the export orders which we have got and apart from the suspension higher growth which we are planning, is there any other growth driver in terms of top line or similarly in terms of margin because our margin also at the same level, how we grow at a gross profit level, our EBITDA margin also increase at the same level. So, are there any operating benefit which we can get for both revenue as well as margin?

So, revenue are strategies around diversification of powertrain, products, and geography. So, light-weighting vertical, as we explained, because of the orders booked in FI 2728, will continue to grow extremely well. In exports, we have booked, despite all the geopolitical tensions and tariffs, we have added largest CV engine maker in the world. We've added one of the top three largest agri tractor company and also two more customers. So this is the second driver of the growth. And the third driver of the growth continues to be emissions and adjacencies, which I had spoken about. I guess that works.

Yeah, that answers my question. But let me just rephrase so that I get a better understanding. I'm saying apart from the export orders, which we have already shown in our PPT, and lightweighting, if we keep lightweighting suspension business, which we are growing, and Donji TLA, which we have signed, in which we will be growing, is there any other opportunity which we are looking? Of course, you mentioned about M&A and TLA, like increasing share, like the one OEM, which we are not supplying, we would not, it has been rumors in the market that they are, they are being going to one of our competitors, and they will be starting supplying to them from like, two years down the line. So are we also getting some share of business there?

So, I presume you are talking about the largest manufacturer of PVs and seller of PVs in terms of percentage. Now, as we have always said, Thank you. What's going to be? a significant part of the vehicle market, but they already have a very well-established supplier ecosystem, and they have dedicated exhaust partnerships and JVs, which have been supplying for a long time. For us, entering into that customer is certainly a long-term opportunity, but it would be a long-term rather than immediate conversion. I mean, we continue our work on direct and indirect engagement rules. But it would not be possible or appropriate for us to indicate a specific timeline of entry to that customer.

Thank you. Thank you. Thank you. Thank you.

Thank you. The next question comes from the line of Angkor Godar. It's for investments. Please go ahead.

Hello. Thanks for taking my question, sir, Vishalia. Sir, this is regarding the SOP for North American engine manufacturer, which we have received last year. So there has been a couple of delays which has happened in execution of this SOP. So, can you share some thought on that, why this delay has been happening? And one more question here is, is it for the new launch for the product, or is it we are replacing some existing customer pair?

We essentially follow the customer schedule on this SOP, and yes, there have been couple of quarters delay in the launch, and we would now be, we are following customer schedules and we'll start the sample orders, sometimes in Q2, but the SOP as per the customer schedule You start in Q3. Now, there is, there is. As we explained last time, the TDAs at the OEM end is difficult to explain by us, but primarily, they are related to some of the inventory build-up, which would have happened because of the transition of norms, is what we understand.

Okay, okay. And, sir, this is for the new launch, or this is for the existing model where we are replacing some supplier there?

No, this is for a new launch. This is for a new launch of product.

Okay, okay. And sir, do you see any benefit of the new CAFE norms which are expected to come by April 2027? Is there a kind of value addition do we envisage per vehicle on our content from the current levels?

So, you're talking about the, you're talking about the category norms?

Yes, yes.

Caffe-3, if you go to the draft-gathered notification, it is structured as a multi-fuel technology-inclusive regulation. Now, in this, while EVs receive the highest credit, this framework also supports CPUC hybrids, CNG, ethanol, flex-fuel, light-weighting, and other fuel-efficiency technologies. Now, our viewers, therefore, the response to CAFE 3 would most likely be a combination of EVs, hybrids, CNG, flex fuel.

Exactly, sir.

Yeah, absolutely. Light-weighting and power-trail agnostic products is what would be. Lightweighting products on EV platforms of key OEMs, and Cafe3 is further strengthening this theme. First one, weight reduction.

Is my understanding right as the OEM would prepare for this norm from six months or eight months, one year prior?

Standardization, and we are adding in lightweighting portfolio, apart from control arms and links, we are also adding torsion beam and subframes. This entire portfolio will lead to a content increase. We intend approximately adding almost 4k to 10k in content because the portfolio, content increase because the portfolio enhancement.

Okay, okay. Sir, in terms of, again, coming back to our gross profit question, repeating the, you know, the earlier participant which he asked. And in last, in fact, not this quarter, last two, three quarters, we have been underperforming the volumes in the passenger vehicle industry, if you consider any ways, like why growth, or if not underperforming, we are on par with the volume growth. So, we are not seeing any kind of You know, value addition there, because we are constantly adding new products in light weighting and other than emission products. So, that is why the question is being raised that is there some dilution in the market share which is happening in our products. So, if you can, you know, throw some light more clear on this or maybe share some presentation. You know, where you bifurcate, what kind of growth in each segment and, you know, what kind of value addition minus the value of each segment. So that will give us a very clear picture how our company is performing on a cost of basis vis-a-vis the industry.

Thank you very much. There are a couple of parts to the question. I will take them one by one.

I'm sorry to interrupt. Mr. Ankur, I would request you to please come back in the queue for further questions. Thank you. The next question comes from the line of Meir Bora with Equator Securities. Please go ahead.

Yeah. Hello. Thank you for taking my question. Jiri, sir, you can just complete the previous participant's question. I think it was left. So, maybe you can complete it.

Right. Sure. So, basically, the growth, as rightly mentioned, has been broadly in line with the industry growth. All of you would have seen a lot of orders being announced in FY25 as well as FY26, particularly in the new areas of growth, which are lightweighting as well as exports. Now, you would have also noticed some of the SOPs have taken place towards the second half of FY26. And good number of orders will see SOPs this financial year and next financial year. And as a result, you know, the real impact of these orders will be visible in our growth as we move along. So, so far, absolutely right. This is not clearly visible because impact is limited as these have gone into SOPs recently only as the ramp-up takes place. As new orders see SOPs, we will start seeing the growth. And on the other disclosures, as we mentioned earlier as well, we are in the process of implementing SAP, and gradually we would know what more we can share to give a better idea about our growth in due course of time. We will keep updating all these stakeholders in our quarterly calls, maybe in the next couple of quarters. We would get back on that as well. Okay.

So, going ahead with my question here. So, sir, basically I got a lot of orders in terms of emission component systems for exports business. So, just one thing here. Does this also have an element of catalyst or this is without X of catalyst kind of orders?

As we explained that in the export, our focus is on CV emission components, temperature control tubes, genset emission components, and small agri-genset exhaust systems. Specifically, to your point, whatever we have announced till now does not have a catalyst component in the export orders.

Okay. All right. So, this would be something, it would be pure revenue, which will come through. And, yeah, so this is one. Apart from, let's say, my question was on to the CAPEX outlook which you're looking at. So, till now, I think we have the suspension plant which is up and running now. But seeing the good order intake which is coming into that segment, and apart from that, we'll be also going through into other lightweighting components. So, what kind of CAPEX strategy do you have here or some number here? What can we see in terms of CAPEX expense for the next two years?

Thank you. So as far as FY27 is concerned, our broad capex guidance is around 90 crore to 110 crore. And we are increasing this because we are augmenting R&D capabilities in light weighting and readiness for new emission norms. And a lot of SOPs of new programs are also taking place this year. Now, Investments in new facilities to expand the footprint as per customer needs will be definitely over and above this yearly capex range, which I just mentioned. And besides this, additional capex we will do in due course of time for growing lightweighting and powertrain agnostic component business. Investment definitely, you know, as we have said earlier as well, will remain linked to customer schedules and order visibility.

Okay. Okay. And in terms of emission side, we don't require any further CAPEX to deliver the export orders as well. Like no major CAPEX except for the Uttarakan plant.

Yeah, so I think in emissions, you know, the capacity augmentation is relatively straightforward and CAPEX involved is also very limited. So it's not very sizable. You rightly mentioned about this facility. Depending on the customer needs, whatever we have to incur in line with their requirements, definitely we will always be engaging with the customer.

All right. Okay. Okay, sir. So, I'll stop here. I'll get back into the queue. Thank you.

Thank you.

Thank you. The next question comes from the line of Manteet Arora with Arora Wealth Advisors. Please go ahead.

Thank you for the opportunity. Am I ordered? So, I have some questions. One is around the TREM-5 regulation, the other is around the PURE. So, from the TREM-5, you mentioned that the new notification, draft notification, limits our opportunity to mufflers, et cetera. So if you can, you know, expand a bit more on that, I believe that, you know, from October, Less than 25 horsepower are probably included, and then the 25 to 50 will get into 2032. If you can, you know, explain a bit on the notification and how, you know, if there is something that we can still serve in this market, and what would be that opportunity for us for those.

Okay, yeah, sorry I couldn't get your first name, so I would address Mr. Orwa. So your question is around TAM5. I think you broke in between, but I broadly understood your question. So one is around what TAM5 notification says, and then what would be the opportunity size for us. So there is a revised draft gadget notification. Now this notification now proposes a power node-wise basis. The different norms and timelines for different kilowatt categories. If I have to go node-wise, there is one node which is below 19 kilowatt. The TREM-5 is applicable from October 26. This is a very limited small market. The key relevant segment is 19 to 37 kilowatts in which the revised TREM-3 AA notification is valid. Now, this is roughly 75 to 80 percent of the market. Because of the revised notification, the opportunity is likely to be around muffler and integrated muffler design. Now, this will be a very small, much smaller niche segment, and what we are awaiting is further design finalization to estimate the actual opportunity size. The next kilowatt is 37 to 56, in which the TREM 4 is already applicable. This is again a small volume business, and as Sharda, we are already present in this business. Then there is about 56 kilowatt in which TREM 5 is applicable from October 26. Now, this is not material again for domestic tractors. So for us, there are two impacts, 19 to 37 kilowatt, the new TREM CAA, which will be around integrated mufflers. We await the design confirmation to get the opportunity size. It's a niche, small size. The second advantage which we have got by TREM 5 is there is a lot of While we have not done any CAPEX, but there is a lot of R&D capability, which we have built around 3.5, which is helping us engage with the customers. And as we announced, there is a new export order, which we have got from one of the top three agri-equipment manufacturers, which will start the SOP from Q1-FI-28.

All right, thanks. So, this is the muffler and integrated muffler market. Is that something we are already present in or supplying to or this is a new market and, you know, once we get the design?

So, as a capability, we have very deep capability in this particular segment because of the products which we make and the business which we do. Now, the specific design, which this 19 to 37 kilowatt segment would need, for which we are engaging now with the customers. Now, this would essentially be a combination of design capability and manufacturing capability, both of them which we have. So, we have now engaged with the customer, which we are in the process now, and leverage the opportunity. But, as I said, it's a smaller niche opportunity now.

Yeah. What I was trying to get at was that this will be over and above what we do today. Yes.

Absolutely. Absolutely right. Absolutely right. We have spoken about the growth. This particular aspect we have not spoken about. So, this is over and above.

Okay, so let's say 2,000 crore-voltage potential market with catalyst and everything, with mufflers and integrated mufflers will... Will it be like a 10% of that market, 20% of that market, any way? No, I do not know.

I do not know about this 2,000 crore market. I guess this is sort of your estimate. But in the muffler, integrated muffler, as I said, at this point of time, it's a much smaller market. Very difficult for us to say what the market size would be and what the percentage would be. This would, essentially when we get the final notification, start engaging with the customer, we will get to know the size. Supposed to say that this is almost a 75 to 80% of the tractor market, 19 to 30 kilowatt is what we are talking about.

I am sorry to interrupt, Manphit, I will request you to please come back in the queue for further questions. Thank you. The next question comes from the line of Darshan, with Rikhar. Please go ahead.

Hello, am I audible?

Yes, Darshan. Darshan, right?

Yeah. I had a few questions. So firstly, as you have mentioned that lightweighting vertical being a megatrend in the future, so currently it comprises about 10%, right? So how much do we aim it being as a percentage of total revenue in the future?

Now, as we explained that the percentage revenue, for example, this year itself, we were last year 9% and we continue to be 9%. Now, this percentage on the overall sale is dependent upon top line. You know, mathematically, denominator, numerator is dependent on the top line. So, while in terms of value, There is a very decent growth in light weighting, but our percentage revenue has still remained 9% because the top line has got impacted, as GD explained, by the catalyst price increase. So it is difficult for us to... But if I put the FI 27 orders and if I put the FI 28 orders, we would almost be three times from what we were last year in FI 28. So that's the kind of increase which is going to happen.

Okay, that's helpful. Thank you. And also, if you could give a little clarity on how much margins would be in the light weighting vertigo.

So, light weighting vertical has very good margins, and while this is obviously a very new segment for us, steadily growing for us, and gradually, as it stabilizes, the margins will also stabilize further. At vertical level, obviously, you know, we don't share the margins. However, these will continue to be decent margins. Emissions definitely, you know, as we have said previously also, will be relatively higher, but margins in this business also will be quite good.

Okay, and one last question I have is that we had a good amount of orders in the last quarter as you have mentioned and in the presentation as well, but the inventories have risen quite rapidly from around 10 crores to 75 crores, you know, so is there any supply chain disruptions or anything if you could give a little bit of clarification on that?

Uh, which number again, sorry, where did you pick up this data of inventory increase?

Sir, this is in the cash flow statement.

Two parts to the question. One is, are we facing any supply chain disruption? The, uh, the market, as of now, there is no supply chain disruption. The volatility continue. We are keeping an extremely close watch on this entire development, but as on today as we speak, there is no supply chain disruption. On the inventory, I would request you to take that.

So, Darshan, I got your point. So, you have looked at the inventory levels here. So, if you see, you know, there has been steep growth in revenues this year, 30%. So, obviously, inventories have moved in line with that. If you look at it on a number of days basis, these have rather improved. So, this is purely on account of overall increase in scale of operations. So, this is nothing unusual there.

Okay, that's helpful. Thank you and all the best for the future.

Thank you. Thank you so much.

We have a follow-up question. It's from the line of Kreet Patani. Please go ahead.

Thank you once again. First question, like you mentioned that we have a higher margin emission and little bit less than emission in suspension business. And I understand that you cannot get the exact, you cannot give the exact breakup of the margin. But if you could just mention the differential of the margin, like it will be 100 basis point or 200 basis point or 300 basis point for full year of F526.

No, Pete, you know, we, as a policy, we do not share the vertical level margins, so I cannot share them indirectly as well. However, as I said, there are good margins in this vertical, and This vertical is still, you know, growing and will grow a lot in the next couple of years on the back of the orders which we already have. And we expect the margins to improve further from here and which will be visible in the business performance as we will see all along. I think that is the next I can share at this stage.

Thank you. Thank you. And apart from this, all the order orders which we have mentioned in the export. I believe export will be requiring a higher working capital for the export. So will export margins be better than our company's margin, or it will be also on the same level?

Yeah, so broadly, you are right, export margins are relatively... are going to be higher, and as you rightly said, there will be an increased working capital requirement. So, on net basis, these will broadly be in line with the domestic business margin. So, at net level, these will be broadly in line.

And the annual value which you have mentioned in the PPT for export, for example, just taking an example, if we take any customer in which you have mentioned that it will be starting from quarter three or quarter four of FY26. So will we see on FY27 entire basis the annual value which you have reported in PPT or it will take one or two years to gradually ramp up and then we will see two years later that this pull number?

Thank you. Obviously, at order level, as a policy, we don't share any specific numbers. However, whatever is the outcome against any particular order, this will be strictly in line with the customer requirements. The annual value is based on the customer guidance, and accordingly, that is arrived at. Precisely, what will be the revenue will entirely depend on the customer schedules and their requirements, and we will abide by that. So annual value is just a projection, which ideally should be the case, but this can move either way based on ultimate requirement of the customer.

Thank you, sir. The next follow-up comes from Ankur Podhar. Please go ahead.

Thanks for taking my question again, sir. Sir, can you share some thought on your vision behind your association with Dongi and what kind of industry will we cater, CD or PD, and what kind of market size will we cater in these kind of products, if you can share some thoughts.

Okay, so there are two, three parts again to your question. So, let me explain the DONGI Association. So, with DONGI, the association is a technology licensing agreement that enables us to expand our suspension light weighting portfolio from our existing control arms, and we will include subframes and torsion wheels. So, this essentially deepens our participation in powertrain agnostic products. In lightweighting, we have already increased our market share in control arm and link to 14%, and basis FI27, FI28 order booked, we are going to grow it further. This will strengthen our capability in the segment, and we also have localized R&D, manufacturing expertise, and Dongi will give us the global access to global technology and benchmarks. Now, Dongi Association, as I said, will help us add quadrant beam subframe to the portfolio. This will help not only penetration, but also help in content per vehicle, which would depend upon the architecture and the product scope. And this is where our light-weighting vertical portfolio will grow further. We are already engaged with Dongi and focusing on knowledge transfer, manufacturing and design technology, improvement of existing products, and the operational efficiency improvement. The subframe torsion beam will essentially supplement and add to the portfolio and content increase. And as we are talking about CAFE 3, these norms will also accelerate the platform standardization. Customers are always talking about platform standardization across multifuel technology.

Okay. And do we export market for these products also? Will we be able to export under this agreement?

So, as of now, the agreement TLA is for India. However, India-based exports are included in the TLA. Which means I manufacture India and export, that's part of TLA. But this TLA is valid only for India geography, if you're talking about only this TLA. In our export, as I explained to you, in the product segment, we are targeting emission components, we are targeting temperature control tubes, we are targeting heat sheets, and we are targeting small agri and genset components.

And when do you envisage the SOP will start under this agreement?

So, as I explained, there are two parts which we are talking about. We are talking about Our operational efficiency improvement, improvement of our existing product portfolio. And the second part is adding the subframe and torsion beans. Now, subframe and torsion beans, the discussion have already started with UAM. These are little long gestation period. So, over a period of few quarters, we anticipate to see success in this area.

Thank you, sir. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.

Thanks a lot. We appreciate your participation in today's earning call. We trust that we have addressed all your queries. Should you have any further questions, please feel free to reach out to our investor relations advisor, Anstin Jan. Thank you, and have a pleasant evening. Thanks a lot.

Thanks so much, everybody on the call. Appreciate it. Thank you so much.

Thank you. On behalf of Victoria Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Thank you.