SPR Auto Technologies Limited (SHRIPISTON) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SPR Auto Technologies Ltd. Q2 and H1 F527 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. Today from the management, we have with us Mr. Krishnakumar Srinivasan, Managing Director and Chief Executive Officer, Mr. Prem Rathi, Executive Director and Chief Financial Officer, and Mr. Nilesh Jain, Head Legal and Company Secretary. Before we begin, let me remind you that this discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It may be viewed in conjunction with the business risks that could cause future results, performance, or achievements to differ significantly from what is expressed or implied by such forward-looking statements. I now hand the conference over to Mr. Krishnakumar for his opening remarks, post which we will open the floor for an interactive Q&A session. Thank you and over to you, sir.

Yeah, thank you, Anam. Good evening, everyone. Thank you for joining us for the Q2 and H1 FY27 earnings call. We hope you have had the opportunity to go through the financial results, the investor presentations, and press release published on the stock exchanges in the company website. I am really pleased to share that SPR Auto Technologies has delivered yet another quarter of strong growth. In Q2 FY27, our consolidated total income grew by 61% year-on-year to Rs. 16,746 million, and consolidated EBITDA grew by 29% to Rs. 3,004 million. For the first half, consolidated total income stood at Rs. 31,738 million, up 56%, with EBITDA of Rs. 5,831 million, up 28%. Now, what makes this performance really noteworthy is the environment in which it was delivered. Through the quarter, the global economy continued to face tremendous geopolitical tensions, volatile commodity prices, supply chain disruptions, and elevated input costs. Our ability to keep growing through these headwinds reflects the strength of our diversified business model, the depth of our customer relationships, and the commitment of our team. I also want to underline that this growth has come from all our businesses, including the recent acquisitions of the three entities of Antolin India. Our standalone business grew its total income by 17% year-on-year in Q2 to Rs 10,500 million. Our core franchise continues to grow on its own strength, and the businesses we have added are building on top of it. The domestic automotive industry remained on a strong growth trajectory. and was an important support to our performance. Passenger vehicles, commercial vehicles, two-wheelers, and three-wheelers all recorded their highest ever Q2 sales. The weighted average industry production grew by almost 17%. When we take the two-wheelers with single cylinder, the passenger car with three cylinders, the big multi-commercial vehicles with six cylinders, etc. When we do the weighted average, the industry production has grown by over 17%. This demand has been broad-based, supported by the GST 2.0 reforms, resilient rural and urban consumption, improved financing, infrastructure-led activities, and healthy freight movement. Our strategy of investing in technology and capacity ahead of demand has allowed us to This is also a good moment to reflect on how far SPR has traveled from a pistons company to a multi-product franchise. Until about five years ago, we were a company of four legacy products, piston fins, piston rings, and engine valves. Today, SPR Group is a multi-product franchise spanning core engine components, high-precision injection molded components, EV motors and controllers, and the automotive interior and lighting solutions. Agnostic products now contribute more than 35% of our consolidated revenue, and nearly 60% of our business is relatively insulated from shifts in powertrain technology. The aim reflects the broader transformation of the group into a more diversified mobility and advanced automotive solutions platform, with each business contributing to its future growth. The legacy powertrain components business continues to outperform its end markets, supported by new program bins across alternative applications and additional piston capacity from the Sunbeam assets. High-precision injection-molded components are gaining momentum from emerging applications such as ABS systems for two-wheelers, supported by capacity expansion in Nimrana and Noida. The EV motors and controllers business continues to scale through our new Coimbatore facility and a growing customer base, while the automotive interiors and lighting business is acquired from Antolin are delivering strong operational financial performance alongside successful integration and new customer wins. Importantly, new programs and customers across the group provide good visibility on future growth, while our continued focus on synergies, operating efficiencies, and integration is expected to support sustainable long-term value creation. Now, coming to our profitability, the EBITDA margin for the quarter was 17.9%, which remains healthy for our industry. Margins were temporarily affected by factors that are largely external, including elevated commodity prices, elevated direct material costs like tools, oils, etc., a change in the sales mix, and the revision in the minimum wages. Commodity movements are usually passed through to our customers under a back-to-back arrangement with a lag of about a quarter. Given that a significant part of this impact is timing-related, we remain focused on areas within our control to drive greater operational efficiency and cost competitiveness. Our key initiatives include cost optimization, plant debottlenecking, and productivity improvements, affordable automation and digitalization of plants and processes, thereby streaming the supply base and strengthening backward integration and optimizing inventory and logistics planning. We are also increasing the use of renewable power, including the new power purchase agreement with Sunshare for our Ferry and Nimrana facilities, which is expected to support further optimization of energy costs. Coming to the bottom line, the elevated finance costs by Rs. 234 million quarter to FY27 and Rs. 486 million for the first half FY27 to fund the acquisition of the three Indian entities of Antolin had a temporary effect which shall be normalized once the debt is repaid. Excluding this impact, PBT grew by 23% in Q2 of FY27 and 22% in H1 of FY27. Our businesses continue to generate strong cash, which allows us to fund working capital for higher volumes and to continue investing in capacity and newer technologies ahead of demand, apart from doing more M&A possibilities, looking at more M&A possibilities. Most of our capacity expansions are backed by firm business orders from all our customers, including aftermarket and export customers. During the quarter, we also completed a qualified institutional placement of Rs. 10,000 million. The strong participation from marquee, domestic, and global institutions reflects the broader market's confidence in SPR's strategy and growth prospects. Coming to sustainability, sustainability remains integral to how we grow. Alongside the renewable PPA in Rajasthan that we have recently signed, our ESG journey continues to receive external validation, which is reflected in the ratings and recognition, which we have received all across. Looking ahead, the momentum in the domestic automotive industry provides an encouraging backdrop. While the global environment may remain dynamic in the near term, we are confident in our ability to navigate it. Our resilient core business, our expanding power train agnostic portfolios, our investments in capacity and technology, our sharp focus on cost discipline, positions us well to sustain our growth momentum and create long-term value for all our stakeholders. I thank you once again for your time and your continued support, and I would request the moderator to open the floor for questions. Thank you once again.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone 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 Vivek from DSM Mutual Fund. Please go ahead.

Congratulations on strong performance. My questions are around the CapEx plans for the company. So what would be the CapEx plans for the current year, given the fact that you've added a lot more products? And even in the working capital, I just noticed that the trade payables had come down. Is this part of a strategy? I mean, was that a higher cost and you're decreasing with lower cost? Those are my only two questions.

Yeah. So, our CapEx plan, you know, we are, as I said, we are actually putting in capacities ahead of the market. We are expanding, you know, in Pitampur. We are also expanding. We have recently expanded in Pathredi. We are also putting up an expansion that is going on in Ghaziabad. But as we speak, there is an expansion in our, you know, there is a capex that we are adding for putting up extra capacity on our, you know, injection molding facility, precision injection molding facility. We are putting up a complete new plant just next door to our existing plant in Imrana. We are also putting in a lot of capex in our TGPL facility. And at the same time, in our interior facility, we are putting in a lot of capex for growing the business as well as for growing the capacity across multiple product lines that we have in Ventolin. So, all across, we are putting a very, very healthy kind of capex across all the segments of our business. We are very confident that we will be able to grow the capacities ahead of the market and be ready for the future market as they open up. Coming to the second part of the question in terms of trade payables, presently if you really see our level of working capital across the group as well as in our standalone basis, you will find that the overall working capital levels are quite normal. Even at the increased level of manufacturing that we have because of the market, we are able to maintain a fairly normal level of working capital. And with the supply chain situation and other things also, even though at some places, maybe at raw material stage or in some of the cases, maybe in processing stage, Depending on, for example, in the business in precision plastic, we have to ensure that the raw material is kept available for at least three months of production. So, those kind of decisions have been taken, but across the group, overall, the working capital levels are quite normal.

Perfect, sir. Could you just give us guidance in terms of the numbers in rupees close for CapEx for the year?

We normally do not give these numbers because obviously, you know, this number keeps on changing with every discussion that we are having. You know, today we are already sitting on probably another three or four decisions that we have to take and the CapEx plan will change tomorrow. So we don't want to, it's not a fixed situation. So as a result, we don't give those numbers. This is a very sizable number.

Okay, sir. Thank you very much and wish you all the best.

Thank you very much, Vivek.

Thank you. The next question is from the line of Radha from Motilal Oswal. Please go ahead.

Hi, sir. Thank you for the opportunity. Firstly, congratulations on securing the PLC for the speaker-less acoustic headliner technology. Based on the feedback received from customers, what proportion of industry do you believe could adopt this technology in the next two to three years, and what would be the content for the vehicle of this product as compared to conventional headlining?

Yeah. Hi, Radha. Thanks. So, basically, you know, you are asking about our new, I mean, the new technology of headliners?

Yes, sir.

Basically, there are a couple of new areas that we have been working on. And, you know, I'm very happy to state that we have got nominated by many of our customers for some of their future programs, including all the electric vehicles. So, actually, with headliners, of course, the overall design depends on the customer based on what kind of sunroof he wants to provide. If it is a minor sunroof, it's overall the complete panoramic sunroof. Based on that, the whole technology changes. Now, as far as the new technology is concerned in terms of, you know, the Immersa technologies and others, it will keep varying depending on the customer's requirements. And presently, we are working with at least two or three customers with whom we have already given proof of concepts and various discussions are going on. So, I don't see any reason why this should not get adopted by a larger group of customers in the country.

And so, what would be your estimate of content for vehicle of this headliner versus the conventional with Sunroo?

Well, it varies from vehicle to vehicle. In a small car, it could be, you know, ranging from somewhere around 15 to 18 percent improved realization to it could go, you know, depending on the bigger vehicles and the kind of levels of, you know, sound quality that you need, it could go even up to somewhere around close to 30 to 40 percent.

Thank you, sir.

Over the first half, I think we have maintained a steady 17% growth in the standalone business. And, you know, that business has come, if you take the weighted average of all the, you know, growth in the market, weighted average comes to around close to 17%. So we are more or less maintaining our growth rate in line with the market. And, you know, I personally feel that, you know, with the way things are going in the auto segment, There is no reason why we cannot maintain a good CAGRC. If you remember our earlier discussions, we have said that the market is expected to grow at a compounded annual growth rate of around close to 7% to 8%. And we are still maintaining that. And we hope that we will be in a position to, you know, and we are putting capacities almost in all the areas, you know, including our legacy business. Because even with the legacy business, we see that with the 7% or 8% market growth and kind of penetrations that we have with the electric segment, we will still require more ICE engines in 2030 and 2032. And now with CNG and the combination of CNG, HCNG, and all other powertrains, there is a fantastic possibility to keep increasing the ICE products. And hence, we expect that we will continue the growth in all segments.

Sir, actually, I was asking for the next two years. I understand FI27 is a high base.

Yeah. You mean for the next two years?

Yes, sir. For the next two years of FI27.

Yeah, so I expect that the next two years will get more or less, you know, toned down to the CAGR to achieve a total CAGR of around 7 to 8 percent. That's what I expect. I don't expect the rate of around 17% to 20% to continue for the next two years.

Wonderful. So, last question, sir. The presentation mentions that every business has run new programs and customers. So, could you please elaborate a bit on the order wins and execution timeline of those wins across businesses?

Thank you. We are looking at the kind of addition in extra businesses that we are winning, over and above our regular businesses. I should expect anywhere between, you know, from a mature year win standpoint, it should be over 1,000 crores, easily, between all our businesses. This is over and above our existing regular standard businesses of around, you know, what we maintain to a tune of around 6,000 crores that we are seeing. So, we have a fairly good, sizable business volume wins, and we are very confident that all our businesses will grow.

That's it, sir.

All the best to get in.

Thank you, Radha.

Thank you. The next question is from the line of Vijay Pandey from Axis Capital. Please go ahead.

Hi, sir. Thank you for taking my questions and congratulations on a good set of numbers. So, firstly, on last quarter, you said that RM impact was around 30 crores. Just if you can quantify what was the impact for this quarter, and how much can we expect to see the recovery of upcoming quarters?

Yeah, see, the RM impact, again, is something that depends on the kind of growth the customer is having on the volumes, as the volumes grow. So it can vary from quarter to quarter. Now, but as far as we are concerned, we are completely backed by a back-to-back arrangement with our customers. So, all RM impacts are normally covered 100%. It may have a lag of, you know, one quarter, primarily because we do also carry stocks, and, you know, there are stocks in the pipeline, in the finished goods, etc., etc. So, we normally have a lag of one month, three months, one quarter.

Thank you, Sir. Right now, we are seeing the steel prices continue to be elevated, but aluminum prices are coming down. Like, if you can help us understand in terms of your RM basket, how does it look like going forward? Because we also make the steel piston and aluminum piston. So, that will be helpful to understand.

It's a small quantity which we do for our export customers. At this stage, our focus is more on aluminum and its movement. When aluminum prices come down, we also have to pass it on with a lag of one quarter to the customer. So, basically, it's not that, you know, it's going to be extremely beneficial in terms of making a big bottom line impact. It normally does not because it gets more or less evened out with the kind of, you know, pass-through that we have to give with our customers. Now, if you really see across the group what are the major commodities, you'll see that aluminum is one of the commodities, copper is another commodity which we use in our motors, controllers. Then there is aluminum castings that we use there, and we also use aluminum for our pistons. We use steel for our engine valves. So it's a combination of all kinds of raw material, including plastics, and in plastics also there are various grades of plastics, including PPE and everything. So as a result, you know, it varies. The whole recovery formula is based on the respective raw material, And it varies from customer to customer and the kind of, you know, value add that we are putting for that customer based on the product. So, as a result, it becomes very difficult to generically say that, you know, aluminum will be only this much or plastics will be this much. You know, it keeps on varying.

Well, what actually I was trying to understand that given the entire RM basket for hours at consolidated level, because some products are going up and some are coming down. Do you expect Q3, RM impact to be higher than Q2, or it will be slattish? Like, what is your expectation going forward?

Yeah, no, our expectation is the war, if both the war ends, I think like it. If even one of it ends, I think I see a situation where there could be an impact crisis coming down. While we could have aluminum, especially with some of the, you know, supply chain issues getting solved in the Middle East for aluminum, aluminum prices have started coming down, and also there have been alternate supply chains which have come up from various other parts of the globe, which have helped in reducing the prices of aluminum. But however, you know, the prices of oils, the prices of, you know, direct materials, prices of tools, dyes, continues to go up because of the situation of the war. So it all depends on how the war situation will actually pan out. So we are closely watching the situation and accordingly also making strategies to ensure that we are able to cover our costs. So, if you really see our first-half performance, you know, while the top line has also grown, we have also seen that the bottom line has also grown, and at the same time, we are also keeping a very close track on the overall movement of the commodities.

Sir, in terms of the other products, the subsidiary products, if you can give a breakup of the revenue between Antol and EMFI and plastic business for second quarter or either first half?

So, I think we have given some kind of a reference to that in the presentation, so you can just have a look at that.

Okay, and lastly, sir, in terms of the ambient lightning, so we are seeing an increase in adoption here. Currently, is it fair to assume that the current adoption date in terms of ambient lightning will be around mid-teens, and this is expected to go up? Like, what is your expectation on the ambient lighting side?

It's growing much faster than our, you know, than all the businesses in the interiors business. So, the lighting business is actually doing extremely well, and we have been able to win some excellent new programs also to the customers. So, we are quite satisfied with the growth rate that we are seeing now.

Okay.

Thanks, Vijay.

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have follow-up questions, please rejoin the queue. The next question is from the line of Ronak Shedda from Avriva Capital. Please go ahead.

Hi, sir. Thanks for the opportunity. Just one clarification. If the commodity prices were to stay at these levels, ideally we should see some sequential improvement in standalone cross-murges. Is that understanding correct? Because you will have a lag effect of what has happened in this quarter?

Yeah, if they were to stay at this level that it is in today, on the commodity side, yes, we could see some improvement, but on the direct materials, if the wall remains at the condition that it is in, if both the walls are still going on, then we expect the prices to go up on the direct materials. So, there could be some plus-minus effect, but, you know, as a team, we are all working towards ensuring that we are able to maintain our margins.

Perfect. So, the second question is on the plastics business. You did mention in the presentation that we've won orders. Just if you could talk more, give some more color around this thing in terms of where is this value-add products? Are we winning customers for the same product or are we adding new products in terms of whatever the opportunity we're seeing on the precision plastic side?

Yeah, yeah. Actually, what happens is in the precision plastic, if you really see the two wheelers, there has been a regulatory change of, you know, introducing the ABS system. So once you have the anti-skid braking system, you need certain, you know, products from the precision plastic side, which needs to be added into the system, along with the ECU and the, you know, for the braking, on the braking side. And all these are parts which actually come as the precision plastics, and this has to be actually, so we are putting up a huge facility in, you know, in Nimrana, which will actually address some of these requirements. We have already won the businesses from the customers, and we are already putting up facilities to ensure that we are able to start the supply. We expect that the supplies will start by April. The customers have given us a deadline that by April they have to introduce this to most of their end customers, which are the two-wheeler manufacturers. So as a result, we will have to ensure that our products are ready to be delivered by April.

Okay. So, just last thing, we actually, at the time of Antolin acquisition, we did talk about some synergies between our plastics business and Antolin's business. Are we on track in terms of kind of capturing those synergies?

Yeah, yeah. We are perfectly on track.

Perfect. Thank you so much, sir, and best of luck.

Thank you, Ranak.

Thank you. The next question is from the line of Puneet Gupta from Girid Capital. Please go ahead.

Good afternoon, sir. Thank you for the opportunity, and congratulations on a good set of numbers. I just wanted to ask regarding our gross margins. I understand that part of this is due to a difference in mix in the standalone business between OEMs and aftermarket. Do we plan to change the mix back to recover gross margins as well, or are we keeping this mix forward in coming quarters?

No, actually, what is happening is, you know, see, when you, you know, let's say that we are operating at a capacity utilization of 75 to 80 percent and suddenly market goes up with 30, 75 percent, the OE alone, then, you know, you tend to ensure that we should not lose any of the market share. And you'll see that we have not lost the secret share. We have ensured that all our customers' requirements are met. And that's why we have to, you know, do some change in the mix between aftermarket exports and OEMs. But in the export also, we have direct OEMs to whom we can't make any changes. So as a result, we have to balance all this out and ensure that we are able to, you know, meet all the... That's what is the mixed impact that we are talking about. As far as going forward is concerned, we are also putting in a lot of capacity addition across all the businesses. That will ease out all the situation that we have, and we don't expect that there will be any issue with regards to capacity.

Understood, sir. And another question regarding potential acquisitions that we're doing in the future. Do we plan to raise any more debt or equity?

We are planning to raise any debt or equity at this stage. It all depends on the kind of acquisitions we are able to tie up. But presently, as we speak, we are also looking at more acquisitions. So it's not that we are not sitting tight. We have a fairly good balance sheet. Balance sheet is supported by a fairly good cash balance. So, we expect that we should utilize it in a proper manner, and accordingly, we are looking at opportunities.

Thank you, sir. Thank you for your time.

Thank you, Puneet.

Thank you. The next question is from the line of Harsh Shah from Seven Rivers Holdings. Please go ahead.

Yeah, hi. Good afternoon, sir. My first question is again on the gross margins. So, we used to operate at around 60% plus 50% but now, last couple of quarters, we have come to somewhere around 55-56%. So, how much of this decline is because of mix and how much would you attribute to raw material inflation that is unrecovered and that we can recover going ahead?

It's a very complex calculation, Harsh, because what happens is, it's not as simple as just saying that, okay, this much percentage is only because of mix or this much, because you also have a lag period of quarter. So, what happens is, you know, and these quarters are based on, you know, some of the customers, we have a quarter starting Jan, March, and then some we have from April. So, it is a mix with variety. In some of the customers where we have, let's say, we have started business in the month of February, the commodity pricing starts from that time to three months, you know. So, it's a very complex calculation, but on an overall basis, if you really see whether we are recovering all the commodities, more or less we are recovering all the commodities, gross margins will vary, you know, because of mix and the combination of this time lag effect. How much of it between this 4 to 5 percent, what impact is because of mix and what impact is because of time lag, very, very difficult to calculate.

So, sir, when you say that we eventually recover the raw material price hike, now our EBITDA margin on standard level has come down from 21 percent to almost 18 percent. So, should we look at this 18 percent as a new normal going forward?

No, as far as the standalone business is concerned, it has not come down to 18%.

It has. I mean, excluding other income, our core EBITDA margin is somewhere around 18% for Q2.

Yeah. So, if you really say, you know, it is 19.9% in Q2, which is almost 20%, which, from my standpoint, is, you know, amongst the best in the industry. And there is no reason why a 1% to 2% EBITDA drop is primarily because of the mix that we see. Most of our other costs are getting covered. We are able to, you know, improve our costs, and we are able to see that we are able to manage the P&L in a better way.

Okay. And, sir, since the Iran war began, there has been, you know, greater affinity towards EVs, especially on the two-wheeler side, and to some extent, even on the passenger vehicle side. So, how do we see the industry shaping up? I mean, when you say that the overall industry could grow at 7% to 8%, and considering that EG penetration is now starting to pick up pace, so should we think that ice volume could grow somewhere at around 5% to 6%?

You know, the way it has to be looked at is from a penetration standpoint. You know, so from a penetration standpoint, we expect that by 2030, you know, the penetration levels, which are at around 9-10% now, we expect it to go to between 15% to 16% by 2030 across all segments of the market, Which means that, you know, when we expect a 15 to 16 percent penetration in a span of three years, we also expect the growth to be in the region of around 7 to 8 percent, which over three years would mean something like a 24 percent increase in volume. So a 24 percent increase in volume with a 15, 16 percent penetration, we still need more ice engines, you know, maybe of different powertrains. Now, what is happening, if you really, and this is something which has been understood by all the OEM manufacturers, and that's why you see that all of them are going to multiple powertrains, including Mahindra, including Tata. They all realize that it is necessary for them to be present in CNG powertrains, necessary to be present in, you know, biofuels, also in diesel, also in gasoline. So, they are investing into multiple areas, and as the customer moves, we also move. So, there is no reason why we should not invest into areas where the customer is already investing. And we are talking about programs which are going to see the light of day sometime in 29, 30. We are already working on those ones.

And the last question, the next two years, we are going to spend rupees 100 worth of capex. What could be the rough split between existing business, including Antolin, and acquisition out of the 100 rupees?

No, there is no strict formula for this. You know, what happens is it all depends on the kind of businesses we win. If we win, let's say, you know, the proportion of win is more in Antolin, but Antolin has a very good asset turnover, so we don't need to really put that kind of capex that is required maybe in some other business, which has an asset turnover 1 to 1. So it varies from business to business. That's why we don't give these figures because these could be very misleading and people could plug in these kind of numbers into their model and then suddenly find that the growth rate is looking different, which is not actually the case. So that's why we normally give the guidance that we will grow as per the industry rate and you will always find us more or less investing into the business also in the capex form. This thing also will be more or less following the industry trends.

Sure, sir. Thank you so much.

Thank you, Arsh.

The next question is from the line of Ravi Purohid from Securities Investment Management. Please go ahead.

Yeah, hi. Thanks for taking my questions, and congratulations on a good setup number. Thank you, Ravi. Yeah. So, one question. So, you know, right now, with the Antolin acquisition, right, our growth rates on a console level are looking very strong. The industry is also doing fairly well. Now, by the time it is March, I think the base would have consolidated with Antolin, fully consolidated. Beyond March 27, like, where do you think our incremental growth could come from? Like, assuming industry is growing, comes back to 5%, 6%, 7%, and we've historically done better than the industry growth. So, if you could just share some insights, whether it is non-auto, whether it is export, whether it is aftermarket, or something else, Yeah,

see, Ravi, I have always in the past also maintained that we would, you know, our hunger for growth is going to be at least we want to outgrow the end markets. If the end markets are growing at 7%, our growth rate has to be far better than 7%. Now, whether that far better is going to be 9%, 10%, 12%, 14%, it all depends on the kind of business wins that we have. Now, and also the kind of products. You know, the mix also makes a very big impact. Now, if in Antolin, let's say we win more of, you know, lighting business, or if we win more of, you know, complete assembly businesses, Like the entire floor console or the head console, etc., the overall turnover will increase tremendously, you know. So, it all, those are the kind of businesses that we are going after, and there is no reason why we should not, you know, see massive, you know, turnaround in the top line, and also hopefully the improvement in the bottom line in all our businesses.

Okay. And just one housekeeping question, sorry, bookkeeping question on the balance sheet side. So, we've raised the 1,000 crore, you know, to the QIP. Yeah. So, have we repaid some of the debt through that, or like, and do we see the interest component dropping off from the next quarter onwards, or how should we see it?

So, the QIP was completed in the end of August, and you will see a small portion of it coming into September in this first half results. But otherwise, you should see the improvement in this thing. Most of the debts that we had have been closed, and hopefully the results from third quarter will show some improvement.

Thanks a lot, and all the best.

Thanks. Thanks, sir.

Thank you. A reminder to all participants, you can press star and want to ask questions. The next question is from the line of Harsh from HRS Enterprises. Please go ahead.

Hello, I'm Audible. Yeah, Harsh, please go ahead. So, first of all, congratulations to the management. You know, what used to be our annual revenue and EBITDA, now our, you know, five years ago is our quarterly run rate from now. And, secondly, sir, I was going through the presentations and annual reports. So, we mentioned about some technological capabilities like DLC coating, tough triding, stellite fladding, PVD coating, etc. Yeah. So, and then, you know, we operate in precision plastic moldings, and piston itself is a highly precision component, you know, to the level of micrometers. And they are all mission-critical components, so to say. So these exact capabilities and technologies have very high-margin applications. If you look at the aerospace and defense sector and mechatronics, et cetera. And even our collaborators like Colbin Schmidt and Reiters, they have, in the past, have seen executed a lot of defense and aerospace-related businesses. So, I would like to get like a slightly longest term, three-year perspective, five-year perspective. How do we look at, you know, an adjacency into the aerospace or defense sector?

Thanks, Harish, for this question. But, you know, frankly, we see a great possibility as far as defense is concerned. You know, on the aerospace side, it's a slightly different kind of industry. It requires a long gestation period. You require various net cap approvals, then you require various tests and other things which takes at least anywhere between three to five years of gestation period in terms of, you know, regularizing the product. So, as a result, consciously, we have decided to focus more on, you know, defense applications primarily for Army and others, where if you really see, we already supply to Shaktiman trucks, we supply to various other defense applications. So, we supply to the vehicle factory in Abdi. So, there are multiple defense applications which we already supply as far as some of these products are concerned.

Okay, and do we see this being a sizable portion going in the future, or will it just be a small part?

See, in defense, it is in most of these defense requirements, the volumes are, while we get fairly good, you know, product categories, but if you really see the volumes are limited. As a result, we don't expect it to make a huge dent to the thing, But as a major player in the Christian arena, it is not possible for us to ignore that business, you know, and ignore that market. So we are going to be present there and we are going to be supplying to the country's defense requirements.

Okay, understandable. And my second question was, recently an article came out that was saying SPR Auto is looking for acquisitions in thermal management and mechatronics. So, could you, I know you can, if something is in the work, you can declare it, but could you shed some more light as to what avenues are we looking at for future acquisitions?

Yeah, so basically, you know, that was something that where I was only, you know, quoted for one particular area. I mean, I, in fact, clarified in that article itself that it's not that tomorrow morning I'm getting into thermal management. So, it's something that was misquoted in the media. But as far as I'm concerned, we are looking at all these areas. What I did say during that time was that we are looking at thermal management, we are looking at mechatronics, we are looking at many other areas, parallel adjacencies that are very specific to the vehicle industry, which will actually help us to, you know, grow the business into related areas. So we have never said that we are getting into these areas directly. So, just to clarify, but whether these areas are not in our radar, it is in our radar.

Okay. Fair enough. Thank you and congratulations again.

A reminder to all participants, you can press star and one to ask questions. The next question is from the line of Vijay Pandey from Access Capital. Please go ahead.

Thank you for allowing the follow-up. Sir, just want to understand our lightning revenue in the past of this year, if you can help us.

It is growing at a very good rate, Vijay, and, you know, at the time when we bought this business, it was almost like, let me put it this way, close to around 20% of our overall interior business, it is growing quite well.

Okay. And, sir, is it fair to assume that in terms of the RM basket, aluminum will be around 50% and steel and copper will be around 25%, 20-25%?

Great call. which makes impact to our P&L. It is very clearly aluminum, steel, copper, plastics, as you can see, all kinds of plastics including PP, and some of the other areas like direct materials like tools, oils, cutting oils, and other things which also makes a very big impact.

And, sir, you also mentioned in your opening remarks about the employee cost increase. So, is this fully involved or should we expect a further increase in Q3?

No, no, it is fully taken. These are basically the new rules that have come up as per the Minimum Bages Act, where there have been change in minimum wages in Haryana and then the consequent effect across Rajasthan and UP and other places. And then we have also had the impact coming out of the PF regulation and the Gratuity regulation, which, you know, of course, Gratuity is a one-time impact, but at the same time, that has to be accounted for sizable, because, you know, our workforce is quite big, and it becomes a very sizable amount for us.

Okay. Okay. Thank you, and all the best.

Thanks, Vijay. Thanks.

As there are no further questions, I would like to hand the conference over to Mr. Krishna Kumar for closing comments.

Yeah, thank you, Anu. Thank you all for joining us today and for your questions. We hope we have been able to address your queries and provide greater perspective on our Q2 and H1 FY27 performance and the progress being made across the group. We remain focused on a very disciplined execution, strengthening our core businesses, scaling the powertrain agnostic portfolio, integrating the acquired businesses well, and improving our operational efficiency. In case you have any further questions, you may please reach out to our secretarial team or our investor relationship partners at Ernst & Young. Thank you once again for your continued interest in SPRL and its other companies and support, and thank you once again for joining us today.

On behalf of SPR Auto Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.