Earnings Call Transcript - XNSE:SJS 2026-11-05

Operator

Ladies and gentlemen, good day and welcome to SJS Enterprises Limited Q2-FY27 Earnings Conference Call. As a reminder, all participant clients will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Sure, do you need assistance during this conference call? Please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jay Kale from Ellara Capital. Thank you, and over to you, sir.

Jay Kale, Other

Thank you, and good morning, everyone, and season's greetings to all. On behalf of Ellara Capital, I welcome you to the Q2 FY27 Earnings Conference Call of SGS Enterprises Limited. From the management team, we have with us today Mr. K.A. Joseph, Promoter and Managing Director, Mr. Sanjay Thapar, Group CEO and Executive Director, Mr. Mahindra Naredi, Group CFO, and Ms. Devanshi Dhruva, Head Investor Relations. I would now hand over the call to Ms. Devanshi Dhruva for our opening remarks. Over to you.

Devanshi Dhruva, Head of Investor Relations

Thank you, Jay, and good morning, ladies and gentlemen. We appreciate you joining us on today's conference call. We will begin the call with opening remarks from Mr. K.A. Joseph, our Managing Director, followed by a business and industry overview from Mr. Sanjay Dharper, our Group CEO and Executive Director. After that, Mr. Mahindra Naredi, our Group CFO, will walk us through the financial performance for the quarter. We will then open the floor for questions. Please note that the duration of this call is expected to be around 60 minutes, with the first 20 minutes reserved for our prepared comments. Should there be enough time for all questions, please feel free to reach out to us via email, and we will respond to your inquiries at the earliest. Thank you once again for your time today. And with that, I will now hand it over to Mr. Joseph for his opening remarks. Over to you, Joseph, sir.

K.A. Joseph, Other

Yes, thank you, Seyvanshi, and good morning, everyone. I trust you all had an opportunity to review our investor presentation and the financial results for the second quarter and the first half of FY27. India's automotive industry grew production volumes by 17.8% in Q2 FY27, led by passenger vehicles at 24.9%. 2-wheelers at 16.5%. Premiumization and the growing adoption of advanced features continue to expand our content per vehicle opportunity. In Q2FI27, SJS witnessed a steady growth of 21.7% YOY in automotive driven by premium products, higher content per vehicle, and deeper OEM relationships. Consolidated revenue rose to 16.9% YOY to Rs. 2827.3 million, led by robust growth in passenger vehicles. Do by 20.4% to Rs. 5,437.3 million. H1-FI27 reported fat of Rs. 1,327.5 million. Higher exports, favorable product mix, and operational efficiency remain central to sustaining profitability as we scale.

Mahindra Naredi, CFO

On the capacity expansion front,

K.A. Joseph, Other

our new SJS Decoplast chrome plating facility in Pune commenced operations in August of 2026. The expansion is also complete, with commercial production starting in Q3 of FY27. Further, the consolidation of Walter Packs, three Rajangau facilities into a single integrated larger plant will drive operational efficiencies and support future growth. With the net gas of 3,318.7 million at the end of September 2026. We have the flexibility to fund capex, strategic initiatives, and potential acquisitions. Going forward, we remain focused on innovation, premium products, and international expansion. Our design and R&D strengths, customer relationships With new program, pipeline, position XA as well for profitable growth. For the business and industry highlights. Over to you, Sanjay.

Operator

Thank you so much.

Sanjay Thapar, CEO

Thank you, Joe, and good morning, everyone. We concluded the first half of FY27 with steady progress on both financial performance and strategic priorities. Our focus on premiumization, deeper customer relationships, and investments in technology and capacity continue to create new business opportunities, increasing our content per vehicle, and widening our presence across automotive and consumer applications. Let me take you through the key updates for the quarter and half year. In Q2 27, consolidated revenue grew 16.9% year-on-year to 282.73 crores, driven by passenger vehicles and a rising contribution from exports. Our automotive business grew 21.7% against industry production growth of 17.8%. Our ability to supply multiple aesthetic products across customer platforms continues to drive growth ahead of industry volumes. Uncertain micros prolongs geopolitical conflicts and a planned rationalization of low-margin SKUs with... Volta Pack India Consumer, OEM, softened the consumer segment performance, partly offsetting strong growth in the automotive and export segments. Further, two-wheeler growth was led by scooters, 30.1% year-on-year growth for Q2, over motorcycles, which was 9.8% year-on-year growth, and which is the core SJS segment that we focus on. A gap that has widened significantly this year, SJS automotive business grew 21.7% against a 13.2% industry growth for passenger vehicles and motorcycles combined, indicating an outperformance by SJS and continued share gains, even as scooters where SJS has limited presence outpaced motorcycles. EBITDA rose 23.1% year-on-year to Rs.896.4 million with a margin of 31%, supported by better product mix, higher exports, and operating efficiency. Despite moderate revenue growth, EBITDA has continued its steady upward trajectory, reflecting the strength of the margin profile and disciplined execution. That grew 34.8% to Rs.583.3 million with a margin of 20.6%. On the capacity front, new chrome plating facility at SJS Dekoplast in Pune commenced operations in August 26, adding 2x capacity and flexibility for new customer programs and emerging opportunities. Our Bangalore facility expansion is complete with a 20% capacity addition and commercial production likely to start in Q3. SJS Display Electronics Private Limited is setting up an automotive display facility in Kona, which will become operational in Q2 of FY28. We have also acquired the balanced 9.9% equity stake in WalterPack India, making it a wholly-owned subsidiary of SES Enterprises. With full ownership, WalterPack is consolidating three runs and runs into one large facility for efficiency and growth, and it is expected to commence operations by May 2027. We will continue to align these additions and customer programs and maintain discipline through commissioning and ramp-up. Innovation remains at the heart of our product development, as aesthetic products increasingly combine visual appeal with technology. Our collaboration with DOE Veritronics is building our capabilities in optical cover glass, glass coatings, and automotive electronic display systems, addressing the growing demand for digital displays in passenger vehicles. Combined with illuminated logos and a growing suite of advanced aesthetic products. These offerings significantly increase our content per vehicle, and strengthen our standing with the OEMs as a capable, innovation-led partner for their new vehicle launches. During the quarter, we won several new businesses from TVS, Mahindra & Mahindra, Hero Motorcorp, Stellantis, Maruti Suzuki, Bajaj Auto, Royal Enfield, Whirlpool, Godrej, among others. SJS Deco Plus added Tata Motors as a chrome plating customer, further increasing our cross-selling opportunities across the SJS portfolio. We also added Harman and Tadmi, which is Toyota Middle East, as our new customers and secured export orders from global OEMs like Stellantis, Whirlpool in North America, and Tadmi, Toyota Middle East. Exports grew 23.1% year-on-year to 282.5 million rupees. We are strengthening our presence in ASEAN, Europe, North America, and expanding into Turkey, Brazil, Argentina, Colombia, South Korea, and Germany. Our engagements with several large global unions are progressing well, and we see promising opportunities ahead. We remain confident of achieving our 14-15% export revenue share by FY28. During the period, we received several awards for financial management, customer engagement, and sustainability, and we continued to invest in employee development and manufacturing excellence. On sustainability, we began sourcing 2 megawatts of wind power from DB Renews Private Limited. We also joined the UN Global Compact, reinforcing our commitment to its 10 principles and the UN Sustainable Development Goals. Through our CSR initiatives in sports, healthcare, education, and women's empowerment, we supported 25 individuals with artificial knee replacements through Karnataka Marwadi Youth Foundation and partnered with Shikshana Foundation on foundational literacy and university programs across 50 government schools in Kanakura, benefiting about 3,800 students. SGS believes in women empowerment, be it within the company or outside. Women now represent 17% of SGS workforce, up from 12% in FY22, reflecting a continued commitment in building a more diverse and inclusive organization. Extending this commitment to community, we partnered with Varsha Seva Trust to launch a women empowerment project at Agara Anchayat, Bangalore, training 200 women in tailoring and beautician skills to help them build sustainable livelihoods. Looking ahead on the business front, We remain focused on premiumization, exports, and deeper customer relationships with disciplined execution, financial flexibility, and visibility from new programs. We are confident of delivering profitable growth and long-term value for all shareholders. With that, I hand over to Mahindra Naredi, a group CFO, to take you through the financial performance. Over to you, Mahindra.

Mahindra Naredi, CFO

Thank you, Sanjay, sir, and good morning, everyone. Q2 April 27 has been another milestone quarter-plus years with record quarterly revenue and profitability. Let me take you through our financial performance and key operating metrics. Starting with revenue, our revenue grew by 16.9% year-on-year to Rs. 2827.3 million, our highest-ever quarterly revenue. An important milestone was achieved in September. When our monthly revenue grossed Rs.1000 million for the first time in our history. Growth was primarily driven by passenger vehicles and exports. Moving to profitability, gross profit grew by 17.9% to Rs.1597.3 million with gross margin improving to 56.5% despite higher raw material, crude price and start-up costs. EBITDA grew by 23.1% to Rs.896.4 million, with margins improving by 144 BIPs to 31%. Both record quarterly performance. The improvement was driven by higher exports, a favorable product mix, operational efficiencies, and our conscious decision to exit low-margin product at WPI. PAT grew by 34.8% to Rs.583.3 million with a margin of 20.6%, the highest normalised quarterly PAT margin since listing. Overall profitability is growing significantly faster than revenue, reflecting healthy operating leverages. Coming to H1 FI 27 performance. Revenue grew by 20.4% to Rs. 5,437.3 million, while apita grew by 28.9% to Rs. 1,696 million, with a margin of 30.5%. Reported fat stood at Rs. 1,327.5 million, including a one-time gain of Rs. 241.7 million from the sale of our old Bangalore facility. Excluding this gain, underlying FAT grew by 39.4% to Rs.1085.8 million. Moving to cash flows and capital expenditures, cash generation continues to be strong with H1 cash flow from operations at Rs.1070.5 million and free cash flow at Rs.1077.3 million. Our total capex plan for FY26 to FY28 is Rs. 2700 to 2850 million, covering our chrome plating and painting plant, SGS Bangalore capacity expansion, our display and cover glass plant, maintenance capex, and WTI plant consolidation. We have incurred Rs. 1,310.6 million so far, including Rs. 822 million in FY26 and Rs. 488.6 million in H1 FY27. Our chrome plating and banglory project are now largely complete, and the remaining capex will be funded entirely through internal approval. During the quarter, we also acquired the remaining 9.9% stake in WalterPack, India for Rs. 199.22 million, making WPI a wholly-owned subsidiary of SGS. Despite these investments and acquisitions, we ended September with net cash of Rs. 3,318.7 million, compared with Rs. 2,437 million at the end of March 26. Coming to return ratios. ROC improved to 41.5% compared with 35.5% in FY26, while ROE improved to 22.8% compared with 20%. This improvement reflects better profitability, higher utilization of existing capacities, tight working capital management, and a debt-free balance sheet. Importantly, we are delivering the ROE while maintaining substantial net cash, Equivalent to approximately one-third of shareholders' equity. Our financial strength is also reflected in ICRA AA- rating with a positive outlook. In Q2, passenger vehicle contributed 43.3% of revenue, two-wheelers 38.9%, and consumer and others contributed 17.8%. New generation products contributed 24% of total revenue. Exports grew by 23.1% to Rs. 282.5 million during Q2, contributing 10% of revenue. As one export growth was even stronger at 45.8%, we remain on track to achieve our target of 14 to 15% export contribution. To sum up, SJS continue to deliver healthy growth, record margins, and improving return ratios. We are generating strong cash flows, maintaining a robust net cash position, and funding our growth investments entirely through internal accruals. With most of our plant capacity investment now in place, we are well positioned to sustain our growth momentum and create long-term shareholder value. With that, I hand over to Sanjay, sir, to take you through the business outlook and opportunity ahead. Over to you, sir.

Sanjay Thapar, CEO

Thank you, Mahendra. Moving on to outlook. As we enter H2 FY27, we remain confident of delivering profitable growth. The head of the automotive industry, supported by a differentiated business model, diversified product portfolio, and longstanding OEM relationships. Our priorities remain unchanged, increasing content per vehicle, building mega accounts, and converting new programs into revenue, while maintaining operational efficiency and financial discipline. Innovation remains central to our strategy. We continue to develop advanced solutions, including optical cover glass, automotive displays, illuminated logos, and in-world electronics. Exports remains a key priority, and we are targeting 14% to 15% of consolidated revenue from Exports by 28, driven by deeper engagement with global customers, new program wins, and entry into new markets. SGS is expanding capacity with new and consolidated facilities at Puna and Bangalore. Mostly coming online in calendar year 27, positioning the company to meet rising demand and support future growth. A strong balance sheet, cash generation, enable us to fund these investments while evaluating acquisitions that add complementary products, technologies, or customers. In a volatile environment, marked by elevated commodity prices, subdued sentiment, pricing pressure across the industry has intensified. To some extent, and dampened consumer sentiment, resulting in dropping sales for consumer OEMs. In addition, the growth divergence between scooters and motorcycles within the two-wheeler industry continues to widen, and our portfolio is predominantly weighted towards motorcycles with relatively limited exposure to scooters. In light of the global macroeconomic environment, we have recalibrated our FY27 revenue growth outlook to 1.2 to 1.5x of the growth of the passenger vehicle and motorcycle industry from 1.5 to 2x earlier. At the same time, we continue to focus on driving cost efficiencies. And an improving product mix gives us the confidence to raise our EBITDA margin guidance to 29% to 30% from 27% to 28% earlier. This moderation reflects a deliberate strategic recalibration rather than a retreat. By consciously stepping back from select low-margin opportunities, we are positioning the business for stronger and more profitable growth ahead. Before concluding, I wish you and your families a very happy and prosperous Diwali. With that said, I come to an end of my quarterly updates. Thank you, and we are now open to answer questions.

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 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 Chandra Mowgli from Goldman Sachs. Please proceed.

Chandra Mowgli, Analyst — Goldman Sachs

Hi, good morning, and thank you for taking my questions. My first question is just for a little bit of additional clarity on the growth outlook. So over the past 48 hours, it looks like a lot of sentiment seems to be changing around what might happen to crude oil prices and what might happen to metal costs. So, in that context, if there is a wave of correction in some of these input costs and crude oil prices correct, there could be some speculative benefit on pricing as well as volume growth in the underlying industries that you serve. So, just in the context of that, maybe this is premature, maybe it's not, but just wanted to understand what you think could be some of the upside optionality to this recalibrated outlook for the back half.

Sanjay Thapar, CEO

Mr. Chandranwali, thank you for that question. Let me put that in proper perspective. So, at SJS, we are committed to allocate manufacturing resources to the most profitable businesses that we see for ourselves. As you are aware, in the last two quarters, we were almost operating at maximum capacity. So the strategy for us was that what can we use our manufacturing resources to generate the... Best-in-class revenues and improve our already strong track record in terms of profitability, and we've done that, and that shows us the numbers. So our EBITDA has grown to a record 30 percent, and essentially... What we see with commodity prices easing, hopefully, let's hope that crude comes down and all the other commodities come down, that should improve buying sentiment. So, the segment that we address, the four-wheelers, the two-wheelers, the consumer businesses. So the consumer especially is driven largely by sentiment, and this is something that we think will benefit from this macroeconomic future becoming a little more clearer. So we expect that growth will come back, but essentially within SJS, we now have capacities in place to again restart or turbocharge our exports and also our domestic business, and that should lead to higher growth. So, we see that over the next few quarters, revenue should come back on trajectory. So, from what we said was allocation of resources to profitable products to increase our EBITDA. We will now be driving growth along with that, thanks to this tailwind of improved sentiment. So I think it will be positive, not only for us, for the overall economy, and that is a very positive.

Chandra Mowgli, Analyst — Goldman Sachs

Got it. Thank you. That's helpful. Second question is just around Tata and Stellantis. I think in recent quarters, you've been winning more business from Tata Motors, and Stellantis is one of the key customers which you think you can export more towards. And over the past few weeks, there have been announcements from both those entities around expanding the scope of their partnership and potentially sharing more vehicle platforms. So as a supplier to Tata locally and Stellantis globally, just want to understand what you're seeing in potential opportunity size from that expanded scope and partnership between these two key customers.

Sanjay Thapar, CEO

We have extremely strong relationship with both. So Stellantis, the business continues to grow. We've won new export orders from Stellantis for a new category of products, which is decals. They have a lot of vehicles in the U.S., and we are making steady inroads into grabbing more and more share. With Tata, of course, we've been traditionally very, very strong for all the products that we have. We were, as I said, to the point of repeating, a little low on capacity, which has now come on track. So we have a brand new plant for SES Deco Plus. We have increased capacity at SES Bangalore. We are consolidating and increasing capacity at Walter Pack. So we see these opportunities, great opportunities to scale up the business very rapidly. The theme that we have is that customer support is critical. We need to be sure that we are able to deliver to customer expectation if we take an order. So we have been circumspect that let us build capacity first before we target new customers. But now the capacity is being done across all our plants. We are absolutely back in business, and we see a very strong trajectory for revenue growth coming from not only this partnership, but for all other.

Chandra Mowgli, Analyst — Goldman Sachs

Correct, that's helpful. The last question is just around margin and just a related question on DNA. So, could you just clarify in a little more detail which are some of the lower margin products that you look to do less of going forward and what sort of products you are trying to vacate that capacity for? And also just related to that, we've had, I think, four successive quarters of depreciation reducing. So just want to understand what's driving that and where that line item should settle out going forward.

Sanjay Thapar, CEO

So I'll answer the question on product margins and I'll ask Meindra to... Talk to you about depreciation. So product margins, we have pruned in the last two quarters. We already have pruned the business, and in fact, in one case, we returned a large consumer business because we found that it was not giving us the margin that we wanted to. We won a successor business, which was a very high-margin business. Unfortunately, the war in West Asia dampened that requirement so that export business was impacted, which I think now should come back with improving sentiment. So, our product portfolio has been sanitized, and we are a high-profit product mix across all the businesses that we do. So, all the pruning that had to happen has already happened. And that is the result where you see our margins to be extremely strong, and they will become stronger when we increase, let's say, benefit from the softening raw material prices. Manindar, could you take that question on depreciation, please?

Mahindra Naredi, CFO

Yeah, Satindra Moli, the depreciation for this quarter, we had 108.9 million, which is lower than the last quarter. When we acquired the VolterPack, there was some intangible was recorded. And after the period of three years, this impact is now nullifying. This is starting from the quarter two of FY27. So approximately 10 million is impacted there. So because of that, the depreciation amount has come down. And we have capitalized this. SJS Deco Plus, the Pune facility, and the Bangor facility in this quarter. The full impact will be going to start from the quarter three. So that will be going to start in next quarter, and we will have an increased depreciation starting from quarter three.

Chandra Mowgli, Analyst — Goldman Sachs

Got it. That's helpful. Thank you very much, and all the best. Thank you.

Operator

Thank you. In order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two questions per participant. For more questions, please rejoin the queue. The next question is from the line of Ajax Fredericks from Sundaram Mutual Fund. Please proceed.

Ajay Fredericks, Analyst — Sundaram Mutual Fund

Hi, sir. Thanks for the opportunity. The first question is on exports. So what are the low-hanging fruits or the visibility or even the type of businesses we are closer to winning in the next, let's say, one year to 18 months time frame? So that's one. And secondly is, will acquisition be a route for enhancing our exports, let's say, to acquire a particular customer, et cetera, et cetera? So it's an export-related question plus acquisition, anything on works, anything being discussed, more on those lines.

Sanjay Thapar, CEO

Again, low-hanging fruit and exports really are, you know, we've... Cross-selling of products to the existing customers. So, Stellantis was a very major customer we acquired. As I mentioned earlier, we won business for Decal with Stellantis. The opportunity set is even larger, but typically what these companies do is test you on a program, and then once they see that, yes, development is on time, they open doors to more products. Cross-selling to export customers, more product from our portfolio is one low-hanging fruit. The other one is chrome plating. So there was a lot of pent-up demand, and that is the reason why we expanded this set of this new plan for chrome plating. We see a lot of mega inquiries for chrome plating. At the moment, we are in the negotiation phase. As you can understand, the startup time for these such businesses is very, very short. So, in some cases, the customer has shifted tooling to us from some other suppliers. So, this is a resourcing business which can start very, very quickly. So, we are looking at all these opportunities and we are very excited about the Toyota opportunity in the Middle East because there's a lot of… Chrome-plated plastic parts that they buy, large value, and that is something that can be done very quickly with this new plant that we have. So these are these low-hanging fruits that we are already addressing. Overall, in terms of inorganic acquisitions, whether that is going to drive exports. It depends on the company that we acquire. So, as I said earlier, our rational or lens to look at an inorganic opportunity is that can we bring add value? That means scale that business up very rapidly as we did SES Decoplast, Forex in five years. That is the sort of growth that we could potentially bring. So, is that potential new target? Something that we could do on similar lines is one question to ask. The other is, can we leverage our capability of being a large supplier and using the buying leverage to improve profitability in that company? So, exports is not really the lens. What we are looking at is that, if there's an opportunity to acquire a company overseas that opens doors to large global OEMs for the rest of our business, That certainly is an opportunity, but specifically to acquire a company that does large amount of exports, it depends on what target do we grow in. So we don't go thinking in terms of what markets. We are looking at the overall business, that if we can scale up the business, add profitability and get it at the right place, those are these questions that we ask ourselves or give access to new markets. So, those are the... Key lenses through which we look at an acquisition of hospitality, not necessarily exports.

Ajay Fredericks, Analyst — Sundaram Mutual Fund

Wonderful, sir. That answers my question. Thank you. Thank you.

Operator

The next question is from the line of Pritesh Cheda from Lucky. Please go ahead.

Pritesh Cheda, Analyst — Lucky

Sir, just a couple of questions. One, if you look at the non-auto, it has not grown in H1 as well as in Quarter 2. So, if you could give some comments on the non-auto, what's happening and what is your outlook there, because the PPTs actually give the outlook on autos and even outlook on exports, but it misses 20% of the business. So, if you could tell me what's the outlook there.

Sanjay Thapar, CEO

Yeah, so the outlook is very strong. The reason that I said of what I talked earlier in my conversation, there were some low margin products that constituted a very large customer, in fact, a very, very sizable business that we chose to give away two quarters ago. So that we said in the last turning call also. So that we replaced with a high margin consumer business. That consumer business, unfortunately for us, was focused largely on the Middle East, where there is a... The current turmoil going on in terms of the macroeconomic challenges that you have. So that will come back. So non-auto continues to be an important part of our portfolio, and we hope to scale it up very well. But since we let go of a low-margin business, that is the reason why you see that impact that our winter margins for Q2 are 31%. That is largely because of product rationalization done. There is a new business that we acquired, so our strategy was perfectly in place. Unfortunately, that volume did not materialize because of this conflict in West Asia. So, that is a short-term hiccup. We are quite confident that this will pick up in the coming quarters.

Pritesh Cheda, Analyst — Lucky

Okay. And, sir, on the coordinating capacity, what is the, you know, revenue pool size now that you add via that capacity? Basically, what kind of peak revenue, incremental peak revenue is possible from that capacity and thus utilize, scale-up utilization of that capacity?

Sanjay Thapar, CEO

So, chrome plating grows very strongly for us. We've added 2x in terms of capacity. So, potentially, we could go to about 500 crores with this new capacity addition. We finished last year about 240 crores. So, we will almost double capacity. And our target really is to get there sooner than later. So if you look at the past track record, we've grown it at 3.5x in the last five years, and we hope to do the next doubling of capacity in the next... Three to four years. So, the faster, the better. But we see a very strong order pipeline for that business. So, we are very optimistic and positive in terms of our outlook for that growth of that business.

Pritesh Cheda, Analyst — Lucky

The last question on SDS Display, if you could tell us now the capex which will be committed in phase 1 and phase 2 and the asset level.

Sanjay Thapar, CEO

Mahindra, would you like to respond to that?

Mahindra Naredi, CFO

Yeah, Mr. Lakhi, for SGS display, we have guided that we will want to incur 65 crore rupees, out of this 25 crore rupees for the loka bonding facility, and 40 crore is going to be for the glass facility. Now, coming on the asset term, since loka bonding is like assembly, which have a generally higher asset term ratio, we expect it between 4 to 5 times. And in the glass, we are expecting between two to three times. So, if you say on average, somewhere 3.5 times.

Speaker 4

Okay. Thank you.

Operator

Thank you. The next question is from the line of Rakesh Jain from Access AMC. Please go ahead.

Rakesh Jain, Analyst — Access

Yeah, hi team. Firstly, appreciate the transparency on the consumer business outlook. Thank you for that. So just a follow-up on the display business. So, now the key picks which we have put in, that's quite a sizable number for us to interpret on what could be the future aspiration would be. Two things. One, if you can help us understand, because we incrementally see a lot of global MNCs either repurposing their display business capacity, either imports through imports or assembly in India now, the vehicle solutions business for them. You know, so in light of that, how do you see this ecosystem evolving in that and within that, you know, what would be our competitive edge? When an OEM, you know, looks at the considerations that when you have an MNC and a domestic layer, of course, we have BOE electronics. So in light of that, if you can shed some color, you know, on a qualitative basis, how should one think about our customer set?

Sanjay Thapar, CEO

Yeah, so two, three things here. So, typically, the opportunity is all about the version of ASLog or digital clusters to be fully configurable displays. So, all the two-wheeler and the four-wheeler companies which make instrument clusters are transitioning to this. Now, to make a display, typically what you need is local bonding of the backlight unit, the TFT screen, and the cover glass. Thank you. Fame to fame for being a winner in this business is our 30 years' expertise in printing. So the cover glass typically is a printed part, which is glass, which is printed on the border. It has some speciality coatings, either through lamination or through coatings, and which we have a great deal of experience and expertise in. So we think that for cover glass, we should be... Potentially, the number one player is not amongst the top two, three companies which will do cover glass in India. And remember, all vehicles in India will have displays in some form of the other, small, big, large. And we are... That's one part of the answer. The second is that customers like to reassure, let's say these are aesthetic parts and they would like the supply chain to be closed, given the experiences in the past on global disruption of the supply chain. You can't build a vehicle or you can't put a display with the vehicle standing on the yard. So you need to be very, very clear that, yes, my supplier is next door. So I think reassuring all OEMs is a critical part. And for the government policy, really, in terms of increasing the local content and incentivizing the OEMs to invest in localization of these parts, is the tailwind that drives the business. So, for us, strategically, it was very important to choose the right partner. And I think in BOE, we have the right partner, which is a global leader in this business, operating out of China. in India and our Customer Connect, our... Innovating and developing new technology products and offering them to the customer, so there's a very strong customer trust that we enjoy, plus a strong partner, all should lead to a very, very successful business, and that's what we are laying the foundations for.

Rakesh Jain, Analyst — Access

Got it, got it. And the scope of opportunity, the initial phase is passenger vehicles, just reactivating that.

Sanjay Thapar, CEO

Yeah, yeah. The passenger vehicle is the mother of these displays because in terms of technology, in terms of capability, these are the most complex displays. And one passenger vehicle could have one display, two displays, three displays. So that increases the time exponentially. And as I mentioned earlier, there's rear seat entertainment which is coming. So very soon, I imagine you will see in cars. And when one vehicle is launched with that, you would have an explosion of demand. So, displays is the way to go. And I think we are absolutely on the track to achieve success in this business.

Rakesh Jain, Analyst — Access

Okay, okay. Got it then. Thank you.

Operator

The next question is from the line of Pradyuma Chaudhary from Bohair Investment.

Pradyuma Chaudhary, Analyst — Bohair Investment

Hi, sir. Congrats on a consistent set of results. My first question is, what was the utilization at standalone SJS 11? Because in your PTT, you've given the utilization in the other two businesses. So, I just wanted to know what the utilization at SJS standalone was, and why are we only going for a 20% capacity addition, given that we'll again stumble upon bottlenecks?

Sanjay Thapar, CEO

Sorry, could you repeat the last part of the question?

Pradyuma Chaudhary, Analyst — Bohair Investment

Why only going for the 20% addition at SGS standalone, given that again we'll be reaching bottlenecks in maybe one to two years' time, right?

Sanjay Thapar, CEO

So, let me answer the last part of your question first. So, we already have a very large piece of land at Bangalore. This was easy. So what we did was we just built a roof on top of a roof that we had. So it was low-cost investment where we could gain Joe how much. And if you recall, we had won a very large hero motocop business. We started with few models. More models are on the way. So there is a requirement for growth of our existing company plus a very large export opportunity for our consumer businesses also. So, it was low-hanging fruit where we could very quickly add capacity, which we have done. That is the reason why we invested. Part of your question was, how much was the capacity earlier? Right, it was close to about 85%. Am I right, Major?

Mahindra Naredi, CFO

No, we were utilizing 70 to 75%, and now we have added 20% more. So let's say current utilization is somewhere 60% of the plant. In our business, we always keep idle capacity because there is a up or scaling up on a festival season. So we are operating right now around 60%, and we can go up to...

Sanjay Thapar, CEO

No, the reason is that the licensing business is a batch mode operation, so you need to have flexibility because the SKUs are so large that you cannot have a higher capacity utilization. I think if we do about 80%, it would be extremely good, but you need to keep that for... Some capacity additional that's required. So that's the reason why we build this capacity.

Pradyuma Chaudhary, Analyst — Bohair Investment

So are we planning in the coming months to announce even more capacities at the standard-owned level, a new investment?

Sanjay Thapar, CEO

No, no. For the moment, for the moment we are sorted, I don't think we need more capacity for the next two years. But if we need be, we have enough land at Bangalore. You start building a new factory and doubling capacity. So that is not the point at the moment. We have a lot of expansion that we've done, and there's also fungibility of the equipment that we have. So the Waterfax plant also does partly printing. We are expanding capacity there. So I think we are good for the next two to three years in terms of capacity.

Pradyuma Chaudhary, Analyst — Bohair Investment

And the second question was, as you mentioned time and again, like the current... The slowdown in terms of our growth compared to industry growth is mainly to do with the capacity constraints that we are facing, and so once this is sorted and once new orders start going through, we should again probably go back to the earlier levels of maybe 1.5x outperformance on the industry. Is that right?

Sanjay Thapar, CEO

Let me repeat that again. I think that is the question that most people have. So we like to be transparent, and what we commit, we would like to deliver that and more. So that is the reason why we highlighted that because of this, especially the consumer business, the export of some consumer businesses, which we had won some very large businesses, got impacted because of the war in West Asia. We have guided that, okay, even though the demand may be muted because of external factors, our growth story continues to be extremely strong. So let me put some numbers in place. So if you look at the four-wheeler market and the motorcycle market, because that is the dominant market we operate in, in Q2, Market grew by 13.2%. Our sales grew by 21.7%. So we are actually at 1.7x of the market growth. So we are outperforming the market. Even if I talk of the H1, so if I talk of motorcycle and passenger vehicles, the market grew by 15.3% in the six months of this year. We've grown at 26.6%. So that is again... We are continuing to outperform. I would like to stress that fact. Only since we did not have capacity, what I said was that we rationalized that I rather use capacity for high margin products, and we did not chase products with lower margins because we wanted to maximize high growth with high profit. And that is what we've done very successfully. So, my fat margin for this water is 31%, which is a record. So, we have, I think, as management, navigated this challenging environment where commodity prices are going up exceedingly well, and this positions us very, very strongly that when these new capacities are in place, our growth will be back on that. So, high growth. So, think of us as a very high growth, high profit company. This detour that we took largely was capacity creation. Now that capacity is in position, you will see SGS growing very, very strongly in terms of revenues as well.

Operator

Sorry to interrupt you, Mr. Chaudhary, but can you please rejoin the queue? Thank you. The next question is from the line of Nandan Pradhan from NK Global. Please go ahead.

Nandan Pradhan, Analyst — NK Global

Oh, hello, sir. Good afternoon, and congratulations on your case, especially in such a volatile environment. This is one small question from my side. On the standalone front, we had a very sharp growth last year because we obviously won new businesses from Hero. Now, coming into 2Q, I think it is entirely in the base. I mean, that and then, as you mentioned, the divergence between scooters and motorcycles. Because would these be the key reasons for slower growth in the standalone operations? We were at about 9, 8.7% in 2Q. If you could just share some color since we've maintained margins, but revenue has not grown as much as soon.

Sanjay Thapar, CEO

No, no. Largely, that is true. As I said, building capacity is critical, especially in the printing business, because of the nature of the business that you have to have multiple operations before you finally can send a product out. So it was just that rationalization. Now that everything is in place, we expect this to grow. And the reason why we've added capacity is we see a very robust outlook in terms of order book across all our customers. So we continue to grow. So largely, it is that capacity piece. Now that capacity is in place, we can challenge large businesses. And in the short term, of course, we focus on profitability. But now property, the product mix being rationalized and being optimized, we look forward to accelerated growth. So, your inference is correct. You should see very high growth over the next... Maybe a quarter or two quarters, it could take, as I said, some of our export business, which is also done through SES standalone, also good CFL.

Nandan Pradhan, Analyst — NK Global

Understood, sir. And so, just a small clarification, if I may, the pruning of low-margin products was done particularly in the WPI operations, right, and not in the standalone business.

Sanjay Thapar, CEO

No, but the overall sentiment for exports for consumers, you're right, I was talking about. One large business that we gave away, where margins were low, was in water pack. That is right. And we won the successor business, which is much better in terms of profitability. That should come back over the next one or two quarters. We hope the market situation should improve. In the standalone overall consumer segment, you know, the West Asia war didn't only impact West Asia. So there were a lot of challenges and issues in North America as well, where demand for consumers was subdued. So that was a global phenomenon. So SGS standalone does a lot of consumer businesses, which got impacted as a result of this. So we expect over the next one or two quarters this to normalize. So just for abundant caution, we said that, okay, next one or two quarters, the growth could be lower than what we... Traditionally forecasting 1.5 to 2x growth. So it was just transparent communication to the investor community. So, as an organization, we've navigated this challenge very well and used this time to rationalize our products, and we will be delivering the numbers that we did forecast at the beginning of the year very, very strongly. So we see no challenge at all in terms of meeting our commitments. So, in terms of a bid line fact.

Nandan Pradhan, Analyst — NK Global

Understood, sir. Thank you so much for that and all the very best.

Sanjay Thapar, CEO

Thank you.

Operator

Thank you. The next question is from the line of Nitin Agarwal from JM Financial. Please proceed.

Nithin Agarwal, Analyst — JM Financial

Thank you. Thanks for the opportunity and congratulations. I just wanted to understand your outlook of outperforming the industry. You made two changes initially just to mention the underlying industry. Now we mentioned underlying PV plus motorcycle industry and we have reduced the guidance from 1.5x to 1.2x to 1.5x. So, wanted your sense that since we've already removed consumer durables from the outlook, why have we reduced the guidance of our performance since we've outdoing the industry by 1.7x, as you've highlighted? And related to that, we are missing auto-miss scooter segment, which as a category is increasing, so contribution on 41%, now expected to go to 45% as per the OEMs. So what are we doing in order to capture the business from that category?

Sanjay Thapar, CEO

Yeah, good question. So, it is not that we don't do scooters. The relative weight on scooters is lower because the content in a scooter is lower than in a motorcycle. So, obviously, we have traditionally focused on motorcycles. But given the strong growth in the two-wheeler market, especially for scooters, we have a strategy in place. So, the chrome business and capacity that we have created, we will use that to target. So, a lot of these scooters use logos, use badges, use garnishes, use… So, we already do very large business with one customer, only our scooter business is not all as broad-based. Now that we have capacities in place and we have the relationship already, So we are already in discussions to attack the scooter market also in a very meaningful manner, and that is what we intend to do. I think we are, this last one or two quarters of building capacity, you will see in the coming year, translating that into much higher revenue gains than the market, and we should be back to our normal trajectory that we forecast. But I think what is underappreciated at the moment, or maybe not so clear, which I want to reiterate, you know, in terms of by rationalizing this product mix, we've made your company We are more profitable. This is 31% EBITDA performance for this quarter, and for the half year also, we are at 30.5%. This, I think, is industry leading, and we are a far, far stronger company. Now, with the capacity in place, we will drive that advantage even more. So, to put that in perspective, I'm only repeating what I said earlier, that we are going to deliver the, in absolute terms, the rupee content of EBITDA and PAT will be absolutely where it was when we started the year. So, we are very conscious of what we commit, and we endeavor to deliver what we have said. I think it should play out.

Nithin Agarwal, Analyst — JM Financial

Have we done that in the automotive segment also along with the consumer-deerable or in the consumer-deerable segment alone?

Sanjay Thapar, CEO

No, no, all segments. So it was a plant-wise look at saying that we have finite resources, we have infinite opportunities. What do we change? So we said, let's allocate resources to the most profitable business, and that is the result of that. I would say I would compliment my team on great execution. So we delivered exactly what we wanted to deliver. So I'm extremely proud of my team.

Nithin Agarwal, Analyst — JM Financial

Okay, okay, thanks. That makes sense. That's it for myself.

Operator

Thank you. The next question is from the line of Hitesh Goyal from Origin Capital. Please go ahead.

Hitesh Goyal, Analyst — Origin Capital

Yeah, thanks for taking my question. First, congratulations. Very few companies have actually reported YOY margin expansion. So, congrats to your management. My question is actually related to Deco Plus. So if I look at, you know, Q&Q revenue, there is not much growth because the new facility has come up in August only. So how should we see this ramp up in the first year itself for Deco Plus? Because you've added Tata Motors as well, you've added Toyota Middle East also. So do we see a decent revenue ramp up from third quarter onwards now?

Sanjay Thapar, CEO

Yeah, some businesses will start from the third quarter. And, of course, you know, the key factor behind success of SES is that we are very, very focused on the customer. So, any new business that I take, I do not take without building capability and capacity in-house. So, the new businesses, it's not that, you know, we won businesses and then we said that, okay, now we'll start figuring out how to build capacity. So, that is not how we do things. We first have the capacity. We are very confident that the customer values us as a very capable supplier, trustworthy supplier. So, once the capacity is in place, so we have started approaching the customers now. And this Tadmi business that I'm telling you is just a result of that. So within a week of our confirming to the customers that, okay, our plant is ready, they said, here, we will ship some tools to you, start supplying to us. So that is the trust that we enjoy with our customers. Building that capacity or filling that capacity is not so challenging. So, we are very optimistic that we will accelerate revenues from that company now that we have capacities in place.

Hitesh Goyal, Analyst — Origin Capital

And the second half, just to clarify, second half is generally seasonally better for agrotech, right? Because, I mean, the automotive volume's second half is better than first half, right?

Sanjay Thapar, CEO

Largely, it is true of the entire industry, not just DECO+.

Hitesh Goyal, Analyst — Origin Capital

Yeah. Okay. Great. Thank you very much.

Sanjay Thapar, CEO

Thank you.

Operator

Thank you. The next question is from the line of Pooja Seth from Yes Securities. Please go ahead. I'm already waiting.

Speaker 6

I'm already waiting. I'm waiting for the train today to be clear today. Miss Seth.

Operator

Miss Seth, please continue with your question.

Pooja Seth, Analyst — Yes Securities

Also, my question is around the guidance which you have said for 1.2 to 1.5, so is there anything on the client side we are seeing or some slowdown in the rent for the models that we are expecting that should be doing good for us?

Sanjay Thapar, CEO

As I have explained earlier in the call, that this was primarily on account of a large export-driven business for consumers at one of our companies, plus our focus on... So, for abundant caution, we guided the market that what we have mentioned earlier, that our top line will grow 1.5 to 2x of the industry growth rate. We thought that it is important to clarify that we are a motorcycle-focused company, even though we have capability to do two-wheeler business. Our focus was on motorcycles. So if you look at motorcycles, I will repeat what I said earlier in the call. If I count industry growth as four-wheeler plus motorcycle, for quarter two, this... Segment, the industry grew at 13.2%, whereas VHS grew sales by 21.7%. So this is far higher than the industry growth rate. We outperformed. Similarly, for the half year, the industry four-wheeler plus motorcycle grew at 15.3%. We grew at 26.6%. So there is no question. We outperformed the market by a wide, wide margin. In terms of my overall revenue, as I have repeatedly said in this call, it was on account of a single customer for exports where we gave away that business, and the overall revenue for the company, therefore, looks a little lower, but our outperformance for the automotive market is exceedingly strong. So it is almost 1.7, 1.8 times the industry growth rate. So it continues to be significantly strong. And we will continue doing that.

Pooja Seth, Analyst — Yes Securities

Okay. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Nanil Sharpe from NVS Brokerage. Please go ahead.

Nanil Sharpe, Analyst — NVS Brokerage

Hello. Hello. Yes, please.

Operator

Yes, sir.

Nanil Sharpe, Analyst — NVS Brokerage

Congratulations on the set of numbers, sir. My first question is, with the chrome plating plant expansion at Pune, which is completed in August 2026, and Bangalore's capacity, which is expected to be completed by Q3F by 27, and Walter Park facility consolidated by May 27, and the new display electronic plant in Pune by September 2027, the benefits are expected to materialize in 28, with a full impact in 29. Given that, what is the top line that the management envisions for the next two to three years, like in 29, 30, 31, 30, 31, as these capacities scale up? My second question is, given the recent decline in crude oil prices and the easing geopolitical tensions, how does the management expect the company to benefit from these favourable developments in the upcoming quarters? Thank you.

Sanjay Thapar, CEO

So let me answer the second question first. So despite crude oil prices and despite the currency challenges, we have delivered very strong margins. As I said earlier, for the first six months of the year, we are at a 30.5% EBITDA margin. Last quarter was 31. We've improved this from last year. So there's a quarter-quarter improvement in profitability. That's because of the playbook that we set for ourselves that we need to allocate resources to high... Profit, uh... products. That was the focus. So we've rationalized that, we've built capacity, and we are back to normal. So if the crude prices and other inflationary pressures go down, of course, this will aid what we do. But we are quite happy with the 31% EBITDA performance. We are okay with this. The next lever would be press the accelerator on growth, which you will see thanks to the capacity that we have in place. So that's the second part of the question. Could it be the first question that you asked?

Nanil Sharpe, Analyst — NVS Brokerage

Sir, with all these capacity expansions that we have planned, which are...

Sanjay Thapar, CEO

Yeah, what would the top line do we see, right? That was the question. Okay, so the top line could increase quite dramatically because all these three products are at a very different price point. You know, in terms of what I've guided earlier is that we expect the display market to be close to a 5,000 to 7,000 crore market by 2030, 2031. And SJS, we've set ourselves an initial target that we should be at least 10% of this business. So maybe a 500 or 700 crore revenue coming out of this place by 2031 is something that we have set an internal target for ourselves. This is completely new on top of whatever we do currently. Our other businesses are more, we know these businesses are shooting me well, and that business growth rate is what I have guided to, that whatever the industry grows, 1.5 to 2 times the industry growth is what you should expect by 2031.

Nanil Sharpe, Analyst — NVS Brokerage

Okay, sir. Thank you so much.

Speaker 4

Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Ms. Devanshi Dhuva for closing comments. Over to you, ma'am.

Devanshi Dhruva, Head of Investor Relations

Thank you, Huda. I would like to thank everyone for joining on the call. I hope we have been able to respond to all your questions adequately. For any further information, we request you to get in touch with us on email. Stay safe, stay healthy, wish you and your families a very happy and prosperous Diwali, and thank you once again for joining with us. Have a good weekend. Thank you, everyone.

Operator

Thank you very much. On behalf of Ilara Capital that concludes this conference, thank you for joining us and you may now disconnect your lines. Thank you.