Indo Farm Equipment Limited (INDOFARM) Q1 2027 Earnings Call Transcript

Good afternoon, everyone, and welcome to the Q1FI27 Earnings Call of Interfarm Equipment Permitted. We sincerely thank you for joining us today. During today's call, the management will discuss the company's operational and financial performance for the first quarter of FI27, followed by an update on key business developments, strategic priorities, and the outlook ahead. This will be followed by an interactive Q&A session. Before we begin, I would like to remind everyone that certain statements made during this call may be forward-looking in nature. These statements are based on management's current expectations and assumptions and are subject to various risks and uncertainties. Actual results may differ materially from those expressed or implied. Participants are advised not to place a new reliance on these forward-looking statements. Please also note that this conference call is being recorded for compliance purposes. Representing Indofarm today, we have with us Mr. Ragbir Singh Khadwalya, Chairman and Managing Director, Mr. Anshul Khadwalya, Whole Time Director, Mr. SM Singla, Finance Head, Mr. Varun Sharma, Chief Financial Officer, Ms. Navpreet Kaur, Company Secretary and Compliance Officer. I now invite the management team to deliver their opening remarks. The presentation has been shared with the exchange. Following their address, we will open the floor for the Q&A session. Thank you and over to you.

Good evening, and welcome everyone to this Earning Conference call for discussing the result of Q1 27. Along with me, we have our whole-time director, Anshul Khadwalya, Mr. Subam Khadwalya, Executive Vice President, Mr. Varun Sarma, Chief Financial Officer, Mr. S.M. Singla, Finance Head, and Ms. Naupreet Kaur, Company Security Compliance Officer. The company financial results for the quarter ended June 2026 have been circulated and uploaded on the stock exchanges and the company website. I will summarize the key highlights of her financial performance in the quarter ended June 26 on a standalone basis. Revenue from operation, Q1, FI27. 104.93 crore in comparison of 91.26 crore. Year-on-year growth is 14.98%. Abita. 13.09 crore. In comparison of 11.81 crore. Year on year, the growth is 10.84 crore. Tector segment revenue, 52.08 crore. In comparison of 38.21, the growth is 36.29%. And the crane segment, 52.86. In comparison of 53.05, this is almost flat. And growth outlook. The company maintain its earlier guideline of FI 2627 and expect to achieve overall revenue growth of around 20 to 25 percent for FI 2627. With the technical revenue is expected to grow around 25 to 30 percent and the crane. Crane revenue is expected to grow around 15% to 20% from the existing plant with expected EBITDA margin in the range of 12.5% to 13% on standalone basis. About the dealer network, the number of dealers in the quarter ended 26 are around 250 plus. Consisting of tractor-division dealers, around 225, and crane dealer is around 225 numbers. Regarding the new project coming up at the Budh nearby site, the civil work, construction work of the main set, including the pre-engineering building structures and related infrastructure at the Budh side is in full swing. Order for major machinery have been placed, and almost all the machines are ready. Expected to start the commercial production in the month, in this financial year only. But we are expecting by end of November, the commercial production can start. Regarding tower crane, already technology, we have already acquired the technology, as explained in the last meeting also. And now successfully developed and tested our first tower cleans prototype, cleared comprehensive evaluations across structural integrity, operational efficiency, reliability, and safety, meeting the highest industry benchmarks. With testing, now is totally complete. We are fully geared for the commercial production in the current financial year. Thank you very much. And now we can pick up any specific questions regarding this.

Thank you, sir, for the opening remarks. We'll open the floor for the Q&A session now. Participants who wish to ask a question are requested to use the raise hand feature. We'll take the first question from Mr. Rahul Gupta.

Hello. Yeah, Mr. Al Gupta, please.

Hello, sir. Am I available?

Yes, yes.

Sir, in Q4, crane profitability was impacted by higher steel cost and transition, the new emission norm that you mentioned. So, have this cost increase now has been fully passed to the customer or you should expect crane margin to normalize from Q2?

I think from Q2, it will be maintained because the demand in Q2 is looking promising. It's better. And whatever time, almost three quarters it has taken to stabilize the things because the change was big from emission norm, term three to term five. So, this quarter onward, because the demand is increased, then everything can be passed on, I think, to the customers.

Okay, and sir, my second question is, as you mentioned in the last call, that tower crane delivery would start from Q2FI27, and you already had a small order book, a single digit order book. How is the order pipeline at, you said that the commercial production will be start in November. So on what basis you said that you start the commercial production in Q2FI27 last call?

Because the machine is already tested and we have started manufacturing these fabricated components in-house. Some components we are getting from outside, like all companies are importing from other countries. Those components, once expected, basically, then I think we'll finish these 10 machines first lot. And we are expected to make this within this quarter, to complete this all the 10 machines. Of course, it is subject to receipt of these few components, which we are expecting from outside.

Okay. So, sir, when will you receive the machinery?

Machinery, you know, almost machines are ready. Once the, you know, flooring is totally complete, Civil work is completed, then we are expected to start getting machinery in the month of October. October, I think the machine will start coming. We'll be able to install the machine in October.

And can you give me the guidance of Q2, FI27 and the whole year?

The guidance is from this old plant, we are expecting a growth of, oral growth of 20 to 25 percent put together tractor and crane. Okay. And the new plant, we were considering some numbers of Q4 only, basically.

Okay, and sir, what are the key major reasons that your tractor capacity utilization is not going to work?

It is, you know, since last three quarters, if you see, the tractor is growing reasonably very well. Almost 35% plus, it is growing. Suddenly, growth will not come because the dealer network has to be created. It will take little time. So making a dealer, it's a bit little complex process because we have to see he has to give service also. He should be equipped with the service. Our product is basically, if a customer is buying, he is taking a decision of 10 years. So this takes little time, this process. But these things already started moving since last three to four quarters. Every quarter we are making good growth.

Okay, and sir, your crane dealer is 25, is he still stagnant? So, is there any addition or not?

We will definitely add on dealer once the capacity come in place. Because sometime, if the more orders we are getting, we couldn't able to supply, this doesn't give a good message in the market. So simultaneously, we are in search, we are looking for it. Basically, first we fully load those existing dealers and new dealers definitely will be added. And some dealers we are making also, but we are replacing some dealers also. Because now we are prepared that the new production plant will be operational. In that situation, we have to keep other more performing dealers. Earlier, our, you know, thinking was if some dealer is there, basically not to replace because we are not prepared to supply them enough quantity. So now we are prepared and we are replacing those dealers also. Similar in tractor and crane both. Yeah.

Sir, as per new emission norm that Action Construction and Mahindra Interactor segment, they started the price hike. So do you take any price hike or not?

The crane price hike is there. For tractor, I think emission norm started one or two years back. So that is industry has taken. And we'll also take according to the industry only. If the industry go for price hike, then everybody increase. It depends on the input cost.

Okay, sir. Thank you, sir. That's just from my side. Okay.

Thank you, sir. We'll move on to the next question from Mr. Sandesh Kumar.

Hello? Yes, yes, sir.

Yes, yes, we can hear. No problem. You can start, sir. Yes, sir. My question is, on crane segment, our YOY growth is kind of flat. So compared to our peer, as crane, they have done around 20%, more than 20% growth. Our is kind of flat. More that our dealers are kind of stagnant, like 15 to 25 only from RHP days. After CapEx, our quantity will be like 1,2802, almost 5,000 units. Without this dealer expansion, especially in South India, how we are planning to observe this massive capacity with this stagnant dealer? Have you done any planned number of dealers by end of this financial year, especially in South India? What plans are? Shubham, would you like to explain this?

Hello. Hello.

Yes, Shubham.

Anjee Kumar, sir. So, sir, our crane sales is flat mostly because we are working at our full capacity only in the plant. So, whatever the sales was last quarter, this year we were only able to match it because of being at the almost similar capacity. But we are further decluttering and this quarter we are expecting reasonable growth. And for the dealers also, as sir explained earlier, we are appointing certain new dealers also and shutting down some old ones which were not able to deliver and perform as per the new plant and company's expectations. Some area allocations have been revised and we have a plan, we have a good plan which we will start executing, you know, once the new plant, the commercial production will start from the new factory. We have a roadmap to a point. Approximately 60-plus dealers to cover the whole country, and as of now, you know, once the new plant will start delivering, I think we are on track to reach there.

You're telling like with 60 dealers, we can observe all these 5,000 units. Am I right?

So, the current capacity, so from day one, we will not get the full capacity. It will go on phase-wise. So, this roadmap, what we have is to, this is the bare minimum dealership which is required to cover the full country. So, as you know, we open the new areas and new markets and if the population is increasing in certain place, then maybe then we have to further break that dealership into two or three parts, depending upon the volume.

So, when we can expect a 60 dealer by end of this year or next year?

It is, so, you know, sir, appointing dealer is not a very, it is not about appointing dealer. It has to be a good dealer also who has, who's aligned with company's expectation and who's able to deliver. If it is just about appointing dealer, we can appoint, but we need to find the right partner who can perform as per the expectation of the company. So it will take some time. It can take maybe a year, year and a half to reach that level, but we are on track.

Yes, sir. With respect to crane growth, you told like we are running on full capacity. I think like we have some tractor capacity I think we are utilizing, right? Like now also told like we will growth in crane, especially like 15 to 20% growth. So in order to get this 15 to 20% growth, I think we should utilize this existing capacity only, right?

That's growth. May I reply? Because the last year, because of this emission norm came, then sales was little affected also in this next month, basically. Okay. But now, the air is already clear, and acceptability of new emission norm is already gone in the market, and seeing the number of last month, July and August, That's the kind of response we are getting. So the growth will start coming. Maybe first quarter it is a flat. Therefore, we are expecting around 15 to 20% growth. Because the last three quarters, because of this emission norm, the sale was little, you know, remained sluggish. Some whatever capacity we have to enhance in the existing plant, that we have already done. Okay. But as far as tractor is concerned, tractor is having different line. So tractor, expanding capacity in tractor is not an issue. That is not interlinked with the crane, this thing. But some area of crane has been, tractor area has been utilized for making some fabrication here and there. That will continue till the new plant start.

Yeah, so like till the new plant start, we can still do a 15 to 20% growth with the whole capacity, right? Yes, yes, yes. Yes, sir. With respect to capex, still we have around 45 crore deposited in banks. Can we utilize this 45 crore within Q3 so that we can start commercialization within January at least?

You know, the majority of machines, you know, some machines, instead of buying, if we need 10 machines, instead of buying 10 machines, 10 machines we need when we produce 5,000 cranes. Maybe we'll buy six machines or eight machines. It will take a little more time, but for our production, it will be sufficient. All sufficient machines we are going to buy, and almost all machines are ready. Maybe we'll utilize fully if the supplier is asking the increase. If not asking increase, maybe we can defer for three more months. Till March, we'll consume everything.

Okay, sir. That's it for me. Thank you.

Thank you, sir. We'll move on to the next question from Mr. Shirshan.

Hello, am I audible? Yes. Yes. Yeah. Would you give us some perspective on the target penetration of Barota finance within Indos farm sector sales?

Singvaldi, you will be able to explain a little bit. I think around 20%, 25%. Around 20%, sir. Around 20%. We are doing around 20% of new tractor of Indofarm. Balance, we are refinancing the tractor of all the brands, old tractor of all the brands, because the inventory is getting piled up our dealers, our channel partner. And when they are selling the tractor in exchange scheme, Then they are taking tector back of any brand. So their old tector, we are financing all brands, but new tector, we are financing only in the firm.

Okay. Okay. Uh, one more question from my side, even the company's focus on increasing utilization at what approximate volume level does the factory business start generating meaningful operating leverage?

It is operating in Lebanese? Yes, sir. The business is still making a profitable business, Abita Positiv? At this level also. But this year, we are expecting around the integral growth around 30%, 25% to 30% year on year we are expecting now.

Okay, okay. Thank you. Thank you.

So, we have a few questions in the Q&A tab. I will request Mr. Omkar to please unmute and ask the question. Oh, Mr. Rooker, please unmute you. Okay, in the meantime, I'll take the question from Mr. Manos.

Hello, am I audible?

Yes, yes, Mr. Manas, you can speak.

Hi, sir. Sir, can you give me a time frame by which we can see the new production starting in the new facility, the one that we are working on?

I have already given this expected time. In November this year, we are planning to start the commercial production.

Okay, and this is for both tower cranes too? Tower cranes are included?

Yes, yes, yes, yes. Tower crane, we are trying to build up in the old factory, little bit numbers, so that, you know, it will start going, we start selling some numbers in the market. Okay, but the real production line will be start in the new factory only.

Okay, and sir, you just gave the guidance for the tractor around 25 to 30 percent year on year. What would that look like for the cranes?

To name this new factory, if we consider that this is running on the peak numbers, so this number will continue from this old factory and from new factory. Then we'll start, maybe in the first year, we'll take only, in the first quarter, take around 30%, singly around 30% capacity utilization, maybe quarter on quarter, we'll increase it, basically.

Okay, so 30% utilization of the new capacity, after the new...

Yeah, new capacity, 3,600 cranes, yeah.

Okay. Okay, sir. Thank you so much, sir. That's all for myself.

Thank you, sir. I'll move on to the next question from Angira Patel.

Hello, sir.

Yes, ma'am.

Crane dealer count has been stagnant at 25 plus for the three consecutive quarters against a stated target of 50 plus. How many crane dealers were added in Q1 and what is the rating factor if production capacity is about to more than double?

Ma'am, the first, it is not going to 10 level. Because already around 1,000 plus crane we are making here and selling these cranes from these dealers and gradually the new plant total capacity will be 3,600 numbers. Okay. But that is going to utilize. It will take a little time. Maybe the first quarter I told maybe around 30%. Maybe the next quarter it may be 35-40%. Like this is gradually grow. It will take average 40-45% in the next financial year, 27-28. Then it is we have to sell maybe around 1,800-1,500 yen almost, that kind of number in that first year. Okay. And then maybe next year it will be more. Selling these numbers again, we need around maybe 20-25 dealers. And these dealers also, ma'am, the existing dealers also, we can increase their capacity sometime because if they bring the bigger order, which we can't supply promptly. Therefore, with these dealers also, they are also not working on the peak capacity. So there also the space is available. And these 25 dealers, maybe, once the new plans start, we can appoint maybe in one year time, six months to one year time. Adding dealer is not a big issue. It's only we have to match with the production and then adding that channel.

Also, we have a follow-up question from Mr. Manus.

Yes.

Hello, am I audible, sir? Yes, yes, Mr. Manus.

Sir, just one last question was there. Can you give me an EBITDA margin guidance for the FY27? Like, for the last year, I think it was around 14.6%. So, what would it look like on the FY27?

This will be around 12.5 to 13 percent. Yes, sir.

Mr. Banasi is talking about the console at console levels.

Consol level it will increase. It is 10 loan, I am telling.

Okay. Sir, on the consolidated consolidation level.

On the consolidated consolidation level, it will be in the parallel lines only, sir. Similar the last year. Similar.

Okay. 14 to 15 percent. Yeah. Okay. Thank you, sir. Thank you. Thank you, sir.

Sir, we have a few questions in the Q&A tab. The first one is, how many units we sold in Q1FI27 for both segments, crane and tractor?

Shingraji, do you have a number handy with you? Ma'am, ma'am, can you take, we can share these numbers, whoever wants.

Okay, sure, sir.

Okay.

We'll take the next question from Ashia Sani.

Hello, am I audible, sir?

Yes, ma'am.

Sir, my question is, could you please share the tractor and crane volume sold during Q1 FY27? Along with YOY growth in volumes.

Ma'am, we'll share this number. We can take this email. And Singlaji, will you share this number later on? Yeah, ma'am, we'll share this ID, I'll send the details to you. We'll share this number, ma'am, with you.

Okay, sir. I also have another question. The tractor business continues to have significant available capacity. What is the current utilization level?

Madam, current utilization level, if you consider in tractor, it is around 35 to 40 percent, but some of the many of the component of crane also we are making in-house. So if you consider all everything, it depends, you know, ma'am. Assembly capacity may be working only 30-35%. Okay. But the machine shop capacity, we have added many more components of crane in-house. There we are utilizing almost 85%. Machine shop fully, capacity we are using. Maybe some shop capacity is less utilized, but the majority, the investment there in the machine shop, that is almost fully utilized, up to 85%, it is utilized.

Okay. Also, sir, what do you expect? What will be the capacity by the end of FY27?

Capacity of Tetra? Yes. Ma'am, the sector capacity we are not increasing. We have got almost 12,000 number capacity. That we are not increasing now. Enough space is available for the growth.

Okay, sir. Thank you.

So the next question is, how do you see volume growth in tractors and in crane and what kind of edge over our competitors we have means what our offering makes so customer can switch in tractors? I think basically they are asking about our USP, like how we are different from our competitors.

Anshul, I think, for Tector Anshul, you can say that. Information Vika Jansul is responsible for tractor sale.

Sure, sir. So, sir, to explain about tractors, sir, first and foremost, we have one of the largest tractor ranges in the country. We manufacture tractors from 16 horsepower to currently 100 horsepower, 100 being under testing. The complete range is available in four-wheel drive also. And since, you know, a lot of our production is done in-house, we are slightly competitive over our competitors also. We have slightly more room for customization as per the market needs. Again, because of the backward integration that we have done in our plant. And currently, we have every feature that the Indian tractor customer requires. So we are at par with every major tractor player in the country and our bouquet of products and our power and our fuel mileage has always been our USPs. So currently the company is going through a mass demonstrations of our product features at village level to make sure that our USP reaches the customer. So, we have a good product. We have sold over 1 lakh tractors since the company's inception. It is just about now reaching more and more markets.

Thanks, about the crane, about the crane.

Sir, Mr. Yogesh wants to ask the question himself. Yes, sir, please unmute yourself and ask the question. Yogesh, sir, please unmute yourself and ask the question.

No. Hello. Hello. Hello.

Yes, you are not very audible.

Yes, fine. Sir, my question is basically, obviously, we have better product, but in terms of how do we market and how do we service, what makes a difference? Because end of the day, it's a consistent business year over year, right? And that's how we continue to grow. But in terms of differentiation, you rightly mentioned that we have better power tractor and plus customization we can do. But in terms of scale-up, sir, how do we do that? And what's stopping us today? Because one is financing, I completely agree. Readership is agree. But apart from these two things, do you think these are the only two things which is stopping the Tektra's growth?

You guys, let me apply this question. Tektra is a product basically, which is this decision taken by a customer. He has to see the 10-year service. He has to see how many tractors population is available. He has to see if all neighbors are having different kind of brand, because they are influenced by the neighborhood. And when we appoint a dealer, the new every brand has to have a little struggle. Okay. A little struggle is there. But it is not impossible. And the way we started growing at 35-40% quarter on quarter, So it is a good sign. We have broken those barriers because we are offering a better product. We are offering at the competitive pricing. And now, the big bottleneck of retail financing also, we are supporting them. If there are three things, but it will not spread immediately. You know, immediately we'll start making 12,000 tectras and we'll be able to sell. No. Because the channel has to be credited. And the word has to go in the market, sir. If we are appointing a dealer, he's not suddenly start selling many tectras. Every village, he give one tectra, two tectra. Selling first two tectras is a little difficult. If the feedback goes, if the neighbor would, they check up, if we demonstrate, those kind of things, but it will take little time. But the way is clear. Since last four quarters, after this IPO, we got some money also in our NBFC. So now the things are moving in the right direction. Okay.

Just again one question on this. Based on your expectation, let's take it two years back, what was your expectation today and are you happy with your performance?

For the technical growth, we are happy. We are okay. This growth should continue. Rather, this should be further momentum to be given. Because we have already started working on dealer network. And we have already started working on export also. Okay? So, it will definitely support us. Export will also certainly support us in long term. Okay. Next, crane. Crane, there is a sudden... Issue came, the change in emission from Trum 3 to Trum 5. There, almost all the players in construction equipment affected the numbers. We will not remain, you know, we were with them only, basically. So that was the reason. So now, this quarter onward, we are expecting the crane growth will also come and technology is already growing.

And sir, I'm asking you, let's take three to four. I completely agree because of this issue and we have sorted the issue, right? So from here, maybe one or two what I'm not asking, but structurally, because again, we keep talking about India growth story and all, that's fine. But in terms of how do you see roadmap three to five years, that's it, simple. In terms of profitability also and volume growth.

Three to five years, a tech trade business, we are very sure around plus 30% growth will continue.

Okay.

Okay. As far as crane concern, this capacity of 1,000, 1,100, 200, the old plant, it will continue. Next plant will be 3,600, which is a big plant. And there, in three years, we are expecting to utilize our capacity up to, you know, maybe 60, 70%, around 70% plus minus a little bit. So 70 to 80% we can try. Balance depends on the market conditions and everything, you know. But we are hopeful. In the next three-year time, more than 70%, 70 to 80%, we will be operating on that capacity.

Okay. And, sir, in Cranes, who do you think you are the closest competitor?

There are two competitors. Both are Faridabad-based. One is Escort Consection. So, that is not a really big competitor with us, basically, because they are selling product only till premium.

Okay.

There is one more competitor. There, we are selling on similar kind of pricing. There, he is our only one competitor, which we feel. Okay.

So, sir, if I take, look, I'm not asking any type of target or guiding. Based on our discussion, we can easily assume 20 to 25% volume growth over next three to five years, right?

You can calculate, but the new plant, all volume will come, it is going to addition, and existing plant, crane, plant will not give more addition, but texture plant will give 35% plus growth, which we are expecting, assessing that current situation, market situation.

Basically, in tractors, we made more than 50% in-house. So, there will be big operating leverage in tractors, right? If utilization crosses, let's take a 60-70%.

Yeah. Profitability will increase, right? Therefore, with the less number, we always remain in the profitable, even in the less numbers.

No, profitable is one part that I am saying more profitable. See, where discussion is more profitable.

Definitely, definitely, definitely when number will increase, the fixed cost remains same. Little variable cost will increase. So definitely the beta and everything will improve.

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

Thank you, sir. We have a follow-up question from Mr. Omkar. Sir, please unmute yourself and ask the question.

Hello. Am I audible? Yes, yes. Hello, sir. Thank you for the opportunity. As we are coming up with large capacity in Cranes, how much we are spending in sales and marketing? Are we spending enough to scale up both brands, Indofarm and Indopower?

As far as Crain is concerned... Once the new plant will start, we are adding manpower, more manpower, more manpower, so that, you know, we'll be able to suffer in other areas where we are not presented at this moment. Because we are working only maybe 20-25% area, the balance area is vacant. Although our machine has been tested and tried out across the country, because if you are selling machine to a North-based contractor, and he is doing the construction across the country, he is taking contact across the country. The machine is known, popular, but we have to create their sales and service network. The main important becomes sales. We can do it directly also, but service becomes very important. Therefore, the new team is being also appointed, and this existing network also, when we'll offer them that enough machines are available in the plant for sale, definitely they are also going to add on the business, increase the business. Now, sometime we are concerned, if we are getting a bulk order from some part of the country, that we cannot execute because of our capacity constraint. We are fully prepared. The way, the kind of product we have created, it is very well acceptable in the market. In some part of market where we are available, we are having major markets here.

Okay. And how much pricing hike we have taken in our crane segment and how much commodity cost has impacted us and our business and how much we are able to pass on that cost?

Almost with this quarter, Q2 quarter, I think we'll be able to recover that cost, whichever the increase was there. Because the demand is now better. If the demand increases, then only one can take the price advantage of the input cost.

Okay, our peers have taken multiple price hikes, so we can also expect some price hike in our segment.

Yeah, some price hike we have taken in past also, but further price hike will take in this month now, coming months.

Yes, sir. Thank you. That's from my side.

Thank you.

Thank you so much. Thank you. With that, we have closed all the questions. I would request the management team to please share the closing remarks.

Yeah.

Sir, I'd just like to thank everyone for their fruitful insight, feedback, and the questions. And we look forward to the next call. And hopefully, whatever has been discussed, you'll see a positive trend for the company. Thank you so much. Thank you. Thank you, ma'am.

Thank you, sir. On behalf of FinPortal, I would like to express our sincere gratitude to the management team of Interfarm Equipment Limited for taking the time to share the company's performance, initiatives, and outlook. We also thank all the participants for such an engaging session. If any questions remain unanswered, Please feel free to reach out to us on the mail IDs given in your chat box. A recording of this call will be made available in new post. Thank you once again for joining. Thank you, Human Out Disconnect.