Jinkushal Industries Limited (JKIPL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Q1 FY27 Results Conference Call of Chen Kushal Industries Limited. As a reminder, all participant lines will be in the listener's limon, 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. I now hand the conference over to Ms. Dhruvi from EquibridgeX. Thank you and over to you.

Thank you. A very good morning to everyone. Welcome to the Q1 FY27 Earnings Call of Genkushal Industries Limited. From the management team, we have with us Mr. Abhinav Jain, the whole-time director, and Mr. Sumit Berlia, the executive director and the chief financial officer. We will have opening remarks from the management team, post which we will open the floor for Q&A. With that, I would like to hand over the call to Mr. Abhinav Jain for opening remarks. Over to you, sir.

Good morning, ladies and gentlemen. Thank you for joining us for Jinkushal Industries Limited, Quarter 1, FY27, Earnings Hall. I am Abhinav Jain, Managing Director and CEO of the company, and I am pleased to share with you the developments during the quarter and the direction in which we are building the business. We began FY27 on a positive note. The quarter reflected healthy revenue growth alongside continued progress across our international markets, further strengthening of the organization, and ongoing investment in areas that we believe will support the company's next stage of growth. Beyond the reported numbers, I would like to use today's call to give you a clearer picture of what is happening within the business, the market, We are prioritizing how our international operations are evolving, how we are positioning ourselves closer to our customers, where we are directing our investment, and how we expect these initiatives to contribute to the business over the longer term. There are few developments during the quarter that I would like to speak to in particular. Before turning to the specifics of the quarter, I would like to briefly touch upon the broader operating environment. The ongoing geopolitical developments across various regions have continued to create operational and logistical challenges, particularly for the businesses with significant international exposure, such as ours. These developments have contributed to an increase in freight and shipping costs during the quarter. We continue to closely monitor these developments and are taking pro-active measures to mitigate their impact, while maintaining our focus on operational efficiency and the disciplined scaling of our international operations. JKPL has steadily expanding, has been expanding its presence across international markets. And we are currently developing businesses across Africa, Latin America, the Middle East, and other geographies. One of the most visible developments during this quarter has been the contribution from Africa. Africa accounted for approximately 32% of our revenue in Q1 FY27, compared with around 4.47% in Q1 FY26, a significant shift in the geographical mix. We view this expansion with long-term perspective. International markets are inherently dynamic. Infrastructure and mining activity, customer buying cycles, import conditions, trade costs, currency movements, and the timing of individual equipment transactions can all influence performance from one quarter to another. Accordingly, we do not view the contribution from any single geography in isolation. Our objective is to build a broader international business and create opportunities across multiple markets. This geographic diversification remains central to our strategy as it broadens our customer base, reduces dependence on any one market, and allows us to direct resources towards the market offering the strongest opportunity. The second area I would like to highlight is the organization we are building behind the business. As JKIPL grows and becomes increasingly international, the complexity of running the business also increases, requiring the right talent across operations, requirements, execution, finance, marketing, international sales, and business development. Over the last several quarters, we have consciously strengthened deep functions, adding experienced professionals across key areas in geography. While this represents an investment that may not immediately transfer into the MMO in any single quarter, we believe it is essential to building a larger and more professionally structured organization, one capable of improving execution, strengthening, customer coverage, And managing higher business volumes as we scale. Another important development during the quarter relates to our inventory position. As of June 30, 2026, a consolidated inventory stood at about 96.8 crores with around 84.4 crores position at our overseas subsidiary. This is a deliberate part of our international strategy in the used equipment and republishment construction equipment business. Availability is the key differentiator, and having machines positioned closer to our customers, allow us to respond faster to requirements, improve product availability, and reduce delivery timelines. At the same time, we recognize that this involves capital being deployed into inventory. Inventory conversion, working capital efficiency, and capital utilization, therefore, remain key management priorities. And we will continue to monitor them closely as we expand the business. The other initiative I would like to highlight is Hexel, our profile-free construction equipment brand. During the quarter, we continue to invest in this product development, international marketing, customer engagement, and dealers and distribution development across all the views. Hexel continues to gain strong momentum and we remain confident in its small-time potential. The investments we are making today in product development, market development, and distribution reflect our belief that a proprietary equipment brand can become an important part of the business over time, complementing our existing new and customized equipment business as well as used and refurbishment equipment business with cross-sales. To summarize Q1, several developments came together during the quarter, continued growth of the business, a meaningful increase in the contribution from newer and international markets, a strengthened organization, improved inventory availability, closer to customers, and continued progress on Excel. Some of these initiatives require upfront investments, and their benefits may not be visible immediately in a single quarter. Our focus remains on building a business that can grow at scale with a wider international presence, stronger execution, capabilities, and a more diversified product portfolio, while maintaining discipline around capital deployment and sustainable profitability. With that overview of the business, I will now hand it over to Sumitji, our CFO, who will take you through the financial performance for the quarter in Kyrgyz.

Thank you, Adama, sir. Good morning, everyone. Let me take you through the financial performance for the quarter. On a standalone basis, revenue from operations stood at 51.29 crore for Q1 FY27, up 37.4% year-on-year for 37.32 crore in Q1 FY26. On a consolidated basis, revenue stood at 56.57 crores compared with 48.82 crores in the corresponding quarter last year, representing growth of 15.9%. While the revenue performance has been encouraging, profitability during the quarter was impacted by a few factors. Standalone Profit Before Tax. So that's 4.15 CR compared with 4.52 crore in Q1 F526, while profit after tax stood at 3.31 CR compared with 3.76 crore. On a consolidated basis, PBT stood at 3.04 CR compared with 7.26 CR and FAT stood at 2.2 crore compared with 6.51 CR. I'm going to be a headman. I'm going to be a headman. Profitability for the quarter reflects an increase in certain key business costs on account of geopolitical sectors as well as our ongoing business expansion efforts. Given the international nature of our business, rate and logistics remain an important cost component. Shipping and logistic costs increased to 3.86 CR from 2.36 CR on a standalone basis, while consolidated shipping and transportation expenses increased to 4.72 CR from 2.76 CR last year. We have also continued to invest in strengthening the organization. Consolidated employee benefit expenses increased to approximately 3.83 CR. We view this as a necessary investment in personal, across operations, procurement, finance, international sales, and business development, in support of the company's next phase of growth. It is also important to note that our business involves procurement, refurbishment, shipping, and delivery cycles. That can extend across reporting periods. As a result, the timing of equipment sales and inventory conversion can create quarter-to-quarter variation in reported profitability. Looking ahead, our focus remains on supporting business growth while maintaining discipline around working capital, inventory conversion, liquidity and capital allocation. The stronger capital base following the IPO together with enhanced banking facilities provides us with the capacity to support higher business volumes and continued international expansion. At the same time, our objective remains to deploy capital prudently, improve conversion, and generate sustainable returns. With that, we have covered the key financial results of U1 FY27. I will now hand over the flow back to the moderator to open it up for questions. Thank you.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Varun Gandhi with HNI Investor. Please go ahead.

Sir, hi. Good morning. Sir, you said that ABSTECO contributes to around 32% of your revenue this quarter, compared to just 3-4% last year. What is really driving this growth, and do you think this level of contribution can continue? Yes, Mr. Warren, good morning.

Yes, Africa started overall, and given the capital allocation decisions that the board has taken,

and given the

geopolitical and logistical challenges in the Middle East, Africa compensated that part of the revenue. With the revenue that used to come from Middle East, and that is the reason for the growth. Africa as a whole is a very large continent, much larger region than other areas. And inherently, we had a diversified business and earlier revenues and sales to Africa. And due to always shortage of capital, you know, capital, working capital intensive business, we had to pick and choose which region to cater to first. So, when the window of opportunity opened up in Africa, we started catering to this, and we see the sustainability going well with the shipping cycle and the overall business cycle established in Africa now.

Sir, between Africa, Latin America, and Middle East, where do you see the biggest opportunity for the company over next few years?

I think in the next three years? As a whole, each of these regions are very large on their own. Each of them are developing regions. Africa and Latin America are very populous regions of the world as a whole. And Middle East has very high per capita spending capacity. There is a lot of infrastructure projects always going on and expected after the geopolitical situation settles. Expectation of. Further spending is there. So, I think I really can't put a pin on this is going to be the winner amongst the three. And we think equally, we have to be present everywhere. And all three will possess enough opportunity.

Okay. As your international business grows, how are you managing challenges around price, currency, and customer collection?

Well, it is a process, and as mentioned in the earnings call as well, we are expanding our team regionally in the markets that we serve. And the challenges around customer collections are, I would say, internationally handled in a more sophisticated way than I would say domestically because things are documented on record and writing, etc. So, I mean, the timeline. Which are there in the commercial negotiation, they are usually met. So, challenges are not possessed or exacerbated unless, you know, real geopolitical situations arise like the one we are facing, in which we have to agree to the genuine reasons of the customers, and they are literally not able to do something that they committed. But other than that, we have not really faced so much challenges as much.

Sir, the company has around 97 floors, I think, of inventory, is it? Which is the largest for sitting overseas, and how quickly do you expect this inventory to be converted into fuel?

Well, the business cycle in energy runs over two quarters, at least, in our business. All right, so... As of the closing date of the reporting period, I think that may have been the figure, but I think over the next two quarters of that closing date or one and a half quarters, I think it will get converted and the new inventory will again come into play. So we have had these levels of inventory, I believe, more or less a few percentage points, plus or minus over the last two quarters, I believe. So they get changed according to demand and supply. And as I said, the business cycle itself runs across two quarters. So it will be interesting to see what demand do we get. And we are hopefully positive on that in the September quarter. Okay, sir. That's it. Thank you very much.

Thank you. Thank you. Participants who wish to ask a question may press star and 1. The next question comes from the line of, are you Shanant, an individual investor? Please go ahead.

Yes, sir. Thank you for the opportunity. Sir, in the previous Q2 FY26 call, you had mentioned that HEXL is being positioned at around a 20-40% price advantage versus established global brands, while the long-term target is around 12-15% FAT margins. Could you help us understand the key structural reasons behind this combination of lower pricing and healthy margins?

Well, I think it's just the competitive business acumen that we've acquired over the years being in the industry. And, I mean, the technical reasons are just, I mean, we're able to achieve lower costs. That's what it could be. I mean, I didn't get your question exactly. What is the question exactly?

The question is that you mentioned that Hectare is being positioned around 20 to 40% price advantage versus global brands, and your black margin is 12 to 15%. How this is?

So the global price positioning is the retail price for the customer.

Right?

That is not bad. Right? Retail price is something that the customer globally, the 20 to 40% price is benchmarked against the selling price of other products globally of similar category. And Pat Margin is our Pat Margin in our P&L or balance sheet after all the expenses, direct cost, indirect cost, whatnot. So those are two separate things anyway, right? Okay, sir.

And, sir? Would you please quantify the impact of commodity inflation on bad margin of republished equipment and Hexel in percentage points, and how much price increase have we already taken to offset this? And this is the remaining inflation expected to be fully passed through?

It is not expected to be fully passed through because the fluctuations in commodity prices are very, very widely swinging right now. What we have tried to do is try to maintain a certain level of Thank you.

Thank you. That's just one more thing.

Thank you. The next question comes from the line of Anuya Shah, an individual investor. Please go ahead. Anvya Shah, your line has been unmuted. Please go ahead with your question.

Hi, hello.

Yes, ma'am, you are audible.

Great. Congratulations for the results. Many questions are covered. I just have three questions from my end. What would you say are the biggest differentiators for Hexel compared with other equipment brands in the international market you are targeting?

Okay, the answer to that is we have filled a lot of gaps that international legacy brands which are old in their philosophy of making the equipment and worked in a traditional conventional way were doing. And similarly, like the automotive industry was disrupted by a few new upcoming players. We intend to do similar things by... We are incorporating a lot of technological features or performance features and productivity features in our own brand, which is now the key differentiator, I believe, when customers are appreciating this. And with further marketing efforts, everything else, we think we are going to get better results.

Right, okay. And you've started at 527 with 37% standalone revenue growth. What kind of growth should investors realistically expect for the full year?

Well, I think such a forward-looking statement would be too far-fetched right now given the geopolitical situation going on and no certainty at all in a lot of input cost in prices. But I think our long-term revenue targets are still in place. And we've been trying to, you know, focus on long-term profitability and long-term revenue achievement to build the real business over the period of next two, three years. And I believe that 600 to 700 growth figure long-term revenue targets are still in place.

Okay. Okay. And looking at the next three quarters, where do you see the biggest growth coming from? Which segment? New equipment, yield and refurbished equipment, Hexel or any new geography?

I think new equipment, customization is more in demand right now because of various reasons and input prices for end users as well. So, they are looking at faster availability and lower breakdown time, etc. So, I think growth link comes from new customizing equipment.

Alright, great. All the very best to you.

Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star M1. The next question comes from the line of Ria Sharma, an individual investor. Please go ahead.

Congratulations for your F1 results. I have three questions. The first one is with more inventory being kept overseas, how should we think about working capital going forward? Will inventory continue to grow at a similar pace as revenue?

Right. Yeah, hello. So, I believe we are going to see some elongated levels of working capital cycles that we are seeing right now because of the obvious fact that geopolitical situations are in a hazy situation, right? So, we still like to keep inventory when the customers need them and the availability is there. And we are seeing a healthy turnaround. Given the fact that we are literally in turmoil and globally, but we are able to actually grow on revenue basis or, you know, maintain our inventory on a healthier level, not expanding unilaterally, but adjusting according to demand and supply. So, I think working capital cycle will be similar to what we are evolving right now. For the time being, and we hope to improve it as soon as the market or the global markets and situation is cool down. And about the inventories as well, I think similar levels, plus or minus a few percentage points in double digits, I believe, lower double digits, we can expect going forward as well.

Okay, so my next question is, what are you doing to improve inventory turnover from here?

Well, aggressive deployment of manpower, and that's where the manpower cost has increased, the employer benefit expenses have increased, and marketing, and basically sales in marketing in layman terms. That's what we are going to do, and that's what we are doing, and that's visible on the numbers as well. However, there's an induction period and an onboarding period for everything, and it will take some time, and then it

may happen annually over the period of years, I mean quarters.

Okay. So, the shipping and transportation cost have done up significantly this quarter. Do you expect this pressure to continue or are you seeing some improvement in trade costs?

So, that is one of the major pain points and there is the reason for the hidden profitability. But we have... Endeavour that and continue to still maintain our profitability on our overall basis and still cater to our customers, which I think will help us as soon as the shipping costs go down and it will directly reflect on the numbers that way. But I think, I mean, it's just like that. Do you know the next quarter oil prices? No one does, right? So it's hard to know what are the oil prices which will directly impact the shipping cost over the next few quarters.

Okay, so are you able to pass those higher logistic cost on to the customers or are you taking most of the revenue?

We are taking the rate, but we are still able to grow on revenue. We are taking partial rate and we are partially trying to pass it on to the suppliers also, like at the time of purchase and partially trying to pass it at the time of sale, but we are taking a substantial amount of it as well.

Okay, thank you.

Thank you. A reminder to all participants that you may press star and one to ask a question. The next question comes from the line of Burush Mehta with PM Consultancy. Please go ahead.

Yeah, thanks for the opportunity. As I see, I have risen up sharply. So, do you expect the larger team to start giving you this operating leverage? And throughout this, do you expect the operating cost and employee to increase further in the next few quarters? Or do you think this major investment has already been made?

No, I think this is a very valid question and we definitely plan to increase our sales team and purchase team and everything. Basically, operational manpower cost is going to rise over the next few quarters. And yes, the reason behind is to get future operating leverage, which will give obviously higher revenue profitability and everything in the quarter and years to come. And we are setting up a business, setting up a team, really transforming our company from their company.

You know, really mid-corporate or large-corporate. And we are in that journey, and I think the first step of that journey is to establish systems for such a team as a professional.

And we don't intend, we have the appetite, and we don't intend to stop that, even at the cost of it reflecting on the number.

Understood. I just missed out the starting line-up, so can you just tell me about Excel's brand? Can you break it about?

I mean, in the interest of other participants to get the quarterly questions, I believe you can just check our website or we can connect one-on-one about the brand. Okay.

Okay, just one question regarding Axel. Any realistic Axel becoming abata-positive in future?

Yes, we definitely learned in the previous question, I think we addressed that, that equal to 14% private levels are estimated. But of course, we are in the nation stages, initial stages.

We require, obviously, A lot of marketing expenses,

accounting, promotions, exhibitions, etc., which will not be viable at a smaller volume. When the volumes pick up, all the capital goods brands or anything else have pointed always in a direction that will become hugely profitable.

Understood. Just one last question. As I see, your data has been increased from the last year, and the working capital is also increased. So, how do you work with this in the current and in the future?

Well, I mean, increase of data is a planned strategy of penetration in overseas market, and as we are deploying manpower and people and teams. So, it is for the purpose to sell locally in those regions, achieve higher growth in sales, and I believe that is the part of the reason of increasing debtors. And in the current geopolitical situation, we have to observe the fact that, you know, there will be a longer working cycle,

longer commercial agreement that we have to maintain.

I mean, one of the most important factors is also the longer shipping time, which has happened because of closure of many routes of shipping. So the shipping time itself has increased, and unless the customer receives the machine, you know, the better the always wants to be reflected. So, but we are in a healthy churning base, and we think as soon as the shipping time gets reduced, things will start to get normalizing.

Okay, quite answered. Yeah, thanks. That's it from my side.

All right.

Thank you.

Thank you. Participants who wish to ask a question may press star and 1. The next question comes from the line of Anvya Shah. Please go ahead.

Hi, I just have a few follow-ups. I needed a few timelines. After the investments made in inventory, people, and international expansion, when should we start seeing a meaningful improvement in return from these investments?

Well, I think all the investments made are transient in nature. None of them are fixed investments or any plant, machinery, capex, purchases, etc., which has a certain timeline of clear break even or whatever. And the investments are also growing in nature, month-on-month, quarter-to-quarter, especially, you know, things like inventory, working capital, and manpower costs, etc. So, I think we can't put a certain time on it exactly that after six months we can see, or after 12 months we can see, or after 18 months we can see. But I think as the team sets in, as the system processes, organization, overall, the inventory, and overall our marketing efforts sets in, for the next three to six quarters, I think we'll start seeing visibility and, you know, the increase in the numbers. And it may not be directly attributable at that point of time in that particular quarter, but this would be the foundation of that.

So, I'm going to be in three to six quarters.

I think we can start seeing results of these strategic investments.

Understood. Three to six quarters. And if we look three years ahead, what would you like JinkoShield to look like in terms of revenue mix, international business, and profitability?

Well, in the next two to three years, definitely we want to achieve, you know, our targeted revenues of 600 to 700 crores for sure. But maintaining healthier levels of profitability, which will not be marked with these sudden jumps in cost, which we're absorbing right now, including shipping, including higher timelines of shipping, including interest costs, including the manpower costs. So, which I think would be a healthier number. And we've always been a company chasing profit. And unfortunately, in the current geopolitical situations, we have to let go of our profit. But in the interest of our long-term business building, we have taken this call. And I think seeing LJ profit in 2-3 years with 600-700 crore of revenue would be the target.

Right. And how about revenue mix? Which segment would be dominating?

Yes, in two to three years, I think Hexel should have larger share of the pie, and our used equipment business should also have the larger share of the pie. And I think if all the three verticals are equal in our revenue mix, I think we would be happy enough.

All right. Okay, that's it from my side.

Thank you very much.

Thank you. The next question comes from the line of

Manas, Anjan, an individual investor. Please go ahead.

Hello, am I audible? Yes, sir. ...on given results during such high volatile market. Also, my first question is, considering the natural calamity is visible...

Sorry to interrupt. Could you please use your handset, Anas?

Yeah, yeah, yeah. Okay. Now, is it clear?

Uh, no, sir. It is still low. The water is coming very low.

Just give me a moment.

Hello. Hello. Yes, sir. This is better. Thank you.

Okay. So, my first question is, considering the natural calamities going on in China, so how do we face any challenge in terms of because we contract manufacture our gecko loaders from China?

So, China is a very large country. I mean, in area much larger than India. The locations that we are presenting are not affected by any such.

Okay, and as you have mentioned, Africa's contribution from Africa has increased significantly. So, is it because in November 2025, you have partnered with Africa's largest equipment dealer? Is it the main reason?

It is partly due to that, that we have increased our efforts in Africa, and it is definitely one of the points.

Okay, thank you.

That's all from my side.

Thank you. The next question comes from the line of Rhea Sharma, an individual investor. Please go ahead.

Yeah, I have some follow-up questions. What are the main things you are focusing on right now to improve profitability while continuing to grow the business?

Well, organizational strength, systems, processes, recurring revenue, solving to repeat customer waves. And, you know, team building activities, right? So that's what our focus remains on, which will definitely give us profit and strategic growth in multiple regions. And we won't have to pick and choose either Africa, either Middle East, either Latin. And we hopefully want to continue solving all these regions on a recurring, regular, stable basis, recurring life.

Okay, so do you expect the second half of financial 2027 to be stronger than the first half in terms of revenue and profitability?

I mean, we're still on quarter one, so it's too hard to comment on that and give me any covered-looking questions. But historically, that has been the case. I am not able to give any covered projections on the second half prior to that.

Okay. So, after the investment made in inventory, people and internal expansion, international expansion, when should we start seeing a meaningful improvement in returns from those investments?

Yeah, three to six quarters, I think I have answered in the previous question.

Okay. So, if we look three years ahead, what would you think like Jinkoshal to look like in terms of revenue mix, international business and profitability?

International business is always going to be dominant. We are an export-oriented company. Profitability, I think, should increase to much LDA level once we have settled down with our increase, sudden increase in jumps in costs in multiple aspects that we see in this quarter and the previous years as well. And revenue mix should be more or less equal in all three verticals of commerce.

Okay, thank you.

Yes, thank you.

Thank you. A reminder to all participants that you may press star and 1 to ask a question.

Participants, if you wish to ask a question to the management, you may press star and 1.

Thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Julie for closing comments.

Thank you so much. On behalf of Jinkusha Industries and Equibrijex Advisors, I thank everyone for taking the time to join today's earnings call. If you have any queries, you can connect to us at info at equibrijex.com. Once again, thank you everyone for joining the conference. Thank you, Abhinav sir. Thank you so much, sir.

Thank you. Thank you, everyone.

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