Karamtara Engineering Limited (KARAMTARA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Karam Tara Engineering Ltd. Q1 F527 Earnings Conference Call hosted by ICICI Securities Ltd. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities Limited. Thank you, and over to you, Mr. Kumar.

Thanks, Rinju. Good morning to all. On behalf of ICICI Securities, I welcome you all to the QNFY27 Hunting School of Karantarai Engineering Limited. Today, we have with us from the management, Mr. Rajiv Singh, Joint Managing Director, Mr. Sunil Rastagi, Full-Time Director. We will begin with the opening remarks from the management, which will be followed by Q&A. Thank you and over to you, sir.

Good morning, everyone. My name is Rajiv Singh, and a very warm welcome to the first earnings conference call of Karantara Engineering Limited as a listed company. Our results and investor presentation have been uploaded to the stock exchange and are available on our website. As we have said, on behalf of the Karantara family, I would like to thank every investor who has participated in our fundraising journey and placed their trust in us. Our listing on the stock exchange is an important milestone in our journey that started almost three decades ago, and we see it as the beginning of a long-term relationship with our shareholders. We have delivered a strong quarterly performance in Q1 F527 in terms of both revenue and profit, making a strong start to our journey as a listed company. Since this is our first interaction with many of you, I would like to introduce Karantara and our ecosystem to you. Karantara was incorporated in 1996 and was built on a strong foundation in power transmission with deep expertise in the manufacturing of lattice towers and renewable steel structures. Over the years, we continue to strengthen these core capabilities, expand our product portfolio, and build scale with establishing ourselves as a trusted partner across the renewable and transmission ecosystem globally. Today, we are very strongly present in all the four major geographies outside of China, namely India, U.S., Saudi Arabia, and Europe, with 12 different products in our portfolio. Today, Karantara is a backward integrated manufacturer of products for the sectors we operate in. Currently, we operate 13 manufacturing facilities, 8 in Maharashtra, of which 7 at Boisar and 1 at Nagpur, 4 in Gujarat at Bachao and 1 in Italy. We further have two new facilities coming up at our complex in Bachao, one new rolling mill to support our transmission tower business and solar track-up files, and one for PEB focused on data centers. We also have one solar stamp part facility coming up in Boisa. In addition, a multi-product facility coming up in Saudi Arabia for transmission line and solar products. As of the current quarter end, our aggregated installed capacity stood at 8,89,200 metric tons per annum, excluding rolling and galvanizing capacity, which are utilized for captive consumption. Let me briefly explain our product offering. For our solar business, we manufacture structural components required to install and support solar panels. This includes structures for both fixed-tilt and cracker-based plants. Our product portfolio includes cold-rolled module mounting structures, cracker piles, stock tubes, couplers, purlins, and stamp parts. Since we manufacture components for both types of solar plants, customers can source most of their structural requirements from us. This is what allows us to offer customers a one-stop-shop solution for their solar structural requirements. Moving to wind energy, we manufacture both tubular and hybrid lattice towers used to support wind turbine. In the manufacturing line vertical, we provide infrastructure that It enables electricity generation at source to reach its end customers. The lattice transmission towers are for lines up to 1,200 kV, along with transmission hardware such as insulator fittings, suspension clamps, and vibration damper. Within the fasteners, we have products such as bolts, nuts, studs, washers, and specialized industrial fasteners. These are used for solar, So, in simple terms, Karantara provides the structural backbone and critical development across the renewable energy and power transmission value chain, while its fastener's business provides additional exposure to several industrial sectors. During the past two years, we have expanded our installed capacity substantially by de-bottlenecking our existing facilities. We have commissioned new facilities in Boisar, Maharashtra and at Bachao Gujarat. The new Bachao cluster is strategically located near major renewable energy hubs such Such as Khaavra, Rappar, and Jamnagar, supporting efficient access to key markets domestically. For international markets, the facility is connected to the close by Mundra and Kandla port. As mentioned previously, we are also setting up one multi-product facility coming up in Saudi Arabia for transmission line and solar products. As we continue to expand our manufacturing footprint in India and international markets, We believe our backward-integrated business model will remain a key competitive advantage, strengthening our execution capabilities, supply chain resilience, and ability to deliver high-quality solutions to customers. Karantara believes in manufacturing products in India for India and global markets, also strengthening its global footprint by manufacturing in key growth markets and their domestic consumption and further export to other countries.

India is a very compelling market for the renewable energy sector. The country has significant solar energy potential and solar capacity has expanded rapidly in recent years. India has set ambitious renewable energy targets for 2035, with solar expected to account for a substantial portion of this capacity. The increasing share of non-fossil sources in India's installed power capacity, together with the several government initiatives, including production-linked incentives, renewable purchase obligations, and green energy open-exit regulations, Continues to support the development of solar ecosystem. The recent green energy corridor phase 3 scheme with a projected outlay of 1.86 lakh crores is a testament to this. We believe the continued growth of utility-scale solar, trackers, and associated infrastructure will create sustained demand across the solar value chain. Alongside solar, wind energy is becoming an increasingly important pillar for India's renewable energy transition. India is already among the leading wind power markets globally and has substantially untapped wind potential. The industry is being supported by increasing tender activity, renewable purchase obligations, and the government's long-term renewable energy objectives. The growth in renewable generation also makes transmission infrastructure critical to the energy transition. For Karantara, these industry trends directly translate into business opportunities. Solar requires mounting structures and trackers, wind requires towers, and renewable project requires transmission infrastructure. Our presence across all three segments allows us to participate across the broader energy transition opportunities. As India expands, renewable capacity and strengthens its power grid, we see multiple structural growth drivers supporting Karam Tara's long-term growth. In fact, currently we are witnessing a market where demand continues to outpace supply, creating Our large install capacities give us flexibility to accept orders, basis the parameters that align with our strategic objectives, while maintaining discipline on commercial terms. Paramtara has built a strong global delivery platform with exports across more than 50 countries, where we work with several leading OEM, EPC, and IPP companies. Europe is emerging as a growing opportunity as well for us. In Q&FI 27, the international business is accounted for 66% of the revenue. Our domestic business is also very strong. We see opportunity to participate in India's accelerating renewable energy sector growth story while continuing to serve civilized international markets, providing diversification and multiple avenues for sustainable growth. Our customer relationships remain at the center of our growth. Our broad product portfolio and our position as a one-stop partner for our customers, allowing us to serve multiple requirements and increase our share over time. Further, our backward integrated manufacturing capability enables us to commit to larger volumes and tighter timelines. While our track record Now, I will walk you through the consolidated quarterly financial performance of Q1FI-27. So, revenue from operations stood at 1381 crores, registering a growth of 72% on year-on-year basis. From a revenue-based perspective, renewable products continue to be the key revenue driver, contributing 82% of Q1 FI27 revenues. Habitat for the quarter stood at 174 crores, reflecting a 45% growth on year-on-year basis. Profit after tax soon had 87 crores, registering a growth of 45% on year-on-year basis. Given the unique measure of our sector, it would be

more meaningful to evaluate the company's performance on an annual basis rather than solely on the quarterly basis.

Talking about our annual performance, 25-27, we endeavored to grow our revenues by 65% over the last year. With that, we conclude our opening remarks. I would now like to hand the call back to the moderator to open the floor for questions. Thank you very much.

Thanks for the opportunity, and congrats on a strong result post-listing, meeting our expectations. And thanks for the exhausting opening remark and the detailed presentation as well. I think most of the queries have been answered, just a couple of questions. One, can you, I mean, comment on a near-to-medium-term strategy on the mix of the business? I mean, currently, solar forms a significant chunk, I mean, greater than 80%. Any plans of increasing the share of transmission given the strong outlook? And I mean, the bidding has been very strong for the past couple of years, and maybe the pricing will be favorable as well. So can you throw some light on the supply demand dynamics for the light-sized towers, and do you see the mix changing going forward?

I thank you for the question. So basically, in our history, we've been traditionally transmission line tower manufacturers, and as the opportunity in the solar sector grew, we committed ourselves into solar and its products and then into wind. And now transmission, which is going to be a key growth driver for us, we have just put up a very large facility in Bajau, which has started manufacturing recently. And, you know, we also have for in our wind, which is a fungible capacity where we do angular wind towers, which are hybrid towers, where we can also manufacture transmission line towers from. Also, we are investing very large amount in Saudi Arabia, where we are putting a very large transmission line tower capacity, and, you know, we feel the demand is very strong there. So, yes, transmission is going to be a very, very large growth driver for us, and how we built in the last five years the solar business, we would love to build, and we are very keen to build a very large transmission tower portfolio. We have the management bandwidth, we are continuing to recruit the best people in the industry, and we believe that this sector will really grow and do well for us.

Thank you.

So, our second question will be on any color on how the Q2 has planned out any guidance for FI27 on the revenue growth EBITDA margins.

So, I'll just answer half the question and then I'll leave it to Rastogizav to answer. Yes, Q2 has been good for us. And as he mentioned in his opening remarks, that we endeavor to grow by about 60 to 65% on a year-on-year basis. So, in line of that, we have done reasonably well. As a business, as a sector, we normally have 40 to 42% of the revenue that comes in in the first six months, and then, you know, 58 to 60% of the revenue that comes in the last six months. That's been the trajectory of the company over the last few years. So, if you keep that in mind, you will see that Thank you, Rajiv.

On the part of EBITDA margin, of course, we earned EBITDA about 11% in quarter 1, and definitely as the revenue grows in subsequent quarter, there would be improvement in the EBITDA margin in line with our expectation, because we will be utilizing, we will be sweating our assets and utilization of resources would be on a high side. So, definitely the margin, there would be some release in the margin in the utilization of all those things.

Thank you, sir.

Thank you. A reminder to all the participants, that you may press star and want to ask a question. Next question comes from the line of Chimit Mehta, an individual investor. Please go by.

Yes, sir. First of all, many congratulations for such a strong result. Sir, I just have one question. Actually, so how are your contracts structured with customers? Like, are they primarily cost plus or fixed price or a combination of both?

Yeah, thank you for the question. So, in solar, for the India business, normally our contracts are about four to five months. We generally get the orders and we have to deliver the material in four to five months. And in that, what happens is that once we get the order, we book the raw material based on the orders. And normally the mills give us about 90 days to pick up that material. And that's how we cover the steel and zinc for those domestic contracts. For international contracts, we have contracts for about, let's say, eight, nine months. And for that, for all our export contracts, we import the raw material. And that's how we cover those contracts. So we are able to not take any major risk on any of the commodity prices if the supply chain, of course, is met correctly. And in war times, it could get disrupted a little bit. But otherwise, generally, all material for all orders, the way they are structured, we have a pass-through. In some cases, where the orders are long-term, even in transmission in domestic markets that we are supplying, we have a price variation clause with the clients. And in some international contracts also, which are longer than one year, we have price variation contracts with them. Some much larger contracts which are there for transmission line overseas, in some of them, we have on FOB basis and the shipping is also a pass-through.

Okay. Thank you for such a detailed explanation, sir. And Vishnikna company to continue with its strong growth project. Thank you. Thank you. Thank you.

Thank you.

Yes, under Section 232, which is globally tariffed at 50%, and if you see the last time around when India got tariffed at 25%, and then there was an oil tariff of 25% put on that, that did not stack up on top of our existing 232 tariff. When that Russian oil tariff got removed and India came back to 25% and then it was lowered again, we still remain at 50%. So for us, globally, the tariff on steel and aluminum products to the U.S. remains at 50%. So for any tariff that comes on top, it doesn't apply to our products. Even, let's say, we're talking about tariff on forced labor, etc. This 232 stays at 50%. Also, in the US, for our kind of products, there is not that much of domestic supply. And hence, when the tariff went from 0 to 25 and from 25 to 50, it fully got absorbed by the buyers. And, you know, so, it was a full pass-through for us. We didn't get hit by the impact of the 50% tariff at all. It was all the material that was yet to sail or was in the water or had reached U.S. customs. We got a change of law and all the money was paid to us.

Sure, understood. Sure. Which are the other geographies, key geographies who are exported to U.S., and which are the two, three other key companies which are standing out as competition for us, and, you know, what would be the cost difference for a U.S. customer for procuring from us versus a competition or a competing geography?

So, you know, we are quite wide in U.S. with all our clients and EPC contractors, and, you know, there are some people who are U.S. companies who come to India and buy from Indian manufacturers, and they import the material into the U.S., you know, they are aggregators that they are doing it. So, as of now, we don't see any major real competition coming I mean, in our kind of products from any Indian company at this point. And sorry, the second part of your question was that the difference in price, you said, between India and the U.S. The price in the U.S. market because, you know, steel is in short supply and in terms of deliveries, it could take six to eight months to get any material It has to be pre-ordered. So the prices are very, very high. They're about 30% to 40% higher than what they're able to buy from India if they buy locally.

That's all for much attention.

Thank you. Next question comes on the line of Gaurav Q. My name is Asit. Please go ahead.

Hi, sir. Good morning. Thank you for the opportunity and congratulations on good set of numbers. Sir, I just wanted to understand a bit more on the margins. We have, earlier, like 10% range or 11% range in terms of EBITDA margin. Going forward, margins would be more of a lever from a gross margin level where we'll see that certain products would contribute more or capacity expansion in Saudi Arabia would contribute more to the gross margins or margin expansion would largely be led by operating leverage. How do we see that? Because I think if you look at the industry as a whole, price for realization per metric ton generally remains in a similar range, and we don't see any material escalation in terms of realization within the industry which we are operating. So what are your thoughts on that?

So, thank you for your question. You know, in terms of EBITDA margins in this quarter, we have had 11%. We would have had a better realization on our margins, but we were, you know, the shipping costs these days and the local costs, let's say in Europe or supplying into the Middle East today, you know, the trucking costs are at all-time high. So that has hit us a little bit at our margins. Otherwise, our margins would have been far better than what we have been able to do. And we feel that over a period of time, once this subsides, these margins will come back. And our new contracts that are negotiated, when they are negotiated, they will have these additional costs paid to us. In terms of the expansion of margins due to production, you see, what is happening is that because we have put up so many new facilities, and we are continuously doing CapEx. Last year, we did 900 crores of CapEx, and we continue to invest this year. There are so many large facilities coming in. The management teams and the employees that are required for these businesses are already there, and we are already holding those costs attributed to those businesses which are not giving us the revenue today, but once we start shredding all these assets to their potentials, definitely there will be a change in the margins because of the utilization of the assets and with the fixed costs. Already there, the margins will definitely improve. As far as Saudi and other countries are concerned, wherever we are manufacturing as a local content, because you're not able to export from India or from China or from any other country into that country, you know, the margins are definitely much, much better. So, as we know, we start producing in Saudi Arabia, we feel that the margin percentage will be far better than, you know, what you've seen this far.

Got it, sir. And similarly, sir, the new capacity which we are putting for transmission, latest hour for, say, for in India and Saudi Arabia, When do we expect this to run on full capacity or optimum capacity of what historically we have seen of 60-70%?

So, Saudi, the capacity, we will start doing hopefully some trials in December, and by February or later by March, we hope that our galvanizing plant will come online. Once that happens, you will start seeing the utilization of the capacity, And it will take about 12 to 18 months for us to be able to hit good numbers in that capacity. Over a period of time, yes, there will be revenue next year that will come. It won't be at, let's say, 90 or 100% capacity, but it would be substantial. But yes, it will take about 12 odd months for it to start hitting closer to the numbers that we are internally projecting. As far as India is concerned, the facility in Bhuj has started. By this quarter, also, we've had reasonable tonnages, but we feel by the next six to nine months, we should be hitting peak capacity in that facility also. As I said previously, transmission is a major growth area for us, and we are being entrenched in this market globally. We have supplied material to over 50 countries worldwide, so we have our network, we are qualified everywhere, so we will scale up.

We hope to scale up very And the last question is largely on the capacity utilization. Historically, we have seen that It is largely in the range of 55% to 60%. And generally, first half is 40% of the revenue for the company, and 60% come on the later half for the year. So do we think that capacity utilization would almost require, like, more than 75% utilization to achieve revenue numbers, what we are targeting here, of more than 7,000 crores of revenue? So what are our thoughts, like, Are we able to do more than 75% capacity utilization, or largely it remains in the same range? Because historically, I think 55-60% is the optimum range what we have seen in capacity utilization.

So, great question. If you look at the enhancement of capacities, and as we have gone on adding capacities, and by the time they come online, it takes a little time to ramp up all those capacities. And since we continue to go on deploying capital and increasing our capacities, You know, they are trying to keep pace with the growth. So, capacity utilization, what you saw last year was because a lot of the facilities came online towards the last quarter, and, you know, this quarter also there has been ramp-up. That's why you see that between the last quarter and this quarter also there has been a difference, there has been an increase in revenue, which in this quarter also we feel there will be. And when we have, let's say, 40% of the revenue, 40 to 42% revenue coming in the first six months and 58 to 60% coming in the last six months. So definitely the utilization of capacity continues to grow. And then, you know, that gets mirrored into the first quarter and the second quarter of last year. If you see what we did in the first quarter of FY26 and what we did in the last quarter. And from the last quarter of FY26 to the first quarter of FY27, also the revenue has grown substantially. So as we go on sweating these assets that we have added, and these assets will yield higher revenue not only this year, but the year going forward. So let's say transmission will hit X percentage this year, and then by next year, it would have ramped up to a large extent. And then same as with Saudi, you will see some revenue coming next year, and then the year after that, a large part of the revenue will come. Same as, let's say, we have added in PEB, the facility should be ready, let's say, by the beginning of next financial year, we should be starting. So, you see some revenue coming in the next financial year, but the year after that, once we start sweating those assets to a large extent, you know, we are able to ramp up really quickly. So, that's how this works, you know, that as capacities keep coming up, we keep adding more, and by the time these get filled, then new keep coming up.

Great, sir. Thank you, sir.

Thank you for answering the questions.

Thank you. Next question comes to the line of Suyash Kela with Singularity AMC. Please go ahead.

Thank you so much, and congratulations on the listing. It's a big milestone for the company. Rajivji, Sunilji, if you can help us understand, how are you looking at capital allocation beyond solar and transmission and the broader renewable segment? I think you just mentioned in the last answer, the mention of PEB, but as promoters, how are you looking at capital allocation in these segments? How do you evaluate the size, scale, you know, the gross margins and EBITDA margins that could be possible in these newer segments? That would be wonderful. Thank you.

Thanks, Swish. We, you know, for us, you know, we build businesses and then we look at all the products around in those businesses. So if you look at what we did in solar and how we allocated capital, we moved a lot of, we reduced our transmission capacity. We shut down one rolling mill in Nagpur. We moved our fastener facility there. So, we tend to use our capital quite efficiently, and we do it in businesses that give us maximum margin. A lot of our facilities are fungible. You know, we are able to move from one sector to the other. So, if you look at what we did in solar, you know, let's say in FI21, we got 20 crores in solar, and, you know, this year, we'll be, let's say, we do 5,500 crores of revenue in that. So, we are able to scale up in sectors that give us good margins. When we look at our business, we look at, let's say, in the generation side, we'll have solar, we'll have wind, and then we have power transmission. And beyond that, then we'll have PEB, and then we are going to be manufacturing solar and transmission products in Saudi. So that's how we look at it, and we continue to expand. All these sectors have a lot of tailwind. So we continue to allocate capital to these sectors and build on these. So I think with our journey in transmission, our second innings in transmission has just started. We will have substantial growth from last year to this year. And then I think we will ramp up really quickly in the next two, three years and try to mirror what we have done in the growth that we have had in solar in transmission and in PEB in India and globally. Also, if you see that as we have scaled up, the utilization of the working capital requirements on a percentage basis has come down substantially, and I'll just allow Mr. Rastogi to give you a little bit of flavor on how that works in terms of our receivable days and in terms of our interest costs. You know, it's come down from, although revenue has gone up, but the entire cost has come down from our last quarter of FI26, though we've done a lot of capex, and, you know, because of that, the term loan cost, the interest cost on that has increased, but generally the working capital cycles have become much better for us.

Yeah. So, thank you, Rari, and thank you, Sears, for asking that question. So, of course, yeah, we are very mindful of the capital allocation in all of our products. So, as rightly pointed out by Rajiv. So, in terms of the numbers, yeah, working up cycle is going down because we are achieving the scale. So, from 67 days, it has come down to 43 days, and now further in this quarter, it has come down to 36 days. So, we are controlling our working up cycle very tightly and not allowing it to really ramp up. And also, in terms of interest costs, what Radyu has pointed out is the fact that it has come down to 2.6% of our revenue, which also gives a signal that we are controlling our working up to very tightly. Of course, there is some portion of term loan which has been taken for our CapEx, and once we deploy the money which we have pulled it from the IPO market, definitely the interest costs are further good.

Mr. Kela, are you done with the question?

Yes, please. Thank you.

Thank you. Thank you.

Next question comes from the line of Shubhuna, Bengal, with 3X Capital. Please go ahead.

Yeah. Thank you. Good morning, sir. I have just two questions. First, on the delivery cost, are you seeing same kind of elevated delivery cost in recent days? Sorry, I was not able to hear.

Can you just repeat the question?

Yeah, export market delivery cost. Are you seeing same kind of elevated delivery cost in recent days?

Yes. So, you know, what's happening globally, because of fuel costs have gone up world over, and local costs of fuel, even in countries that are oil producing, like the Middle East, like Saudi and the UAE and US, which is a large producer of oil, the domestic cost itself of fuel costs, oil has gone up. That has increased the shipment cost and the delivery cost globally. It's a global phenomenon. It has gone up everywhere.

That means, can I assume, in H1 or H2FI27, can I assume this 11% of the return margin is sustainable or it will go down further?

So, yeah, you know, I don't want to comment on our, although we have already done with our Q2, and margins, you know, I'll just leave it at that, that the margins are far better, even with the elevated cost of the oil, we've done, our revenue has increased, and so will you see a decent increase in the EBITDA margins.

Great. And my last question on our revenue mix, as per our T1FI 27, our 13% revenue comes from transmission segment. Going forward, suppose next two to three years, what kind of revenue mix are you targeting from transmission segment?

So, transmission for us is, as I said, you know, is a growing sector. We've done that our entire, you know, the company's history. And what I spoke about previously that, you know, we have scaled up so much in solar, where we were about 20 crores and we are going to be, you know, close to the number which I already spoke about. We will like to mirror that, and we would like to have similar kind of growth and similar kind of numbers in our transmission business and our PEP business locally.

Okay. Next, three to five years, what kind of EBITDA margin are you targeting? Can we assume we can expect going forward our EBITDA margin will close to touch 13-14% or furthermore?

Sorry, you said 30-40%. I didn't hear that. 13%? No, 13-40%. 13-40%.

So, with due respect, you know, we are not able to really comment on the percentage, but definitely, as we said, that once we sweat all our assets, we have already created, you know, fixed overheads in our books account, and once we increase our revenue, sweat all our assets, utilize our resources better, definitely there would be a better EBITDA margin.

So let me answer this a little differently from what Rastoghi Sarg was saying, that if you look at our Q1 numbers of FY26, and you see the margins there, we were at 13% EBITDA there. And, you know, with that revenue, and as the revenue grows, and we sweat all our assets, and things on the freight, you know, either with the war situation normalizing, or with, you know, when the new freight rates kick in, I think you, You should do the math and see where this could land.

Okay. Great. Best interest for future. Thank you for answering.

Thank you. Next question comes to the line of Arvind Arora with A Square Capital. Please go ahead.

Hi. Thank you for the opportunity and congratulations for a good set of numbers and fantastic listening. Sir, my question is more on PEP facility. So continue with the previous participants. Sir, how we are different than the existing player in the market in PVP sector? How our PVP solution would be different than our previous? So, if you can explain that. And I think, sir, margin profile, if you can take it, like, how this will increase our margin, is it, like, accretive for a company? Because currently, I can see it's 5.5% paid margin. So, how this will improve? So, if you can throw some light on that part.

Proud ourselves with people who are good prices because of our scale and because we are buying all our material globally. So I think any product we do because of our capability to buy, we feel we are able to squeeze out some extra margin. As far as the business model is concerned, you know, basically, there is so much of demand coming today in, you know, data centers and other businesses where today there are not many scale players in this industry that are able to deliver product on time, quality product. So, I think there is, for us, it was an aligned business where it was, you know, where we were able to procure similar material, you know, and there is a lot of, let's say, technical manufacturing with welding and all is there, where, you know, we are today qualified to do work globally, you know, we are doing, we are qualified in the Nordics and other countries. So we felt that this was a natural fit for us. Our existing clients, a lot of the large ones today that are getting into this business have been encouraging us over the last six, nine months to get into it, you know, to be able to support them in the quick turnaround for these plants of theirs. So, that was one major reason why we looked at it because, you know, our existing buyers have been asking us that why we do not support them in that. That's why.

We are in the center and we believe that,

you know, the margin profile is similar to what, you know, we are able to do in our other businesses.

So, is it like in the range of 11 to 13 percent EBITDA margin?

I don't want to qualify that, we are just getting into it, but we are very hopeful that the margins should be really, really good. That's why we are approaching it.

Understood. Fair enough, sir. And sir, your guidance, can you be repeat for FY27-28?

So, as Mr. Rasturi-sabh said in his opening statement that, you know, we are looking at a growth of 60-65%, we obviously internally hope to beat that, but, you know, we hope to We will continue to grow at 60 to 65% this year. And so that is what we are hoping to do and have good EBITDA margins. So normally you see that, you know, the first six months is 42% and the last six months is 58 to 60%. So if you do the math, you'll be able to.

And what about 28, FY28, any color on that?

So we will continue to grow. You know, we don't want to give today that, you know, where we would land up in FI28. But yes, you know, we've done a lot of capex, as I said, that Saudi will start next year and partial revenue will come next year. And the major part of the revenue of what we are invested, only invested in, will come the year after that. Same as with PV, same as with transmission, where we said that we are expecting a lot of growth. So, based on that, yes, we should have strong growth, but on a number today, we would not like to give the guidance as of today. And I think as we pan out during the year, we will speak more about it.

Sure, sure, sir. So, this growth that you are talking, 60 to 65 percent, so this comes, we don't see from the renewable sector or non-renewable, if you can, like, highlight that.

So, all of it, you know, we are sweating all our renewable assets, we are sweating our wind asset, where transmission is going to grow. So, all businesses are going to grow, you know, and grow at rapid pace. So, it's going to come from all of them. It's coming from solar, it's coming from wind, it's coming from transmission, all three, and fasteners. You know, we're doing a fair amount of aspects there also, so that will also grow.

Thank you. Thank you so much, sir, and all the way.

Thank you.

Next question comes from the line of Sanjay Parikh with Suhum Asset Managers Private Limited. Please go ahead.

Yeah, congratulations, Rajiji and Rastogiji. Amazing result and amazing clarification as well. One question was, you know, we are growing at a very good pace. The return ratios are very good today. As I see, you know, EBIT margins and asset turn is leading to, you know, our ROC is being at 25%, 26%, 27%. Of course, it depends on where our EBITDA margin lands at. So this character of the business, which is very strong of great growth and great return ratios, as we scale up, that would continue, right? That is the question.

Thank you, Sanjay Bhai, for the question. Yeah, we hope that this trajectory continues. If you see the way we model the business is that, you know, we manufacture in India for India and global markets. And, you know, we go to areas, countries like we've gone to, Kingdom of Saudi Arabia, where, you know, you require everything to be made locally. And our endeavor would be that the products that we look at, we are able to sell it at scale. And, you know, because, you know, of already the absorbed costs at the corporate level and, you know, because of the management of our working capital and our fixed assets, whatever we borrow for, is quite strong. You know, our costs on all those areas are maintained quite strong. So, as we go on adding more revenue and more products, I think the efficiency of the business, of the money, and the capacities should become better and better.

Yeah, yeah. And I think one thing assuring during our earlier meeting was that we are clearly a product company and not EPC company, and hence there are no major working-able cycle issues, which is quite assuring.

Yes, thank you for asking that. So, if you look at our working capital days and where they were at today, in the first quarter from last year, we've come down to 36 days, our working capital cycle. Last year, we had EBITDA close to about 500 crores, and our cash conversion was about 650 crores. So, 615 crores, sorry, 675 crores, I beg your pardon. And, you know, so we will do a little bit of services as and there is required to protect our margin, but that would be 3 to 5% of our revenue. We are not really looking at, you know, doing that, those kinds of businesses where, you know, working capital cycles become longer and longer and, you know, you know, that's when the cash flows and all get stuck. You know, we are predominantly a product company, and, you know, we'd like to stay there. That's the character of the company that we are building.

Yeah, thank you very much. The last one, while we are predominantly exporting to U.S., but, you know, any plans further to have some setup there, and also Europe, a little bit, your thoughts would help, because the opportunity is pretty large. So, there's some thoughts to help, and thanks a lot.

Thank you. So, Sanjay Bhai, we are always, you know, this is the first time the company has raised money, you know, so we are very, very careful where our capital is concerned. And, you know, we are very good as a company to build assets and scale up very quickly what we have demonstrated in solar and, you know, what now we are doing in transmission and our other products. So unless we see real value for the asset and then how we can expand in and around that region or do more products with it, then it makes sense. We'll definitely look at that. We are looking everywhere, wherever we can get a good opportunity. You know, we have very, very good management bandwidth. We are adding a lot of bench strength. We believe in investing in human capital. If you see our teams, you know, people have stayed with us, you know, from the time me and my brother have started working. And, you know, normally people, when they come in, they like to get associated with the company. So, yes, we will look at every opportunity that is available and to build the business and grow, continue to grow at the rate that we are growing at.

Okay. Thank you very much, and best wishes.

Thank you, sir.

Thank you. Next question comes from the line of Pankaj Saraf, an individual investor. Please go ahead.

Hi. My call actually got dropped earlier, so if you've answered the question, please feel free to just say that you answered it, and I'll listen to the call. But my question is, in the last quarter, how much of the revenue came from tariffs? And adjusted for tariffs, how do we think about revenue this quarter versus last quarter and the same quarter previous year?

So I'll allow Astohisabh to answer the percentages, the total revenue that came from tariffs. But I'll just say that the last quarter and the first quarter, The tariff has remained at 50%. So, there has been no change in the percentage of tariff. So, whatever we were paying in terms of percentages in, let's say, Q2 or Q3 or Q4 of last year has continued in this financial year also. So, yeah.

So, as rightly mentioned by Rajiv, basically, you know, the tariff and the freight, actually, the cost is almost, to some extent, the tariff was at 250 crores and not because, which is part of our Q1 revenue. But, as mentioned earlier by Rajiv, that, you know, everything is passed down to our customers, which doesn't impact our profitability.

Right. Now, understood. I was just focused on the top line. So, you said in Q1, the tariff was 250 crores. And if I'm to compare this to previous quarter and the same quarter last year, would you have the numbers handy, Bhadishan? So, I could actually, what I'm interested in is basically figuring out revenue X tariff on a comparable basis.

Yeah, I understand that. Okay, that was about 113 crores. 113.

This is previous quarter.

Yeah, Q126, I'm talking about.

Sorry, Q126 was 113.

Yeah, and before it was about 196 crews.

Okay, so Q1, sorry, this is Q1 of this year? Q1 of this year is 250. 250, got it.

Yeah, QN 26 was 113.

Got it.

Yeah.

Understood. Okay. Thank you. That's helpful.

Thank you.

Next question comes to the line of Sidham Jain with ICC Securities Limited. Please go ahead.

Hello. Thank you for the opportunity. My question is, what are the sales in Libyan terms for the current quarter?

Can you be a little bit louder? Can't hear you.

Yeah. I'm audible now.

Yeah.

Yeah, so I just wanted to know that what are the sales in million tons for the current quarter?

Sales in?

Million tons.

Sales in million tons? Okay, so see, generally, you know, a couple of products, we don't measure sales in million tons, but yeah, all put together, we have done about like 135,000 tons this quarter.

Okay, and my next question is, how do you see the UAE contribution in this fiscal and next fiscal, and do you think that there will be any slowdown due to ongoing conflicts?

It means, you mean Saudi Arabia? The Saudi Arabia facility is under construction. We haven't started, you know, manufacturing there as of now. As mentioned by Raghi, sir, last in his speech, that the trial production would happen before somewhere around December, and then commercial production would start maybe by the end of the year or early next year.

Okay. And that ends the ongoing conflicts. What are your thoughts on that?

No, we believe that the long-term plan for the kingdom and neighboring countries where North Africa and other countries that we could look at potentially supplying from there is quite strong. Their renewal plan for the next 10 years is very, very strong, and then because of that, the transmission grids required would be substantial. They are working towards, like UAE had Expo 2020, Saudis is going to have 2030, and then they have the World Cup in 34. So, because of that, there is a huge investment in the country, and that is on a continuous basis, because these two events are bound to happen in the country. So, that is why we feel that the progress will continue.

Okay, and my last question is that in the current quarter, the other expenses have nearly very high, like it's around 500 crores. So, what is the reason for that?

So, that tariff and the paid cost is a part of that of our expenses, and therefore, as you must have heard in our earlier conversation, where we have said that, okay, the tariff is about like 250 crores, and also the paid cost, which has gone, which has impacted a lot of EBITDA margin in the last quarter. So that forms a part of other expenses. Otherwise, well, other than freight and U.S. tariffs, the other expenses are getting control.

Okay. Thank you. Thank you for the question.

Thank you.

Thank you. A reminder to all the participants, starting with a star and want to ask a question. Next question comes from the line of Rahel Shah with Axel Proo. Please go back.

My question has been answered. Thank you.

Mr. Shah, please go back.

My question has been answered.

Thank you. A reminder to all the participants, ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Yeah, hi. Thank you so much for joining in and our first conference call for our results. And we've had a great quarter. We're looking forward to – we've had a good second quarter, and we look forward to having a good year. Based on what the guidance that we have given earlier on, just one or two clarifications, just wanted to give in terms of margins that when we feel that the revenue for Q3 and Q4 is as per projected, the guidance on the margins also will move in accordance to the growth in the revenue. So, you know, once the utilization of the assets happens, and, you know, we are able to sweat our assets fully, and the fixed costs of those are absorbed, you know, in those numbers will definitely improve.

Thank you. Thank you very much.

Thank you. On behalf of ICC Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.