Precision Camshafts Limited (PRECAM) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q4, FI 25 and 26 earning conference call hosted by Precise and Campus Limited. As a reminder, all participant line will be the listen-only mode and there will be opportunity for you to ask questions after the presentation concludes. Should we need assistance during the conference call? Please signal an operator by pressing start, then zero on your touchstone phone. I now hand the conference over to Mr. Kalanshah, full-time director, business development. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen. I'd like to thank you all for being a part of the Precision Campshaft Limited Q4FY26 earnings conference call. In case you have any detailed questions related to finance, please email your queries to cs at pclindia.in, and we shall provide a response in a reasonable time. We have submitted our investor presentation for the quarter four to the stock exchanges, and the same is available on our website. Investors have requested to refer to the presentation for detailed financial and operational information. I am pleased to share that Precision Camp Trust Limited has delivered a strong performance during the fourth quarter of FY26. The company reported a net profit of 13.2 crores compared to 9.5 crores in the previous quarter, reflecting a growth of approximately 38%. The improvement in profitability was primarily driven by higher revenues and improved operating performance. Revenue increased by 14.5 crores during the quarter, particularly offset by increases in raw material costs and other operating expenses. For the full year of FY26, company reported a profit of 5.78 crores. This performance includes an exceptional charge of 48.8 crores related to the impairment of investment in our step-down subsidiary, MFT, which is currently undergoing insolvency proceedings in Germany. Excluding the reception items, the underlying operating performance of the business remains stable and resilient. The Indian automotive market continues to demonstrate strong fundamentals despite global uncertainties, and we will continue to benefit from increasing localization. Strong demand from domestic OEMs, and the growing preference of customers to partner with reliable suppliers have improved quality delivery and manufacturing capabilities. As highlighted in our previous earnings call, PCL has secured multiple new business awards from leading OEMs including Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, Renault Nissan, and some other international customers as well. These programs extend our business visibility well into the next decade and represent a cumulative lifetime revenue of approximately 1,500 crores over and above our existing order book. To support this growth, the company is executing a comprehensive capacity expansion program. Over the next three years, PCL plans to invest over 100 crores in foundry and machine shop capacity expansion. Advanced manufacturing technologies as well as automation. These investments are expected to support incremental revenues of more than two times the capex, which will be incurred in the coming years. The new solar wood manufacturing facility continues to progress as planned. The facility will house new machining lines, assembly capabilities, automation systems, and supporting infrastructure for our future. We expect the facility to enhance our production capabilities and support customer commitments for the future. In addition to the capacity expansion, we are undertaking significant automation initiatives across the foundry and the machine shop. These projects are expected to generate significant cost savings while improving quality, productivity, and efficiency. I would also like to update shareholders on our renewable energy initiatives. During FY26, the second phase of our solar power project was successfully commissioned, taking the total capacity to 29 megawatts. This investment is expected to generate an annual saving of approximately 24 crores, while reducing dependence on conventional power sources and supporting sustainability objectives. Our subsidiary Memco reported improved operational performance during the quarter. We recorded a revenue of 14 crores during quarter 4 and continue to focus on building relationships with key customers. The modernization of legacy equipment and operational improvements are expected to further enhance profitability at Memco. Our e-mobility subsidiary EMOS in the Netherlands reported a revenue of 29.47 crores during the quarter compared to 23.9 crores the previous quarter. And while market conditions remain challenging in the world, the business has maintained operational stability and continues to pursue new opportunities in electric commercial vehicles applications. In terms of an e-mobility business in India, I am pleased to share that we have successfully developed our electric commercial...

I am sorry to interrupt you, sir, but your voice is breaking, sir.

Are you able to hear now?

Yes.

Turning to our key mobility business in India, I am pleased to share that we have successfully developed our electric heavy commercial vehicle platform and have already delivered the first vehicle to a customer this quarter. This theme marks an important milestone in our electrification journey and validates our capabilities. This vehicle is undergoing customer evaluation and field trials with initial feedback being intelligent. We expect to complete certification and homologation during this current financial year, and upon successful validation, plan a scale-up and commercial deployment from April of next year. Looking forward, we remain optimistic about the long-term outlook of our business. Demand visibility remains strong across India, North America, and South America, while opportunities for assembled camsha and precision engineered products continues to expand. With a healthy order, ongoing capacity expansion, significant automation initiatives, and a renewable energy platform, we believe PCL is well-positioned to deliver sustainable growth and create long-term value for all shareholders. Coming to the financial performance again, the standalone business increased by 6.5%, quarter-on-quarter, 262 crores. EBITDA margins stood at 15%, PAT margins stood at 8%. The consolidated business grew by 9% quarter-on-quarter to 205 crores. EBITDA margins stood at 30 crores or 15% and FAT margins stood at 4.9%. With this, I would like to open the floor for questions and answers. Thank you very much.

Thank you, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Reminder to all the participants, if you wish to ask a question, you may press star and 1. Thank you.

Anyone who wishes to ask a question, we press star and 1. Our first question comes from the line of Shrivani Salve with Neomile AMC. Please go ahead.

Hi, sir. I'm happy to welcome you.

Shrivani, your voice is low.

I'm not getting to hear.

Can you hear me now?

Yeah.

Hello. Yeah. So, my question was regarding the Sulapur facility that we have, which is under construction. So, when is this expected to complete and what kind of capacity is it expected to bring in?

The facility is complete, actually, from a civil construction point of view. The plant is ready. The utilities also. Now, we expect machines to start coming in for the first two projects, which are going to be based in that plant from middle of the year, and we will start the production by... Quarter one of FY27, which is next year in the next. Yeah, so that is the plan for the initial project. The total capacity of this plant is 10 lines, so approximately 200,000 machine cam traps per month can be produced from this facility, but we are taking, obviously, this will be in a phased manner.

Thank you. And regarding the emails. You mentioned there was some slowdown in Europe last quarter because of which the company could not do well. What kind of business outlook would you give regarding the Europe situation now?

I think the Europe situation is very volatile right now. There are, you know, two walls happening and there are several constraints, a lot of issues on subsidies and so on. And we will take this by the year and see how it goes. I think right now we are stable at the rate at which we are operating at. We don't see great amount of growth in this year or perhaps even the next year. But we are now actively working on a lot of new customers, a lot of new applications, which we are now in the initial phases of. So any scale-up of such platforms or such new programs would happen in the next year and a half or so.

Sure, sir. Thank you. Any acquisition plans internationally, no?

Not at all. Not internationally, but we are actively looking in India.

Sure, sir. Thank you. That's it from my side.

Thank you. Our next question comes from the line of Richesh with Nevitas corporate advisor. Please go ahead.

Hi, Karan. Thanks for the call. Karan, couple of things. One is we have done significant capex and we are doing it now. As informed to us, around 1,500 crore would be the new order book which will execute over next maybe four to five years. So can you give some light in terms of incremental revenue which this will add over next couple of years? Also the impact on the margin. This is one first question. And then maybe I'll come to the EV part.

Okay, to answer that question, I think there are – see, this is a 1,500 crores cumulative is a combination of variety of programs which have a different start date for each one of them. Right now, we are not able to share with you exact year-wise projections, and we are also retaining from sharing future numbers or financials. In any case, I think that, like I mentioned in the call, we are investing about 100 to 120 crores in CapEx, and we expect that the top-line increase, incremental top-line increase, would be nearly 1.5 to 2x of that CapEx on an annualized basis, which will peak out in, let's say, 2.5 to 3 years from now, where we will ramp up and be at full utilization of the CapEx.

Well, I think that is helpful. And now, in terms of margin, whether this new CapEx due to automation and all will be incremental to EBITDA margins?

There should be slightly. Anyway, the new projects are all assembled. They are higher value-add. Therefore, higher margin. And also, with the automation, we expect that EBITDA margin improves a little bit. But it would be very difficult to quantify that right now in terms of numbers.

And currently, the prices of this aluminum and all has gone up drastically, I think more than 50%. So, do you think this will have some margin impact in coming quarter before you pass on the electric cost to the OEM?

Yes, surely. I think all raw materials, including the steels, including LPG, including cutting tools, oils, everything has increased over the last two to three months due to this Iran war situation. While customers do compensate us, they don't fully compensate us, and there might be also a time gap between when we are incurring that expense and when it is compensated for. So surely there will be some margin impact, but we hope that this is a short-term scenario, and once this war situation has eased out, that prices come back to normal.

But let's see if it passes longer, so how many quarters it will take a month before we fully pass on it to OEM?

No, OEMs are passing on the benefit to us. Like I said, there is a time lag because we are producing now. We sell nearly 40-50% of our businesses exports, so there is a transit time also, and then payments happen from there. So, most of our customers have agreed to compensate us for this increased cost, which is beneficial to us, but there might be a time lag.

Sure, sure. I think that's good. So, Karan, a couple of questions more. So, one is, you know, we have been hearing about EV, let's say, you know, this EV play for last, I think, two, three years. Earlier, we were backing on a smaller data and that could not fortify due to whatever, let's say, issues in compliance and RTO and all. And now we are bringing this technology from EMOS to India. Yeah. So as a shareholder, we would like to understand, you know, what is the, let's say, broad understanding of the management in terms of, you know, the opportunity, if this fruitifies well, how big this opportunity can be for the company. Because as a shareholder, I would like to understand whether it makes, you know, what kind of growth, you know, we can achieve in future. So I understand you can't give me figures, but at least, you know, some outlook in terms of, you know, the numbers, maybe the market size which you look at. This is one. And second thing, See, market is, you know, progressing into multiple things. So many people were into casting, they've diversified into defense and engineering tools, so many other things. But if you look at our journey, we have been more focused in terms of, you know, our, let's say, shops. So do you think we should maybe look at the new opportunities where we can diversify, we can also maybe defense, I don't know, whatever, like as a management, I'm sure you guys are much smarter than us. So, I would request some light on these two things.

Sure. So, this HCV that we have developed has been delivered to a customer. It's undergoing testing, and we hope that in the next six to eight months, we complete certification, and then we are able to commercially sell it, right? The potential is tremendous. Just, I think, if I have to quantify with one customer, we have an MOU already signed, where we are looking at an order book of 60 to 70 crore rupees, annualized revenue of that much. Just from one customer and one product. If we kind of extrapolate this to others in this industry who are operating in a similar space or neighboring space, I think the opportunity is tremendous. But I don't think I would like to comment on that at this point of time. But there is a clear gap in the market, right? At this point of time, there are OEMs that are operating in the electric LCV space, and there are OEMs operating in the 50 tons and above kind of truck. And there are also OEMs in the bus space. This middle space, which is the MCV, HCV space, which is, let's say, from 10 tons to 30 tons, there are no OEMs that are present in this application. And what we are also trying to do is we are trying to address a niche in the market where we are not trying to go after a logistics play or a transport of goods kind of customer, but a very specialized customer where the electrification has immediate benefits for the customer in terms of ROI and total cost of operation. So these are nicer applications which are related to, let's say, public services, infrastructure, utilities, and so on. So, I think that's the focus that we have. It has been successful for us in Europe because we don't go head-on with the large OEMs, and that is the same concept that we have in India for. Again, we have tried this with the Cat IS, as you correctly mentioned, and we did not pursue it further due to all the issues that we had. And we just hope that compliance and regulatory came-offs become easier over the coming years so that this retro-hitting business can actually take off. A lot is subject to that and depends on that. So that's the answer on the EV side. On the new opportunities, our whole objective is to become the number one player in the shaft space that we operate in. I think in India, we are by far the largest. We aim to be the largest in the world, and there is headroom for us to grow here. Very clearly, we hear from our OEMs that the EV business direction that was very clear two years ago has reversed, has some of the largest American OEMs have taken a complete U-turn on their EV strategy, and I think that helps us significantly. One thing is clear that on the camshaft business and so on, we will surely like to be the last man standing and the biggest player in this business. Of course, we are interested in Defense and Aero and other such businesses, but I think we look at such opportunities from an M&A perspective, and we are, like I said to the previous question, that we are actively looking in India, and we will, of course, keep you and all shareholders updated as and how we come across the right opportunities for that.

Thanks, Puran. I think I have more questions, but I will come back. Maybe I will leave other. Thank you.

Thank you. Our next question comes from the line of Deepak Poddar with Sapphire Capital. Please, correct?

Yeah, am I audible, sir?

Yes.

Yeah, thank you very much, sir, for this opportunity. Sir, just wanted to understand first up, what's our current...

Deepak, I'm sorry, but your voice is low now. Are you audible? Is that a...

No? Oh, just hold on.

Deepak, I'm sorry, but we cannot hear you properly.

Now is it better?

No, sir.

Not audible?

No, if you are using any external device like Bluetooth or something, please remove that.

I was, but I have removed it. I thought that this would be better.

Okay, okay, okay, great.

Sir, thank you very much, sir, for this opportunity. Sir, just first I wanted to understand.

Deepak, I am sorry again, but no, the voice is not audible.

Hello? Now is it better?

Hello. Can you hear him? Yes, I can hear him. Okay, okay, great.

So, what is your current capacity utilization?

Current capacity utilization across foundry and machine shop is over 80-85%. So, we are...

80-85%, right? And the new CAPEX that you have mentioned, when is expected to commission? What is, sorry? The new CAPEX that you mentioned of 100 to 120 crore. So, when is expected to commission?

Early next year. So, early next financial year. So, April, I would say. April, May.

April 27, right?

Okay.

So, what would be the growth driver for us? I mean, because we are already running at 80-85% utilization and incremental can give us, what, 200-250 crores of revenue, right? So, in the meantime, I think next one year, because our capacity utilization is already 85%, our growth drivers would be muted? I mean, how should one look at that?

No, I think there is still room to grow within the existing capacity, right? So, on the foundry side, we are operating about 80%. On the machine shop side, we are operating about 90%. So, I think there is growth in the foundry. In fact, a lot of the growth that we see in the Indian market, there are some customers where we supply large volumes as in casting form only. We don't machine it. So whatever growth that we are getting there right now, we are able to better utilize our foundry facilities for sure. And similarly, there is some room to grow in the machining plant also. Thank you. To correct myself, there is this CAPEX. The two big projects that are going into production and will start a ramp-up will be from April of next year. But there are several ongoing capacity enhancements that have been going on as we speak right now, even over the last three to four months. And there are some programs that are starting with capacity enhancement this month, some in July, some in September, and so on. So there will be a gradual increase in numbers that you will see going forward. And you've seen that from Q3 to Q4 also, that there has been an increase in the revenue at PCL level.

Current capacity utilization, we can go up to, what, 90-95%?

No, I think 90% is enough, but like I said, right now we are also installing capex on existing lines, on certain existing customer platforms, where capacity is being enhanced as we speak. So, while I say that April is the big jump... There are several projects in the pipeline right now which are adding to capacity and will add to volume also.

Okay, and this CAPEX in existing line, I mean, by when? I mean, you can call it a de-bottlenecking kind of a CAPEX?

Yes, yes, yes, yes. De-bottlenecking or adding, let's say, 10-20% capacity. So, yeah, that's what I was trying to understand.

So, it will add about 10-20% of capacity. And by when this is coming through?

Some of it is already in place, which is why the numbers are increasing as we see. Some of it is already in place, some next quarter, some the next quarter, and so on.

Understood. And in terms of revenue potential of our new Capex, this 200 to 250 crores of revenue potential that we expect to realize over the next two and a half to three years.

Yeah, yes, yes, yes. At peak, yeah.

At peak, yeah, of course. And in terms of order book, our current order book stands at 1,500 crores. Would that be right?

Yes, cumulative, yeah.

Cumulative, right? And what would be the execution period?

Everything will be executed in the next two. You mean the 1,500 crores is about five-year, kind of five-six-year kind of period. That's the cumulative value, yeah.

Yes, yes. A little bit from my side. Thank you. Thank you.

Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. Thank you. Our next question comes from the line of British with Nebitis Corporate Advisor. Please go ahead.

Karan, one last question on EV, let's say, use case. So, for example, what is the benefit in terms of an existing company or client to go for retrofit versus, let's say, new vehicle in terms of the cost, payback, and other things, if you can just give one case study?

Yeah, it's a cost arbitrage, basically. If you are buying today a brand new electric vehicle, it is costing over 1.2 to 1.4 crores. A truck, I'm talking about a heavy truck, not passenger cars and so on. Whereas a retrofit, because we are using the existing chassis, the existing body and so on, we are able to do that at, let's say, 70-75% of the cost. So, there is definitely a cost delta. That's number one. Number two, what is more interesting is when we offer an electric truck solution, it comes with a standard platform, right? It comes with a standard battery pack, standard motor, and so on. Whereas what we are able to do for our specific application customers, we are able to customize and we are able to provide a personalized solution to the customers. For example, on a 16-ton truck, we are able to go from a 200 kWh battery all the way to a 400-450 kWh battery, which can enhance range, which can enhance operational uptime and so on. I think those are the two big advantages of retrofitting instead of buying new. And the third one, of course, like I said, in the category that we operate in, there are no new trucks, new electric trucks available at this point of time.

Got it, got it. And do we also intend to provide powertrains to other, let's say, OEMs in future?

It doesn't look like that. We do this in Europe, but I think the Indian market does not look like that at this point of time at least.

All right, all right. Thanks, Karan. Thanks for the time.

Thank you.

Thank you. As there are no further questions from the participants, I would like to hand the conference over to Mr. Karan Shah for closing comments. Thank you, and over to you, sir.

Thank you so much. I hope you've been able to answer most of your queries. We thank all our shareholders, our customers, employees for their continued support and confidence in PCL, and we remain focused on executing on our growth strategy and creating a sustainable long-term value for shareholders. We look forward to your participation in the next earnings call. Thank you, and have a very good day.

Thank you so much, Mr. Shah. Ladies and gentlemen, on behalf of Precision Campus Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.