SPR Auto Technologies Limited (SHRIPISTON) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to SPR Auto Technologies Ltd. Q1 FY27 Earnings Call. As a reminder, all participant clients will be in the listen-only mood, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. Today from the management, we have with us Mr. Krishnakumar Srinivasan, Managing Director and Chief Executive Officer, and Mr. Prem Rathi, Executive Director and Chief Financial Officer. Before we begin, let me remind you that this discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It may be viewed in conjunction with the business risks that could cause future results, performance, and achievements to differ significantly from what is expressed or implied by such forward-looking statements. I now hand the conference over to Mr. Krishna Kumar. For his opening remarks, post which we will open the floor for an interactive question and answer session. Thank you and over to you, sir.

Thank you, Sanya. Hope you can hear me well.

Yes, sir. Please go ahead.

Okay. Thank you. Good evening, everyone. Thank you for joining us for this Q1 FY27 earnings call. We hope you have had an opportunity to go through the financial results, the investor presentation and the press release, which are published on the stock exchanges and the company website. I'm really pleased to share that SPR Auto Technologies has commenced the financial year 2027 on a very strong note and delivered an encouraging performance during Q1 FY27 as a company delivered a 51% year-on-year growth on a consolidated total income and a 27% year-on-year growth on a consolidated EBITDA. The strong performance is particularly noteworthy, given the challenging industry backdrop. Characterized by elevated commodity prices, supply chain disruptions, and broader macroeconomical uncertainties, stemming from heightened geopolitical tensions. Moreover, commodity cost adjustments normally have a time lag of a quarter for regularization customers, thereby presenting a temporary gap in the margins. Even with the above impacts, the company has delivered a strong financial performance during the quarter. Consolidated profit before tax grew by 7% year-on-year in Q1 FY27, while profit after tax increased by 9% year-on-year. The growth is after reflecting the flow-through impact from EBITDA primarily contributed by higher finance costs to fund the acquisition of the automotive interiors and lighting businesses. These elevated finance costs are expected to be temporary and should normalize as the related debt is repaid. Post the GST 2.0 reform, we are seeing a phenomenal growth in both the two-wheeler and the passenger car markets. We expect this volume momentum to continue for the above segments and also for the commercial vehicle and tractor segment throughout the year. Our strategy to invest in technology and capacity ahead of time has really helped us to cater to these increased demands. This performance underscores the strength and resilience of our diversified business model, our continued focus on operational excellence, and the effectiveness of our strategic initiatives. We remain focused on driving cost efficiencies, streamlining the supply chain, integrating the low-cost automation and digitization programs across all our manufacturing operations and optimizing inventory and logistics planning. These initiatives are aimed at strengthening the structural resilience across the business and form the foundation of our established and growing presence in the auto components industry. We continue to build on our strong leadership in legacy products, while steadily scaling our powertrain agnostic businesses, which, of course, enhances the future readiness of our portfolio. In the legacy business, we achieved a key milestone during the quarter with the successful completion of the acquisition of the piston manufacturing plant and machinery from Sunbeam Lightweighting Solutions Limited. This acquisition strengthens our piston manufacturing capacity and also enables us to meet the growing demand for all our products. I am happy to state that we are continuing to win new programs for hybrid and flexible applications. From all our customers in the legacy business. The integration of the recently acquired automotive interiors and lighting businesses progressed very well during the quarter. These businesses continued to deliver a strong performance, reinforcing the strategic rationale for the acquisition. We remain focused on aligning the operating processes, leveraging cost-selling opportunities, and unlocking cost and operational synergies across the group. Post our acquisition, the auto interior business has also won some very important customer programs to fuel the future growth of this segment. The economic motor and controller business has been continuously exceeding all the targets that we have set for the businesses at the beginning of this year. The high-precision injection molded components business has also witnessed a very significant growth during the quarter. We also continue to make a very steady progress on all our group-wide capacity expansion programs. These investments are designed to support customer programs, enhance capacity availability, and create a stronger platform for future growth across all our products. Including the legacy engine components business, the automotive interiors, lighting, the high-precision injection molded components, and the EV motors and controllers continue to perform very well during the quarter. The power agnostic business now contributes over 35% of our consolidated total income, while nearly 60% of the overall business is positioned to remain relatively insulated from the impact of EV penetration. The steady progress of our diversification strategy and the increasing strength of our group. We continue to strengthen our ESG credentials through focused investment in renewable energy and robust sustainability practices. ESG remains a very strategic priority for the company, and we are pleased to report that we achieved a CDP B rating for climate and water disclosures. We obtained our TUV certified sustainability assurance. We secured certifications under ISO 14064, ISO 50001, ISO 46001, ISO 17029, and ISO 27001. We were also recognized with an Ecovides bronze medal, putting us in the top 35 percentile globally on sustainability achievements, Dun & Bradstreet's highest ESG rating of 2 in India. And the CII Award for Corporate Sustainability, further reaffirming our commitment to responsible business practices and long-term sustainable value creation. We have also continued our journey of winning many awards from all our customers across the country. We have also got our T-SAC certification done, and... We are happy to state that from a cyber security angle, the company is well positioned to be able to counter any possibilities in the future. Looking forward, we remain focused on disciplined execution, strategic investments, and sustained operational excellence. Led by a diversified product portfolio, long-standing technology partnerships with global industry leaders, and deep customer relationships, SPR Auto Technologies Limited is now well-positioned to drive its next phase of growth and create sustainable long-term value for all our stakeholders. I thank you all for all your continued support, and I am looking forward to taking your questions and request the moderator to open the floor for questions and answers. Thank you once again.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Radha, from Motival Ursual Financial. Please go ahead.

Hi, team. Congratulations on the staff improvement in Antolin performance. So, my first question is, Antolin Global Health introduced the program next time.

Sorry to interrupt. Your voice is not clear.

Yeah, it's better now.

Yes, sir. Antelion Global has introduced several next-gen interior technologies over the past few quarters, like electrochromic sun visors, cockpit solutions integrated with human-machine interface, emotional lighting, etc. So, to what extent does SPR India have access to these technologies today, and how are they being localized for the Indian market? Do you see these differentiated capabilities becoming a key competitive advantage in getting new businesses with customers?

Thank you, Radha. We have access to all the technologies that are globally available and tested within the Antolin portfolio. As you all know, we have already signed a long-term TLA, which is a complete licensing agreement. And we have all the solutions available. In fact, we are working on a number of programs with end customers for various HMI initiatives. As well as, you know, the newer programs for headliners, the Immersa technologies and others, which is all being tested with customers, and we are looking forward to, you know, once they fructify, then we will be at the right position to come and inform all of you with regards to all the new businesses that we are working on. But we are happy to state that we are working on all the technologies. All the technologies are seamlessly available to us, and we will be probably amongst the frontrunners to introduce some of those technologies which have been time-tested elsewhere in the globe with Indian customers, and we are already working on it.

That's great to hear. Second question, sir. Eton USA has shut down its engine wall plant in the last calendar year end. So, are you witnessing a boost in export due to this? And apart from this, what are the other key growth drivers in the export segment for pistons?

Yeah, so Eton is basically mostly in the engine valve segment. They don't, you know, operate on the piston side. But as far as the engine valve segment is concerned, we do have the growth, and we are working on a number of initiatives to be able to meet our customer programs. You know, and... The mobility solutions of Eaton has been now sold to Dana, as you might have heard, and we have yet to see as to what exactly is the strategy of Dana to grow the business here in India. As far as India is concerned, I think we lead the stack with a fairly good market share across all customers and across all industry segments, and we are fairly well entrenched with most of our customers. To be able to cater to their demands.

And the last question is, Takahata Global has a lot of products in non-auto, like office automation, measuring instruments, etc. So are we supplying these components from the Indian entity to our customers as well? And what can be the scale of non-auto portion of the business in the next three to four years as compared to where it is today? And what are the delta in margins of non-auto compared to auto?

We already supply to non-auto components. We also make non-auto components in India. We already supply to medical industry. We supply to sports industry. We supply to music industry. But as you know, these segments do not have very high volumes. They are all low volume segments. And, you know, so that way, you know, for example, the music industry, we supply the complete keyboard for... You know, some of our customers like Yamaha and others, which is, you know, the keyboards, etc., they are not sold in millions, you know, it is not like in automotive. So, it will be on a lower side. We don't normally give the breakup of this segment, but it's a sizable segment for us, and it's a good margin business for us. Thank you.

Wonderful. Thanks and all the best to the team.

Thanks. Thanks a lot, brother.

Thank you. The next question is from the line of Gokul Maheshwari from Aviga Capital Advisors. Please go ahead.

Thank you for the opportunity. KK, sir, if I may ask, what kind of opportunity do you see for our legacy business once we cap in on our interviews? And does this increase our realization or a chance to consolidate our market share in this production?

Yeah, see, we are already, you know, working with our customers on the cafe norms, and based on the new cafe norms that have been released, we have already submitted products which are under testing and validation with the customers. And, you know, most of these products require a different kind of an approach with regards to, you know, frictional reduction as well as reduction of, you know, exhaust gases and others. For which a completely new technology has to be introduced in terms of coating and in terms of, you know, the piston ring manufacturing strategy. So, all this has already been done. We have already invested ahead of time. And the technology is all available within our, you know, manufacturing setup that we have in Ghaziabad and Patridi. And our engineering teams are well, you know... We have well progressed with the development of these technologies. So, we are well entrenched with all our customers.

But does this increase the realizations for the same product which we were supplying earlier?

Yeah, to some extent, yes. Because with all the technologies, the cost is also more, the realization is also more.

Okay, and is our competition also following us by offering this to their OEM customers?

I would say that we are leading the game.

Okay, great. Secondly, sir, just on the M&A front, I mean, in the past, you mentioned that you would want to look to expand our scope of offerings and look for M&As. Just a question given where we are in the automotive cycle, how are you protecting yourself? Because the industry is doing very well in the last 12 months or so, and more specifically after JST cuts, and this could be possibly closer to peak sales or peak profitability from a cycle perspective. So how are you safeguarding yourselves when you're looking at potential opportunities over there?

Well, if I have understood your question right, you are asking me how we are safeguarding with regards to newer M&As and, you know, doing it at the right deal price and all that, right?

Right, right time and right price, actually.

Yeah, so we have a very, you know, very detailed working that we do with our M&A team. The M&A team looks at multiple angles, not only the angle of multiple on EBITDA, but it's a very detailed exercise that we do with regards to the overall strategy of investment. And, you know, we, of course, take all the future outlooks in place and we look at the current situation of the industry as well as look at the situation of how the industry is growing over the next 5 to 10 years' time. And then, you know, do a lot of forecasting to be able to take a decision because to our M&A direction.

Okay, great. Just lastly, in the non-auto business, in the annual report you mentioned, there is a mention of pistons for railways, snowmobiles, compressors, etc. What would be the contribution of this segment to our current size, current business, and how do you see this business shape up over the next two or three years?

Well, it has been a sizable business because, see, this, again, as I said, this is a segment which is growing for us, and if I give one figure, it will change tomorrow morning because it is a continuous growth that we are having both in terms of the compressor industry, the marine, the defense, and the various other applications. Like snowmobiles and others. So, at this stage, to give any number percentage to this will not be correct because we expect this percentage to go. It's a sizable business now. Over the last four years, I think we have grown almost at the rate of 15 to 20 percent in this particular segment. And, you know, we have entered into various applications, including lawn moving applications and others. All this has really helped us to maintain our growth trajectory and also maintain, you know, continuous growth, which is, you know, better than the market growth. You know, we have always maintained that we want to outgrow the end markets.

Great, sir. Thank you and all the best.

Thanks. Thanks a lot, Vokul.

Thank you. The next question is from the line of Vijay Pandey from Access Capital. Please go ahead.

Hi, sir. Thank you for taking my question. This is a couple of questions. Firstly, if you can give the breakup between the plastic business, the Andolan business, and EMFI, the revenue and EBITDA for the first quarter.

You know, we normally, within the quarter, we don't give the break-up. The first half, you will get the break-up, but you have the break-up of the end of last year, and you can see that more or less that kind of a trend has been maintained even today because we see an all-round, you know, growth across the auto industry. Thanks to the GST 2.0, as a result, you know, we see that the end markets are really doing well, and we are seeing a full growth across all the segments that we operate in today.

Sir, actually, just want to understand how the margin profile is looking for the plastic and antelope business. I think plastic is around 18-19% at this time margin, and I told it more that around 7-8%, so just want to see as this...

We have significantly improved the interior's business also, and that has come with a lot of synergies playing out, as well as we have streamlined a lot of things with regards to the... Fixed costs, and we have taken a lot of actions with regards to improving the cost structure of the company, which has really helped us to improve the margins. As of now, I can say that we have crossed the double-digit figure, and we are in the early mid-teens, I should

Okay, okay, that's good to hear. Secondly, I would like, want to know, so, The industry has definitely grown at 20% in Q1. But our, like, if I see our standalone business, the legacy business, there the growth was around 12%. So just want to know any reason for lower performance versus industry? Is it if you can throw some color?

Yeah, I will. Let me attempt to, you know, answer your question. You know, basically, if you see, the industry was also carrying a good amount of stock. We go by the manufacturing that has been done, not by the sales, because sales normally carry a lot of stock coming from the previous year. So, if you really see the manufacturing, the manufacturing growth has been in the region of around 12 to 14 percent, and our growth has been over 16 percent. We have actually outgrown the industry, even as we speak. And within the mix, if you see, the two-wheelers and, you know, the two-wheelers have grown by almost 20%. The passenger car has probably grown by around 11% from a manufacturing angle. 19% and 11% to be exact from a manufacturing angle. And, but the, you know, commercial vehicles in the tractor industry have grown by somewhere around 7% to 8%. And the other industries have grown by something like 4% or 5%, you know, including the compressor industry. So, as a result, you will see a mix of all this coming into the end product, but overall, considering that, you know, the exports got affected because of the war situation, you know, where there was a tremendous impact on the export side, and also, you know, because of this sudden rise in the two-wheeler and the passenger car industry. The manufacturing had to be a little bit tweaked towards the OE industry. As a result, you will see that the growth impact is fairly significant considering that we have grown at this percentage, which is better than the market percentage, even after considering all these segments of the market. And I am happy to state that we have actually satisfied all the segments of the market with regards to our supply.

And so, over the last one month, or last one and a half months, when things have started to normalize in West Asia, has the exports picked up? So, could we expect a better quarter in exports in second quarter?

See, exports are still quite affected, especially in Europe and in, you know, America. So, both U.S., America, and the Middle East markets, including Egypt and others, Turkey, Egypt, and others, have been badly affected. And, you know, they have not still picked up, and it's quite slow, I would say. There are still a lot of ambiguities in the overall supply chain with regards to what will happen with regards to a very seamless, you know, supply chain situation that we had earlier. So I personally think that it will take some more time for things to normalize. Commodity prices have started falling. You know, it had gone to unprecedented levels. You know, we have had to face a very unprecedented increase in the commodity prices, but we have been able to manage it, and we see this now slightly coming down. So, hopefully, it should all normalize within this next quarter.

And lastly, sir, just if you can probably give us some of the technologies that can come up from Antigone business, upcoming technologies.

I think I spoke in the earlier question, a number of technologies on which we are working on, including HMIs, as well as, you know, the Immersa technologies, the technologies with various kind of, you know, pillar trims, backlit, the floor consoles, etc. So, a number of areas on which we are working on.

Okay. Thank you, sir, and all the best for coming out.

Thanks a lot. Thanks a lot.

Thank you very much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is from the line of Harsha from Seven Rivers Holdings. Please go ahead. Current participant has been disconnected from the call. The next participant, we'll take the next participant. The next question is from the line of Anubha Mukherjee from President Capital. Please go ahead.

Sir, am I audible?

Yeah, Anubha. Go ahead.

Sir, this EBITDA impact of 300 million that was mentioned in the investor presentation, So, are we able to receive like price hikes from the audience to pass this on, and any timeline by which we think our margins can normalize?

No, this, you know, as I said, this is the impact which has happened because of commodity prices, and also the impact of our, you know, So, to a fair extent, that has been covered up already, as you can see from our financial results. It's certainly better than, you know, if you really discount the fact that we have had to pay the interest on our NCDs, if you really take that out, then you'll see that our performance has been really in line with our previous quarter's performances, and we continue to maintain those performances, and I don't see any reason.

So my question was more on the, not on the finance cost, but more on the, like, EBITDA impact because of logistics and commodity inflation. So do we need to, like, ask for any sort of prime hikes from the OEM? Come on, my God.

I think I mentioned it. But it has a time-lapse delay. Normally, there is a delay of a quarter with most of the customers. That's how the industry operates. And that's why what will happen is, whatever is the commodity increase that we have had this year, based on the average commodity prices, we get the price increase for the next quarter, and that gets covered in the next quarter. So, we already have a back-to-back arrangement with all our customers, and not only for this particular business, even for our plastics business as well as... Our, you know, motor's business and the interior's business.

Thank you. And for further, like, the motor controller business and plastic business, will you be able to share what kind of, like, revenue growth has been engineered year on year in these two segments?

Well, last year we grew by double. And I am hoping that we continue the trend. I am pushing my team for that, but then we will certainly continue to outgrow the markets.

Good, sir. And so my last question is for the auto interior, Antonian business. Do we have a margin target that we want to achieve? Can we bring it to the stand-alone kind of margins? Can you share some perspective on that?

No, I already replied this to the earlier question. Yes, we have improved the margins and we have improved from the earlier 7-8% that they were operating on to almost... Let's say the early teams.

Thank you for this information. Yeah.

Thank you. The next question is from the line of Harsha from Seven Rivers Holdings. Please go ahead.

Yeah, good afternoon, sir. Am I audible?

Yeah, Rajeev, go ahead.

Yeah, yeah. So, I was referring to slide 8 of our presentation wherein it's mentioned that production volumes have grown by 22%. Now, when I compare that with our standalone revenue, which has grown at around 12, 12.5%, so how do we reconcile it?

You know, normally what happens is volume need not necessarily, because the mix changes in the industry, you know, even all our end customers, if you see our, even if you see our end customers, the overall post GST 2.0, what has happened is the mix has changed. They have gone in for more production of low-end cars. I mean, let me not put it as low-end cars. It is basically... Smaller-sized cars, smaller-sized vehicles, because the demand for that is more, both in the rural and the urban segment. So, automatically, the realization price per piece changes, as we have those kind of products going in more. And you will find that by value, the realization could slightly vary, because the mix changes drastically.

Okay, okay. What is

important is to maintain the kind of margins that we want to maintain, which we have been able to do that.

Okay, so another question is on the margin side. So if I look at the standalone business, now I'm comparing sequentially Q4FI26 versus Q1FI27. So, between these two quarters, our gross margins have gone up on standalone business. It has gone up by 60 waves. Yet, our EBITDA margins have come down. They have almost come down by 200 bills. So, what explains that?

That's what I explained. You know, the commodity prices. You know, you have a quarter delay in the commodity prices, and you will see that...

No, no, but our gross margins have improved. Between Q4, FY26 to Q1, FY27, our gross margins are almost intact. Yet, the EBITDA margins are down by 200%.

No, that's what I said. It's a combination of a multiple combination of, you know, mix plus volume. And also, the fact that, you know, when I say mix, it also means a mix of, you know, our overall business within our portfolio, you know, the kind of mix that we have. So, you know... Overall, it shows that some of our areas of, you know, let's say, aftermarket business and other things have, you know, normally in the first quarter, we always have a lag. In the first quarter, if you really compare the first quarter of last year, you'll always see that lag.

Okay. And the last question is, any update on the fundraise and any new acquisitions that are in the admin?

Yeah, our team is working on the acquisition part, and, you know, there is a lot of, you know, work going on there, and we'll come, we'll inform the, you know, all of you guys at the right time. As far as fundraisers are concerned, I think we are progressing as per target.

Sure, sure. Thank you so much, sir.

Thank you.

Thank you. The next question is from the line of Nandan Pradhan from MK Global Financial Services. Please go ahead.

Yeah, hi. Good evening, sir, and congratulations on a great set of results. I hope I'm audible. Good evening. So, I think just following up on the questions from the previous participant, I think what we are trying to understand is our gross margins are intact. Sequentially, our staff cost as well as our OPEX has gone up. I understand there could be some impact from the minimum wage hike as well, you're right. So just on that, and also those other expense would include some sort of one-off expenditure since we are just integrating Antolin, and do we consider this as a new normal, or do we expect this run rate to go down as we get the synergies kicked in over the coming quarters? That would be the first question.

No, I think you are, again, You know, the overall mix impact has an impact while the gross margin could show, you know, show the improvement. But if you have compared it, you cannot compare it sequentially with quarter four of last year because mix was completely different. You know, so you will have to see it with the mix of Q1. The mix of the market also makes a big difference. So both the things come together. Of course, we have, you know, our normal wage increases that we have, you know, every year, which happens normally during the first quarter, first of April. And that has a small impact on the employee cost percentage that you see. But otherwise, we are well within the targets.

Got it, sir. And, sir, just, I think, across Anselviz, the wage hike has seen an impact, and since we are also in the northern region, are we, could you broadly give, directionally, some idea about how much the wage impact has been this quarter, and how are we seeing about the...

No, normally, in those internal figures, we don't normally give Nandanji, but the good part is that we have been able to retain the team. The team is doing a fantastic job. All of them are very motivated to work in the kind of atmosphere that we are presenting to them, and the team is doing a fantastic job.

Okay, sir. Thank you so much, sir. Good luck.

Thank you. Yeah, thanks a lot, Nandaji. Thanks.

Thank you. The next question is from the line of Divyansh Gupta from Latent PMS. Please go ahead.

Hi, sir. So, the first question is to just understand the timeline from when we supply the pistons to our OEMs. To their production timeline, what is the typical cap?

Can you come again? There was a small drop in your voice.

I'll repeat the question. Basically, let's say we supply X number of Christians to, say, Maruti on 1st of April. How far ahead in their production line will that be continued?

In their production way.

In Hamala, does it mean for them to finally ship out the car, what is the timeline?

It varies, yeah, it varies. You know, product to product, it varies. Some of the product, they, you know, when the demand is very good in the end markets, then those products go within maybe less than a month's time. But, if the products are, you know, depending on the kind of stock levels that they operated across various operators across the country, it varies. So, it varies from time to time. But, on an average, you know, you can see the kind of volume growth that Suzuki is having. And, we are growing quite well with them. We have a fairly good market share.

No, I wasn't specifically asking for Maruti. I just took Maruti as a, let's say, example, as a name, as a placeholder. Even others.

Everywhere it is the same story. See, on an average, you know, the product when we supply, we, of course, do a lot of things to supply them. You know, there are also requirements that we should supply just in time as the manufacturing takes place. But post their manufacturing, how much time they will take to supply to the end market, that is a question that you have to probably ask the end customers here.

Got it.

Understood, sir.

The second question was, just if you can tell what would have been the growth of our consolidated business, Exopantolin. I'm just looking at the numbers and not margin or anything. But just Exopantolin, what would have been our growth? Top line.

So, I think it's over 16%.

One, six. Answered your last question. With the government trying to push in higher blends of ethanol, We have readiness up till E85 is what I understand. The question that I have is that what are the kind of conversations we are having with our clients? And let's say the ramp up, the actual blending levels increase, would it lead to more CAPEX just to support higher blending or current capacity can also support higher blending?

What happens is, when the blending goes on a higher side, the product undergoes a change. Okay, you have to, because of more water content and carbon content, you have to improve the kind of coatings that we have on the piston as well as on the rings. So, we have already tested all the products that is required by our customers right up to E85. Now, the strategy of what they want to introduce into the market will depend on various geopolitical situation, sorry, the political situation in the country as well as the end customer's market needs. So, as far as we are concerned, we are ready with the products. So, every product, you know, every segment of the product, whether it is for E20 or whether it is for E40 or whether E85, will undergo a change and the price is different because of the content change that happens. So, with most of the customers, we have already signed up. The products are all tested for our products. I don't know about what other products has an impact because of E20 or E40. And we feel that this situation should get addressed quickly, and hopefully, you know, the customers will start going their business. You know, as far as we are concerned, on the FlexQL side, we are completely ready.

But my question was a bit different. So my question was, let's say, if we have to supply 100 pistons to Maruti, if we are doing for E20 versus, let's say, E40 or E85, to provide the same volume. Do we need to do further capex?

That's what I said. I think I answered this question. I think it requires different kind of plating and we have enough capacity for that.

Understood. That's all. That's all from my side. Thank you.

Thank you. We take the next question from the line of Devesh Kaya from Boring AMC. Please go ahead.

Yeah, I'm just going to understand our gross margins on the standard side have been around the past two quarters, have been around 6 to 57 percent. This was what we have seen historically of 59 to 61 percent. So, is it just a commodity hit or any other product mix or lower export share or if you can just throw some color on it?

Actually, I think I answered this question. It is a mix of... You know, both the, you know, the product mix as well as the commodity impact. Both are there. And we have normally a gap in our recovery with our customers, as far as I explained. I think I explained this in the earlier question.

Okay, so we can try to assume that we will see recovery in this part, and it's not a normalized scenario.

Obviously, we will recover. We are not going to lose our no margins.

Okay, thank you. And what would we have roged at currently, if they confirm again?

Net date is around 550. Our net debt is around 550. You can see it on our balance sheet that we have declared already.

Okay, this is as of June, and not much. Thank you.

The next question is from the line of Viraj Kacharya from SIMPL. Please go ahead.

Yeah, thanks for the opportunity and congratulations on good set of numbers, challenging environment. Three or four questions, sir. First is, this technical road will eventually, if I look at annual wages, we will recover this from the customer, right?

Normally, it has a, you know, you have a gap of a, you know, quarter. So, we are hoping that it will get, it will all get normalized in this quarter.

Okay. Also, second question is, if I look at exports, I understand the environment outside India is pretty bad in terms of market not. Recover from the bottom doors. But if one has to understand, say, our next three, five-year kind of horizon, how should one understand export play for us, you know, especially in the legacy business, right? Because capacity is, you know, market is getting consolidated. So what are we doing? You know, if we can give some more deep dive, you know, how are we approaching this over a three, five-year period?

You know, it is amazing. It's a mix of the end market that is happening in exports and also the, you know, the issue of some of the people vacating capacities. As you heard in the previous question, you know, Eton has closed down some of their plans for engine wells in the U.S. So it's a mix of both. But, you know, what we see as a possibility for us is that the end markets will recover because Once the geopolitical situation improves, it will certainly recover. And the possibilities of markets opening up for us is always there, and we are already working on it. So, both the things seem to be quite positive for us looking forward. So, I don't see any major issue. If you see, even under a very tough... In this geopolitical situation the whole of last year, we delivered almost 2 to 3 percent better results in exports coming out of different segments of the market that we have been able to develop. Now that, and that also was for partial of the year. So for this year, I hope that we'll get the full year benefit. At the same time, we are continuing to grow into newer segments and newer areas and with newer customers. Which will really help us to grow the export business. So, frankly, I see it as a very, very positive side for us.

Okay, just one follow-up on this. See, technology partners also have their own, you know, customer base and, you know, market policies. So, you know, when we're looking at business, say, in U.S. or, you know, Is there a limitation for us to explore and, you know, go and approach for new business wins in those markets, or any color you can get on this?

We have had clear agreements with our technology partners, and we have always worked within those precincts of those agreements that we have in the previous years also. So whatever you see is always relative to the previous years, and I am seeing that it is going to be positive going ahead, so I don't see any issue there.

Okay, this last question, sir, if you look at the Takata subsidiary, for FY26, we had seen a margin moderation and a packed drop, right? So, what was, you know, what really happened there? You know, if you can give some color.

It's purely a market mix situation there. And, you know, the product mix also. So, that always, if you really compare, you have to compare it with the first quarter of last year. Don't compare it on a sequential, because always in April, we do have a drop in the mold sales and others. So, it always happens that way.

No, no, I was actually asking about FY26 as a whole for Takata. So, there was a margin moderation and there was a degrowth and profitability on a full year basis.

Yeah, it's purely a sales mix. I don't think there is a major issue on any drop in prices.

Okay, and last question was the EM5 business. I think we have now commissioned the capacity, and based on your earlier communication, the capacity can go up to a peak sales of a couple of hundred crores. So, where are we in that process of ramp-up, and any color new order wins?

It was only because of the ramp-up, because of the new, you know... The investments that we have done in Coimbatore, that we have been able to double the sales last year, and that's only, you know, that was only for part of the year, because we commissioned it sometime by end of December only. So, this year we will get the full benefit of the full, you know, capacity that we have created there. And we are really progressing very well. In the very first quarter itself, we have done quite well.

Thank you very much.

Thanks, Bidaji.

Thank you. The next question is from the line of Preet Pitlani from Ingrid AMC. Please go ahead.

Thank you. Am I audible?

Yeah, Preetjee. Please go ahead.

Hello, am I audible?

Yeah, please, please go ahead.

Yeah, my first question is on the line of margin. Like we have said that of all the acquisitions we have done, we have translated margin from high single digit to low double digit, and we are aiming to acquire double digit. I just wanted to know what are the margin drivers? Is it by price we are getting change price? Or is it from the operating leverage or is it from the expense which earlier pre-acquisition gave, they were into the place which we have removed. If you could give some highlights on the scene.

Frankly, there are, you know, over... You know, many, many actions due to which this starts happening, and, you know, it not only takes, you know, it's not only related to actions on the shop floor, actions on improvements on operations, improvements on supply chain, improvements on, you know, some of the insourcing that we are planning, a lot of, lot of, lot of, lot of actions. So... It will, it will, it has a time period for that and over a period of time, you will see the improvements happening further.

Thank you. And second question is on the line of peak, with our current capacity realization, what peak revenue can we achieve?

The capacity is something that we continue to keep on investing. As I said, you know, we bought the Sunbeam lines. We got a fantastic capacity for pistols. So, this capacity is a dynamic number. We keep on changing. So, we have to continue the investments and continue to ensure that we are able to meet our customer demands. So, we are putting all the money at the right place and ensuring that we are able to meet the customer demands. Happy to state that in the first quarter, we have met our customer demands. And they have maintained a fairly good mix so that you are able to maintain a margin.

Not on Pistons, are the three acquisitions?

Everywhere we are putting in a lot of money. That's what I said in my speech, that there are capacity expansion programs going on almost in every place, right? From, you know, our plastics business to motors controllers to, you know, even our interiors business and also our legacy pistons business.

Thank you so much. I like it for myself.

Ladies and gentlemen, in order to make sure that the management is able to answer questions from all participants, please limit your question to two per participant. The next question is from the line of Varun Arora from Safe Enterprises. Please go ahead.

Hi, thanks for the opportunity. So my question is regarding Antel in India. You mentioned about some new wins. It will be great if you can engage from customer-wise, you know, idea in terms of share of business. You know, my understanding is that until in India was probably not investing, you know, prior to being acquired, and customers wanted them to make certain investments. So, under now SPR, you know, you've also mentioned that you've made some investments. So, now, can you give some idea in terms of how our share of business could improve with OEMs, leading OEMs?

We, you know, if you really see Antolin's business, Antolin's business has been quite, you know, they have a fairly good market share with all the other customers, all the customers. And, you know, we have maintained those market shares, and we are seeing how we can go further. And as far as we are concerned, we have opened up all the possibilities to invest, and all our customers know that. Customers know us right from the beginning. You know, almost all the customers are similar. We have contacts with all the levels of the customers, even, you know, at... Both for our legacy business as well as all our other businesses. So we have a fairly good confidence, and customers have a good confidence on the SPR auto technologies that we'll continue to invest and make the right investment for them. So we don't give the exact figures, but we are continuing to invest. And you'll see it at the end of the year, you'll see all the details.

And, sir, on subsidies, we've seen a good margin improvement. So, you mentioned partly due to Antolin, you know, margins have come to early teams. Again, I think our competitors are operating at early teams to mid teams. So, fair to say that, I mean, SPR, I mean, you know, our profitability, generally we do a good job across the businesses. So, fair to say that we can kind of get to mid teams level even for Antolin.

Well, I hope we can. So, we are pushing the teams, and we will continue to see how we can make further progress on our margins. We have a number of actions lined up, and I think all of them are working, which is seen by the result, and I don't see any reason why it should not further improve.

Just a follow-up, sir. Related to margins, margins improvement, is it also driven by the EV subsidiary or just handling like Q&Q margin improvement?

No, all the subsidiaries. All the subsidiaries have done well on the margins.

Right, because the EV subsidiary would have got the maximum operating leverage, right, with the volume ramp up.

Yeah, yeah. Everybody has got a good margin improvement. So, I must say that all the companies have done really well. Yeah.

Thank you, sir. Thank you.

Thank you. The next question is from the line of Nikon Jumehta from Magma Ventures. Please go ahead.

Yeah, hi. Thanks for the opportunity. Am I audible? So just a couple of questions from my side. So one is that from the fundraise which we have taken the board approval from, so I just wanted to understand that how much is going to be used for acquisition and how much will be used for debt repayment.

We are looking at various things. You know, see, money is completely fungible, you know. We already have money sitting in our balance sheet. So, we do have plans for, you know, further investments. We have plans for, you know, the repayment of debt. At the same time, we also have to continue to invest. On all our businesses. So it's a mix of everything. And the good part is that it will be put to very good use and it will be put to the areas of growth. And we continue to look at excellent business opportunities ahead and we are quite confident of using the money there.

Okay, so just a follow-on question on this one that from an acquisition perspective, now as we have moved over the last two years, our acquisition size has clearly increased with the Antolin being the largest one which we have acquired. So how should we look at now going forward? Because at the console level, our size and scale is increasing. So is there any threshold in terms of acquisition amount of the business which you want to acquire? Is there any threshold or something like that? What did you have in your mind?

No, Nikunji, normally the acquisition has to stand on its own legs with regards to all the parameters that we have in our evolution. We completely ensure that it falls into the respective parameters that we check on. It has, you know, we tick mark on all the issues related to technology, future growth, markets, and so many other possibilities that we really fix it. It could be a 300 crore or it could be a 500 crore or a 1,500 crore. So we can't really go by that. The good part is that the company now has a good appetite and it has a good means of managing a fairly good appetite in terms of managing their mandate. So we'll continue to do that till the time we know that for sure we are able to service it well and especially for all our stakeholders.

So, from a balance sheet perspective, is there any matrix like a net debt to equity or a net debt to EBITDA which you would want that these are the threshold that we will not cross this one?

We have very clear parameters on that, very, very clear parameters internally, and you can always work out the net debt to the equity that we have, so it's fairly, very low.

So, is it fair to say that we would like to keep it at 1 as a higher sign, net debt to equity?

Yeah, it could even be lower than that. You know, I don't think we'll... Sorry, it is 0.2. It is only 0.2, so we don't see any reason why we have to go even up to 1. Okay.

And we have a lot of questions on my side.

Now balance sheet, yeah.

And last question from my side that you have mentioned that you are, you want that the consolidated margins essentially should over the time kind of merge with what we are doing on the standalone side of the equation. So in that journey, how much time do you see that it will be, you will be able to kind of meet that?

You mean investment in the legacy business?

No, no. The margins in the consolidated level to reach at the...

Sorry to interrupt, Mr. Nikunj Mehta. Please get back in the queue for any follow-up question.

Sir, this was just the last question. Just to answer this question, Nikunji, we are continuing to grow our margins. You can see that at a consolidated level, if you are able to maintain the high teams, I think it's excellent... And, uh... The possibility, and it gives us a lot of opportunity within the group to do many things, both in terms of improving capacities as well as in terms of investing for the future in future M&A.

Okay. Thank you so much.

Thank you, Nikonji.

Thank you. The next question is from the line of Ravi Purohit from Securities Investment Management. Please go ahead.

Yeah, hi. Thanks for taking my question. So, two questions. One is on, you know, this EFI, you know, business that we have.

If you could just, you know, kind of give us some color on, you know, what kind of capacities have we created and what kind of product. Because when we go on the, you know, website of our SPRM fly, you know, we see products like, you know, axial flux motors or drone motors or electric marine motors, right? So there are quite a few interesting products that are there listed on the website. If you could kind of, you know, because generally this business does not really get too much spoken about in our, you know, either in our presentations or the con calls.

So, if you could just spend some time, and I think we have commissioned a capacity like you had mentioned in December, you know, last year. So, if you could just share some insights as to what this business is, how scalable it is, what kind of products are we doing,

how big can it be over a period of time, what are the industries that it is addressing?

Yeah, see, we put our, you know, electric motor and controller facility. We are probably one of the very few who make both the motors and controllers together. We have a complete lines, we have a couple of lines for electric motors and controllers, electric motors standalone and controllers also. And as far as electric motors is concerned, we make traction motors, you know, we can make PMSM motors, non-PMSM motors, ferrite motors, as well as, you know, the synchronous ferrite motors, as well as others for the two-wheeler industry, the car industry, that is the passenger car industry, and also the truck and the bus industry. And we already have products which are under various stages of validation with various customers. So, I would like to state that we have really grown very well in this, and we have almost become a very sizable player today as a motor and controller supplier across the industry. So, you know, we don't normally give the market share, obviously, because this is changing by the day. We are getting new customers, it's changing by the day, and it's really not right to give one number and then tomorrow say a different number. So we are as yet not giving any kind of those details because it's evolving, and I am very happy to state that last year we doubled the turnover and we continue to grow very, very fast in this segment.

So what kind of capacity do we have right now at peak capacity utilization levels? What kind of turnover can this business do? And is it like what kind of, is it a diluting?

No, no, I'll tell you, Prabhuji, if I add one winding machine, capacity will increase by more than 15%. So I can't give the capacity number. It's a figure which will keep changing as we keep putting a little bit of investment here and there. So, normally we are not giving that because then that restricts our, you know, growth targets, and neither do I want to tell the team that we are not going to invest and not, you know, for me, it's important to get the business and meet those businesses, and we'll continue to grow.

Because, you know, some of the products that like axial flux motors, right, not many companies actually do it in India. So I was wondering, like, as to, you know, what kind of, you know, R&D work is being done, what kind of technology do we have there?

And what is the source of the technology for this business?

This I think I have answered in my previous calls. We have a, you know, good technology partner. EMF is based out of, EMFI International is based out of Singapore. We have a fairly good technology availability. We have also tie-ups with Lingbo for our controller, and we are able to cater to all the requirements that is there for the Indian market as on date.

Okay, okay. So, would you... So, you know, now we have...

Sorry to interrupt, Mr. Rawi Purwit. Please, you may please return to the queue for any follow-up questions.

Okay, thank you.

The next question is from the line of Vijay Pandey from Axis Capital. Please go ahead.

Yeah, which is it?

I just want to understand about the capacity expansion, which we are taking for Takata and TGPS. So how is it looking, and when can we expect revenues from there?

No, phase 4 expansion in Takata has already started, and we are building up the new plant, just adjacent to our existing plant. We have another 5 acres of land, which is adjacent to that piece of land, the factory that we had, where we have got 3 phases of expansion already done. Now we have gone in for the 4th phase of expansion in Takata, and similarly in TGPL, we already have the 2 plants. And in the second plant, we have complete capacity available, and that's getting filled up as we speak.

And these two plants will start generating revenues by over next year, or will it be faster?

As far as the new business in Takata is concerned, I think we are expecting it to start generating revenues by next year. Early next year. And TGPL is already on the process.

Okay. And just on the EMFI business, just to follow up for the previous question, if you can help us understand the key OEMs to which we supply, because... Even in the EV, it does not...

Almost on a monthly basis, we have got addition of new customers happening. So, it's very difficult for me to give any particular names and miss out the others which would be, you know, impacting my business. So, kindly believe in us that, you know, it's not that we have doubled the volume just by talking. It is double the volume just by getting new customers, right? So, we are growing the business and it's going very well.

Mr. Vijay Pandey, sorry to interrupt.

Sorry to interrupt, Mr. Vijay Pandey. We may request you to return to the question queue for any follow-up questions. The next follow-up question is from the line of Gokul Maheshwari from Avriga Capital Advisors. Please go ahead.

Yeah, thanks for the opportunity again. Just one question, sir. Just if you could comment on... On the Antolin business, how does our current business or standalone or whether Takahata or TGPL work along with the Antolin business with respect to providing synergies or certain products, etc., which can be catered by or providing raw materials, etc., to the Antolin business? How are the operational synergies taking place?

Yeah, it's going quite well, and we are looking at, you know, all this takes a lot of time with regards to approvals, getting the clearances, making the dice, tools, and then getting the customer approvals, end customer approvals. So, all this takes time, but we are progressing quite well, and, you know, already the synergies have started, and the works have, you know, the teams have started collaborating quite well, and the overall, let me put it this way, The integration of the team. Within the overall SPR management has been extremely good, and that's what is showing in the results.

Okay, sir. Thank you so much.

Thank you so much, Gokulji.

Thank you. The next question is from the line of Ajay Omprakash Ahuja, an individual investor. Please go ahead.

Hello. Am I available?

Hello. Yeah, please go ahead. Yeah, please go ahead, Ajay Ji.

So, my question is regarding the Android integration. Three years from now, what has to be true for you to say the acquisition has been truly successful? Beyond the financial metrics, I am asking, what would be the early strategic indicators that tell you the integration is progressing in the right direction? This is my question.

Yeah, it's a very interesting question. From my standpoint, at least from the standpoint of the management, I can tell you that we have four or five clear parameters based on which we say that it has been successful. I already say that it is successful because the integration of the teams have happened well, teams are working together quite well, there's a good collaboration, there's a good amount of culture that is getting developed across all the companies that we have done M&A. Almost all of them have, you know, we are trying to build in the same kind of culture in terms of how we work. And, you know, it's going to be more about people that I'm going to say, because automatically then once we know that our people are all aligned, businesses start thriving. We are quite confident of getting that to happen. We provide a very, very professional management, and that really helps everybody to grow within the umbrella of SPR.

Thank you, so thanks a lot.

Thanks, Ajit. Thanks.

Thank you very much. We take that as the last question and conclude the question and answer session. I would now like to hand the conference over to Mr. Krishna Kumar for closing comments.

I know we have overshot the time. I know that some of the people have also not been able to complete all their questions. I would really request all of you to reach out to our secretarial department so that we can answer back one-on-one. And please do not feel otherwise that we have not been able to take all the questions because time-wise we were limited. We have already overshot by almost 15 minutes, but I'm very happy to see the amount of questions that we have had and the kind of questions that we have had which really talks about how deeply people are really analyzing the company and that gives us a lot of confidence that we have great stakeholders who are supporting the business. Thank you for joining us today and for asking such valuable questions. We hope that all your queries will get answered, even if some of them have not been answered so far. You can reach out and we'll answer it back. And thank you once again for the, you know, Secretary of Health and the Investor Relationship partners at Ernst & Young to have given the full support. Thank you once again for everybody to have joined the call. And thanks. Thanks a lot.

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