Q1 2027 Avalon Technologies Ltd Earnings Call

August 5, 2026

Speaker #1: Ladies and gentlemen, good day, and welcome to Avalon Technologies Limited Q1 FY27 earnings call, hosted by DAM Capital Advisors. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day, and welcome to Avalon Technologies Limited Q1 FY27 earnings call hosted by DAM Capital Advisors. As a reminder, all participant lines will be in listen only mode, 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tanay Shah. Thank you, and over to you, sir.

Operator: Ladies and gentlemen, good day, and welcome to Avalon Technologies Limited Q1 FY27 earnings call hosted by DAM Capital Advisors. As a reminder, all participant lines will be in listen only mode, 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tanay Shah. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Tanay Shah. Thank you, and over to you, sir.

Speaker #2: Hi, Mr. Talver. Good afternoon, everyone, and a warm welcome to the Q1 FY27 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management, Mr. Konamath Bicha.

Tanay Shah: Thanks, Satarva. Good afternoon, everyone, and a warm welcome to the Q1 FY27 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management, Mr. Kunhamed Bicha, Chairman and Managing Director, Mr. Suresh Veerappan, Chief Financial Officer, Mr. Shriram Vijayaraghavan, Chief Operating Officer, and Mr. Venky Venkatesh, Chief Sales Officer. Mr. Bicha will give us an overview of the business performance and will be followed up by Mr. Suresh's remarks on the financial performance, post which we'll open up the floor for Q&A. As we move forward, it is important to bear in mind that any forward-looking statements made during the call are subject to potential risks and uncertainties, both known and unknown. Now, without any further delay, I'll hand over the floor to Mr. Bicha for his initial remarks. Thank you, and over to you, sir.

Speaker #2: Chairman and Managing Director, Mr. Suresh Veyal; Chief Financial Officer, Mr. Sreeram Vijay Raghavan; Chief Operating Officer, and Mr. Wenki Venkatesh, Chief Sales Officer. Mr. Bicha will give us an overview of the business performance and will be followed by Mr. Suresh's remarks on the financial performance.

Speaker #2: After this, we'll open up the floor for Q&A. As we move forward, it is important to bear in mind that any forward-looking statements made during the call are subject to potential risks and uncertainties, both known and unknown.

Speaker #2: Now, without any further delay, I'll hand over the floor to Mr. Bicha for his initial remarks. Thank you, and over to you, sir.

Speaker #3: Thank you, Tanay. Good afternoon, ladies and gentlemen. A very warm welcome to Avalon Technologies' Q1 FY27 earnings call. I want to begin by thanking our investors for your continued trust and support.

Kunhamed Bicha: Thank you, Tanay. Good afternoon, ladies and gentlemen. A very warm welcome to Avalon Technologies's Q1 FY27 earnings call. I want to begin by thanking our investors for your continued trust and support. Your confidence has enabled us to stay focused on what really matters: consistent execution, disciplined investment, and building a long-term profitable business. We are grateful for your trust, and our commitment to deliver has only grown stronger. Q1 FY27 was another strong quarter. This marks our eighth consecutive quarter of improvement in performance and growth across key metrics. What stands out is the quality and the breadth of this growth. Our revenue growth is well diversified across geographies and industry verticals. Our profitability metrics has improved. Our ROCE has moved up to 23.4%, reflecting that we are scaling with discipline.

Speaker #3: Your confidence has enabled us to stay focused on what really matters: consistent execution, disciplined investment, and building a long-term profitable business. We are grateful for your trust, and our commitment to deliver has only grown stronger.

Speaker #3: Q1 FY27 was another strong quarter. This marks our eighth consecutive quarter of improvement in performance and growth across key metrics. What stands out is the quality and the breadth of this growth.

Speaker #3: Our revenue growth is well diversified across geographies and industry verticals. Our profitability metrics have improved, and ROCE has moved up to 23.4%, reflecting that we are scaling with discipline.

Speaker #3: Net working capital has improved, and our order book continues to provide good visibility for the quarters ahead. Our three growth engines—existing business, new program wins, and our expanding opportunity pipeline—are all gaining momentum together.

Kunhamed Bicha: Net working capital has improved, our order book continues to provide good visibility on quarters ahead. Our three growth engines are existing business, new program wins, and our expanding opportunity pipeline are all gaining momentum together. Based on this strong momentum across our business and the visibility we have on programs ramping through the year, we are revising our FY27 revenue growth guidance upward from 24% to 27% to 26% to 30%. Moving to the financial highlights. Revenue for Q1 FY27 was INR 484 crores, up 50% year on year from INR 323 crores in Q1 FY26. Q1 revenues are marginally ahead of Q4 FY26. A positive start for FY27. During the quarter, India contributed 41% of the revenue and export business contributed 59%.

Speaker #3: Based on this strong momentum across our business and the visibility we have on programs ramping through the year, we are revising our FY27 revenue growth guidance upward from 24–27% to 26–30%.

Speaker #3: Moving to the financial highlights, revenue for Q1 FY27 was ₹484 crore, up 50% year-on-year from ₹323 crore in Q1 FY26. Q1 revenues are marginally ahead of Q4 FY26—a positive start for FY27.

Speaker #3: During the quarter, India contributed 41% of the revenue, and export business contributed 59%. India business grew 53% year-on-year, and export business grew 48% year-on-year, with both geographies contributing to the growth.

Kunhamed Bicha: India business grew 53% year on year and export business grew 48% year on year, with both geographies contributing to the growth. Now on industry vertical revenue contribution. Industrial contributed 32% of our revenues, growing 52% year on year. Mobility contributed 25%, growing 36% year on year. Within mobility, rail accounted for approximately 15% and aerospace 8%, growing 37% and 47% respectively. Clean energy contributed 29%. Our gross margins for the quarter came in at 34.7%, within our guided range of 33% to 35%. EBITDA margins came in at 12%, up from 11.8% in Q4 FY26, reflecting continued operating leverage as revenues grow. Profit after tax was INR 35 crores with a PAT margin of 7.2%, a meaningful improvement year on year. As of 30 June 2026, our order book grew 23.4% year on year to INR 2,208 crores with an average execution period of 14 months.

Speaker #3: Now, on industry vertical revenue contribution: Industrial contributed 32% of our revenues, growing 52% year-on-year. Mobility contributed 25%, growing 36% year-on-year. Within Mobility, Rail accounted for approximately 15%, and Aerospace, 8%.

Speaker #3: Growing 37% and 47%, respectively. Clean energy contributed 29%. Our gross margins for the quarter came in at 34.7%, within our guided range of 33% to 35%.

Speaker #3: EBITDA margins came in at 12%, up from 11.8% in Q4 FY26, reflecting continued operating leverage as revenues grow. Profit after tax was ₹35 crore, with the PAT margin at 7.2%—a meaningful improvement year-on-year.

Speaker #3: As of June 13, 2026, our order book grew 23.4% year-on-year to ₹2,208 crore, with an average execution period of 14 months. Long-term contracts with execution timelines ranging from 15 to 36 months stand at ₹1,256 crore.

Kunhamed Bicha: Long-term contracts with execution timelines ranging from 15 to 36 months stands at INR 1,256 crores. Order book growth remains well-diversified across industry verticals and geographies. Net working capital days improved to 117 days in June 2026 versus 142 days in June 2025, an improvement of 25 days year on year. Within this, inventory days improved from 104 days to 94 days. Receivable days reduced by 13 days and payable days improved by 2 days over the same period. Asset turns are at 9.9x, and return on capital employed stands at 23.4%. India manufacturing operations, which serve both domestic and global customers, accounted for 72% of our revenue in Q1 FY27, delivering healthy profitability at an EBITDA margin of 16.7% and a PAT margin of 11.1%. US operations contributed the remaining 28%. Moving on to our US operations.

Speaker #3: Order book growth remains well diversified across industry verticals and geographies. Networking capital days improved 117 days in June 2026 to 142 days in June 2026, versus 142 days in June 2025.

Speaker #3: An improvement of 25 days year-on-year. Within this, inventory days improved from 104 days to 94 days, receivable days reduced by 13 days, and payable days improved by 2 days over the same period.

Speaker #3: Asset turns are 9.9 times, and return on capital employed stands at 23.4%. India manufacturing operations, which serve both domestic and global customers, accounted for 72% of our revenue in Q1 FY27.

Speaker #3: Delivering healthy profitability at an EBITDA margin of 16.7% and a PAT margin of 11.1%. US operations contributed the remaining 28%. Moving on to our US operations, losses in US manufacturing have continued to narrow, coming in at approximately ₹4 crores in Q1 FY27.

Kunhamed Bicha: Losses in US manufacturing has continued to narrow, coming in at approximately INR 4 crores in Q1 FY27. Our US manufacturing plant has a clear and deliberate role. It is where new customers come in, validate our capabilities, and get comfortable with Avalon as a partner. Once that comfort is established, production progressively transitions to India manufacturing, where customers benefit from our cost structure, depth of capabilities, and scale. Our manufacturing presence in both geographies gives customers the flexibility to start in the US or come directly to India. We are well-positioned to support both. As India manufacturing continues to scale over the coming years, we expect US manufacturing contribution to naturally settle at around 20% of our total revenue. On revenue guidance, we have previously committed to double revenues from FY24 to FY27, a target of approximately INR 1,734 crores.

Speaker #3: Our US manufacturing plant has a clear and deliberate role. It is where new customers come in, validate our capabilities, and get comfortable with Avalon as a partner.

Speaker #3: Once that comfort is established, production progressively transitions to India manufacturing, where customers benefit from our cost structure, depth of capabilities, and scale. Our manufacturing presence in both geographies gives customers the flexibility to start in the US or come directly to India.

Speaker #3: And we are well positioned to support both. As India manufacturing continues to scale over the coming years, we expect U.S. manufacturing contribution to naturally settle at around 20% of our total revenue.

Speaker #3: On revenue guidance, we have previously committed to doubling revenues from FY24 to FY27—a target of approximately ₹1,734 crore. Our trailing 12-month revenue has already crossed that milestone, nearly a year ahead of our commitment.

Kunhamed Bicha: Our trailing 12-month revenue have already crossed that milestone, nearly a year ahead of our commitment. As highlighted earlier, reflecting on the strong Q1 performance, we are now focused on the next doubling from INR 1,603 crores in FY26 to approximately INR 3,200 crores in FY29. The products we manufacture and the verticals we build are long-term in nature. Program life cycles run for years, sometimes decades. Our customer relationships deepen over time, and our revenue compound accordingly. We encourage you to evaluate our progress over a multi-year period. That is how we manage this business, and that is the lens through which our strength, performance, and value will most meaningfully be perceived. Now moving to our key growth drivers. Our existing business continues to provide a strong and steady foundation with long product life cycles, mission-critical programs, and recurring revenues across rail, aerospace, industrial, clean energy, and communication.

Speaker #3: As highlighted earlier, reflecting on the strong Q1 performance, we are now focused on the next doubling—from ₹1,603 crore in FY26 to approximately ₹3,200 crore in FY29.

Speaker #3: The products we manufacture and the verticals we build are long-term in nature. Program lifecycles run for years, sometimes decades. Our customer relationships deepen over time, and our revenue compounds accordingly.

Speaker #3: We encourage you to evaluate our progress over a multi-year period. That is how we manage this business, and that is the lens through which our strength, performance, and value will most meaningfully be perceived.

Speaker #3: Now, moving to our key growth drivers. Our existing business continues to provide a strong and steady foundation, with long product lifecycles, mission-critical programs, and recurring revenues across rail, aerospace, industrial, clean energy, and communication.

Speaker #3: On new business wins, the programs we have been building for the last two or three years are now progressing well. Aerospace cabin subassemblies are moving towards volume.

Kunhamed Bicha: On new business wins, the programs we have been building for the last two or three years are now progressing well. Aerospace cabin subassemblies are moving towards volume. Production of locomotive engine subsystems is underway. The Kavach anti-collision system is on track for commercial production. On semiconductor equipment, we have increased our allocation with one of our world's leading wafer fabrication equipment suppliers, expanding from power box assemblies into other products with production rampings over the next few quarters. In aerospace, we have secured incremental box build business with a leading aerospace company, further strengthening our engagement in the export market. On the opportunities pipeline, we continue to see a healthy expanding set of opportunities across geographies and verticals. Southeast Asia and Europe continue to add a new dimension to our geographical reach. All three growth engines are gaining momentum together.

Speaker #3: Production of locomotive engine subsystems is underway. The Kavach anti-collision system is on track for commercial production. On semiconductor equipment, we have increased our allocation with one of our world's leading wafer fabrication equipment suppliers, expanding from PowerBox assemblies into other products, with production ramping over the next few quarters.

Speaker #3: In aerospace, we have secured incremental Boxwell business with the leading aerospace company, further strengthening our engagement in the export market. Regarding our opportunities pipeline, we continue to see a healthy and expanding set of opportunities across geographies and verticals.

Speaker #3: Southeast Asia and Europe continue to add a new dimension to our geographical reach. All three growth engines are gaining momentum together. On our manufacturing footprint, our new manufacturing plant, focused on domestic demand in Chennai, is now complete and will commence commercial production from Q2 FY27.

Kunhamed Bicha: On our manufacturing footprint, our new manufacturing plant focused on domestic demand in Chennai is now complete and will commence commercial production from Q2 FY27. As we deepen our presence in semiconductor equipment and advanced electronics, the need for world-class infrastructure becomes increasingly important. We are in the process of acquiring a large parcel of land in Chennai that will support Avalon's growth over the next decade, catering to both domestic and export opportunities. We shall share more details as it crystallizes. We are now building the organization for the next phase of growth. We are investing in leadership, process automation, IT systems, and AI-enabled capabilities across functions. Some of these investments are being made now ahead of the growth. As I close, let me offer a broader perspective. Global supply chains are being realigned. Customers are looking for reliable manufacturing partners beyond traditional geographies.

Speaker #3: As we deepen our presence in semiconductor equipment and advanced electronics, the need for world-class infrastructure becomes increasingly important. We are in the process of acquiring a large parcel of land in Chennai that will support Avalon's growth over the next decade.

Speaker #3: Catering to both domestic and export opportunities. We shall share more details as it crystallizes. We are now building the organization for the next phase of growth.

Speaker #3: We are investing in leadership, process automation, IT systems, and AI-enabled capabilities across functions. Some of these investments are being made now, ahead of the growth.

Speaker #3: As I close, let me offer a broader perspective. Global supply chains are being realigned; customers are looking for reliable manufacturing partners beyond traditional geographies. India is emerging as a credible and competitive destination.

Kunhamed Bicha: India is emerging as a credible and competitive destination. We are well-placed in this environment. Avalon is building a global integrated electronics manufacturing business focused on complex box build solutions for mission-critical applications across high-growth industries. Our continued goal is to build an enduring institution that customers trust, that is deep in engineering capability, and that is built to last. We remain committed to efficient capital allocation, strong governance, disciplined execution, and, of course, profitable growth. With that, I hand over to our CFO, Suresh Veerappan, for a detailed overview of our financial performance. Thank you.

Speaker #3: We are well placed in this environment. Avalon is building a global, integrated electronics manufacturing business focused on complex box-build solutions for mission-critical applications across high-growth industries.

Speaker #3: Our continued goal is to build an enduring institution that customers trust, that is deep in engineering capability, and that is built to last. We remain committed to efficient capital allocation, strong governance, disciplined execution, and, of course, profitable growth.

Speaker #3: With that, I hand over to our CFO, Suresh Veerappan, for a detailed overview of our financial performance. Thank you.

Speaker #1: Thank you, KB. Good afternoon, everyone. Let me take you through the financial performance in detail. Revenue for Q1 FY27 was ₹484 crore, up 49.8% year-on-year from ₹323 crore in Q1 FY26.

Suresh Veerappan: Thank you, K.B. Good afternoon, everyone. Let me take you through the financial performance in detail. Revenue for Q1 FY27 was INR 484 crores, up 49.8% year-on-year from INR 323 crores in Q1 FY26, and up 0.9% sequentially from INR 480 crores in Q4 FY26. Our average revenue growth over the last eight quarters has been 46%. box build contribution has increased from 44.5% in FY22 to 59.9% in Q1 FY27, reflecting our continued focus on complex high-value manufacturing. Gross margin for Q1 FY27 was INR 168 crores at a margin of 34.7% within our guided range of 33% to 35%, representing year-on-year growth of 46.3% from INR 115 crores in Q1 FY26.

Speaker #1: And up 0.9% sequentially from ₹480 crore in Q4 FY26. Our average revenue growth over the last 8 quarters has been 46%. Boxwell's contribution has increased from 44.5% in FY22 to 59.9% in Q1 FY27.

Speaker #1: Reflecting our continued focus on complex, high-value manufacturing, gross margin for Q1 FY27 was ₹168 crore, at a margin of 34.7%, within our guided range of 33% to 35%.

Speaker #1: Representing year-on-year growth of 46.3% from ₹115 crore in Q1 FY26. EBITDA for Q1 FY27 was ₹58 crore, with a margin of 12%, up from 9.2% in Q1 FY26 and 11.8% in Q4 FY26.

Suresh Veerappan: EBITDA for Q1 FY27 was INR 58 crores with a margin of 12%, up from 9.2% in Q1 FY26 and 11.8% in Q4 FY26, reflecting operating leverage as revenues scale. Adjusting for the tariff pass-through impact, our EBITDA margin would have been approximately 0.9% higher. PAT for Q1 FY27 was INR 35 crores with a margin of 7.2%, up 145.3% year-on-year from INR 14 crores in Q1 FY26. We continue to invest in talent, capacity, and inventory to support upcoming growth in new programs. These initiatives strengthen our foundation for long-term growth and are expected to enhance operating efficiency as business volumes continue to scale. Moving on to the balance sheet.

Speaker #1: Reflecting operating leverage as revenue scales. Adjusting for the tariff pass-through impact, our EBITDA margin would have been approximately 0.9% higher. PACC for Q1 FY27 was ₹35 crore, with a margin of 7.2%, up 145.3% year on year from ₹14 crore in Q1 FY26.

Speaker #1: We continue to invest in talent, capacity, and inventory to support upcoming growth in new programs. These initiatives strengthen our foundation for long-term growth and are expected to enhance operating efficiency as business volumes continue to scale.

Speaker #1: Moving on to the balance sheet, net working capital improved to 117 days in June 2026 from 142 days in June 2025, an improvement of 25 days year on year.

Suresh Veerappan: Networking capital improved to 117 days in June 2026 from 142 days in June 2025, an improvement of 25 days year-on-year. Within this, inventory days improved from 104 days to 94 days. Trade receivable days reduced from 87 days to 74 days. Trade payable days improved from 49 days to 51 days. On a sequential basis, networking capital moved from 112 days in March 2026 to 117 days in June 2026. Cash flow from operations was INR +32 crores in Q1 FY27, an improvement from INR 16 crores in Q4 FY26. As of 30 June 2026, total debt was INR 196 crores, with cash and investments of INR 171 crores, resulting in a net debt position of INR 24 crores. net debt-to-equity ratio stands at 0.03, a comfortable position.

Speaker #1: Within this, inventory days improved from 104 days to 94 days. Trade receivable days reduced from 87 days to 74 days. Trade payable days improved from 49 days to 51 days.

Speaker #1: On a sequential basis, networking capital moved from 112 days in March 2026 to 117 days in June 2026. Cash flow from operations was positive at ₹32 crore in Q1 FY27, an improvement from ₹16 crore in Q4 FY26.

Speaker #1: As of June 30, 2026, total debt was INR 196 crore, with cash and investments of INR 171 crore, resulting in a net debt position of INR 24 crore.

Speaker #1: Net debt-to-equity ratio stands at 0.03—a comfortable position. Capex for Q1 FY27 was ₹16 crore, and asset turns remained strong at 9.9 times. Return on capital employed improved to 23.4% from approximately 10% about two years ago, showing a consistent and meaningful improvement.

Suresh Veerappan: CapEx for Q1 FY27 was INR 16 crores. Asset turns remained strong at 9.9 times. Return on capital employed improved to 23.4% from 10% approximately two years ago, a consistent and meaningful improvement. With improved business visibility, we have revised our FY27 revenue growth guidance upwards to 26% to 30% from the earlier guidance of 24% to 27%. To summarize, Q1 reflects continued progress across our key operating and financial metrics, demonstrating the strength of our execution. As we move forward, our focus remains on delivering sustainable profitable growth, improving operational efficiency, and strengthening long-term customer relationships. With that, I request the moderator to open the floor for questions. Thank you.

Speaker #1: With improved business visibility, we have revised our FY27 revenue growth guidance upwards to 26–30% from the earlier guidance of 24–27%.

Speaker #1: To summarize, Q1 reflects continued progress across our key operating and financial metrics, demonstrating the strength of our execution. As we move forward, our focus remains on delivering sustainable, profitable growth, improving operational efficiency, and strengthening long-term customer relationships.

Speaker #1: With that, I request the moderator to open the floor for questions. Thank you.

Speaker #2: Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone.

Operator 2: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question comes from the line of Santhosh Seshadri from Avendus Spark. Please go ahead.

Operator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question comes from the line of Santhosh Seshadri from Avendus Spark. Please go ahead.

Speaker #2: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.

Speaker #2: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Santosh Seshadri from Avendas Park.

Speaker #2: Please go ahead.

Speaker #3: Yeah, hi. Good evening, sir. Congratulations for a great set of numbers. My first question is on long-term steady-state gross margin. You know, we have been historically talking about 33% to 35% kind of margins.

Santhosh Seshadri: Hi. Good evening, sir. Congratulations for great set of numbers. My first question is on long-term steady state gross margin. We have been historically talking about 33% to 35% kind of margins. Just as we think about some of these newer businesses like semiconductor equipment and the power modules and Kavach that we are working on. As it scales up, how should we think about the structural impact of these businesses on margin profile? Do you think of these businesses inherently higher on the margin growth and any scope for margin improvement? That's my first question. I have a follow-up.

Speaker #3: And just as we think about some of these newer businesses, like semiconductor equipment and the power modules and coverage that we are working on.

Speaker #3: So, as it scales up, how should we think about the, you know, structural impact of these businesses on the margin profile? Do you think these businesses are inherently higher on the margin curve?

Speaker #3: And is there any scope for margin improvement? So that's my first question. I have a follow-up. Okay.

Kunhamed Bicha: Okay. Thank you, Santhosh. That's an interesting question. If you look at last 5 years or so, we've always maintained this range. Sometimes we are a little bit higher and sometimes a little bit lower, but this is a comfortable range. Saying this, certain set of our industries and products have much higher margins, and certain industries have lower margins. What you're seeing is a blended rate. As you see the higher margin business kick in, you will see some difference. As of now, just rate us at 33% to 35% with a few quarters being up or down.

Speaker #4: Thank you. Thank you, Santosh. That's an interesting question. So, if you look at the last five years or so, we've always maintained this range.

Speaker #4: Sometimes we are a little bit higher, and sometimes a little bit lower, but this is a comfortable range. That said, certain set of our industries and products have much higher margins.

Speaker #4: Certain industries have lower margins, so what you're seeing is a blended rate. As you see the higher-margin business kick in, you will see some difference.

Speaker #4: But as of now, you know, this rate is at 33 to 35, with a few quarters being up or down.

Speaker #3: Got it. So there is scope for improvement in the long run. But as of now, we are maintaining at 33 to 35 percent. So is that the takeaway?

Santhosh Seshadri: Got it. There is scope for improvement in the long run. As of now we are maintaining at 33% to 35%. Is that the takeaway?

Speaker #4: That's our aspiration, as you very well know. Yeah.

Kunhamed Bicha: That's our aspiration as you very well know it, yeah.

Speaker #3: Got it. And my second question is about the cost structure below the gross margin line items. So, here we have been talking about roughly a 50-50 split between fixed and variable costs.

Santhosh Seshadri: Got it. My second question is on the cost structure below the gross margin line items. Here we have been talking about roughly 50/50 split between fixed and variable cost. My question here is, given the strong revenue growth and the kind of ongoing investments that we have in the manufacturing footprint that you mentioned in the opening remarks, at what stage do you think some of these fixed costs become semi-variable in nature, and what would be the implication on operating leverage over the medium term for FY27 and FY28?

Speaker #3: So my question here is: given the strong revenue growth and the ongoing investments that we have in the manufacturing footprint, which you mentioned in the opening remarks, at what stage do you think some of these fixed costs become semi-variable in nature?

Speaker #3: And what would be the implication on operating leverage over the medium term for FY27 and FY28?

Speaker #1: Hi, Santosh. Suresh, is it correct that between 45% and 50% of the expenses below the gross margin are semi-fixed or fixed in nature? And most of these expenses are semi-fixed in nature.

Suresh Veerappan: Hi, Santosh. Suresh here.

Santhosh Seshadri: Hi, sir.

Suresh Veerappan: We've always maintained that between 45% and 50% of the expenses below the gross margin are semi-fixed or fixed in nature. Some of the expenses, most of the expenses are semi-fixed in nature. What we believe is with scale in revenue, with growth in revenue, we believe the operating leverage will continue to play out. If you look at our India manufacturing business, it has delivered an EBITDA of 16.7%, and it is a continuing delivery in terms of profitability over the last few quarters. We expect the operating leverage to play out. We do not give any particular guidance, per se, for EBITDA margins. Otherwise, I would add to what KB said, that we have consistently maintained our gross margin percentage in the range of 33% to 35%. We believe we can continue to do that.

Speaker #1: What we believe is, with scale in revenue, with growth in revenue, we believe the operating leverage will continue to play out. If you look at our India manufacturing business, it has delivered an EBITDA of 16.7%.

Speaker #1: And it is a delivery in terms of profitability over the last few quarters, so we expect the operating leverage to play out. We do not give any particular guidance, per se, for EBITDA margins.

Speaker #1: But otherwise, I would add to what KB said, that we have consistently maintained our gross margin percentage in the range of 33% to 35%.

Speaker #1: We believe we can continue to do that.

Speaker #3: Thank you. And just one last question. Some of your peers have recently spoken about opportunities in the data center space and ramping up business starting from FY27.

Santhosh Seshadri: Thank you. Just one last question. Some of your peers have recently spoken about opportunities in the data center space and ramping up business starting from FY27. Could you share your perspective on this particular opportunity? Are you currently in talks with any of the potential customers? Also where do you see yourself positioning within this value chain? Will it be mostly in the servers, or rack systems, or power management? Any thoughts on that?

Speaker #3: So could you share your perspective on this particular opportunity? Are you currently in talks with any of the potential customers and also, do you see and also, where do you see yourself positioning within this value chain?

Speaker #3: Will it be mostly in the servers, or rack systems, or power management? Any thoughts on that?

Speaker #4: So, as you know, Santosh, the one piece is that the world is going through a supercycle in power. We have HVDC systems and all that.

Kunhamed Bicha: As you know, Santosh, that one piece is the world is going through a super cycle in power, we have HVDC systems and all that. We are playing with some of the leaders and we started production with a couple of them. That's going to be a part of that. Saying that, we're also working with multiple customers who supply off-grid power into the data centers, okay? That is bound to grow. Also now into the future, you will see us work more towards the rack and the cooling systems, okay? Which we have not won the business yet, but we are still working towards that. Of course, all this growth comes with the semicon industry, okay? Equipment industry. We are well-positioned for that in the near future. We are not going to make server boards as of now, okay?

Speaker #4: So we are playing with some of the leaders that we started production with, a couple of them. So that's going to be a part of that.

Speaker #4: But saying that, we're also working with multiple customers who supply off-grid power into the data centers, okay? And that is bound to grow.

Speaker #4: And also, now is the future. You will see us work more towards the rack and the cooling systems, okay? We have not won the business yet, but we are still working towards that.

Speaker #4: And of course, you know, all this growth comes with the semiconductor industry—okay? The equipment industry. We are well positioned for that in the near future.

Speaker #4: So, we are not going to make server boards as of now, okay? I'm not saying that we won't do that in the future. But anything around it, which is probably the fastest-growing element, we are intending to play.

Kunhamed Bicha: Not saying that we won't do that in the future. Anything around it, which is probably the fastest growing element, we intending play and we are playing in some of those areas. Did I answer your question, Santosh?

Speaker #4: And we are playing in some of those areas. Did I answer your question, Santosh?

Speaker #3: Absolutely. Thank you very much, sir, and all the very best.

Santhosh Seshadri: Absolutely. Thank you very much, sir, and all the very best.

Speaker #4: Thank you. Thank you, Santosh.

Kunhamed Bicha: Thank you. Thank you, Santosh.

Speaker #3: Thank you. The next question comes from the line of Siddharth Bera from Nomura. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Siddhartha Bera from Nomura. Please go ahead.

Operator: Thank you. The next question comes from the line of Siddhartha Bera from Nomura. Please go ahead.

Speaker #5: Oh, yeah. Hi, sir. Thanks for the opportunity, and congrats, Ana. Great set of numbers. Sir, first question is, on the two-segment HVDC and semi-SPE, where are we in terms of the other wind cycle?

Siddhartha Bera: Yeah. Hi, sir. Thanks for the opportunity and congrats on a great set of numbers. Sir, first question is on the two segments, the HVDC and semi SPE. Where are we in terms of the other win cycle? When should we expect that to come through for us this year? Second is on the clean energy side, we did have seen a very strong growth in this quarter on a YOY basis. Is there any new customer addition, or it is more from a higher share of business from the existing customers? If you can throw some more light there.

Speaker #5: When should we expect that to come through for us this year? And second, on the clean energy side, we have seen very strong growth this quarter.

Speaker #5: On a year-over-year basis, is there any new customer addition, or is it more from a higher share of business from existing customers? If you can throw some light on this.

Speaker #4: Yeah. On the first piece, I mean, the full revenue has not started, but revenue has started for both the sectors, okay? For HVDC as well as semicon equipment.

Kunhamed Bicha: Yeah. On the first piece, the full revenue is not started, but revenue has started for both the sectors. Okay. For HVDC as well as semicon equipment. Revenue has started, but it'll gradually grow. It is not a switch on and off because there are multiple systems, multiple products. It's starting. Okay. It started this quarter, and we'll see the ramps in the following quarters. On your second part of your question, clean energy has been fluctuating for us over the years, and this has been a great quarter for that, and we will continue to see the growth. Certain quarters you may see clean energy up. That's why we are diversified. Certain quarters you may see the mobility up. Certain quarters, industrial. Industrial has always been up.

Speaker #4: Revenue has started, but it will gradually grow. It is not, you know, a switch on and off. And because we have multiple systems, multiple products, it's starting.

Speaker #4: Okay, it started this quarter, and we'll see the ramp in the following quarters. On the second part of your question, clean energy has been, you know, fluctuating for us over the years.

Speaker #4: And this has been a great quarter for that, and we will continue to see growth. But in certain quarters, you may see clean energy up.

Speaker #4: That's why we are diversified. Certain quarters, you may see the mobility up. Certain quarters, industrial. Industrial has always been up. Okay? So it's not that it's it could be since everything is growing and certain cut-ins and certain production happen at various time frames, so you will continue to see growth in all sectors.

Kunhamed Bicha: Since everything is growing and certain cut-ins and certain production happen at various time frames, you will continue to see growth in all sectors. What we are happy is that every sector is growing, except for communication, we added it.

Speaker #4: What we are happy about is that every sector is growing, except for communication—we added it.

Speaker #5: About it. And would you be able to share the US loss for this quarter? Have we already turned around, or where are we in terms of the plans?

Siddhartha Bera: Got it. Would you be able to share the US loss for this quarter? Have you already turned around or here where are we in terms of the plans?

Speaker #1: So, in terms of US manufacturing, we have reported a PAT loss of approximately ₹4 crore in Q1 FY27.

Suresh Veerappan: In terms of US manufacturing, we have reported a PAT losses of approximately INR 4 crores in Q1 FY27.

Speaker #5: Got it.

Siddhartha Bera: Got it.

Speaker #1: Because it has largely narrowed down. Two years ago, it was approximately around ₹14 crores. One year ago, it was around ₹9 crores in losses. And now it has narrowed down to ₹4 crores in losses.

Suresh Veerappan: It is largely narrowed down. Two years ago, it was approximately around INR 14 crores. One year ago, it was around INR 9 crores losses. Now it has narrowed down to INR 4 crores losses at PAT level.

Speaker #1: At patch level.

Speaker #5: Got it. Thanks a lot, sir. I'll come back in detail.

Siddhartha Bera: Got it. Thanks a lot, Sudarshan. I will come back in the queue.

Speaker #4: Thank you, Siddharth.

Kunhamed Bicha: Thank you, Sudarshan.

Speaker #3: Thank you. The next question comes from the line of Samit Sinha from Macquarie. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Ashwin Sinha from Macquarie. Please go ahead.

Operator: Thank you. The next question comes from the line of Ashwin Sinha from Macquarie. Please go ahead.

Speaker #2: Yes, thank you very much, and congratulations on another incredible quarter. I have a couple of questions here. KB, I was really happy to hear how you spoke about bolstering your operations and leadership.

Ashwin Sinha: Yes, thank you very much. Congratulations on another incredible quarter. I guess a couple of questions here. KB, I was really happy to see about how you spoke about bolstering your operations and leadership, because usually, when smaller companies grow at this pace, you've done a great job with execution. At some point things start to fall by the wayside. If you can just talk a little more, provide a little more color about what you're doing, what sort of leadership positions you're hiring for, I think that'll be really helpful. Secondly, historically, most of your products have been PCBA and box build. Do you think you have an opportunity to go into new product categories or you'd rather just service with these products? Because demand obviously is there, and you're executing on the pipeline.

Sameet Sinha: Yes, thank you very much. Congratulations on another incredible quarter. I guess a couple of questions here. KB, I was really happy to see about how you spoke about bolstering your operations and leadership, because usually, when smaller companies grow at this pace, you've done a great job with execution. At some point things start to fall by the wayside. If you can just talk a little more, provide a little more color about what you're doing, what sort of leadership positions you're hiring for, I think that'll be really helpful. Secondly, historically, most of your products have been PCBA and box build. Do you think you have an opportunity to go into new product categories or you'd rather just service with these products? Because demand obviously is there, and you're executing on the pipeline.

Speaker #2: Because usually, you know, when smaller companies grow at this pace—I mean, you're doing a great job with execution—but at some point, you know, things start to fall by the wayside.

Speaker #2: So if you could just talk a little more and provide a little more color about what you're doing, what sort of leadership positions you're hiring for.

Speaker #2: I think that would be really helpful. Secondly, you know, historically, most of your products have been PCBA and box build. Do you think you have an opportunity to go into new product categories, or would you rather just service with these products?

Speaker #2: Because, you know, demand obviously is there, and you're executing on the pipeline. Or maybe you'll tell me that, you know, coverage in aerospace and all have different new products.

Ashwin Sinha: Maybe you'll tell me that data coverage and aerospace and all have different new products. I'd like to know more about the SKUs that you have. Third question is, generally, your business, the H2 of the year, your business does better than the H1. With 50% growth in Q1, how should we think about the H2? I know the guidance implies it's kind of 25% growth in the next three quarters, if you can provide some clarity more around the H2 versus H1 dynamic. Thank you.

Sameet Sinha: Maybe you'll tell me that data coverage and aerospace and all have different new products. I'd like to know more about the SKUs that you have. Third question is, generally, your business, the H2 of the year, your business does better than the H1. With 50% growth in Q1, how should we think about the H2? I know the guidance implies it's kind of 25% growth in the next three quarters, if you can provide some clarity more around the H2 versus H1 dynamic. Thank you.

Speaker #2: So I'd like to know more about the SKUs that you have. And third question is, generally, your business, the second half of your, you know, of the year, your business does better than the first half.

Speaker #2: So, with 50% growth in Q1, how should we think about the second half? I know the guidance implies it's about 25% growth over the next three quarters.

Speaker #2: But if you can provide some clarity around the second half versus first half dynamic, thank you.

Speaker #4: Hi, Samit. Nice to talk to you again. So, if I missed out on any part of your questions, just, you know, just remind me once.

Kunhamed Bicha: Hi, Samit. Nice to talk to you again. If I missed out any part of your questions, just remind me once. The first part was leadership. See, as we grow each of our divisions and capabilities and verticals, we need leadership. These are growing from INR 20 to INR 100 million, however you want to look at it. We have taken a dedicated or a very focused approach to get leadership. I believe the first level of leadership is there already with our CEO, CFO, CSO, we're adding probably five or six new candidates at the VP level to either lead a BU or lead a capability. Okay? That work has already started. We're trying to plan for the next three years of growth, at least, for who are the right leaders.

Speaker #4: The first part was the leadership. See, as we grow, each of our divisions and capabilities, and verticals, we need leadership. These are growing from, you know, $20 million to $100 million, however you want to look at it.

Speaker #4: So we have taken a dedicated, or a very focused, approach to get leadership. I believe the first level of leadership is already there, with our CEO, CFO, and CSO.

Speaker #4: And we're adding, you know, probably five or six new candidates at the VP level to either lead a BU or lead a capability. Okay?

Speaker #4: And that work has already started. So, we're trying to plan for the next three years of growth, at least. Who are the right leaders?

Speaker #4: The same thing we did three years back when we started with the C-levels to get the company going in the right direction. And so we are, you know, looking for the right candidates.

Kunhamed Bicha: The same thing we did three years back when we started with the C-levels to get the company going the right direction. We are looking for the right candidates. We're not going to rush to it because that candidate is very important to us. Okay. Yeah. You want to add something.

Speaker #4: We may be—we're not going to rush to it, because that candidate is very important to us. Okay? Yeah. So, do you want to add something?

Shriram Vijayaraghavan: Yeah

Kunhamed Bicha: Sridhar?

Speaker #2: Yeah, yeah. Thanks, KB. Hey Samit, so a couple, three pieces of fundamental building blocks, right, of growth. One is people. Second, I think, what KB touched upon—processes, internally.

Shriram Vijayaraghavan: Yeah. Thanks, KB. Hey, Samit. Couple three pieces of fundamental building blocks, right, of growth. One is people. Second, I think what KB touched upon are processes internally. Third is automation, right? The focus is to build the capability in all three areas, and that work that's underway. I think KB's given you the highlights on the leadership. I just want to touch.

Speaker #2: And the third area is automation, right? So the focus is to build the capability in all three areas, and that work is underway. I think KB has given you the highlights on the leadership.

Speaker #2: I just want to touch base and make sure that, you know, it's across all three areas.

Kunhamed Bicha: Make sure that it's across all three areas. The second question, if you could remind me, Sumit. Yeah. It was more around products. Historically, you've done PCBA box build. Okay. Got it. We are vertically integrated. That's why you see our box build move from, what, 43% to 59% in a year or so. We are building a lot more metal, we're building a lot more cables, we're building a lot more plastics. We're building a lot more magnetic to get into our own final product, and that's why you see a box build ratio going up. Saying that, there's one or two areas, actually one which we may announce, I don't want to preset that. We will enter into one area which is well within our capability. That I think in the next two quarters, we'll make that announcement.

Shriram Vijayaraghavan: Make sure that it's across all three areas.

Speaker #4: And the second question, if you could just remind me, Samit.

Kunhamed Bicha: The second question, if you could remind me, Sumit.

Speaker #2: Yeah, it was more around products. So, you know, historically, you've done PCBA, box build.

Sameet Sinha: Yeah. It was more around products. Historically, you've done PCBA box build.

Speaker #4: Okay, okay. Got it, got it. So we are vertically integrated, so that's why you see our box build move from, you know, what, 43% to 59% in a, you know, year or two.

Kunhamed Bicha: Okay. Got it. We are vertically integrated. That's why you see our box build move from, what, 43% to 59% in a year or so. We are building a lot more metal, we're building a lot more cables, we're building a lot more plastics. We're building a lot more magnetic to get into our own final product, and that's why you see a box build ratio going up. Saying that, there's one or two areas, actually one which we may announce, I don't want to preset that. We will enter into one area which is well within our capability. That I think in the next two quarters, we'll make that announcement.

Speaker #4: So, we are building a lot more metal. We're building a lot more cables. We're building a lot more plastics. We're building a lot more magnetics.

Speaker #4: To get into our own final product. And that's why you see our box build ratio going up. Saying that, you know, there are one or two areas—actually, one—which we may announce. You know, I don't want to reset that.

Speaker #4: We will enter into one area, which is well within our capability, and that, I think, in the next two quarters, we will make that announcement.

Speaker #4: So, there's one area we'll add because we see a lot of opportunity in that, and we'll add to our box build capabilities.

Kunhamed Bicha: There's one area we'll add, because we see a lot of opportunity in that, and will add to our box build capabilities. Sumit. Just to add to that, we are getting into newer industrial verticals as well as newer geographies like Europe, Southeast Asia. In terms of increasing our target market, the work is already underway, and we will start seeing the results of that in the coming quarters. Got it. Last question about the guidance. Sumit, you know we are conservative. The problem we have, to be honest, is when we get these into these large programs, for example, it may cut in in February of next year, okay? The customer may delay it to April. We're trying to be conservative. If it cuts it in February, everything's well and good. Okay. If it cuts it in April, it's a next year thing.

Kunhamed Bicha: There's one area we'll add, because we see a lot of opportunity in that, and will add to our box build capabilities. Sumit.

Speaker #1: Just to add to that, we are getting into new year, newer industrial verticals, as well as newer geographies, like Europe and Southeast Asia. So, in terms of increasing our target market, the work is already underway.

Suresh Veerappan: Just to add to that, we are getting into newer industrial verticals as well as newer geographies like Europe, Southeast Asia. In terms of increasing our target market, the work is already underway, and we will start seeing the results of that in the coming quarters.

Speaker #1: And we will start seeing the results of that in the coming quarters.

Speaker #2: Got it. And last question about guidance.

Sameet Sinha: Got it. Last question about the guidance.

Speaker #4: Samit, you know we are conservative. The problem we have, to be honest, is, you know, when we get this into these large programs, for example, it may cut in in February of next year.

Kunhamed Bicha: Sumit, you know we are conservative. The problem we have, to be honest, is when we get these into these large programs, for example, it may cut in in February of next year, okay? The customer may delay it to April. We're trying to be conservative. If it cuts it in February, everything's well and good. Okay. If it cuts it in April, it's a next year thing.

Speaker #4: Okay? Or it could, you know, customer may delay it to April. So we're trying to be conservative. So if it comes, if it comes in February, everything is well and good.

Speaker #4: Okay? If it cuts off in April, it's a next year thing. But look at us from a three-year lens, right? Like we said, our business is not quarter to quarter.

Kunhamed Bicha: Look at us from a 3-year lens, right? Like we said, our business is not quarter to quarter because our customers look at us over a multi-year period and are we a good partner over the next 10 years, right? We're trying to kind of get that all together and try to give you a feel of what we can be. In a 3-year period, as we have done in the last time, we said we'll double within instead of 3 years, within 2 years. The aspiration is always to do it faster. You need to look at us from that rather than what's going to happen next quarter or the following quarter. Got it. Thank you very much. All the best. You're welcome, Sumit. Thank you.

Speaker #4: Because our customers look at us over a multi-year period. And, are we a good partner over the next 10 years, right? So, but just, you know, we're trying to kind of get that all together and try to give you a feel of what we can be.

Speaker #4: But in a three-year period, as we have done in the last time, we said we’ll double. We did it instead of in three years, within two years.

Speaker #4: But our aspiration is always to do faster. So you need to look at us from that perspective, rather than, you know, what's going to happen next quarter or the following quarter.

Speaker #2: Got it. Thank you very much. All the best.

Sameet Sinha: Got it. Thank you very much. All the best.

Speaker #4: You're welcome, Samit. Thank you.

Kunhamed Bicha: You're welcome, Sumit. Thank you.

Speaker #1: Thank you. The next question comes from the line of Balasubramaniam from Arihant Capital. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Bala Subramanian from Arihant Capital. Please go ahead.

Operator: Thank you. The next question comes from the line of Bala Subramanian from Arihant Capital. Please go ahead.

Speaker #3: Good evening, sir. Thank you so much for the opportunities. A follow-up on the previous participant and the guidance side. Sir, we are doing ₹50 to ₹60 crore annual capex, with a 10x of asset, and is it right to understand that every year this gives ₹500 to ₹600 crore additional revenue?

Bala Subramanian: Good evening, sir. Thank you so much for the opportunity. A follow-up on the previous participant on the guidance side. Sir, we are doing INR 50 to 60 crore annual CapEx, with 10x of asset turn. It's a right way to understand every year INR 500 to 600 crore additional revenue. I think if you're adding that, it will come nearly INR 3,300 to 3,400 crore top line range by FY29. Secondly, these sunrise sectors like clean energy and aerospace and defense, and these also are same kind of 10x asset turn?

Speaker #3: I think if you're adding that, it will come to nearly ₹3,100 to ₹3,400 crore top-line range by FY29. And secondly, these sunrise sectors, like clean energy and aerospace & defense, are also seeing the same kind of 10x asset and...

Speaker #1: Hi Suresh, you're Balak. So, firstly, on the capex side, last year we did a capex of ₹56 crores, and in Q1 it is ₹16 crores.

Kunhamed Bicha: Hi, Suresh here. Bala. Firstly, on the CapEx side, last year we did a CapEx of INR 56 crore and Q1 at INR 15 crore. Like what KB highlighted in his opening remarks, we are looking at expanding our manufacturing footprint in Chennai. Whenever that happens, we will do it in a modular fashion, and that will involve incurring additional CapEx to an extent there. Having said that, we are focused on capital efficiency. If you look at our ROCEs couple of years back, approximately two and a half years back, it was around 10%. Today, it is 23.4%. Our goal is to improve that even further. Every new asset, new plant that comes into picture, it will take its own timeframe for it to reach its optimum capacity in terms of utilization.

Suresh Veerappan: Hi, Suresh here. Bala. Firstly, on the CapEx side, last year we did a CapEx of INR 56 crore and Q1 at INR 15 crore. Like what KB highlighted in his opening remarks, we are looking at expanding our manufacturing footprint in Chennai. Whenever that happens, we will do it in a modular fashion, and that will involve incurring additional CapEx to an extent there. Having said that, we are focused on capital efficiency. If you look at our ROCEs couple of years back, approximately two and a half years back, it was around 10%. Today, it is 23.4%. Our goal is to improve that even further. Every new asset, new plant that comes into picture, it will take its own timeframe for it to reach its optimum capacity in terms of utilization.

Speaker #1: But like what KB highlighted in his opening remarks, we are looking at expanding our manufacturing footprint in Chennai. So whenever that happens, we will do it in a modular fashion.

Speaker #1: And that will involve incurring additional capex to an extent there. But having said that, we are focused on capital efficiency. If you look at our ROCs, a couple of years back—approximately two to two and a half years back—it was around 10%.

Speaker #1: Today, it is 23.4%. Our goal is to improve that even further. But every asset—every new asset, new plant—that comes into the picture will take its own time frame to reach its optimum capacity in terms of utilization.

Speaker #1: So it will gradually get to that, but our focus is to improve our ROCE.

Kunhamed Bicha: It will gradually get to that, our focus is to improve our ROCE. I'll add to this. As we go into these bigger box build solutions, space is a premium. We are building up land and buildings before we actually put machines, so that we are comfortable with that, then we'll add the machines when required.

Suresh Veerappan: It will gradually get to that, our focus is to improve our ROCE.

Speaker #4: And I'll add to this, yeah, as we go into this bigger box build solutions, space is at a premium. So we are building up, you know, land and buildings before we actually put in machines.

Kunhamed Bicha: I'll add to this. As we go into these bigger box build solutions, space is a premium. We are building up land and buildings before we actually put machines, so that we are comfortable with that, then we'll add the machines when required.

Speaker #4: So that, you know, we are comfortable with that. And then we'll add the machines when required. Could you answer the question, Mr. Subramaniam?

Bala Subramanian: Okay.

Kunhamed Bicha: Is your question answered, Mr. Subramanian?

Speaker #3: Yes, sir. Around the qualitative perspective, it's been answered. And, sir, my second question — I think we have, in Q1, nearly 50% top-line growth, and the order book also increased by nearly 23%.

Bala Subramanian: Yes, sir. On the qualitative perspective, it's been answered. Sir, my second question, I think we have in Q1 nearly 50% top line growth. Order book also increased nearly 23%. If you look at our working capital days, it came down to 142 to 117. Generally, with growing order book and revenue, it leads to working capital strain. For example, building inventory for new programs. I'm just trying to understand how we managed to improve the working capital days and how do you look at in coming years.

Speaker #3: But if you look at our working capital, at least it's come down from 142 to 117. So generally, with a growing order book and revenue, it leads to working capital strain.

Speaker #3: For example, building inventory for new programs. So I'm just trying to understand how we managed to improve the working capital days, and how you look at the coming years.

Speaker #1: Thank you for that, Balak. So that was a consistent and continuous effort over the last two to three years on each bucket: inventory, receivables, and payables.

Kunhamed Bicha: Thank you for that, Bala. That was a consistent and continuous effort over the last two, three years on each bucket, inventory, receivables, and payables. Inventory days, it actually improved to 94 days from 104 days. Same is the case with the receivable and payable.

Suresh Veerappan: Thank you for that, Bala. That was a consistent and continuous effort over the last two, three years on each bucket, inventory, receivables, and payables. Inventory days, it actually improved to 94 days from 104 days. Same is the case with the receivable and payable.

Speaker #1: Inventory days actually improved to 94 days from 104 days. The same is the case with receivables and payables. But again, as we said in the opening remarks and in previous quarters, we also have some new programs running in parallel.

Suresh Veerappan: Again, what we said in the opening remarks and in the previous quarters, we are also having some new programs going parallelly. For new programs, we may have higher networking capital at the start, and we will find our efficiency over a period of time. For existing businesses, we would have already found our efficiency in networking capital. Overall, what was our guided range in the previous quarters were around 120 to 130 days. We are well within that range.

Speaker #1: So for new programs, we may have higher net working capital at the start, and we will find our efficiency over a period of time. For existing businesses, we would have already found our efficiency in net working capital.

Speaker #1: But overall, our guided range in the previous quarters was around 120 to 130 days, so we are well within that range.

Speaker #3: Okay, sir. Sir, my last question—I think yours last—it's around ₹4 crore. In this quarter last year, it was ₹9 crore. So I'm trying to understand what is the minimum revenue run rate required to achieve break-even.

Bala Subramanian: Okay, sir. Sir, my last question, I think US loss, it's around INR 4 crore in this quarter. Last year it was INR 9 crore. I'm trying to understand what is the minimum revenue run rate required to achieve a breakeven, whether we can expect by Q3 or Q4.

Speaker #3: Whether we can expect by Q3 or Q4.

Speaker #1: We have not given any particular quantum at which we will reach the break-even. But what you have highlighted in the earlier calls also is, by the end of this fiscal year, we would like to see a steady state EBITDA break-even.

Suresh Veerappan: We have not given any particular quantum at which we will reach the breakeven. What we have highlighted in the earlier calls also is, by the end of this fiscal year, we would like to see a steady state EBITDA breakeven, and then following that, a PAT breakeven. What I would like to highlight here, Bala, is the important way to look at our US businesses, US manufacturing operations is, that is our plan to reel in the customers, make the customers comfortable, and then as it ramps up, transition it to India manufacturing. It is our beachhead from that perspective. Hope that answered the question, Bala.

Speaker #1: And then following that, a bad break-even. But what I would like to highlight here, Balak, is the important way to look at our US businesses, US manufacturing operations, is that that is our plan to reel in the customers, make the customers comfortable.

Speaker #1: And then, as it ramps up, we will transition it to India manufacturing. So, it is our beachhead from that perspective. Hope that answered the question well.

Speaker #3: Okay, sir. Thank you.

Bala Subramanian: Okay, sir. Thank you.

Speaker #1: Thank you.

Suresh Veerappan: Thank you.

Speaker #2: Thank you. The next question comes from the line of Praveen Sahay from PL Capital. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Praveen Sahay from PL Capital. Please go ahead.

Operator: Thank you. The next question comes from the line of Praveen Sahay from PL Capital. Please go ahead.

Speaker #3: Yeah. Hi. Thank you for the opportunity. My first question is related to the box build. Over the last four quarters, we have continuously seen an increase in the contribution from the box build.

Praveen Sahay: Yeah. Hi. Thank you for the opportunity. My first question is related to the box build, as from the last four quarter, we are continuously seeing the increase in the contribution from the box build. Also you had highlighted the way forward also, we will see this trend continue. How you are seeing the gross margin profile with this box build contribution to increase the way forward?

Speaker #3: And also, you had highlighted the way forward. We will see this trend continue. How are you seeing the gross margin profile with these box build contributions increasing going forward?

Speaker #4: Yeah. See, we are always, you know, our business model is, you know, to get to the box build, right? We may start with the PCB.

Kunhamed Bicha: Yeah. See, always our business model is to get to the box build, right? We may start with the PCB, we may start with the metals, we may start with the cable. Our goal two to three years from where we start with the customer is to do the whole box if he doesn't give it to us in the beginning. Of course, the gross margins are better in box build. Okay. It takes time for the gross margins to improve. It's over a period of time. It's not as soon as you start. When the program starts, the gross margin may be a little lower. Okay. Over a period of time, it does increase as the processes and our quantum buys help. The other piece is, with the tariffs, we're still maintaining gross margins. Okay. It does have an effect.

Speaker #4: We may start with the metals. We may start with the cable. But our goal two to three years, from where we start with the customer, is to do the whole box.

Speaker #4: If he doesn't give it to us in the beginning—of course, the gross margins are better in box build. Okay? And some of these, you know, it takes time for the gross margins to improve.

Speaker #4: It's over a period of time. It's not as soon as you start. So when the program starts, the gross margin may be a little lower.

Speaker #4: Okay. But over a period of time, it does increase as we process, and our quantum buys help. The other piece is, you know, with the status, we are still maintaining the gross margins.

Speaker #4: Okay. It does have an effect. Though not a big effect, it does have an effect. So in spite of that, we have maintained the gross margins.

Kunhamed Bicha: Though not a big effect, it does have an effect. In spite of that, we have maintained the gross margins.

Speaker #3: So, if you'll maintain this, you know, the contribution of 60%, we may see an improvement in the gross margin. Is that a fair understanding?

Praveen Sahay: If you'll maintain the contribution of 60%, we may see the improvement in the gross margin. Is it fair understanding?

Speaker #1: See, the the way to understand it is, if you ask do we do we anticipate our box build percentage to go up, the answer is yes.

Suresh Veerappan: See, the way to understand it is, if you ask do we anticipate our box build percentage to go up? The answer is yes, because that is one of our strength point, building complex boxes. On one side you will have new programs which will start maybe at a lower percentage, and other side you will have existing business which may be at a higher percentage. What you see as a 33% to 35% is a blended mix of both of that. I think it is best to assume and estimate a gross margin percentage of 33% to 35% to continue.

Speaker #1: Because that is one of our strengths—building complex boxes. But on one side, we will have new programs, which will start maybe at a lower percentage.

Speaker #1: And on the other side, you will have existing business, which may be at a higher percentage. What you see as 33% to 35% is a blended mix of both of those.

Speaker #1: So, I think it is best to assume and estimate a gross margin percentage of 33 to 35 percent to continue.

Speaker #3: Right. Next question is related to the order book. Out of your ₹2,200-odd crore, can you give some indication as to how the mix of segments has been?

Praveen Sahay: Okay. Next question is, sir, related to the order book. Out of your INR 2,200 crore, can you give some indication that how has been mix of segments?

Speaker #4: So, it's broadly based on the segments and the growth or the percentages we have kind of declared. It's across verticals. In certain quarters, some may be higher than the others.

Kunhamed Bicha: It's broadly based on the segments and the growth of the percentages we have kind of declared. It's across verticals. Some certain quarters, some may be higher than the others. We always aspire to be around 25%. Industrial right now is around 30% to 32%. Our total order book, if you look at it, we only look at a three-year window. We have orders from three to 15 years. We don't count that. That itself is INR 3,465 crores. In the short term, which is the order book for the next 12 months or so, it's INR 2,208 crores. We're very comfortable on what we need to do in the near term. We have long-term contracts, which we don't count in this one.

Speaker #4: And we always aspire to be around 25%. But industrial right now is around 30% to 32%. Our total order book, if you look at it, we only look at the three-year window.

Speaker #4: We have orders from three to 15 years. We don't count that. That itself is 3,465 crores. And in the short term, which is the order book for the next 12 months or so, it's 2,208 crores.

Speaker #4: So, we're very comfortable with what we need to do in the near term. And we have long-term contracts, which we don't count in this one.

Speaker #3: All right. Lastly, one clarification—so in the international business, which now the U.S. is 60% of your business, is that majority from the Clean and the Mobility businesses?

Praveen Sahay: All right. Lastly, one clarification. In the international business, which now the US is 60% of your business, is that majority is from the clean and the mobility businesses?

Speaker #4: No, it's across. See, a lot of the clean is done in the US, but the rest of it is done in India.

Kunhamed Bicha: No, it's across. A lot of the clean is done in the US, but the rest of it is done in India, a lot of it is industrial. We don't have rail in the US. Aero, industrial, communications, as well as clean. A big chunk is there because of the subsidies in the US. Again, the sub parts of these US build is done in India. Okay? It's a mix.

Speaker #4: So a lot of it is industrial. We don't have rail in the US. Aero-industrial communications, as well as clean—you know, a big chunk is there because of the subsidies in the US.

Speaker #4: But again, the sub-sub parts of these US builds are done in India. Okay. So, it's a mix.

Speaker #1: So, Praveen, even in the US, we have well-balanced and diversified growth across verticals.

Suresh Veerappan: I mean, even in US, we have a very balanced and diversified growth across verticals.

Speaker #3: Okay, got it. Thank you. All the best.

Praveen Sahay: Okay. Got it. Thank you, sir. All the best.

Speaker #1: Thank you.

Speaker #4: Thank you, Praveen.

Kunhamed Bicha: Thank you, Praveen.

Speaker #2: Thank you. The next question comes from the line of Viprav Srivastava from Philip Capital. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Viprav Srivastava from PhillipCapital. Please go ahead.

Operator: Thank you. The next question comes from the line of Viprav Srivastava from PhillipCapital. Please go ahead.

Vibhav Srivastava: Hi, sir. Good evening. Great set of results. Just two quick questions. Firstly, on the order book side. For the last three quarters, your order book has been hovering around INR 2,000 crore. This quarter also it's around INR 2,200 crore. In that sense, given that your revenue growth is exceeding order book growth, any reasons for that? Why is this order book growth slow or am I missing something?

Vipraw Srivastava: Hi, sir. Good evening. Great set of results. Just two quick questions. Firstly, on the order book side. For the last three quarters, your order book has been hovering around INR 2,000 crore. This quarter also it's around INR 2,200 crore. In that sense, given that your revenue growth is exceeding order book growth, any reasons for that? Why is this order book growth slow or am I missing something?

Speaker #3: Hi, sir. Good evening. Great set of results. Just two quick questions. Firstly, on the order book side: for the last three quarters, your order book has been hovering around ₹2,000 crores.

Speaker #3: This quarter also, it's around 2,200. So, I mean, in that sense, given that your revenue growth is exceeding order book growth, are there any reasons for that?

Speaker #3: Why is this order book growth slow and or or am I missing something? So yeah.

Speaker #4: No. So if you look at it, right, it's it's always consistent. And it's it's growing. But it's year to year, it's grown 23.4 percent.

Kunhamed Bicha: No. If you look at it, right, it's always consistent and it's growing. Year to year it's grown 23.4%. Okay. We are very well covered for the next 12 months to 36 months. Okay? In the sense of what we want to achieve, if you look at it, we are saying we are going to do INR 3,200 crore in three years. More or less that order book is covered, right? If you look at it from INR 2,208 crore in 12 months and INR 1,256 crore in 14 months to 36 months. Again, we have five-year contracts, we have 10-year contracts. It's easy to add them, it's not the right message to give that these orders are there for years, right?

Speaker #4: Okay. The so we are very well covered for the next 12 months to 36 months. Okay. In the sense of what we want to achieve, if you look at it, you know, we are saying we're going to do 3,200 crores in three years.

Speaker #4: More or less, that order book is covered, right? If you look at it from if you look at it from 2,208 crores 1,256 crores in 12 months to 36.

Speaker #4: 14 months to 36 months. And again, we have five-year contracts, we have 10-year contracts. It's easy to add them, but it's not the right message to give—that, you know, these orders are there for years, right?

Speaker #4: So, we like to keep it in this range, which is 14 months to 36 months, so that you get a realistic perspective rather than a hype perspective of, you know, "I got orders worth so much."

Kunhamed Bicha: We would like to keep it in this range, which is 14 months to 36 months, so that you get a realistic perspective rather than a hype perspective of I got orders worth so much. Some of these, if you multiply this into 10 years, what you do in one year, it's a huge number. We do not want to put that out.

Speaker #4: Because some of the if you multiply this into 10 years, what you do in one year, it's it's a it's a huge number. We don't want to put that out.

Speaker #1: Another important perspective to have on this is that some of the new programs may be at the pilot stage. And so, whenever they move from the pilot stage to ramp up production, the larger sum of orders will come and fall there.

Suresh Veerappan: Another important perspective to have on this is some of the new programs may be on pilot stage, whenever they move from pilot stage to ramp-up production, the larger sum of orders will come in for them. For us, the beneficial advantage, what we see in our business is the annuity sale of orders, what we receive. The long-term nature of the life cycle of the products, as well as the customer relationship with us. Hope that answers the question, Viprav.

Speaker #1: But for us, the benefit and advantage that we see in our business is the annuity sale of orders that we receive, the long-term nature of the lifecycle of the products, as well as the customer relationship with us.

Speaker #1: Hope that answered the question, Viprav.

Speaker #3: Oh, sure, sir. So that's that's the quick follow-up on this. So given that your again, please correct me if I'm wrong. Given that your current order book is around 2,200 crores and your average execution period is 14 months, so so that that is very close to what the guidance you have given.

Vibhav Srivastava: Sure, sir. Just a quick follow-up on this. Again, please correct me if I am wrong. Given that your current order book is around INR 2,200 crore and your average execution period is 14 months, that is very close to what the guidance you have given. Is this understanding correct?

Vipraw Srivastava: Sure, sir. Just a quick follow-up on this. Again, please correct me if I am wrong. Given that your current order book is around INR 2,200 crore and your average execution period is 14 months, that is very close to what the guidance you have given. Is this understanding correct?

Speaker #3: So is this understanding correct?

Speaker #1: See, some.

Suresh Veerappan: See.

Speaker #4: You already finished one quarter, right? So you need to...

Kunhamed Bicha: We already finished Q1, right? You need to.

Speaker #1: Yeah. See, the way to look at it is, our order book is executable over an average period of 14 months. So for some customers, it may be three months.

Suresh Veerappan: Yeah. See, the way to look at it is our order book is executable over an average period of 14 months. For some customers, it may be three months, some customers it may be six months, some customers it may be 18 months. It is not a straightforward straight line number over there. Yeah, you can have this assumption over there.

Speaker #1: Some customers, it may be six months. Some customers, it may be 15 months. So it's not a straightforward straight-line number over there. But yeah, you can have that fare assumption over there.

Speaker #3: Fair enough, sir. Last question from my end. On the clean energy side—so, obviously, that has seen very rapid growth in Q1.

Vibhav Srivastava: Fair enough, sir. Last question from my end on the clean energy side. Obviously that has seen a very rapid growth in Q1. Given going forward for FY27 and FY28, obviously, since the IRA incentives for solar projects in US ends on 31 December 2027. You expect such growth to continue for next couple of years, or you plan to offset that by onboarding new clients, new projects? Any thoughts on that?

Vipraw Srivastava: Fair enough, sir. Last question from my end on the clean energy side. Obviously that has seen a very rapid growth in Q1. Given going forward for FY27 and FY28, obviously, since the IRA incentives for solar projects in US ends on 31 December 2027. You expect such growth to continue for next couple of years, or you plan to offset that by onboarding new clients, new projects? Any thoughts on that?

Speaker #3: So you mean going forward for FY 27 and 28, obviously since the IRA incentives for solar projects in US ends on December 31, 27, so I mean, you expect such growth to continue for next couple of years?

Speaker #3: Or do you plan to offset that by onboarding new clients or new projects? Any thoughts on that?

Speaker #4: So, Sreeram here. Just a quick point. The subsidies and the support continue until 2032 because this is, you know, storage solutions.

Shriram Vijayaraghavan: Shriram here. Just a quick point here. The subsidies or the support continues until 2032 because this is storage solution. These have a longer sort of subsidy support in the US at this point. Suresh, and the rest of you.

Speaker #4: So, these have a longer, you know, sort of subsidy support in the US at this point. Suresh, have the rest of it.

Speaker #1: So Viprav, like we have discussed in the last four or five quarters, we are not in the solar panel business. We are in the energy storage solutions business.

Suresh Veerappan: Viprav, like we have discussed in the last four, five quarters, we are not in a solar panel business. We are in the energy storage solutions business. That is number one. Number two, if you look at the growth across verticals, industrials has grown by 52%, aero has grown by 47%, rail has grown by 37%, medical has grown by 15%. The growth is across verticals. It's just that in some quarters, one vertical may have a lumpy growth and it goes on like that. For us, the comfort from where we derive is the long-term annuities trail of business. That's the kind of business what we are targeting.

Speaker #1: That is number one. And number two, if you look at the growth across verticals, Industrials has grown by 52 percent. Aero has grown by 47 percent.

Speaker #1: Rail has grown by 37%. Medical has grown by 15%. So, the growth is across verticals. It's just that in some quarters, one vertical may have lumpy growth, and it goes on like that.

Speaker #1: But for us, the comfort, where we derive it from, is the long-term annuity sale of business. So that's where—it's a kind of business that we are targeting.

Speaker #3: Oh, sure, sir. Just a quick follow-up on what Sreeram sir said. Sir, you rightly mentioned that battery energy storage incentives are till 2032. But as far as I know—again, please correct me if I'm wrong—the majority of battery installations in the US happen along with solar.

Vibhav Srivastava: Sure, sir. Just a quick follow-up on what Shriram sir said. Sir, you rightly mentioned that battery energy storage incentive is till 2032, as far as I know, again, please correct me if I'm wrong, majority of battery installations in US happens along with solar. It's not in isolation. That's what the data says. Even if the incentives continue till 2032, if a panel is not being installed, what are your comments on the future of the battery energy storage industry?

Vipraw Srivastava: Sure, sir. Just a quick follow-up on what Shriram sir said. Sir, you rightly mentioned that battery energy storage incentive is till 2032, as far as I know, again, please correct me if I'm wrong, majority of battery installations in US happens along with solar. It's not in isolation. That's what the data says. Even if the incentives continue till 2032, if a panel is not being installed, what are your comments on the future of the battery energy storage industry?

Speaker #3: It's not in isolation; that's what the data says. So, even if the incentives continue until 2032, if a panel is not being installed, what are your comments on the future of the battery energy storage industry?

Speaker #4: We're happy to answer this offline, yeah. There's a method to this situation. We're happy to take this offline and—

Kunhamed Bicha: We're happy to answer this offline. There's a method to this situation. We're happy to take this offline.

Shriram Vijayaraghavan: We're happy to answer this offline. There's a method to this situation. We're happy to take this offline.

Vibhav Srivastava: Sure.

Vipraw Srivastava: Sure.

Kunhamed Bicha: It's quite complicated.

Shriram Vijayaraghavan: It's quite complicated.

Suresh Veerappan: For us, over the last 2 years, even this vertical has grown along with all the other verticals.

Speaker #1: Years, even with vertical, has grown along with all the other verticals.

Speaker #3: Sure, sir. Thank you. No worries. Thank you.

Vibhav Srivastava: Sure, sir. Thank you. No worries. Thank you.

Vipraw Srivastava: Sure, sir. Thank you. No worries. Thank you.

Speaker #1: Thank you, Viprav.

Suresh Veerappan: Thank you, Viprav.

Speaker #2: Thank you. The next question comes from the line. Of Bhavik Mehta from JP Morgan. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Bhavik Mehta from J.P. Morgan. Please go ahead.

Operator: Thank you. The next question comes from the line of Bhavik Mehta from J.P. Morgan. Please go ahead.

Speaker #3: Hi, thank you. Just one question. Again, going back to the guidance—obviously, after a very strong Q1, one might have assumed that the guidance would have been upgraded to at least more than 30%.

Bhavik Mehta: Hi. Thank you. Sir, just one question again. Going back to the guidance, obviously after a very strong Q1, one would have assumed that the guidance would have been upgraded to at least more than 30%. Given the range is 26% to 30% right now, just trying to understand what are the various scenarios you are baking into the guide. Is this new guide like the worst possible outcome? Even if everything goes wrong, you could still deliver on this guidance, and hence this is like the worst case where assume, and there could be some upside to it if the other projects what you are hoping to convert comes through.

Speaker #3: But given the range is more 26 to 30 percent right now, I'm just trying to understand what are the various scenarios you are baking into the guide.

Speaker #3: Is this new guide like the worst possible outcome you even if everything goes wrong, you could still deliver on this guidance and hence this is like the worst case to assume and there could be some upside to it if if the other players what you are hoping to convert, you know, comes through.

Speaker #4: So Bhavik, this is Kunamat. The way we look at this, you know, I know everybody loves quarter to quarter. But as a business, when we plan, we plan on a three-year horizon.

Kunhamed Bicha: This is Bhavik, this is Kunal. The way we look at this, I know everybody loves quarter to quarter, but as a business, when we plan, we plan on a 3-year horizon. That's what we try to deliver. Okay? Some quarters may be huge, some quarters will be lower. Saying that, we are conservative. To answer your question, we are conservative. Some of the reasons are when these new projects will kick in into volume, right? Like I explained before, it could be in February of this year or it could be in April of next year. It is 2 months. It doesn't matter to the customer, but it does matter to us. We do have some conservatism in this, and that's what we are comfortable with, to be honest, rather than go out with flying numbers and chase that.

Speaker #4: And that's what we try to deliver, okay? Some quarters may be huge, some quarters will be lower. But, saying that we are conservative—to answer your question—we are conservative.

Speaker #4: We don't want because some of the reasons of when these new projects will kick in into volume, right? Like I explained before, it could be, you know, in February of this year or it could be in April of next year.

Speaker #4: It's two months. It doesn't matter to the customer, but it does matter to us. So we do have some conservatism in this, and that's what we are comfortable with, to be honest, rather than go out with flying numbers and chase that, you know.

Speaker #4: And we have demonstrated that in the last seven or eight quarters, you know.

Kunhamed Bicha: We have demonstrated that in the last 7, 8 quarters.

Speaker #1: To add to that, Bhavik Suresh here, to add to that, the kind of new programs what we have gotten, whether it is semiconductor acute point or in the industrial sector or in the power vertical or in terms of new geography, getting into Southeast Asia or into Europe, that is an exciting phase for us because it it may not be fully reflected in the P&L today, but it is there either as a pipeline or a proto or waiting to be into a waiting to get into a commercial ramp perspective.

Suresh Veerappan: To add to that, Bhavik, Suresh here. To add to that, the kind of new programs, what we have gotten, whether it is semiconductor equipment or in the industrial sector or in the power vertical or in terms of new geography, getting into Southeast Asia or into Europe, that is an exciting place for us because it may not be fully reflected in the P&L today. It is there either as a pipeline or a proto or waiting to get into a commercial ramp-up for setup.

Speaker #4: So Bhavik, just to echo what Suresh said, I think we have never been this excited about the possibilities. It may not show in the P&L.

Kunhamed Bicha: Bhavik, just to kind of echo on what Suresh said, I think we have never been this excited on the possibilities. It may not show in the P&L. Okay? The type of products which are coming in and the type of geographies it's coming in. At least, in 25 years of doing this, I've not seen that. Okay? Long term, we are very Midterm and long term, we are very positive.

Speaker #4: Okay? The type of products which are coming in and the type of geographies that's coming in. At least, you know, in 25 years of doing this, I've not seen that.

Speaker #4: Okay? So we are, on a long-term, we are very, very—the mid-term and long-term—we are very, very positive.

Speaker #3: Okay. Got it. That's helpful. Thank you.

Bhavik Mehta: Okay, got it. That's helpful. Thank you.

Speaker #1: Thank you.

Speaker #4: Thank you, Bhavik.

Suresh Veerappan: Thank you.

Kunhamed Bicha: Thank you, Bhavik.

Speaker #2: Thank you. The next question comes from the line of Archit Shah from 361 Capital. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Archit Shah from 360 ONE Mutual Fund. Please go ahead.

Operator: Thank you. The next question comes from the line of Archit Shah from 360 ONE Mutual Fund. Please go ahead.

Speaker #3: Oh, thank you for the opportunity. And sir, congratulations for the good set of results. Sir, just one question that the growth that we are seeing in the 40 percent growth and the guidance that we are giving, so is this fundamental question that is there any split or is there is there a, you know, there are pricing growth because of the components price that have gone, you know, have increased so much.

Archit Shah: Thank you for the opportunity. Sir, congratulations for the good set of results. Sir, just one question that the growth that we are seeing, the 40% growth and the guidance that we are giving. Just a fundamental question that, is there any split or is it a pricing growth because of the components price that have increased so much? Tomorrow, if they correct or let's say if this will remain stable, will our growth remain the same? Will we still be able to beat the guidance that we are doing right now?

Speaker #3: And, like, tomorrow, if they correct, or let's say if they remain stable, will the growth remain the same? Will we still be able to beat the guidance that we are giving right now?

Speaker #1: Hi, Suresh Shah. Our last eight quarters' average revenue growth is 46 percent. And over the quarters, across verticals and geographies, this growth has been achieved.

Suresh Veerappan: Hi, Suresh here. Our last 8 quarters' average revenue growth is 46%. Over the quarters, across verticals, across geographies, this growth has been reached. Even now, if you look at this quarter, it is well-diversified in both the US markets as well as export market as well as India market. If your question is if there is any one-off growth in this, the answer is no. The answer had been the same over the last past quarters also.

Speaker #1: And even now, if you look at this quarter, it is well diversified in both the US markets as well as export market as well as India market.

Speaker #1: So, if your question is whether there is any one-off growth in this, the answer is no. The answer has been the same over the past quarters as well.

Speaker #4: Just to get that, that is Kunamat there. Just to—we don't have exposure to memory here as much, okay? Very limited, because we are not in the consumer space or we're not in the server space.

Kunhamed Bicha: Just to get that, Kunal here. We don't have exposure to memory as much. Okay? Very little. Because we're not in the consumer space or we're not in the server space.

Speaker #3: Okay. So, let's say if other components, like if you have copper and PVs and everything, so if tomorrow those prices continue to rise or increase, will it show higher growth in the numbers?

Archit Shah: Okay. Let's say if other components like if you have copper and PVC and everything. If tomorrow those prices continue to rise or increase, will it show higher growth in the numbers and versus if they stay stable or maybe decline a bit? Just that I wanted to understand.

Speaker #3: And versus if they stay stable or maybe decline a bit, I just wanted to understand.

Speaker #4: Yeah, Archit Shiram here. So, you know, all of these components you talk about form a part of the, you know, bill of materials, right?

Shriram Vijayaraghavan: Yeah, Archit, Shriram here. All of these components you talk about form a part of the bill of materials, right? You'll have metals, you'll have cables, you'll have PCBA, you'll have a lot of other things. On the whole, we don't believe this is driving the increase in prices, right? Ultimately, as Suresh said, this is broad-based growth. It's been driving for the last eight quarters. The margins are holding between 33% and 35%. This is sort of inherent business growth that you're seeing.

Speaker #4: So you will have metals, you will have cables, you will have PCBs, you will have a lot of other things. So, on the whole, you know, we don't believe this is driving the increase in prices, right?

Speaker #4: Ultimately, as Suresh said, right, this is broad-based growth. It's been driving for the last eight quarters. You know, and you know, the margins are holding between 33 and 35 percent.

Speaker #4: So, this is the sort of inherent business growth that you're seeing.

Speaker #3: Yeah. Oh, okay. That's what I was looking for. Thank you so much, sir. Thank you very much.

Archit Shah: Yeah. Okay. That's what I was looking for. Thank you so much, sir. Thank you very much.

Speaker #4: Thank you, Archit.

Shriram Vijayaraghavan: Thank you, Archit.

Speaker #1: Thank you, Archit.

Speaker #2: Thank you. We have the next question from the line. Of Tanesha from Dam Capital Advisors. Please go ahead.

Operator 2: Thank you. We have the next question from the line of Tanay Shah from DAM Capital Advisors. Please go ahead.

Operator: Thank you. We have the next question from the line of Tanay Shah from DAM Capital Advisors. Please go ahead.

Speaker #4: Hi, Tanesha. Are you there?

Shriram Vijayaraghavan: Hi, Tanay. Are you there?

Speaker #2: Hello, Mr. Tanesha. Can you hear me?

Operator 2: Hello, Mr. Tanay. Can you hear me?

Operator: Hello, Mr. Tanay. Can you hear me?

Suresh Veerappan: Could we go to the next question?

Speaker #1: If you go to the next question.

Speaker #2: Tanesha: Okay, so we'll move to the next question. The next question comes from the line of Siddharth S. from Napa. Please go ahead.

Operator 2: Done. Okay, we'll move to the next question. The next question comes from the line of Siddharth Sanghvi from Nuvama. Please go ahead.

Operator: Done. Okay, we'll move to the next question. The next question comes from the line of Siddharth Sanghvi from Nuvama. Please go ahead.

Speaker #3: Oh, congrats, Kunamat. Good setup number. So I would just like to get some clarity on your exposure, on an overall basis, to the defense space.

Siddharth Sanghvi: Congrats on the good set of numbers. I'd just like to get some clarity on your exposure on an overall basis to the defense space. It seems to be the central sector and the hottest sector at the moment. At the moment, I think the medical and defense combined comes close to 10% of your revenues as per Q1 FY27. I would like to get some light on if you plan to foray into that space via the PCB or the whole EMS ecosystem or the supply chain as a whole. If you have any plans to actively increase the focus there, or what's your stance on it?

Speaker #3: It seems to be the, you know, centralized sector and the hot sector at the moment. So at the moment, I think the medical and the defense combined comes close to 10 percentage of your revenues as per Q1 in FY27.

Speaker #3: I just want to get some clarity on whether you plan to foray into that space. Why is the PCBRB—the whole EMS ecosystem, you know, or the supply chain as a whole?

Speaker #3: Do you have any plans to actively increase the focus there, or what's your stance on it?

Speaker #4: Thank you, Siddharth, for that question. We have nothing against the defense business, but it's a very lumpy business. It's all a feast or famine.

Kunhamed Bicha: Thank you, Siddharth, for that question. We have nothing against the defense business, it's a very lumpy business. It's all a feast or famine is the right way I should say. Saying that, we do defense. We do defense in India as well as in the US. Okay. It's one of the verticals we are looking at to focus. We have done the first set of hiring for looking at defense as a segment 3 years from now. Okay. Because that is the time frame we need to spend to get the larger chunks in. Okay. Again, the whole world is out of ammunition, right? The defense will grow, and I'm pretty sure we'll be a part of it, and we've taken the first steps to look at it as a vertical. Not saying that we have created the vertical.

Speaker #4: This is the right way, I should say. Saying that, we do defense. We do defense in India as well as in the US, okay?

Speaker #4: And it's one of the verticals we are looking at to focus on. We have done the first set of hiring for looking at defense as a segment three years from now.

Speaker #4: Okay? Because that is the time frame we need to spend to get the larger chunks in. Okay? So again, whether the whole world is, you know, out of ammunition, right?

Speaker #4: So the defense will grow, and I'm pretty sure we'll be a part of it. We have taken the first steps to look at it as a vertical—not saying that we have created a vertical.

Speaker #4: We're starting to look at it. How do I expand to get into this space, yeah? In a meaningful way. We are still doing quite a bit of it, but not in large numbers.

Kunhamed Bicha: We're starting to look at it, how do I expand to get into this space? In a meaningful way. We are still doing quite a bit of it, but not in large numbers.

Speaker #3: Understood. Understood. Thanks for the clarity, and wish you all the best.

Siddharth Sanghvi: Understood. Thanks for the clarity, and wish you all the best.

Speaker #1: Thank you, Siddharth.

Shriram Vijayaraghavan: Thank you, Siddharth.

Speaker #4: Thank you, Siddharth.

Kunhamed Bicha: Thank you, Siddharth.

Speaker #2: Thank you. The next question comes from the line of Tanesha from DAM Capital Advisors. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Tanay Shah from DAM Capital Advisors. Please go ahead.

Operator: Thank you. The next question comes from the line of Tanay Shah from DAM Capital Advisors. Please go ahead.

Speaker #3: Yes, sir. Am I audible now?

Tanay Shah: Yes, sir. Am I audible now?

Speaker #4: Yes, Tanesha, you are. You are audible.

Kunhamed Bicha: Yes, Tanay, you are.

Tanay Shah: Hello. Yes, sir.

Kunhamed Bicha: You are audible

Speaker #3: I think there was just some mix-up. Sorry. Thank you so much for taking my question again, sir. Sir, I have two questions, right? I mean, if we look at it over the last few quarters, we've steadily increased our U.S. manufacturing, right?

Tanay Shah: I think that was just some mix-up. Sorry. Thank you so much for taking my question again, sir. Sir, I have two questions. If we look at it over the last few quarters, we've steadily increased our US manufacturing. Almost from 18% to 20% to now almost 28%. That's now, in fact, even sort of helped us, if I'm not wrong, almost reach at breakeven levels for our US manufacturing standpoint on the EBITDA level. Is it fair to say that this is a base which now helps us sort of build on, and this becomes our base where we break even on US levels? Or do you think that this is just a quarterly fluctuation, and what would the ideal split be between the India versus US manufacturing?

Speaker #3: I mean, almost from 18 to 20 percent to now almost 28 percent. So, and that has now, in fact, even sort of helped us, if I'm not wrong, almost reach break-even levels for my US manufacturing standpoint on the EBITDA level.

Speaker #3: Is it fair to say that this is a base which now helps us sort of build on, and this becomes a base where we break even on the US levels?

Speaker #3: Or do you think that this is just a quarterly fluctuation, and, you know, what would the eyes split be between the India versus US manufacturing?

Speaker #4: Yeah, Tanesha. So as we grow, as the top lines grow over the next few years, our goal is to keep US manufacturing around 20%.

Kunhamed Bicha: Yeah, Tanay. As we grow, as the top lines grow over the next few years, our goal is to keep US manufacturing around 20%. Okay. The best growth for us is made in India for export and made in India for India. Okay. To get these margins made in India, I need the US manufacturing. In the short term, we want to cap it at 20. You'll have a few quarters which goes up and down, and most of the significant growth what we anticipate over the next two, three years is going to be made in India. Okay. Saying that, we are also opening up two geographies. Which we are very excited about. Which is Europe, which was a very small percentage of exports. The next two years, we see that hopefully growing in a very meaningful way.

Speaker #4: Okay? So I’m not saying that. The more important growth for us is ‘Made in India for export’ and ‘Made in India for India.’ Okay?

Speaker #4: So, but to get these margins in 'Made in India', I need the US manufacturing, so, in the short term — so we want to cap it at 20.

Speaker #4: You'll have a few quarters which go up and down. And most of the significant growth, what we anticipate over the next two to three years, is going to be made in India.

Speaker #4: Okay? Having said that, we are also opening up two geographies, right, which we are very excited about. Okay? One of them is Europe, which was a very small percentage of exports.

Speaker #4: The next two years, we see that hopefully growing, you know, in a very, very meaningful way. And Southeast Asia—I mean, that is a foray which I believe will take us to the next level.

Kunhamed Bicha: Southeast Asia, that is a foray which I believe will take us to the next level. You're basically competing with the best in the world, with the best products you can make made in India. This comes with relatively very decent margins. We're not doing commodity type stuff. We are doing complex systems. Saying that, US will always be there. Again, it is a treadmill. I feel bad for the US guys because every time there's a good number coming there, it's always more profitable to move to India. As a group, we tend to do that. You'll see certain spikes. That has helped us through the tariff situation, if you look at it. It has given a lot of solace to our customers that we are in the US.

Speaker #4: So you're basically competing with the best in the world, with the best products you can make, made in India. And this comes with relatively very decent margins.

Speaker #4: We're not doing commodity-type stuff. We are doing complex systems. So, saying that the US will always be there—and again, it is a treadmill.

Speaker #4: You know, I feel bad for the US guys because every time there's a good number coming there, it's always more profitable to move to India.

Speaker #4: Okay? So that's a group—we tend to do that. So you'll see certain spikes, and that has helped us through the tariff situation, if you look at it, right?

Speaker #4: It has given a lot of solace to our customers that we are in the U.S. And if they want to launch there, they're more than welcome to launch there.

Kunhamed Bicha: If they want to launch there, they're more than welcome to launch there at the higher cost. Does that answer your question, Tanay?

Speaker #4: The higher cost. Did I answer your question, Tanesha?

Speaker #3: Absolutely, sir. Absolutely. That makes sense. Sir, the second question I had is that we're seeing a lot of supply chain disruptions, especially from the bare PCB board side.

Tanay Shah: Absolutely, sir. Absolutely. That makes sense. Sir, the second question which I had is that, we're seeing a lot of supply chain disruptions, especially from a bare PCB board side. May it be for the raw materials or even the glass, the fiberglass, or the high purity PP which is required. Sir, any comments on that is it impacting our operations by any means, or do we expect any impact going forward, or are we well covered?

Speaker #3: May it be for the raw materials, or even the glass, the fiberglass, or, you know, the high-priority PP which is required—Sir, any comments on that? Is it impacting our operations by any means, or do we expect any impact going forward? Or are we well covered?

Speaker #4: Hey, Tanesha, I'm here. See, you know, you have instances and different commodities that go up and down. We are generally okay. You know, last quarter and this quarter, we've tried to stay a little ahead of the curve.

Shriram Vijayaraghavan: Hey, Tanay. Sriram here. See, you have instances and different commodities that go up and down. We are generally okay last quarter and this quarter. We've tried to stay a little ahead of the curve, in terms of securing some of the supplies of the commodities that you mentioned. For the time being, with the environment the way it is, we think we're okay. Obviously we stay on high alert, and we'll move quickly where we have to if we need to.

Speaker #4: In terms of securing some of the supplies of the commodities that you mentioned—so, for the time being, you know, with the environment the way it is, we think we're okay.

Speaker #4: But obviously, you know, we stay on high alert and, you know, we'll move quickly where we have to if we need to.

Speaker #3: Perfect. Perfect. Great. Thank you so much for answering my questions, and wishing you all the very best. Thank you.

Tanay Shah: Perfect. Great. Thank you so much for answering my questions. Wishing you all the very best. Thank you.

Speaker #4: Thank you, Tanesha.

Kunhamed Bicha: Thank you, Tanay.

Speaker #2: Thank you. The next question comes from the line of Mayank Pande from MK Global. Please go ahead.

Operator 2: Thank you. The next question comes from the line of Mayank Pant from NK Global. Please go ahead.

Operator: Thank you. The next question comes from the line of Mayank Pant from NK Global. Please go ahead.

Speaker #3: Hi, sir. Congratulations on a good set of numbers, and thank you for taking my question. I have two questions. Question number one is regarding your asset terms, 9.9x.

Mayank Pant: Hi, sir. Congratulations on a good set of numbers, and thank you for taking my question. I have two questions. Question number one is your asset turns 9.9x. Now with our ODM revenues going up to 60% of our total revenues, I would have expected that this would probably be a driver to move up the asset turns. Just want to get a theoretical understanding as to what would cause us to reach this level. Or put another way, what could be the maximum level that we can see on asset turns with the current asset base and the current sort of growth that we are having? That's question number one. The second question is on the ODM mix itself. If you could just walk us through the segments that we have in the ODM mix in each of those segments, if that's possible.

Mayank Pandey: Hi, sir. Congratulations on a good set of numbers, and thank you for taking my question. I have two questions. Question number one is your asset turns 9.9x. Now with our ODM revenues going up to 60% of our total revenues, I would have expected that this would probably be a driver to move up the asset turns. Just want to get a theoretical understanding as to what would cause us to reach this level. Or put another way, what could be the maximum level that we can see on asset turns with the current asset base and the current sort of growth that we are having? That's question number one. The second question is on the ODM mix itself. If you could just walk us through the segments that we have in the ODM mix in each of those segments, if that's possible.

Speaker #3: Now, with our ODM revenues going up to 60 percent of our total revenues, I would have expected that this would probably be a driver to move up the asset terms.

Speaker #3: So I just want to get a theoretical understanding as to what would, you know, cause us to breach this level, or put another way, what could be the maximum level that we can see on asset terms with the current asset base and the current sort of growth that we are having.

Speaker #3: That's question number one. And the second question is, on the ODM mix itself, if you could just walk us through the segments that we have in the ODM mix in each of those segments, if that if that's possible or if, you know, what is the main driver, which segments are the main drivers for the ODM to grow further from these current levels?

Mayank Pant: What is the main driver, which segments are the main drivers for the ODM to grow further from these current levels? Those are my two questions.

Mayank Pandey: What is the main driver, which segments are the main drivers for the ODM to grow further from these current levels? Those are my two questions.

Speaker #3: Those are my two questions.

Speaker #4: Okay, great. Thank you, Mayank. First and foremost, we don't do ODM, okay? We do box fill, which is custom-designed by a customer. Even if we do the design for them, the IP is owned by the customer.

Kunhamed Bicha: Okay, great. Thank you, Mayank. First and foremost, we don't do ODM. Okay, we do box build, which is custom designed by a customer. Even if we do the design for them, the IP is owned by the customer. We do build to print, and that is the reason why most of these complex systems are coming to us. We don't want to have a situation where we can do our own products. Okay. At the end of the day, even though we do design, it is done for the customer. The ODM piece is not there. What you're referring to is a box build solution, which is where we do the whole product for the customer.

Speaker #4: So we do build-to-print, and that is the reason why most of these complex systems are coming to us. So we don't want to have a situation where we are doing our own products.

Speaker #4: Okay? So, at the end of the day, even though we do design, it is done for the customer. So, the ODM piece is not there. What you're referring to is our box-build solution, which is where we do the whole product for the customer.

Speaker #3: Okay.

Mayank Pant: Yeah.

Mayank Pandey: Yeah.

Speaker #4: So, so we have always strived with our vertical integration to get this number as high as possible. And we've been successful so far, and we continue to strive.

Kunhamed Bicha: We have always strived with our vertical integration, to get this number as high as possible. We've been successful so far, and we continue to strive, and I think that portion of our business will grow. Because we may start with one commodity and then we try to, in two to three years, get the whole box build, that's PCBA, cable, plastic, all in a box. That's always been our aspiration as well as our goal. Did I miss anything?

Speaker #4: And I think that portion of our business will grow, because we may start with one commodity and then we try to, in two to three years, get the whole box filled—that's PCBA, cable, plastic, all in a box.

Speaker #4: Yeah, so that's always been our aspiration as well as our goal. Did I miss anything?

Speaker #3: So, I just want to understand it from a different lens. Is it like, can this go up to, let's say, 10x, 12x, 15x? How should I—or, like, what would be the incremental capex required in that sense for that?

Mayank Pant: Just want to understand it from a different lens. Is it like, can this go up to, let's say, 10x, 12x, 15x? How should I Or what would be the incremental CapEx required in that sense?

Mayank Pandey: Just want to understand it from a different lens. Is it like, can this go up to, let's say, 10x, 12x, 15x? How should I Or what would be the incremental CapEx required in that sense?

Speaker #4: Exactly. As you know, we are, you know, probably—even if you look at a global market—probably the best in asset terms. You know, what we always commit to is eight to ten times.

Kunhamed Bicha: As you know, probably, even if you look at a global market, probably the best in the set terms. What we always commit to is 8 to 10 times. Sometimes it goes up and down when you do an investment in a building on. At 8 to 10 times is what we should look at, and we want to stay in that range because we have to make investments also, right? That's our goal. I think you should look at us 8 to 10 times.

Speaker #4: Sometimes it goes up and down when you do an investment in a building or so. That 8 to 10 times is what you should look at.

Speaker #4: And we want to stay in that range because we have to make investments also, right? So that's our goal. I think you should look at us at 8 to 10 times.

Speaker #1: And we are looking to improve our ROCs even from here, so to answer that.

Suresh Veerappan: We are looking to improve our ROCEs even from here, so to answer that.

Speaker #3: Yeah. Yeah. Yeah. Of course. And if you could sorry, I misspoke earlier on the ODM versus box fill. My bad. But yeah, if you could just if you could just help me understand which of our segments have the highest, let's say, percentage of box bills or how should we look at it from a segment to segment perspective?

Kunhamed Bicha: Yeah. Of course.

Mayank Pandey: Yeah. Of course.

Mayank Pant: If you could, sorry, I misspoke earlier on the ODM versus box build, my bad.

Mayank Pandey: If you could, sorry, I misspoke earlier on the ODM versus box build, my bad.

Kunhamed Bicha: It's no problem.

Mayank Pant: Yeah. If you could just help me understand, which of our segments have the highest, let's say, percentage of box builds? Or how should we look at it from a segment to segment perspective?

Mayank Pandey: Yeah. If you could just help me understand, which of our segments have the highest, let's say, percentage of box builds? Or how should we look at it from a segment to segment perspective?

Speaker #4: I think most of this is segments, except for aero. We can't build a plane, but we build boxes. Yeah?

Kunhamed Bicha: I think most of the segments except for aero, we can't build a plane. We build boxes, yeah.

Speaker #1: It's spread across various verticals—parts for—it is not focused on just one industry vertical.

Mayank Pant: It's spread across various verticals.

Suresh Veerappan: It's spread across various verticals.

Kunhamed Bicha: All verticals.

Mayank Pant: It is not focused on just one industry vertical.

Suresh Veerappan: It is not focused on just one industry vertical.

Speaker #4: For example, in railways, we do the, you know, the interlocking systems, braking systems, the complete box. In clean energy, we make different types of inverters, battery storage—you know, it's all complete boxes.

Kunhamed Bicha: For example, railways, we do the interlocking systems, braking systems, the complete box. In the clean energy, we make different type of inverters, battery storage, it's all complete boxes. Only in the aero piece where we do sub-assemblies.

Speaker #4: Only in the aero piece, where we do subassemblies. Yeah?

Speaker #3: Got it, got it. And sir, just one last question. The ISM 2.0 scheme came out. I know we must have been getting a lot of questions on that, but is there any chance you see that we could be one of the beneficiaries from it, given that it specifically calls out equipment suppliers, and we might be part of that value chain now with your wins in that space?

Mayank Pant: Got it. Sir, just one last question. The ISM 2.0 scheme came out. I know you must have been getting a lot of questions on that, any chance you see that we could be one of the beneficiaries from it, given that Because it specifically calls out equipment suppliers, and we might be part of that value chain now with your wins in that space. Any possible benefits you see to Avalon from that scheme? We believe so, we are yet to look at the finer details of that ISM 2.0. Definitely, semiconductor manufacturing equipment is one of the key verticals for us over the coming years. When the final details come, and then we will have more details to share to everyone.

Mayank Pandey: Got it. Sir, just one last question. The ISM 2.0 scheme came out. I know you must have been getting a lot of questions on that, any chance you see that we could be one of the beneficiaries from it, given that Because it specifically calls out equipment suppliers, and we might be part of that value chain now with your wins in that space. Any possible benefits you see to Avalon from that scheme? We believe so, we are yet to look at the finer details of that ISM 2.0. Definitely, semiconductor manufacturing equipment is one of the key verticals for us over the coming years. When the final details come, and then we will have more details to share to everyone.

Speaker #3: Are there any possible benefits you see to Avalon from that scheme?

Speaker #1: We believe so, but we are yet to look at the finer details of that ISM 2.0. But definitely, semiconductor manufacturing equipment is one of the key verticals for us over the coming years.

Speaker #1: And in the finer details come, and then we will have more details to share with everyone.

Speaker #4: So, in short, yes, we are looking at it.

Kunhamed Bicha: In short, yes, we are looking at it.

Speaker #3: Nice. And would you would you be open to like incremental capex for that as a separate carved out sort of structure? I'm not carved out structure, but let's say just separate capex to that effect.

Mayank Pant: Right. Would you be open to incremental CapEx for that, as a separate carved-out sort of structure or Not carved-out structure, but let's say just separate CapEx to that effect? Or would you want to continue with the current business model? In the opening remarks, we had highlighted about acquiring a large piece of land in Chennai for our future growth, for the next phase of growth, whether it is with respect to semiconductor manufacturing equipment or advanced electronics. Both of it. Yes, the answer is yes. Okay. Thank you. Thank you so much.

Mayank Pandey: Right. Would you be open to incremental CapEx for that, as a separate carved-out sort of structure or Not carved-out structure, but let's say just separate CapEx to that effect? Or would you want to continue with the current business model? In the opening remarks, we had highlighted about acquiring a large piece of land in Chennai for our future growth, for the next phase of growth, whether it is with respect to semiconductor manufacturing equipment or advanced electronics. Both of it. Yes, the answer is yes. Okay. Thank you. Thank you so much.

Speaker #3: Or would you want to continue with the current business model?

Speaker #1: In the opening remarks, we had highlighted acquiring a large piece of land in Chennai for our future growth, for the next phase of growth, whether it is with respect to semiconductor manufacturing equipment or advanced electronics.

Speaker #1: So, both of it. So, yes, the answer is yes.

Speaker #3: Okay, thank you. Thank you so much. Thank you.

Kunhamed Bicha: Thank you, Mayank.

Mayank Pant: Thank you.

Mayank Pandey: Thank you.

Speaker #2: Thank you. Ladies and gentlemen, in the interest of time, that was our last question. I would now like to hand the conference over to management for closing comments.

Operator 2: Thank you. Ladies and gentlemen, in the interest of time, that was our last question. I would now like to hand the conference over to the management for the closing comments. Thank you, over to you.

Operator: Thank you. Ladies and gentlemen, in the interest of time, that was our last question. I would now like to hand the conference over to the management for the closing comments. Thank you, over to you.

Speaker #2: Thank you, and over to you.

Speaker #4: With a healthy order book, expanding customer engagement, and a flexible global manufacturing model, we remain focused on delivering profitable growth. We thank our investors for their continued support and look forward to updating you in the coming quarters.

Kunhamed Bicha: With a healthy order book, expanding customer engagement, and a flexible global manufacturing model, we remain focused on delivering profitable growth. We thank our investors for their continued support and look forward to updating you in the coming quarters. Thank you. Thank you very much.

Speaker #4: Thank you. Thank you very much.

Speaker #1: Thank you.

Mayank Pant: Thank you.

Suresh Veerappan: Thank you.

Operator 2: Thank you. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, you may now disconnect your lines.

Operator: Thank you. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, you may now disconnect your lines.

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Q1 2027 Avalon Technologies Ltd Earnings Call

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