Q1 2027 PPAP Automotive Ltd Earnings Call

August 10, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the PPAP Automotive Limited Q1 2027 earnings conference call. The conference call will begin shortly. Please stay connected.

Operator: Ladies and gentlemen, good day and welcome to the PPAP Automotive Limited Q1 FY27 Earnings Conference Call. The conference call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Conference Call for PPAP Automotive Limited. The conference call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Conference Call of PPAP Automotive Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Speaker #1: Ladies and gentlemen, good day and welcome to the Q1 2027 earnings conference call for PPAP Automotive Limited. The conference call will begin shortly.

Speaker #1: Please stay connected. Ladies and gentlemen, good day and welcome to the Q1 2027 earnings conference call of PPAP Automotive Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call.

Operator: Ladies and gentlemen, good day and welcome to the Q1 FY 2027 Earnings Conference Call of PPAP Automotive Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Speaker #1: These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. 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.

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

Operator: Should you need assistance during the conference call, please signal an operator by pressing star then zero on the touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Jain, Managing Director and CEO of PPAP Automotive Limited. Thank you, and over to you, sir.

Speaker #1: I now hand the conference over to Mr. Abhishek Jain, Managing Director and CEO of PPAP Automotive Limited. Thank you, and over to you, sir.

Speaker #2: Yeah, thank you, Avirad. Good morning, everyone, and a very warm welcome to all of you. Thank you for joining us for PPAP Automotive Limited's Q1 Financial Year 2027 Earnings Conference Call.

Abhishek Jain: Yeah. Thank you, Avirat. Good morning, everyone, and a very warm welcome to all of you, and thank you for joining us for the PPAP Automotive Limited's Q1 FY27 Earnings Conference Call. I am joined today by Mr. Sachin Jain, our Chief Financial Officer, along with our investor relations advisor, Strategic Growth Advisors. While Q4 FY26 marked a significant turning point for the company, reflecting the positive outcomes of the sustained efforts and strategic initiatives undertaken over the past several quarter, this positive momentum has continued into Q1 FY27 as well. Q4 FY27 had laid a strong foundation for the future through a series of long-term strategic reforms and organizational initiatives aimed at driving sustainable growth, improving efficiencies, and enhancing long-term value creation.

Abhishek Jain: Yeah. Thank you, Avirat. Good morning, everyone, and a very warm welcome to all of you, and thank you for joining us for the PPAP Automotive Limited's Q1 FY 2027 Earnings Conference Call. I am joined today by Mr. Sachin Jain, our Chief Financial Officer, along with our investor relations advisor, Strategic Growth Advisors.

Speaker #2: I am joined today by Mr. Sachin Jain, our Chief Financial Officer, along with our Investor Relations Advisor, Strategic Growth Advisors. While Q4 of financial year 2026 marked a significant turning point for the company, reflecting the positive outcomes of the sustained efforts and strategic initiatives undertaken over the past several quarters, this positive momentum has continued into Q1 of financial year 2027 as well.

Abhishek Jain: While Q4 FY 2026 marked a significant turning point for the company, reflecting the positive outcomes of the sustained efforts and strategic initiatives undertaken over the past several quarter, this positive momentum has continued into Q1 FY 2027 as well. Q4 FY 2027 had laid a strong foundation for the future through a series of long-term strategic reforms and organizational initiatives aimed at driving sustainable growth, improving efficiencies, and enhancing long-term value creation.

Speaker #2: Q4 of financial year 2027 has laid a strong foundation for the future through a series of long-term strategic reforms and organizational initiatives aimed at driving sustainable growth, improving efficiencies, and enhancing long-term value creation.

Speaker #2: One of the key initiatives announced during Q4 was the decision to bring the company and all its subsidiaries under the unified identity of the Ajay Group.

Abhishek Jain: One of the key initiatives announced during the Q4 was the decision to bring the company and all its subsidiaries under the unified identity of the Ajay Group. This transition is intended to create a future-ready organization with a shared vision, a unified culture, stronger collaboration across businesses, and enhanced strategic alignment across our diversified operations. During Q4, we also completed the divestment of our stake in the joint venture company and initiated the restructuring of our tooling business. As part of this restructuring, the tooling business is proposed to be hived off into a wholly owned subsidiary of PPAP under the name of Meraki Precision Tool Engineering Limited. This process is currently underway and is expected to be completed by Q3 of FY27.

Speaker #2: This transition is intended to create a future-ready organization with a shared vision, a unified culture, stronger collaboration across businesses, and enhanced strategic alignment across our diversified operations.

Speaker #2: During Q4, we also completed the divestment of our stake in the joint venture company and initiated the restructuring of our tooling business. As part of this restructuring, the tooling business is proposed to be hived off into a wholly owned subsidiary of PPAP, under the name Meraki Precision Tools Engineering Limited.

Abhishek Jain: During Q4, we also completed the divestment of our stake in the joint venture company and initiated the restructuring of our tooling business. As part of this restructuring, the tooling business is proposed to be hived off into a wholly owned subsidiary of PPAP under the name of Meraki Precision Tool Engineering Limited. This process is currently underway and is expected to be completed by Q3 of FY27.

Speaker #2: This process is currently underway and is expected to be completed by Q3 of financial year 2027. In addition, as part of the group's ongoing efforts to streamline operations, simplify the corporate structure, and improve efficiencies, the company has initiated the process of merging Vineyard Batteries Limited with the parent entity, PPAP.

Abhishek Jain: In addition, as part of the group's ongoing efforts to streamline operations, simplify the corporate structure, and improve the efficiencies, company has initiated the process of merging Avinya Batteries Limited with the parent entity, PPAP. The merger process is in progress and is expected to complete by Q4 of FY27. Coming to the Q1 of FY27, we have entered the new financial year with strong momentum, building on the progress achieved over the last few quarters. Higher customer production schedules, healthy demand across vehicle segments, and the ramp-up of new programs have supported a robust start to this new year. Our focus continues to remain on strengthening our core automotive business, expanding our technology and manufacturing capabilities, improving operational excellence, and creating sustainable long-term value through disciplined execution across all our business verticals.

Speaker #2: The merger process is in progress and is expected to complete by Q4 of financial year 2027. Coming to Q1 of financial year 2027, we have entered the new financial year with strong momentum, building on the progress achieved over the last few quarters: higher customer production schedules, healthy demand across vehicle segments, and the ramp-up of new programs have supported a robust start to this new year.

Abhishek Jain: Higher customer production schedules, healthy demand across vehicle segments, and the ramp-up of new programs have supported a robust start to this new year. Our focus continues to remain on strengthening our core automotive business, expanding our technology and manufacturing capabilities, improving operational excellence, and creating sustainable long-term value through disciplined execution across all our business verticals.

Speaker #2: Our focus continues to remain on strengthening our core automotive business, expanding our technology and manufacturing capabilities, improving operational excellence, and creating sustainable, long-term value.

Speaker #2: Through disciplined execution across all our business verticals, on a consolidated basis, the company reported revenues from operations of INR 156.4 crores, representing a growth of 34.1% year-on-year. The EBITDA increased by 33.3% year-on-year to INR 12.4 crores. This performance was driven by higher production volumes, improved operating leverage, better capacity utilization, and disciplined execution across all our businesses.

Abhishek Jain: On a consolidated basis, the company reported revenues from operations of INR 156.4 crores, representing a growth of 34.1% year on year. The EBITDA increased by 33.3% year on year to INR 12.4 crores. This performance was driven by higher production volumes, improved operating leverage, better capacity utilization, and disciplined execution across all our businesses. Let me now briefly discuss the performance across our key business segments. First, we'll start with the automotive part business. The industry delivered an exceptionally strong performance in Q1, recording its best ever quarterly sales across passenger vehicles, commercial vehicles, and three-wheelers. The growth was supported by lower GST rates, improved availability of finance, new model launches, and strengthening consumer demand. Passenger vehicle sales increased by 25% year on year to 1.27 million units, driven primarily by the strong momentum in the utility vehicle segment.

Speaker #2: Let me now briefly discuss the performance across our key business segments. First, we'll start with the automotive parts business. The industry delivered an exceptionally strong performance in Q1, recording its best-ever quarterly sales across passenger vehicles and three-wheelers.

Abhishek Jain: First, we'll start with the automotive part business. The industry delivered an exceptionally strong performance in Q1, recording its best ever quarterly sales across passenger vehicles, commercial vehicles, and three-wheelers. The growth was supported by lower GST rates, improved availability of finance, new model launches, and strengthening consumer demand. Passenger vehicle sales increased by 25% year on year to 1.27 million units, driven primarily by the strong momentum in the utility vehicle segment.

Speaker #2: The growth was supported by lower GST rates, improved availability of finance, new model launches, and strengthening consumer demand. Passenger vehicle sales increased by 25% year-on-year to 1.27 million units, driven primarily by the strong momentum in the utility vehicle segment.

Speaker #2: Two-wheeler sales grew by 20.3%, supported by scooter demand, while commercial vehicle sales rose by 18.3% on the back of replacement demand and increasing infrastructure activity.

Abhishek Jain: Two-wheeler sales grew by 20.3%, supported by scooter demand, while commercial vehicle sales rose by 18.3% on the back of replacement demand and increasing infrastructure activity. Three-wheeler sales also remained strong, growing by 29.7%, led by healthy demand across both passenger and goods carrier segments. In addition, vehicle exports also recorded their strongest ever Q1, reflecting improved demand across several global markets and strengthening India's position as a competitive automotive manufacturing hub. Looking ahead, the industry outlook remains encouraging. The upcoming festival season, lower vehicle ownership costs following the new improved GST 2.0, easier financing conditions, and overall a positive consumer sentiment are expected to support the continued demand momentum. At the same time, we remain watchful of the geopolitical developments, commodity price volatility, and global supply chain dynamics, which could influence the operating environment over the course of this year.

Speaker #2: Three-wheeler sales also remained strong, growing by 29.7%, led by healthy demand across both passenger and goods carrier segments. In addition, vehicle exports also recorded their strongest-ever first quarter, reflecting improved demand across several global markets and strengthening India's position as a competitive automotive manufacturing hub.

Speaker #2: Looking ahead, the industry outlook remains encouraging. The upcoming festival season, lower vehicle ownership costs following the new and improved GST 2.0, easier financing conditions, and overall positive consumer sentiment are expected to support the continued demand momentum.

Abhishek Jain: Looking ahead, the industry outlook remains encouraging. The upcoming festival season, lower vehicle ownership costs following the new improved GST 2.0, easier financing conditions, and overall a positive consumer sentiment are expected to support the continued demand momentum. At the same time, we remain watchful of the geopolitical developments, commodity price volatility, and global supply chain dynamics, which could influence the operating environment over the course of this year.

Speaker #2: At the same time, we remain watchful of geopolitical developments, commodity price volatility, and global supply chain dynamics, which could influence the operating environment over the course of this year.

Speaker #2: Coming to our business performance, the automotive parts business continued to be the largest contributor to our revenues during the quarter. The segment benefited from higher customer production schedules, improved capacity utilization, and the continued ramp-up of new vehicle programs across all the key OEM platforms.

Abhishek Jain: Coming to our business performance, the automotive part business continued to be the largest contributor to our revenues during the quarter. The segment benefited from higher customer production schedules, improved capacity utilization, and the continued ramp-up of new vehicle program across all the key OEM platforms. During the quarter, we secured lifetime orders worth INR 131 crores, representing a growth of 51.8% year on year. Importantly, the EV programs contributed nearly INR 64 crores out of this 131, highlighting our increasing participation in the rapidly expanding electric mobility ecosystem and strengthening our long-term revenue visibility. A key strategic milestone during the quarter was our technology partnership with Hutchinson, which is a global leader in the automotive sealing systems. Through this partnership, PPAP will offer modern and advanced body sealing system solutions to all the customers in India, enabling access to global technologies and next generation sealing solutions.

Speaker #2: During the quarter, we secured lifetime orders worth ₹131 crore, representing a growth of 51.8% year-on-year. Importantly, the EV programs contributed nearly ₹64 crore out of this ₹131 crore, highlighting our increasing participation in the rapidly expanding electric mobility ecosystem.

Abhishek Jain: Importantly, the EV programs contributed nearly INR 64 crores out of this 131, highlighting our increasing participation in the rapidly expanding electric mobility ecosystem and strengthening our long-term revenue visibility. A key strategic milestone during the quarter was our technology partnership with Hutchinson, which is a global leader in the automotive sealing systems. Through this partnership, PPAP will offer modern and advanced body sealing system solutions to all the customers in India, enabling access to global technologies and next generation sealing solutions.

Speaker #2: And strengthening our long-term revenue visibility. A key strategic milestone during the quarter was our technology partnership with Hutchinson, which is a global leader in automotive sealing systems.

Speaker #2: Through this partnership, PPAP will offer modern and advanced body sealing system solutions to all customers in India, enabling access to global technologies and next-generation sealing solutions.

Speaker #2: We believe this collaboration will significantly enhance our technological capabilities, accelerate new product development, and expand our addressable opportunities with OEM customers, and further strengthen our position as a preferred technology-driven mobility solutions provider.

Abhishek Jain: We believe this collaboration will significantly enhance our technological capabilities, accelerate new product development, and expand our addressable opportunities with OEM customer, and further strengthen our position as a preferred technology-driven mobility solutions provider. With a healthy order pipeline across both ICE and EV platforms, increasing customer engagements, and continued focus on technology-led growth, we remain confident of sustaining our growth momentum and delivering improved business performance in the coming quarters. Our aftermarket business also continued to deliver strong growth momentum, with revenue increasing by 30% year on year in Q1 FY27. During this quarter, we successfully launched 345 new SKUs, expanding our total product portfolio to 1,312 SKUs compared to 1,264 at the end of FY26. This reflects our continued focus on broadening our product offering and addressing a wider range of customer requirements in the aftermarket ecosystem.

Speaker #2: With a healthy order pipeline across both ICE and EV platforms, increasing customer engagements, and a continued focus on technology-led growth, we remain confident of sustaining our growth momentum and delivering improved business performance in the coming quarters.

Speaker #2: Our aftermarket business also continued to deliver strong growth momentum, with revenue increasing by 30% year-on-year in Q1 of financial year 2027. During this quarter, we successfully launched 345 new SKUs, expanding our total product portfolio to 1,312 SKUs compared to 1,264 at the end of financial year 2026.

Abhishek Jain: Our aftermarket business also continued to deliver strong growth momentum, with revenue increasing by 30% year on year in Q1 FY27. During this quarter, we successfully launched 345 new SKUs, expanding our total product portfolio to 1,312 SKUs compared to 1,264 at the end of FY26. This reflects our continued focus on broadening our product offering and addressing a wider range of customer requirements in the aftermarket ecosystem.

Speaker #2: This reflects our continued focus on broadening our product offering and addressing a wider range of customer requirements in the aftermarket ecosystem. During this quarter, we also strengthened our distribution footprint by expanding our network to 155 distributors, further enhancing our reach across India as well as neighboring international markets.

Abhishek Jain: During this quarter, we also strengthened our distribution footprint by expanding our network to 155 distributors, further enhancing our reach across India as well as the neighboring international markets. The aftermarket business currently contributes around 6% to our overall revenues. Going forward, we remain focused on accelerating growth in this segment through continued product portfolio expansion, deeper penetration of our distribution network, and increased presence in both domestic as well as international markets. This business remains an important strategic pillar in our efforts to diversify revenue streams, improve market resilience, and build a strong customer base beyond the OEM segment. We are very hopeful that sooner than later, this segment will start contributing around 10% to the overall revenues of the company. The tooling business continues to maintain a healthy order pipeline across both automotive and non-automotive customers.

Speaker #2: The aftermarket business currently contributes around 6% to our overall revenues, and going forward, we remain focused on accelerating growth in this segment through continued product portfolio expansion, deeper penetration of our distribution network, and increased presence in both domestic as well as international markets.

Speaker #2: This business remains an important strategic pillar in our efforts to diversify revenue streams, improve market resilience, and build a strong customer base beyond the OEM segment.

Abhishek Jain: This business remains an important strategic pillar in our efforts to diversify revenue streams, improve market resilience, and build a strong customer base beyond the OEM segment. We are very hopeful that sooner than later, this segment will start contributing around 10% to the overall revenues of the company. The tooling business continues to maintain a healthy order pipeline across both automotive and non-automotive customers.

Speaker #2: We are very hopeful that, sooner rather than later, this segment will start contributing around 10% to the overall revenues of the company. The tooling business continues to maintain a healthy order pipeline across both automotive and non-automotive customers. Capacity utilization currently stands at 84%, indicating sustained demand and efficient utilization of available resources.

Abhishek Jain: Capacity utilization currently stands at 84%, indicating sustained demand and efficient utilization of available resources. During the quarter, we received orders for 30 molds while maintaining a strong pipeline of 124 molds, providing healthy revenue visibility for the coming quarters. While last year this division had successfully developed 148 molds, this year we intend to increase our output by 20%. As part of our strategic restructuring initiative, this business is proposed to commence independent operations under the newly formed entity, Meraki Precision Tool Engineering Limited, from Q3 of this financial year. This transition is expected to enhance operational focus, improve agility in serving customers, and enhance our engineering capabilities by creating a dedicated platform for further growth in the tooling and precision engineering business.

Speaker #2: During the quarter, we received orders for 30 molds while maintaining a strong pipeline of 124 molds, providing healthy revenue visibility for the coming quarters.

Speaker #2: While last year this division had successfully developed 148 molds, this year we intend to increase our output by 20%. As part of our strategic restructuring initiative, this business is proposed to commence independent operations under the newly formed entity, Meraki Precision Tool Engineering Limited, from Q3 of this financial year. This transition is expected to enhance operational focus, improve agility in serving customers, and enhance our engineering capabilities by creating a dedicated platform for further growth in the tooling and precision engineering business.

Abhishek Jain: As part of our strategic restructuring initiative, this business is proposed to commence independent operations under the newly formed entity, Meraki Precision Tool Engineering Limited, from Q3 of this financial year. This transition is expected to enhance operational focus, improve agility in serving customers, and enhance our engineering capabilities by creating a dedicated platform for further growth in the tooling and precision engineering business.

Speaker #2: The Industrial Product business delivered strong growth of 38% in financial year 2026, reflecting the progress made in expanding our customer base and product applications.

Abhishek Jain: The industrial product business delivered a strong growth of 38% in financial year 2026, reflecting on the progress made in expanding our customer base and product applications. However, in Q1 Financial Year 2027, the business witnessed some moderation in sales, primarily due to the seasonal nature of demand in certain product categories. Despite the softer quarter, the business continued to demonstrate encouraging traction in international markets, with approximately 30% of the quarter's revenue generated from exports. This highlights the growing acceptance of our products in overseas markets and provides a strong foundation for future expansion. Currently, the industrial product division contributes less than 1% of the company's total revenues. Nevertheless, we see significant long-term potential in this business. With our ongoing business development initiatives, expansion of customer engagement, product portfolio enhancement, and increasing focus on export opportunity, we are targeting a meaningful scale-up of this vertical.

Speaker #2: However, in Q1 of financial year 2027, the business witnessed some moderation in sales, primarily due to the seasonal nature of demand in certain product categories.

Speaker #2: Despite the softer quarter, the business continued to demonstrate encouraging traction in international markets, with approximately 30% of the quarter's revenue generated from exports. This highlights the growing acceptance of our products in overseas markets and provides a strong foundation for future expansion.

Abhishek Jain: This highlights the growing acceptance of our products in overseas markets and provides a strong foundation for future expansion. Currently, the industrial product division contributes less than 1% of the company's total revenues. Nevertheless, we see significant long-term potential in this business. With our ongoing business development initiatives, expansion of customer engagement, product portfolio enhancement, and increasing focus on export opportunity, we are targeting a meaningful scale-up of this vertical.

Speaker #2: Currently, the industrial product division contributes less than 1% of the company's total revenues. Nevertheless, we see significant long-term potential in this business. With our ongoing business development initiatives, expansion of customer engagement, product portfolio enhancement, and increasing focus on export opportunities, we are targeting a meaningful scale-up of this vertical.

Speaker #2: Over the medium term, we are optimistic that the industrial product business can evolve into a significant growth engine and contribute approximately 10% to the company's overall revenues.

Abhishek Jain: Over the medium term, we are optimistic that the industrial product business can evolve into a significant growth engine and contribute approximately 10% to the company's overall revenues, while also supporting our broader strategy of revenue diversification beyond the core automotive business. The battery business continued to show encouraging growth momentum, with revenue increasing by 1.28 times in financial year 2026 compared to the previous year. During Q1 of financial year 2027, the revenue increased by four times year-on-year basis, but that was primarily owing to a lower base of the last financial year, 2026. Despite the strong growth in revenue, the business continues to operate in a challenging environment, primarily due to increases in raw material costs, pricing pressures, and significantly shorter customer delivery timelines.

Speaker #2: while also supporting our broader strategy of revenue diversification beyond the core automotive business. The battery business continued to show encouraging growth momentum, with revenue increasing by 1.28 times in financial year 2026 compared to the previous year.

Speaker #2: During Q1 of financial year 2027, the revenue increased by four times on a year-on-year basis, but that was primarily owing to a lower base in the last financial year, 2026.

Abhishek Jain: During Q1 of financial year 2027, the revenue increased by four times year-on-year basis, but that was primarily owing to a lower base of the last financial year, 2026. Despite the strong growth in revenue, the business continues to operate in a challenging environment, primarily due to increases in raw material costs, pricing pressures, and significantly shorter customer delivery timelines.

Speaker #2: Despite the strong growth in revenue, the business continues to operate in a challenging environment, primarily due to increases in raw material costs, rising pressures, and significantly shorter customer delivery timelines.

Speaker #2: We are working closely with our supply chain partners to improve overall efficiency and to enhance our inventory management and sourcing, so that we can cater to their requirements in a better way.

Abhishek Jain: We are working closely with our supply chain partners to improve the overall efficiency and to improve our inventory management and sourcing so that we can cater to their requirements in a better way. Our focus remains on improving the execution, controlling our costs, and minimizing the losses contributed by this business. Overall, we are encouraged by the strong start to financial year 2027 across all our business segments. Our healthy order pipeline, new product development initiatives, and favorable industry outlook provides a strong foundation for sustained growth. At the same time, our technology partnership with Hutchinson marks an important strategic milestone, significantly enhancing our capabilities in advanced sealing systems and reinforcing our position as a preferred technology-driven mobility solutions partner. Raw material inflation remains an important near-term watch item across our businesses.

Speaker #2: Our focus remains on improving execution, controlling our costs, and minimizing the losses contributed by this business. Overall, we are encouraged by the strong start to financial year 2027 across all our business segments.

Speaker #2: Our healthy order pipeline, new product development initiatives, and favorable industry outlook provide a strong foundation for sustained growth. At the same time, our technology partnership with Hutchinson marks an important strategic milestone, significantly enhancing our capabilities in advanced sealing systems and reinforcing our position as a preferred, technology-driven mobility solutions partner.

Abhishek Jain: Our healthy order pipeline, new product development initiatives, and favorable industry outlook provides a strong foundation for sustained growth. At the same time, our technology partnership with Hutchinson marks an important strategic milestone, significantly enhancing our capabilities in advanced sealing systems and reinforcing our position as a preferred technology-driven mobility solutions partner. Raw material inflation remains an important near-term watch item across our businesses.

Speaker #2: However, raw material inflation remains an important near-term watch item across our businesses. While we have made progress in securing cost pass-through arrangements with customers, a portion of the recent cost increases is still under discussion.

Abhishek Jain: While we have made progress in securing cost pass through arrangements with customers, a portion of the recent cost increases is still under discussion. We are continuously engaging with our customers closely and maintaining a disciplined approach towards cost management and margin protection. We also remain watchful of the geopolitical developments, commodity price movements, and the global supply chain dynamics, which could influence the operation environment over the course of this year. At the same time, we believe that our diversified business portfolio, technology-led growth strategy, strengthening customer relationships, and disciplined execution capabilities position us well to deliver sustained long-term growth and creating value for all the stakeholders. With that, I conclude my opening remarks and request the moderator to kindly open the floor for questioning. Thank you.

Speaker #2: We are continuing to engage closely with our customers and maintaining a disciplined approach towards cost management and margin protection. We also remain watchful of geopolitical developments, commodity price movements, and the global supply chain dynamics which could influence the operating environment over the course of this year.

Speaker #2: At the same time, we believe that our diversified business portfolio, technology-led growth strategy, strengthening customer relationships, and disciplined execution capabilities position us well to deliver sustained long-term growth and create value for all the stakeholders.

Abhishek Jain: At the same time, we believe that our diversified business portfolio, technology-led growth strategy, strengthening customer relationships, and disciplined execution capabilities position us well to deliver sustained long-term growth and creating value for all the stakeholders. With that, I conclude my opening remarks and request the moderator to kindly open the floor for questioning. Thank you.

Speaker #2: With that, I conclude my opening remarks and request the moderator to kindly open the floor for questions. Thank you.

Speaker #1: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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, we will wait for a moment while the question queue assembles. The first question is from the line of Hardik Chheda from Lark. Please go ahead.

Speaker #1: Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Hardik Cheda from Lark. Please go ahead.

Speaker #2: Yes, sir, with regard to the Hutchinson JV, can you draw a little on what kind of revenue you are expecting over the next three years because of this? That is, I would say, the main development, so can you throw some details on that?

Hardik Chheda: Sir, with regard to the Hutchinson JV, can you throw a little what kind of revenue are expecting over the next three years, because of this? That is, I would say, the main development. Can you throw some details on that?

Speaker #3: With Hutchinson, we have signed a technology partnership agreement.

Abhishek Jain: With Hutchinson, we have signed a technology partnership agreement.

Speaker #2: Yes.

Speaker #3: Wherein we'll be developing new solutions for all the customers not only covering only European but across all the segments. So currently we are engaging with the customers to look for more opportunities for these new new solutions along with our engagement with the existing customers.

Hardik Chheda: Yeah.

Abhishek Jain: Wherein we're developing new solutions for all the customers, not only covering only European, but across all the segments. Currently, we are engaging with the customers to look for more opportunities for these new solutions along with our engagement with the existing customers. Two ways business is happening basically automotive side. The PPAP is already doing business, that PPAP is already doing. We are adding new customers like those who were our existing and new players are coming. With Hutchinson, we will be making some new kind of products, and that is under discussion. Right now we don't have a number in mind, but customers are very excited about these solutions being available in India market now, and I think this year we will be able to achieve some breakthrough.

Speaker #3: देखिए दो तरीके से बिजनेस हो रहा है बेसिकली ऑटोमोटिव साइट पे जो पीपीएपी ऑलरेडी कर रही है बिजनेस वो पीपीएपी ऑलरेडी कर ही रही है एंड वी आर एडिंग न्यू कस्टमर्स लाइक लाइक जो भी हमारे एक्जिस्टिंग थे और नए प्लेयर्स आ रहे हैं Hutchinson के साथ जो है वी विल बी मेकिंग सम न्यू काइंड ऑफ प्रोडक्ट्स एंड दैट इज अंडर डिस्कशन सो राइट नाउ वी डोंट हैव अ नंबर इन माइंड बट कस्टमर्स आर वेरी एक्साइटेड अबाउट दीज सॉल्यूशंस बीइंग अवेलेबल इन इंडिया मार्केट नाउ एंड आई थिंक दिस ईयर वी विल बी एबल टू अचीव सम ब्रेक थ्रू.

Abhishek Jain: The PPAP is already doing business, that PPAP is already doing. We are adding new customers like those who were our existing and new players are coming. With Hutchinson, we will be making some new kind of products, and that is under discussion. Right now we don't have a number in mind, but customers are very excited about these solutions being available in India market now, and I think this year we will be able to achieve some breakthrough.

Speaker #2: Okay, so sir, we will be marketing the existing product, and we are developing products with them, and then we will start marketing them. So I don’t give that.

Hardik Chheda: Okay. Sir, we will be marketing the existing product, or we are developing product with them and then we will start marketing them. I didn't get that.

Speaker #3: We will be developing new products along with them.

Abhishek Jain: We will be developing new products along with them.

Hardik Chheda: Okay. This product will be sold exclusively for India or after developing this product will we even export this product? We are looking for only the domestic market, or once it's done, we are looking to export on this market.

Speaker #2: Okay, and this product will be sold exclusively for India, and after developing this product, even export this product. We are looking for only the domestic market, even looking for exports of this market.

Speaker #3: As of now, we are focusing primarily on the Indian market.

Abhishek Jain: As of now, we are focusing primarily on the Indian market.

Speaker #2: Okay. And sir, could you give me, actually translate to three, four, how many quarters are we expecting it to translate to meaningful revenue?

Hardik Chheda: Okay. Sir, at least could you give me a ballpark, means time, when we will actually translate it to revenue? Like Q2, Q3, Q4. How many quarters are we expecting it to translate into meaningful revenue?

Speaker #3: देखिए, we are already engaging with the customers अभी, and so I think by end of this year we should have some clarity on that.

Abhishek Jain: We are already engaging with the customers now. I think by end of this year, we should have some clarity on that.

Speaker #2: Okay, okay. And we are focusing on your one particular product, or is it a range of products that you are developing with them?

Hardik Chheda: Okay. We are focusing only on one particular product or it's a range of products that you are developing with them.

Speaker #3: अह इज पार्टनरशिप दिस पार्टनरशिप बेसिकली हैज़ फोकस ऑन वन अह काइंड ऑफ प्रोडक्ट प्राइमरली दैट इज मतलब एक वो होता है ना कि द मेन फोकस इज गोइंग टू बी ऑन द ग्लास रन चैनल बट विद द ग्लास रन चैनल ऑल द एक्जिस्टिंग प्रोडक्ट्स दैट वी आर ऑलरेडी मेकिंग फॉर द कस्टमर्स दैट विल आल्सो बी इज आल्सो पार्ट ऑफ आवर एग्रीमेंट.

Abhishek Jain: This partnership basically has focus on one kind of product primarily. The main focus is going to be on the glass run channel.

Hardik Chheda: Okay.

Abhishek Jain: With the glass run channel, all the existing products that we are already making for the customers, that is also part of our agreement.

Speaker #2: Okay, okay. And how big is the market for these glass run channels in India?

Hardik Chheda: Okay. How big is the market for this glass run channel in India?

Speaker #3: I don't have the number right now in front of me for glass run channel, but basically, all the passengers, every car needs a glass run channel.

Abhishek Jain: I don't have the number right now in front of me for glass run channel.

Hardik Chheda: It's just a ballpark.

Abhishek Jain: Basically, every car needs a glass run channel.

Speaker #2: Okay, okay. And who will be competing in this? Like, main competitor—who is your main competitor in this in India?

Hardik Chheda: Okay. Whom will you be competing with? Like main competitor, who is your main competitor in this in India?

Speaker #3: In glass run channel, in this particular technology, main competitor is SFC, Anand Nishikawa, Toyota Gosei.

Abhishek Jain: In glass run channel, in this particular technology, main competitor is SFC, Anand Nishikawa, and Toyoda Gosei.

Speaker #2: Okay, thank you so much. So that's it from my side. Thank you, sir.

Hardik Chheda: Okay. Thank you so much, sir. That's it from my side. Thank you, sir.

Speaker #1: Thank you. The next question is from the line of Dhruv Ravani from Price Bridge PMS. Please go ahead.

Operator: Thank you. The next question is from the line of Dhruv Ravani from PriceBridge PMS. Please go ahead.

Speaker #2: Uh, hello sir, good morning. Uh, I wanted to check that, you know, while we are seeing revenue growth, uh, what is your plan for operating profit margin, sir? When do you see that going up, and what is your internal target on that?

Dhruv Ravani: Hello, sir. Good morning. Wanted to check that while we are seeing revenue growth, what is your plan for operating profit margins, sir? When do you see that going up, and what is your internal target on that?

Dhruv Rawani: Hello, sir. Good morning. Wanted to check that while we are seeing revenue growth, what is your plan for operating profit margins, sir? When do you see that going up, and what is your internal target on that?

Speaker #3: So thank you for the question regarding the operating margin side, because in this quarter you see there was an impact of these raw material prices increases across the businesses which we have. So, on the raw material side, the main impact is there. So approximately 4% of the raw material cost has gone up due to these increases. Out of that, we were able to pass on around 2% of the raw material prices to the customer. For the balance 50% price increases, we are in the discussion with the customer, and we are hopeful that by the end of Q2 and the start of Q3, we will be able to settle those price increases also with the customer.

Sachin Jain: Thank you for the question. Regarding the operating margin side, because in this quarter, you see there was an impact of these raw material price increases across the businesses which we have. On the raw material side, the main impact is there. Approximately 4% of the raw material cost has gone up due to these increases. Out of that, we are able to pass on around 2% of the raw material prices to the customer. For the balance 50% price increases, we are in the discussion with the customer, and we are hopeful that by the end of Q2 and the start of Q3, we will be able to settle those price increases also with the customer.

Sachin Jain: Out of that, we are able to pass on around 2% of the raw material prices to the customer. For the balance 50% price increases, we are in the discussion with the customer, and we are hopeful that by the end of Q2 and the start of Q3, we will be able to settle those price increases also with the customer.

Speaker #2: Understood. So, because—but even otherwise, do you have any internal target that at what level you would want your operating margin to look like, say one year down the line, or exit FY27 with?

Dhruv Ravani: Understood. Even otherwise, do you have any internal target that at what level you would want your operating margins to look like, say, one year down the line or exit FY27 with?

Dhruv Rawani: Understood. Even otherwise, do you have any internal target that at what level you would want your operating margins to look like, say, one year down the line or exit FY27 with?

Speaker #3: Yeah, that's that. Their internal targets are there, so we are working closely to chase those targets and to achieve those targets.

Sachin Jain: Their internal targets are there. We are working closely to chase those targets and to achieve those targets.

Speaker #2: Okay, with Mahindra, can you just help us, like which, you know, vehicle onwards you would be able to participate with them?

Dhruv Ravani: Okay. With Mahindra, can you just help us, like which vehicle onwards you'd be able to participate with them?

Dhruv Rawani: Okay. With Mahindra, can you just help us, like which vehicle onwards you'd be able to participate with them?

Speaker #3: सो महिंद्रा वी हैव मेनी रिलेशनशिप्स नाउ इंक्लूडिंग टियर वन एंड टियर टू सो फॉर द प्राइमरली फॉर द टियर वन बिज़नेस वेयर इन वी आर गोइंग टू स्टार्ट आवर सीलिंग प्रोडक्ट्स विथ देम द एसओपी इज गोइंग टू स्टार्ट इन क्वार्टर थ्री सो दैट इज आवर टियर वन बिज़नेस बट एट टियर टू लेवल विद महिंद्रा वी आर ऑलरेडी डेवलपिंग अह देयर इंजेक्शन मोल्डिंग टूलिंग अलोंग विद अह सम सीलिंग सिस्टम फॉर देयर सनरूफ सिस्टम थ्रू देयर टियर वन मेकर.

Abhishek Jain: Mahindra, we have many relationships now, including tier 1 and tier 2. Primarily, for the tier 1 business, wherein we are going to start our sealing products with them, the SOP is going to start in Q3. That is our tier 1 business. But at tier 2 level with Mahindra, we are already developing their injection molding tooling along with some sealing system for their sunroof system to their tier 1 maker.

Speaker #2: Okay, sir. My third question is with regards to the sale process that we sell from the exit of the Japanese JV. Can you throw some light, like how we are utilizing that?

Dhruv Ravani: Okay, sir. My third question is with regards to the sale proceeds that we received from the exit of the Japanese JV. Can you throw some light, like how we are utilizing that?

Dhruv Rawani: Okay, sir. My third question is with regards to the sale proceeds that we received from the exit of the Japanese JV. Can you throw some light, like how we are utilizing that?

Speaker #3: So, on the sale proceeds which we got from the exit of the JV—so, around ₹100 crore we got—out of that, around ₹8 crore has been utilized towards the payment of taxes. So, out of the balance amount, 25% would be retained for the working capital requirements and the rest would be used for the strategic capex requirements of the company.

Sachin Jain: On the sale proceed, which we got from the exit of the JV, around INR 100 crore we got. Out of that, around INR 8 crore has been utilized towards the payment of taxes.

Sachin Jain: On the sale proceed, which we got from the exit of the JV, around INR 100 crore we got. Out of that, around INR 8 crore has been utilized towards the payment of taxes. Out of that balance amount, 25% would be retained for the working capital requirements and rest would be used for the strategic CapEx requirement of the company.

Abhishek Jain: Out of that balance amount, 25% would be retained for the working capital requirements and rest would be used for the strategic CapEx requirement of the company.

Speaker #3: As of now, we are not.

Speaker #2: So you would want to use this for the hatches and JV, or the industrial tooling. Have you had any—can you throw some light on that, like what sort of FX you may look at?

Dhruv Ravani: You would want to use this for the Hutchinson JV or the industrial tooling. Can you throw some light on that? Like what sort of CapEx you may look at?

Dhruv Rawani: You would want to use this for the Hutchinson JV or the industrial tooling. Can you throw some light on that? Like what sort of CapEx you may look at?

Speaker #3: At the age of now, we are not having any joint venture with Hach & Son, so there could be some technological investment on the machinery and the equipment which would be required for this product development, which will be developed in collaboration with Hach & Son. And on the industrial product side also, there would not be any requirement because mostly these are the toolings of low value that is developed in-house by the company. So investment would be in this financial year in three areas: one is the capability development in the APDM product; second, in the expansion of the tooling/tool room; and for the land requirement on the west area near Sambhajinagar.

Abhishek Jain: As of now, we are not having any JV with the Hutchinson. There could be some technological investment on the machine and the equipment which would be required for this product development, which will be developed in the cooperation of the Hutchinson. Industrial product side also, there would not be any requirement because mostly these are the toolings of low value that is developed in-house by the company. Investment would be in this financial year in three areas. One is the capability development in the EPDM product, second in the expansion of the tool room, and for the land requirement on the west area near Chhatrapati Sambhajinagar.

Abhishek Jain: Industrial product side also, there would not be any requirement because mostly these are the toolings of low value that is developed in-house by the company. Investment would be in this financial year in three areas. One is the capability development in the EPDM product, second in the expansion of the tool room, and for the land requirement on the west area near Chhatrapati Sambhajinagar.

Speaker #2: Okay, okay. Fourthly, on the battery division, you know, where are we in terms of break-even? Because we have been guiding that we are trying hard, so any, you know, positive developments out there which you may want to share? That, you know, in terms of numbers, probably like what levels we have broken even and where we are in terms of Q2, Q3? Because I think that is denting our margin in a long way.

Dhruv Ravani: Fourthly, on the battery division, where are we in terms of breakeven? Because we have been guiding that we are trying hard. Any positive developments out there which you may want to share that, in terms of numbers probably like what levels we have broken even and where we are in terms of Q2, Q3. Because I think that is denting our margin in a long way.

Dhruv Rawani: Fourthly, on the battery division, where are we in terms of breakeven? Because we have been guiding that we are trying hard. Any positive developments out there which you may want to share that, in terms of numbers probably like what levels we have broken even and where we are in terms of Q2, Q3. Because I think that is denting our margin in a long way.

Speaker #3: Yes, you're right. Battery business, that is why in our opening comments also we categorically said that the focus is basically on minimizing the losses, which are contributed by this business, and we are continuously working towards that.

Abhishek Jain: You're right. Battery business, that is why in our opening comments also, we've categorically said that the focus is basically on minimizing the losses which are contributed by this business. We are continuously working towards that. We are engaging with customers, getting new customers on board, especially in the energy storage area. I think Q1, contribution was not that good, but we are hopeful that Q2 onwards, things may start get better. It still remains a cause of concern for us.

Speaker #3: We are engaging with customers, getting new customers on board, especially in the energy storage area. And I think in Quarter 1, the contribution was not that good, but we are hopeful that Quarter 2 onwards, things may start to get better.

Speaker #3: But it still remains a cause of concern for us.

Speaker #2: या, ओके ओके सर. Thank you, sir.

Dhruv Ravani: Yeah. Okay. Got it. Thank you, sir.

Dhruv Rawani: Yeah. Okay. Got it. Thank you, sir.

Speaker #1: Thank you. Participants who wish to ask questions may press star and one at this time. The next question is from the line of Tania Desai from B.S. Securities. Please go ahead.

Operator: Thank you. Participants who wish to ask questions may press star and one at this time. The next question is from the line of Tanya Desai from B.S. Securities. Please go ahead.

Speaker #4: Uh, yeah. Good afternoon, sir, and thank you for the opportunity. I had a couple of questions. First was on after-market business. So, we can see that this segment has been the fastest growing part in our portfolio, and we have added roughly around 345 products during Q1.

Tanya Desai: Yeah. Good afternoon, sir, and thank you for the opportunity. I have couple of questions. First was on aftermarket business. We can see that this segment has been fastest growing parts in our portfolio, and we have added roughly around 345 products during Q1. I just wanted to understand how this growth trajectory would be like from this particular business. Also if you could highlight if we can see any kind of constraints in terms of growth, say probably in the distribution reach or any kind of demand.

Speaker #4: I just wanted to understand how this growth trajectory would be like from this particular business, and also if you could highlight if we can see any kind of constraints in terms of growth, probably in the distribution to each, or any kind of demand.

Speaker #3: Last year also, this business grew by 30%, and this year also we are expecting that this business will continue growing at that rate.

Abhishek Jain: Tanya, last year also this business grew by 30%. This year also, we are expecting that this business will continue growing at that rate. We started focusing on this business just about 3, 4 years back, and we have a long ground to cover. Till that time, this growth momentum will surely be there. For this growth to continue, we are, like I said in the opening remarks, our focus is basically to improve our product portfolio and as well as our distribution network. By this, we should be in our growth space and focus is not only just on the offline distribution, but online networks as well. Warehouse also, we have one distribution warehouse in the north, and I think in this quarter we'll be establishing one distribution warehouse somewhere in west as well to improve all this.

Speaker #3: We started focusing on this business just about three to four years back, and we have a long ground to cover. So, till that time, this growth momentum will surely be there.

Speaker #3: And for this growth to continue, we are, like I said in the opening remarks, our focus is basically to improve our product portfolio and as well as our distribution network.

Speaker #3: सो बाय दिस वी शुड बी इन अ इन अ ग्रोथ स्पेस एंड फोकस इज़ नॉट ओनली जस्ट ऑन द ऑफलाइन डिस्ट्रीब्यूशन बट ऑनलाइन नेटवर्क्स एज़ वेल एंड वेयर हाउस आल्सो वी हैव वन डिस्ट्रीब्यूशन वेयर हाउस इन इन द नॉर्थ एंड आई थिंक इन दिस क्वार्टर वी विल बी इस्टैब्लिशिंग वन डिस्ट्रीब्यूशन वेयर हाउस समवेयर इन वेस्ट एज़ वेल टू इंप्रूव ऑल दिस.

Abhishek Jain: By this, we should be in our growth space and focus is not only just on the offline distribution, but online networks as well. Warehouse also, we have one distribution warehouse in the north, and I think in this quarter we'll be establishing one distribution warehouse somewhere in west as well to improve all this. I think we're quite hopeful that the growth will definitely be there in this business.

Speaker #3: So, I think we are quite hopeful that the growth will definitely be there in this business.

Abhishek Jain: I think we're quite hopeful that the growth will definitely be there in this business.

Speaker #4: Understood, sir. So my next question was to understand about the capex for this Safety Me 7. We believe that this business has been growing extremely strong and capacity utilization is expected to improve.

Tanya Desai: Understood, sir. My next question was to understand about the CapEx for this FY27. We believe that this business has been growing extremely strong, and capacity utilization is expected to improve. Have you outlined any kind of CapEx for this FY?

Speaker #4: So, have you outlined any kind of capex for this FY?

Speaker #3: या फॉर दिस फाइनेंसियल ईयर द कैपेक्स इज़ ऑलरेडी आउटलाइंड एज़ आई मेंशन इन द लास्ट क्वेश्चन आल्सो. सो दिस ईयर द मेन द कैपेक्स वुड बी ड्राइव्ड मेनली फॉर द एपीडीएम बिज़नेस बिकॉज़ ऑफ़ द इंजेक्शन मोल्डिंग साइड एंड द प्लास्टिक एक्सक्लूजन साइड वी हैव सफिशिएंट कैपेसिटी एंड न्यू ऑर्डर इज़ आल्सो कमिंग अप इन द एपीडीएम स्पेस वेयर वी आर ग्रोइंग इफेक्टिवली एंड आउट ऑफ़ दैट वन न्यू लाइन वुड बी ऑपरेशनल इन द क्यू टू इटसेल्फ एंड वी वुड बी फर्दर इन्वेस्टिंग इन अनदर टू लाइंस इन दिस फाइनेंसियल ईयर एंड द टूलिंग बिज़नेस आल्सो वुड बी द अनदर एरिया वेयर वी वुड बी इन्वेस्टिंग दिस फाइनेंसियल ईयर.

Abhishek Jain: Yeah. For this financial year, the CapEx is already outlined, as I mentioned in the last question also. This year, the CapEx would be derived mainly for the EPDM business because of the injection molding side and the plastic extrusion sides, we have sufficient capacity. New order is also coming up in the EPDM space where we are growing effectively. Out of that, one new line would be operational in the Q2 itself. We would be further investing in another two lines in this financial year. The tooling business also would be another area where we would be investing this financial year.

Speaker #4: Understood, sir. So I believe we expect some incremental capacity investments, right? Ah, and— Yeah, okay, okay, sir. Sir, thank you so much. Sir, I will get back in touch with you.

Tanya Desai: Understood, sir. I believe we expect some incremental capacity investments, right?

Abhishek Jain: Yes.

Tanya Desai: Okay. Sure, sir. Thank you so much, sir. I will get back into queue.

Speaker #1: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.

Operator: Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Mihir Shah from MP Securities. Please go ahead.

Speaker #1: The next question is from the line of Mihir Shah from Emkay Securities. Please go ahead.

Speaker #5: Hello, am I audible? Yes. Hello? Yeah, yes please. Yeah, so congratulations sir on the strong start of the year. You have reported over like 34% console revenue growth in Q1, and I like also indicated a good robust order pipeline. So, should we expect the growth momentum seen in Q1 to sustain throughout the year? Or, like, was this some benefit from low base and deferred orders, you know, this year?

Mihir Shah: Hello. Am I audible?

Operator: Yes.

Mihir Shah: Hello.

Abhishek Jain: Yeah. Yes, please.

Mihir Shah: Congratulations, sir, on the strong start of the year. You have reported over 34% of consolidated revenue growth in Q1, and have also indicated a good robust order pipeline. Should we expect the growth momentum seen in Q1 to sustain throughout the year, or this was some benefit from low base or deferred orders?

Abhishek Jain: No, this year, even Q2 till date, we are seeing strong growth coming in. That momentum is still continuing.

Speaker #3: Even quarter two till date, we are seeing strong growth coming in, so that momentum is still continuing.

Speaker #5: ओके एंड लाइक क्वार्टर आई थिंक दिस व्हाट वी आर एक्सपेक्टिंग इज़ द सेल्स नंबर्स टू इंक्रीस ओके या एंड सर एंड आई थिंक आई वुड लाइक टू आस्क इज द ईवी कंपोनेंट ऑफ योर लाइफ टाइम ऑर्डर प्रिंस हैज़ इंक्रीस लाइक क्वाइट शार्पली टू अराउंड 64 करोड़ इन क्यू वन एंड आई फील लाइक 11 करोड़ इन ईयर ऑफ़ अ पीरियड लाइक यू हैव ऑलरेडी टॉक अबाउट दिस इन द अर्लियर क्वेश्चन बट लाइक हाउ शुड वी थिंक अबाउट द कंट्रीब्यूशन फ्रॉम दीज़ ईवी प्रोग्राम्स टू रेवेन्यूस ओवर द नेक्स्ट टू टू थ्री इयर्स एंड हाउ आर यू सीइंग एनी मीनिंगफुल व्हीकल लाइक से डिफरेंस इन कंटेंट फॉर व्हीकल बिटवीन योर ईवी एंड आइस प्रोग्राम्स।

Mihir Shah: Okay. Like

Abhishek Jain: Around quarter, I think, what we are expecting the sales numbers to increase.

Mihir Shah: Okay. Yeah. Sir, another thing I would like to ask is, the EV component of your lifetime order, Vince, has increased quite sharply to around INR 64 crores in Q1 and up to INR 11 crores in year-over-period. You have already talked about this in the earlier question, but how should we think about the contributions from these EV programs to revenues over the next two to three years? How are you seeing any meaningful vehicle, like say, difference in content for vehicle between your EV and ICE programs?

Speaker #3: जी फर्स्ट ऑफ़ ऑल लेट मी मेक इट वेरी क्लियर टू यू दैट द प्रोडक्ट्स दैट वी मेक दे आर बेसिकली इंजन एग्नोस्टिक प्रोडक्ट्स सो सिमिलर प्रोडक्ट गोज़ इन एंड एन आइस व्हीकल एंड सिमिलर गोज़ इन एन ईवी आल्सो ओनली देयर आर सर्टेन इन ईवी बेसिकली अपीयरेंस एंड ऑल दोज़ रिक्वायरमेंट्स आर लिटिल लिटिल मोर देन एन आइस व्हीकल टुडे एंड दैट्स वेयर द अ लिटिल बिट ऑफ़ प्रीमियम प्रीमियमनेस हैपेंस ऑफ़ द ऑफ़ आवर प्रोडक्ट्स। बट टेक्नोलॉजी साइड ऑल दीज़ व्हीकल्स दे दे आर बेसिकली दे यूज़ सिमिलर सीलिंग सिस्टम।

Abhishek Jain: See, first of all, let me make it very clear to you that the products that we make, they are basically engine agnostic products. Similar product goes in an ICE vehicle and similar goes in an EV also. Only there are certain, in EV basically, appearance and all those requirements are little more than an ICE vehicle today. That's where a little bit of premiumness happens of our products. Technology side, all these vehicles, they are basically use similar sealing systems.

Speaker #5: या अंडरस्टुड दैट्स दैट्स हेल्पफुल एंड सर आर एबिटा मार्जिन्स रिमेन ब्रॉडली स्टेबल इन क्यू वन सो कुड यू हेल्प मी अंडरस्टैंड लाइक द की फैक्टर्स करेंटली लिमिटिंग द मार्जिन एक्सपेंशन एंड आल्सो ऑन द पैट लेवल लाइक हाउ शुड वी लुक आफ्टर द ग्रोथ इन आफ्टर ग्रोथ इन पैट एंड लाइक हाउ डू वी एक्सपेक्ट द फाइनेंस कॉस्ट टू कम डाउन कंसीडरिंग द डाइवेसमेंट वी हैव डन इन पीपीएपी टोकाई।

Mihir Shah: Yeah, understood. That's helpful. Sir, our EBITDA margins remain broadly stable in Q1. Could you help me understand the key factors currently limiting the margin expansion? Also on the PAT level, how should we look after growth in PAT? How do we expect the finance cost to come down considering the divestment we have done in PPAP Tokai?

Speaker #3: Yeah, okay. So, on the margin side, if you see in the quarter one, the margins are basically improved versus last year due to better utilization of the capex. If we see on the fixed cost absorption, but due to the raw material price increases, the 100% effect we are not able to get on the margin side. And gradually, as soon as the topline would increase, as we have already indicated, and further, the raw material prices are settled and our negotiations with the customer would be stabilized and finalized by the end of quarter two or early in quarter three, then automatically there would be a reflection on the improvement in the EBITDA margin. And that would directly reflect to our PAT level also.

Abhishek Jain: Yeah. Okay, the margin side, if you see in Q1, the margins are basically improved, but still due to the better utilization of the CapEx, if we see on the fixed cost absorption. Due to the raw material price increases, the 100% effect, we are not able to get on the margin side. Gradually, as soon as the top line would increase, as we have already indicated, and further the raw material prices are settled and our negotiations with the customer would be stabilized or finalized by the end of Q2 or the early of Q3, then automatically there would be reflection on the improvement in the EBITDA margin, and that would directly reflect to our PAT level also.

Sachin Jain: Yeah. Okay, the margin side, if you see in Q1, the margins are basically improved, but still due to the better utilization of the CapEx, if we see on the fixed cost absorption. Due to the raw material price increases, the 100% effect, we are not able to get on the margin side.

Sachin Jain: Gradually, as soon as the top line would increase, as we have already indicated, and further the raw material prices are settled and our negotiations with the customer would be stabilized or finalized by the end of Q2 or the early of Q3, then automatically there would be reflection on the improvement in the EBITDA margin, and that would directly reflect to our PAT level also.

Speaker #5: Yeah, that's helpful, sir. Thank you. That's all from my side.

Mihir Shah: Yeah, that's helpful, sir. Thank you. That's all from my side.

Speaker #1: Thank you. Participants who wish to ask questions may press star and one at this time. Ladies and gentlemen, in order to ask a question, you may press star and one now. The next question is from the line of Hardik Chedda from Lark. Please go ahead.

Operator: Thank you. Participants who wish to ask questions may press star and one at this time. Ladies and gentlemen, in order to ask a question, you may press star and one now. The next question is from the line of Hardik Chheda from Lark. Please go ahead.

Speaker #3: Sir, with the government opening up these DTX exploration blocks—so many—and considering deep-sea exploration, how would that figure for our company in the long run? How is that opportunity? In recent news, there was whether the government is opening up more and more blocks for deep-sea exploration. Hardik ji: We have nothing to do with deep-sea exploration. Achha, okay, okay. Sorry, just one minute sir. Okay, okay. Thank you, sir.

Hardik Chheda: Sir, with the government opening up this deep sea exploration blocks so many and considering deep sea exploration, how would that figure for our company in the long run? How do you see that opportunity? In recent news, there was that the government is opening up more and more blocks for deep sea exploration.

Abhishek Jain: Rajiv, we have nothing to do with deep sea exploration.

Hardik Chheda: Okay. Sorry. That was on my side. Okay. Thank you, sir.

Speaker #1: Thank you. The next question is from the line of Saket, an individual investor. Please go ahead.

Operator: Thank you. The next question is from the line of Saket, an individual investor. Please go ahead.

Speaker #5: या सर एक्चुअली आई हैड अ क्वेश्चन रिगार्डिंग द कंपनीज़ मार्जिन्स लाइक हिस्टोरिकली प्री कोविड द मार्जिन लेवल्स वर सिग्निफिकेंटली बेटर एंड ऑफ लेट द मार्जिन्स हैव ऑलमोस्ट हाफ सो गोइंग फॉरवर्ड हाउ द कंपनी सीज़ रिगार्डिंग द मार्जिन्स इंप्रूविंग टू द प्री कोविड लेवल्स और देयर आर सम फैक्टर्स दैट आर मेकिंग द मार्जिन्स गो लोअर।

[Company Representative]: Yeah, sir, actually, I had a question regarding the company's margins. Like historically, pre-COVID, the margin levels were significantly better, and of late, the margins have almost halved. Going forward, how the company sees regarding the margins improving to the pre-COVID levels, or there are some factors that are making the margins go lower?

[Shareholder] (Private Investor): Yeah, sir, actually, I had a question regarding the company's margins. Like historically, pre-COVID, the margin levels were significantly better, and of late, the margins have almost halved. Going forward, how the company sees regarding the margins improving to the pre-COVID levels, or there are some factors that are making the margins go lower?

Speaker #3: या रिगार्डिंग द मार्जिन्स इफ वी कंपेयर विथ द प्री कोविड लेवल्स सो प्री कोविड लेवल द सिचुएशंस वर डिफरेंट द रॉ मटेरियल प्राइसेस वर डिफरेंट्स एंड डे बाय डे व्हेन यू आर टॉप लाइन इज़ इंक्रीजिंग यू आर एडिंग नो मोर कस्टमर्स एंड सो यू नीड टू बी मोर कॉम्पिटिटिव एंड यू नीड टू कीप द प्राइसेस एस पर द मार्केट सो द प्री कोविड प्राइसेस इज़ वेरी डिफिकल्ट टू अचीव अगेन इट इज़ क्लियर एंड तो मार्जिन्स वुड इंप्रूव इन क्यू टू क्यू थ्री ग्रेजुअली व्हेन द यूटिलाइजेशन ऑफ़ द एसेट्स वुड बी बेटर एंड वी आर आल्सो एबल टू सेटल्स द पेंडिंग क्लेम्स विथ द कस्टमर्स।

Abhishek Jain: Yeah. Regarding the margins, if we compare with the pre-COVID levels, Pre-COVID levels, the situations were different. Raw material prices were different. Day by day when your top line is increasing, you are adding more customers, you need to be more competitive, and you need to keep the prices as per the market. The pre-COVID prices is very difficult to achieve again. It is clear. Margins would improve in Q2, Q3 gradually when the utilization of the assets would be better, and we are also able to settle the pending claims with the customers.

Speaker #5: So, what would be sustainable margin levels for a long-term period if we see...

[Company Representative]: What would be sustainable margin levels for a longer-term period if we see?

[Shareholder] (Private Investor): What would be sustainable margin levels for a longer-term period if we see?

Speaker #3: Yeah, if we talk about the automotive ancillaries like us and so, because there where we have the OEM customer, where we need to be more, 12 to 13% margins would be on a sustainable basis.

Sachin Jain: If you talk about the automotive ancillaries like us, because where we have the OEM customer there, we need to be the most cost competitive. 12% to 13% margins would be on the sustainable basis.

Speaker #5: Now 19% we expect to go to 12–13%.

[Company Representative]: Now 19%, we expect it to go to 12%, 13%?

[Shareholder] (Private Investor): Now 19%, we expect it to go to 12%, 13%?

Speaker #3: यस।

Sachin Jain: Yes.

Speaker #5: Okay. But for the last seven years, sir, the growth in the top line has been very muted for our company. The sector has grown very well, the auto sector, but if we see from 2019-2020, from ₹400 crore we have just moved to ₹600 crore in the last six or seven years. So, like, what is plugging the growth in the sales?

[Company Representative]: For last several years, sir, the growth in the top line has been very muted for our company. Though sector has grown very well, the auto sector, if we see from 2019, from INR 400 crores, we have just moved to INR 600 crores in last six, seven years. What is plaguing the growth in the sales?

[Shareholder] (Private Investor): For last several years, sir, the growth in the top line has been very muted for our company. Though sector has grown very well, the auto sector, if we see from 2019, from INR 400 crores, we have just moved to INR 600 crores in last six, seven years. What is plaguing the growth in the sales?

Speaker #3: So this year, if you see our quarter number results—so in the Q1, we have a 34% growth. So there are certain actions which you have taken in the last two to three years. So now this result has started coming. So this year, we will be able to have good growth and this momentum should continue for the next year also.

Sachin Jain: This year, if you see our quarter number results, in the Q1, we have the 34% of the growth. There are certain actions which we have taken in last two to three years. Now the result has start coming. This year we will able to have the good growth, and this momentum should continue for the next year also.

Speaker #5: So, like sir, have we lost any clients over the years? That is why the sales are not grown this much, because the industry has gone much better than what we have grown.

[Company Representative]: Sir, have we lost any client over the years, that is why the sales have not grown this much? The industry has grown much better than what we have grown.

[Shareholder] (Private Investor): Sir, have we lost any client over the years, that is why the sales have not grown this much? The industry has grown much better than what we have grown.

Speaker #3: या नो वी हैव नॉट लॉस्ट एनी क्लाइंट पर से यू आई वुड से बिकॉज़ द इंडस्ट्री हैज़ ग्रोन बिकॉज़ इफ यू सी दैट देयर इज़ वाज़ अ मोस्ट इफ यू सी दैट नाउ द व्हेन यू सी इन इन टर्म्स ऑफ़ एक्चुअल नंबर्स एंड द वैल्यू ऑफ़ द कार हैज़ गॉन अप ड्यू टू द इन्फ्लेशन एंड अदर थिंग्स बिकॉज़ द मोर एडवांस फीचर्स हैज़ बीन एडेड टू द कार सो यू नो द इलेक्ट्रिकल साइड देयर वाज़ अ मोर ऑफ़ मोर पार्ट्स वर एडेड सो वी वर नॉट एबल टू गेट बेनिफिट ऑफ़ दोज़ एरियाज़ इफ यू सी बिकॉज़ वी वर मेकिंग प्राइमरली द सेलिंग सिस्टम एंड द इंजेक्शन मोल्डेड पार्ट सो देयर वाज़ नो नॉट मच चेंजेस इन दोज़ कैटेगरी हाउएवर इन द द इलेक्ट्रिकल साइड देयर वाज़ अ मोर सेंसर मोर एडवांस फीचर कार्ड आर नाउ बीइंग डेवलप्ड सो ड्यू टू दैट दैट इफेक्ट व्हिच हैज़ बीन शोन इन द अदर ऑटो एनसिलरी प्लेयर वुड नॉट रिफ्लेक्ट टू द आवर टॉप लाइन।

Sachin Jain: Yeah, no, we have not lost any client per se, I would say, the industry has grown. If you see that now, when you see in terms of actual numbers and the value of the car has gone up due to the inflation and other things, the more advanced features has been added to the car. On the electrical side, there was a more and more parts were added. We were not able to get benefit of those areas, if you see, because we were making primarily the sealing system and the injection molded part. There was not much changes in those categories. However, in the electrical side, there was a more sensor, more advanced feature car are now being developed. Due to that effect which has been shown in the other auto ancillary player could not reflect to our top line.

Sachin Jain: We were not able to get benefit of those areas, if you see, because we were making primarily the sealing system and the injection molded part. There was not much changes in those categories. However, in the electrical side, there was a more sensor, more advanced feature car are now being developed. Due to that effect which has been shown in the other auto ancillary player could not reflect to our top line.

Speaker #5: Sir, one more question regarding the debt levels we have. So, going forward, do we see the company—you can get a frame sometimes because of the inflow of money recently we have had—so what are plans regarding the debt?

[Company Representative]: Sir, one more question regarding the debt levels we have. Going forward, do we see the company becoming debt-free in some time because of the inflow of money recently we have had? What are plans regarding the debt?

[Shareholder] (Private Investor): Sir, one more question regarding the debt levels we have. Going forward, do we see the company becoming debt-free in some time because of the inflow of money recently we have had? What are plans regarding the debt?

Speaker #3: So, in for the short term, sir, our target is that in the next three years, at the net level, we would like to be debt free.

Sachin Jain: For the short-term side, our target is that in next three years at the net level, we would like to be debt-free.

Speaker #5: And regarding the capital, regarding capital utilization, what is the utilization level as of now, sir?

[Company Representative]: Regarding the capacity utilization, what is the utilization level as of now, sir?

[Shareholder] (Private Investor): Regarding the capacity utilization, what is the utilization level as of now, sir?

Speaker #3: In Q1, it was 73%.

Sachin Jain: In Q1, it was 73%.

[Company Representative]: Okay. Thank you so much, sir.

[Shareholder] (Private Investor): Okay. Thank you so much, sir.

Speaker #5: थैंक यू सो मच सर।

Speaker #1: Thank you. As of now, sir, no further questions from the participants. I would now like to hand the conference over to Mr. Abhishek Jain for closing comments.

Operator: Thank you. As there are no further questions from the participants, I would now like to hand the conference over to Mr. Abhishek Jain for closing comments.

Speaker #3: Thank you very much everyone for joining us today. We hope we have been able to address all your questions effectively. For any further questions or clarifications, please feel free to reach out to us or to our IR advisors, Strategic Growth Advisors. Thank you very much everyone. Thank you, thank you everyone.

Abhishek Jain: Yeah, thank you very much everyone for joining us today. We hope we have been able to address all your questions effectively. For any further questions or clarifications, please feel free to reach out to us or to our IR advisors, Strategic Growth Advisors. Thank you very much, everyone.

Sachin Jain: Thank you. Thank you, everyone.

Operator: Thank you. On behalf of PPAP Automotive Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

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Q1 2027 PPAP Automotive Ltd Earnings Call

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