Nature of the Event

This document is a transcript of the Q1 FY2027 earnings conference call for Alicon Castalloy Limited, held on 14th August 2026, following the announcement of financial results for the quarter ended 30th June 2026.

Key Financial Figures

  • Total Income: ₹579 crore for Q1 FY27, representing a 37% year-on-year growth and 17% sequential growth.
  • EBITDA: ₹55 crore with an EBITDA margin of 9.5%.
  • Profit Before Tax (PBT): ₹18 crore, growing 45% year-on-year.
  • Profit After Tax (PAT): ₹12 crore, higher by 23% year-on-year.
  • Capital Expenditure: Approximately ₹40 crore for Q1 FY27. Full-year capex plan is approximately ₹150 crore, which includes ₹70 crore earmarked for a new manufacturing facility out of a total planned investment of ₹125 crore.
  • Tonnage: Consolidated tonnage for Q1 FY27 was 9,124 tonnes. FY26 total tonnage was 34,000 tonnes.

Strategic and Operational Updates

  • New CEO Strategy: Mr. Sumit Bhatnagar, who took charge as CEO on 1st April 2026, articulated a three-pillar operating philosophy: 'Reset', 'Refocus', and 'Rebuild'.
  • Market Growth: The Indian automotive industry showed strong growth in Q1: Passenger vehicles grew 11.3% (1.57 million units), 2-wheelers grew 21%, and commercial vehicles grew 19.5%. Alicon's growth significantly outpaced the market.
  • Underlying Volume Growth: After adjusting for material inflation, Alicon's underlying volume growth was approximately 17.5% on a consolidated basis and 22% on a stand-alone basis.
  • New Capacity Investment: The company announced an investment of ₹125 crore over the next two years at a leased facility in Shikrapur (1.36 lakh square feet). The facility is expected to generate approximately ₹500 crore in annual revenue over 4-5 years. Possession is scheduled for 1st September 2026, with Start of Production (SOP) targeted for March 2027.
  • Order Book: The executable order book stands at ₹8,450 crore as of 30th June 2026, representing orders over six years (2026 to 2031). This does not include ongoing programs that were part of revenue prior to FY26.
  • Order Book Split: 16% Electric Vehicles (EV), 12% Hybrid, 10% Structural (common to ICE, EV, hybrid), 2% Non-Automotive, and the remainder Internal Combustion Engine (ICE) and 2-wheelers.
  • Export Contribution: 40% of the new business order book is for exports, with 30% of that being deemed exports (domestically produced for export).
  • European Operations: The European facility reported lower sales due to the end of production life cycle for certain parts. New programs, including an e-Axle business, are under development with a expected strong comeback from Q3 FY27 onwards.
  • New Customer Wins: The company gained entry into two large Indian passenger vehicle and commercial vehicle OEMs, with visibility of approximately ₹850 crore of business over the next five years.
  • Non-Automotive Focus: A separate vertical has been created for non-automotive sales. Recent wins include business in HVAC for data servers and the defence segment. The company also won its first business in the tractor segment for an aluminium cylinder head.

Profitability and Margin Outlook

  • Margins were impacted by significant volatility in input costs, including aluminium, alloys, gas, tooling, employees, energy, and logistics.
  • Raw material inflation (aluminium) is contractually pass-through with a timing lag.
  • The company is engaging with customers for price revisions to recover increases in manufacturing costs and has secured some approvals.
  • The immediate focus is on operational efficiency initiatives (productivity, automation, process optimization) to improve the underlying cost structure.
  • Management expects a 1% improvement in EBITDA margins for FY27 and is working towards progressive improvement in subsequent years.

Guidance and Outlook

  • Revenue Growth: Management guides for 12% to 15% underlying volume growth (neutralizing aluminium impact) for FY27.
  • Margins: Expects a 1% improvement in EBITDA margins for FY27.
  • ROCE: Acknowledges current Return on Capital Employed (ROCE) is not attractive but is on an increasing trend. FY26 ROCE was 10.7%, with an aim to reach 15%.
  • Capacity Utilization: Current utilization is above 90%,接近 100%, necessitating new capacity expansion.

Capital Allocation and Cash Flow

  • The new facility investment of ₹125 crore will be phased over 2-3 years and funded primarily through internal accruals, supplemented by borrowings.
  • The company prioritizes disciplined capital allocation, investing behind visible customer demand with a clear path to utilization and appropriate returns.
  • A key priority for FY27 is to improve working capital efficiency to ensure better conversion of operating performance into cash.

Development Costs

  • The company incurs development costs for new parts, approximately ₹3-5 crore quarterly (₹18-20 crore annually), covering testing, dedicated teams, and special alloys that often cannot be reused.