Revenue from Operations: Stood at ₹886 crores for Q1 FY27, representing a growth of 34% year-on-year (YoY).
PLI Income: The company did not accrue any PLI income in Q1 FY27. This compares to PLI income of ₹13.31 crores accrued in Q1 FY26.
EBITDA: Was ₹55 crores for the quarter, an increase of approximately 0.70% YoY.
EBITDA Margin: Reported at 6.21%, compared to 8.24% in Q1 FY26. Management clarified that excluding the ₹13.3 crores PLI benefit from the year-ago quarter, the underlying YoY margin improvement was approximately 15 basis points.
Net Profit: Was ₹11.8 crores for the quarter.
Finance Cost: Increased by approximately ₹3-4 crores quarter-on-quarter due to higher working capital requirements aligned with a 40% growth in operations.
Depreciation: Increased compared to Q4 FY26 as new capacities were put to use. An additional capex of ₹60-70 crores is planned for the rest of FY27, which will be capitalized over the coming quarters.
Other Expenses: Saw a significant increase, primarily due to a foreign exchange loss of ₹6-7 crores recorded in the quarter.
Operational and Strategic Highlights
Business Diversification: The company is actively diversifying beyond Room Air Conditioners (RAC) into Small Domestic Appliances (SDA) and Large Domestic Appliances (LDA), including components, air fryers, and washing machines. The SDA and LDA business grew 68% YoY in Q1.
Customer Base: The company now serves over 72 customers across 19 product categories, reducing customer concentration risk. Three new product categories were added in Q1, with four more in the pipeline.
Hisense Partnership: The branded partnership with Hisense contributed approximately ₹65 crores in revenue from producing close to 60,000 air conditioners in Q1. Pilot production for front-load washing machines with Hisense is on track to begin by the end of October 2026.
Capacity Utilization: Plant utilization for Q1 was approximately 90% at Dehradun and Bhiwadi facilities. The Sri City plant achieved close to 50% utilization, a significant improvement from less than 25% previously. The target for FY27 is to achieve an average utilization of over 60% across all three plants.
Capex Update: Of a total planned capex of ~₹450 crores, ₹340-350 crores has been booked. An additional ₹10 crores was spent in Q1 FY27, with ₹40-45 crores currently in CWIP. The total remaining capex for FY27 is estimated at ₹60-70 crores.
Andhra Pradesh Incentives: The company has an MoU with the Andhra Pradesh government for investments totaling ₹1,085 crores, for which it has been allotted 35 acres of land. An investment subsidy of approximately 50% of the capex is expected to be refunded over 10 years.
Management Commentary and Outlook
Demand & Inventory: Management indicated strong industry tailwinds for air conditioners and believes inventory levels in the trade channel are at comfortable and historically low levels, estimated at 3.5-4 million units industry-wide.
Margin Outlook: Near-term margins are pressured by investment cycles and input costs (including forex). The focus is on converting scale into operating leverage. The company is in the process of rolling back PLI-related discounts passed to customers, as FY27 is the last year of its PLI eligibility. The goal is to return to a more normalized EBITDA profile thereafter.
Growth Guidance: While not providing specific forward-looking numbers, management expressed confidence in surpassing the industry's expected ~20% growth in ACs and achieving faster growth in SDA and LDA categories. The long-term target is to reach ₹5,000 crores in revenue.
Seasonality: Q2 and Q3 have historically been loss-making due to high dependence on the seasonal AC business. The diversification into non-seasonal products like washing machines is a key strategy to reduce this seasonality over the next 4-6 quarters.
Q&A Session Insights
Volume/Value Split: The 44% growth in the RAC business was comprised of approximately 30% volume growth and 12-15% value growth (price increases).
Commodity Price Pass-through: Prices are updated quarterly with customers, and most commodity-driven increases are passed on after a time lag. The recent quarter was significantly impacted by forex volatility rather than unpassed commodity costs.
Compressor Supply: Management does not foresee significant challenges in compressor supply for the upcoming season, citing sufficient domestic capacity and allowed imports until the end of the calendar year.
Working Capital: Working capital days are typically 50-60 days. Inventory levels remain a focus area for normalization to manage working capital needs.
