Operational Performance Overview

Revenue Mix by Segment (Q1 FY27):

  • Traction Motor and Railway Components: 28%
  • Power Generation: 15%
  • Industrial and Commercial Applications: 12%
  • Mining, Oil & Gas: 10%
  • Special Application Motors: 9%
  • Data Centers: 5%
  • Renewable Energy: 3%
  • Other Segments: 17%

Volume Metrics:

  • Total Lamination and assembly volumes: 19,200 tons (19% YoY growth)
  • Higher Value-Added Assemblies (Integrated Rotor Shaft and Stator Assemblies): grew faster than loose lamination at 37%
  • Total Casting and Machine Components volume: 3,191 tons (4.2% YoY growth) [Corrected from 13,191 tons mentioned on call]

Capacity Utilization:

  • Sheet metal utilization: 73% in Q1 FY27 (vs 70% previous)
  • Machining utilization: 86% (vs 82% previous)
  • Casting and fabrication utilization: 72%

Financial Performance (Q1 FY27 vs Q1 FY26)

  • Revenue from operations: ₹529 crores (vs ₹457 crores), +16% YoY
  • Adjusted EBITDA: ₹89 crores (vs ₹78 crores), +14% YoY
  • Adjusted EBITDA margin: 16.8%
  • Adjusted PAT: ₹32 crores (vs ₹26 crores)
  • Finance cost: ₹19.6 crores (interest and bank charges) + ₹3 crores (Forex impact due to West Asia crisis)
  • Net debt: ₹491 crores as of quarter end

Strategic Growth Drivers

Management highlighted three key growth drivers:

1. Localization and China Plus One opportunity - Customers looking at India as alternate manufacturing base for electrical steel laminations, casting, and machining

2. Shift of manufacturing from Europe to India - Due to increased energy, labor, and material costs in Europe

3. Electrification - Creating structural demand for electrical steel laminations at both energy generation and consumption ends

Capacity Expansion Update

  • Recently commenced operations of previously announced ₹150 crores Capex, increasing sheet metal capacity to 108,000 tons
  • Progressing with ₹290 crores investment for Greenfield Casting facility in Hyderabad (₹60 crores already incurred)
  • Facility expected to commission by Q1 FY30
  • Breakup: 30% infrastructure investment, 70% plant and equipment

Revised Guidance

  • Annual lamination volume target revised upward to 82,000 tons from previously stated 78,000 tons
  • Casting volume guidance upward to 17,000 tons

Segment-Specific Insights

Data Centers:

  • Emerging as strong near-term opportunity due to significant power requirements
  • Serving customers including Cummins, Marathon, Nidec
  • Developing opportunities with additional marquee customers
  • Revenue currently 5% of mix, primarily power generation side

Other Growth Segments:

  • Strong visibility in railways, metros, mining and off-highway equipment, specialty industrial applications
  • Modernization of North American railways and increasing mining activity supporting demand
  • Longer-term opportunity in automotive and electric mobility

Working Capital and Debt

  • Potential to further rationalize working capital by ₹25-30 crores
  • Net debt at ₹491 crores despite ₹60 crores Capex expenditure from ongoing project

Government Incentives

  • Previous ₹220 crores Capex incentive program exhausted
  • ₹400 crores expansion Capex eligible for incentives (~₹40 crores annually)
  • ₹70 crores pending receipt from government expected in next 9-12 months
  • Evaluating whether to claim incentives from current year or next year to maximize net cash flow

Future Outlook

  • FY27 EBITDA target: ~₹370 crores
  • FY28 turnover target: ₹2,500+ crores at 90,000 ton operating level
  • FY28 EBITDA margin target: 17%-17.2%
  • Long-term margin expectation: upwards of 18% with Capex completion and value-added products increase
  • Considering Bangalore facility Capex of ~₹200 crores for FY28-FY29 timeframe

Tax Rate Guidance

  • Full year tax rate expected to be ~25% (Q1 had lower rate due to deferred tax on lease assets)