Financial Performance Highlights

  • Q2 FY27 Revenue: Approximately ₹400 crore (implied from working capital discussion)
  • Revenue Growth: 40%+ year-on-year growth for both Q2 and H1 FY27
  • EBITDA Margin: Dip experienced primarily due to raw material cost inflation
  • PAT: Unevenness due to transition to new tax regime from old tax regime
  • TTM Performance (Trailing 12 Months):
  • Revenue CAGR: 38% over 3 years, 48% YoY
  • Control-intensive ECUs sold: 4.6 million units (44% YoY growth from 3.2 million)
  • ROCE: Dip due to aggressive manufacturing infrastructure investments

Business Updates and Operational Highlights

Mobility Segment (H1 FY27):

  • ISG ECU for export ICE 3-wheelers fully ramped up (launched in FY26)
  • Electric 2-wheeler MCU fully ramped up (launched in FY26)
  • ISG+EFI ECUs shipped over 1 million units within 2 years of introduction
  • ISG adoption on 3 top 10 motorcycle models: 2 models launched and ramped up, 1 expected to shift to ISG+EFI in FY28
  • Business win for ISG ECU and Electric Motor (Magneto Kit) from European 2/3-wheeler OEM with SOP expected in H1 FY28

Industrial Segment:

  • Weaker demand for EFI ECUs due to reduced 2025 Atlantic hurricane season activity in North America
  • Signs of demand recovery emerging in H1 FY27

Markets Under Development:

  • Commercial Vehicles (engine powered and electric): After-treatment controller, EFI ECUs and MCUs expected in production in coming quarters
  • Power Tools: Motor controller with sensorless control technology expected in production H1 FY28 (entry into market with hundreds of millions unit potential)

Capacity Expansion and Investments

  • MF3 Plant: Started pilot production with built-up area 3x existing facility (MF1). Full production transition expected over next few quarters.
  • MF5 Plant: Land acquired in Shoolagiri, Tamil Nadu. Plant development expected over next 1-2 years.
  • Capex Investment: Cumulative tangible investments reached ₹450 crore as of H1 FY27 (from ₹227 crore in FY26)
  • Working Capital: Increased to ₹258 crore from ₹135 crore due to revenue growth and advanced raw material purchases for supply security
  • Funding: Capex and working capital funded through internal cash accruals and debt without equity requirement

Risk Management Commentary

  • Customer Concentration: Metric improved (revenue from biggest customer minus sum of next four customers) due to new launches and ramp-ups
  • EV Relevance: EV products contributed 11.4% of 2/3-wheeler revenue, in line with market penetration
  • R&D Effectiveness: Track record maintained despite inherent innovation risks

FY27 Outlook

  • EBITDA: Expected to hold for H2 versus H1 FY27 despite additional pressure from PCB cost increases
  • Revenue Growth: H1 performance exceeded initial expectations with all planned launches and ramp-ups fructifying
  • Raw Materials: Continued cost pressure expected, particularly on PCBs, with some offset from price corrections and new generation ISG controller introduction

Q&A Session Key Points

Margin and Cost Pass-through:

  • No automatic cost pass-through mechanisms
  • Pricing negotiated with customers, not cost-plus model
  • Forex adjustments through standard formulae
  • Ongoing negotiations for price increases due to cost environment

Working Capital:

  • Increase primarily due to revenue growth, not external pressures
  • Working capital at 15-16% of annualized revenue, within 13-15% guidance range

Capacity Utilization:

  • MF1 plant at >90% utilization
  • MF3 expected to operate at 65-70% utilization when fully populated

Product and Technology:

  • ISG+EFI adoption constraints relate to OEM relationships with existing EFI suppliers, not technical limitations
  • Sensorless control technology patented and unique (not based on existing techniques)
  • EV MCU with sensorless technology in development with strong value proposition

Market Expansion:

  • China market challenging for direct sales though some indirect sales exist
  • Power tools market engagement at early stages with promising customer interest

Supply Chain:

  • No single-chip supplier dependency
  • Multiple sourcing strategies implemented post-COVID semiconductor crunch
  • India semiconductor sourcing not yet significant

Commercial Vehicle Products:

  • After-treatment controller and EFI ECUs for MHCV segment
  • Wins driven by flexibility and custom ECU business model
  • BS7 norms potential future opportunity

Capex and Borrowings:

  • H2 FY27 capex expected lower than H1 as MF3 nears completion
  • Borrowings increased by ~₹110 crore in H1 primarily for working capital
  • Debt strategy focused on maintaining healthy debt-to-equity ratio, not reduction

Volume Drivers:

  • Sequential growth driven by FY26 product ramp-ups and new launches
  • ISG adoption spread across scooter, motorcycle, moped and three-wheeler segments