# 1. Financial Performance ## A. Key Figures * Revenue: **INR7,663 million** (+3%) * EBITDA Margin: 17.2% (+10 bps YoY, +90 bps QoQ) * PAT: ₹630 Mn (+26%) · PAT Margin: 8.2% * OCF Net of Tax: ₹962 Mn (13% of operating revenue) * D&A / Finance Costs: ₹4.76 Cr D&A · ₹0.36 Cr net interest cost ## B. Revenue Growth * **Sweden Drives Outperformance:** Swedish subsidiary delivered **80% YoY revenue growth** and a **400 bps gross margin expansion**, becoming a key growth engine. * **Sustained Momentum Expected:** Sweden on track for **20–25% full-year revenue and margin growth** due to new product launches and favorable base effects. * **Resilient Core Performance:** Group revenue maintained **low-single-digit growth** despite macro headwinds, supported by successful diversification efforts. ## C. Margin Trends * **Record Gross Margin Achieved:** Q1 marked the **highest gross margin to date**, driven by a **favorable shift toward higher-value ADS products**. * **Stabilization Ahead:** Current operational scale has locked in **margins of 10–11% in 1Q**, suggesting limited near-term expansion potential. * **Structural Resilience:** Company has **defended ~17% core margins** over two years of disruptions, though **below targeted 50–75 bps annual improvement**. ## D. Cash Flow & Profitability * **Strong Cash Conversion:** Operating cash flow at **13% of revenue** underscores efficient working capital and earnings quality. * **Leverage Reduction Benefit:** **Net interest cost cut in half YoY**, significantly boosting bottom-line growth despite flat EBITDA margin. --- # 2. Order Book & Demand ## A. Key Figures * **Order Book:** **₹20,243 Mn** as of Jun-25 (60%+ int’l) · **₹1,732 Mn** added in quarter * **Revenue Outlook:** **₹225 Cr** expected from Sweden (FY, fixed currency) ## B. New Order Wins * **Strategic Order Momentum:** Robust new order inflow reflects alignment with long-term growth strategy, led by ADS and premium 2-wheelers despite US export headwinds. * **High-Value Portfolio Expansion:** ADS segment drives value addition, with equal traction in aerospace and semiconductors, signaling diversification into advanced technology domains. * **Customer & Geopolitical Diversification:** Wins include defense orders from Israel, long-term aerospace clients, and a major North American EV OEM, enhancing demand resilience. * **Forward Visibility:** ADS revenue runway extends to FY '27–'28, supported by strong booking momentum and customer pipeline confidence. ## C. Segment Mix * **Diverse Segment Contribution:** New orders span PV-CV (30%), 2-wheelers (15%), xEV (10%), and tech-agnostic auto (9%), indicating balanced exposure across evolving mobility trends. ## D. International Share * **Aggressive Geographic Expansion:** Strategic entry into Korea via experienced sales agent, with growing focus on Japan and broader East Asia to capture untapped potential. * **Strong OEM Penetration:** Active engagement with all three major US and leading European OEMs underscores global competitiveness and relationship depth. --- # 3. Segment & Product Performance ## A. Key Figures * Domestic Business Growth: **~4%** YoY · **~25%** growth (Sweden-led, full-year) * **MMRFIC Revenue Guidance:** **₹35–40 Cr** annual projection (project-based) ## B. ADS Growth * **Resilient ADS Momentum:** ADS remains a critical growth engine with no signs of slowdown, supported by strong development pipelines and strategic focus. * **Geographic Insulation:** Contracted semiconductor work under ADS is largely non-US, providing resilience amid global market uncertainties. * **Strategic Commitment:** Over a decade of investment in aerospace and defense capabilities is now driving cross-segment expansion, with full resource allocation to scale ADS. ## C. EV & xEV Revenue * **EV Revenue Live:** EV components—especially for 2-wheelers—are already contributing, with a pathway into passenger EVs reinforcing long-term growth potential. ## D. CV & 2-Wheeler Trends * **CV Strength via Sweden:** CV segment growth is heavily driven by Swedish operations, despite solid Indian OEM relationships, highlighting international leverage. * **2-Wheeler Divergence:** Motorcycles show strong rural and premium urban demand, while scooter weakness—impacting **6–7% of revenues**—is seen as temporary with recovery expected. * **Connecting Rod Outsourcing Trend:** Global OEMs in Europe and North America are increasingly outsourcing connecting rods, benefiting the company as a leading independent supplier. * **ICE Platform Rebound:** Despite EV headwinds, OEMs are revalidating ICE platforms, creating incremental outsourcing opportunities in core components. ## E. Non-Auto Expansion * **Structural Diversification Achieved:** Company has successfully reduced ICE dependence to 60%, with 40% now in higher-margin, tech-agnostic non-auto segments. * **Aluminum & Suspension Expansion:** Development underway for aluminum-based suspension and driveline parts for passenger vehicles, though commercialization will require time and capability validation. * **MMRFIC Strategic Potential:** Investment in radar-focused MMRFIC offers exposure to government and space projects; stake can be increased to **51%** as funding needs arise. * **Distinct Technology Path:** MMRFIC’s radar tech is non-overlapping with core ADS machining, enabling diversification without operational conflict. * **Inorganic Growth Pipeline:** Active pursuit of M&A and new technology areas to accelerate structural transformation beyond auto. --- # 4. Capacity & Utilization ## A. Key Figures * Sales (Sweden): ₹637 Mn (Q1 FY'26) (+80% YoY) * **Full-Year Growth (Sweden):** **>20%** (revised from 15–20% guidance) ## B. Sweden Operations * **Exceptional Growth Momentum:** Record quarterly sales in Sweden driven by low base effect, pricing recovery, and volume ramp-up with a key customer, signaling strong market repositioning. * **Margin & Utilization Tailwinds:** High capacity utilization and price corrections from pending activity recognition boosted margins, with further cost savings expected post-automation completion by end-Q2. * **Near-Term Outlook Stabilizing:** Growth trajectory to moderate from Q3 FY'26; Q2 seasonally impacted by summer holidays, but underlying capacity and demand remain robust. ## C. Forge Shop Expansion * **Aluminum Forging Scale-Up:** New 2,500 and 4,000 Tonne presses in Bidadi expand capability for complex components, supporting stable production of 100–110 parts for premium 2-wheeler OEMs. * **Operational Maturity:** Forge shop now on stable footing, marking transition from development to volume execution phase. ## D. US Facility Plans * **US Expansion Progressing Amid Delays:** No land acquired yet due to tariff-related customer uncertainty; however, site identification and partner discussions are active, with execution plans accelerating. --- # 5. Geopolitical & Trade Risks ## A. Tariff Impacts * **Minimal Near-Term Impact:** Tariff increases largely passed through to customers, with **most major clients absorbing 10% and 25% duties**, resulting in negligible financial impact. * **Cautious Export Outlook:** Despite strong engineering capabilities and diversified offerings, **near-term export momentum remains uncertain** amid evolving U.S. trade policy. * **Offshoring Threshold Identified:** **50% tariffs would render Indian machining unviable**, making U.S. onshoring economically feasible; cost-benefit reviews ongoing with key customers. ## B. Supply Chain Shifts * **Temporary Global Slowdown:** International business weakened due to geopolitical volatility, with **exports from India (ex-ADS) down 6%**, though Europe operations grew and domestic performance held steady. * **Project Allocation Delays:** Customer decisions on regional sourcing—particularly across **Asia, Mexico, Canada, and the U.S.**—are on hold pending resolution of **RVC and supply chain realignment concerns**. * **Resilience Focus:** Leadership prioritizing import substitution in **critical aluminum and steel forged components** to mitigate technology and geopolitical risks. ## C. RVC Requirements --- # 6. Guidance & Outlook ## A. Key Figures * **FY '26 ADS Revenue Target:** **INR 280–300 Cr** (on track) * **FY '27 Aluminum Portfolio Revenue Target:** **INR 500 Cr** * **3-Year ADS Revenue Target:** **INR 1,000 Cr** (supported by INR 750 Cr order book) * **FY '28 Revenue Ambition:** **INR 5,000 Cr** (based on prior revenue + current order book) ## B. Margin Projections * **Margin Expansion Underway:** Full-year margin expected to be double-digit, with substantial improvement over prior year driven by volume leverage and automation. * **Long-Term Margin Target Intact:** 20% EBITDA margin remains the mid- to long-term goal, supported by portfolio shift toward **20% non-automotive** and **20% xEV revenue**. * **H2 Inflection Expected:** Benefits from capacity utilization and automation initiatives to positively impact margins starting in second half. ## C. Growth Assumptions * **Strong Long-Term Visibility:** 3–5 years of order visibility and a widening addressable market underpin sustained growth momentum. * **Cautious Near-Term Outlook:** Domestic business expected to grow 5–8%, led by 8–10% in 2-wheelers; passenger vehicles flat to +3%, aided by favorable monsoon. * **Geopolitical Caution:** No segment-wise or precise growth guidance due to tariff and supply chain uncertainties; strategy finalization delayed by several months. * **Upside Optionality:** Potential for 2.5x–3x pricing uplift if value addition shifts from India to North America, subject to customer allocation decisions.