H1 milestone masks Q2 margin miss; H2 recovery contingent on execution

₹69.1 Cr EBITDA, 7.4% margin confirmed; below prior 8% target

Primary sales muted, OPM 6.4% vs 8% target, NPM 1.4%, QoQ -54% revenue

Q2 ₹933.9 Cr, Q1 likely ~₹2,015 Cr; consistent with stated figure

Management admitted primary sales muted Q2; volume growth soft; secondary channel drove revenue

Unverified; relies on customer price acceptance and commodity normalization ahead

Prior guidance 8% OPM, ex-PLI 7.3%; delivered 6.4% Q2. Below both marks. Attributed to commodity pass-through and electronics mix.

Prior clear '20%+ full year'; now '20%–25%, 20%±2–3%'. Management explicitly avoiding 30% claim. Q2 primary sales muted (volume growth 'not much'); secondary sales strong (inventory build).

Still expecting improvement from Dec-Jan as commodity passes through and new projects ramp. Q2 weakness acknowledged; secondary sales to convert to volumes in Q3-Q4.

Compressor trial Nov (reconfirmed), refrigerator Jan-Feb (reconfirmed). Both still contingent on customer approvals. No new specifics vs prior call.

Price hikes Jan, Apr, Oct this year. High growth in electronics (lower margin) and commodity inflation passed through to customers. Per-unit margin stable; percentage margin compressed due to commodity model and electronics mix.

Volume growth close to 20% full year for RAC. This quarter primary sales muted; secondary sales very strong. H2 will be much better based on order book and client feedback.

FOREX loss ₹8 Cr last year vs ₹3 Cr this year (₹5 Cr benefit). One-off GST adjustment ₹3 Cr. Opex lower YoY due to FOREX. WC optimization ongoing; high commodity prices driving inventory up despite efforts.

RAC ₹4,000+ Cr should be possible. Gross margins percentage may not look high in H2 due to commodity pass-through model; per-unit margin is stable. AC BOM moved ₹14,000 to ₹18,500 (2 years back); percentage margin may look lower but absolute is managed.

CAPEX ₹400 Cr FY27 on track. Refrigerator at Sri City starts Q4 FY27 (1.2M capacity, 700k FY28 target). Compressor margin will be accretive once production scales; using large capacity for in-house only initially. Margins to be shared post-stabilization.

Compressor trial production end-Nov, mass production Jan-Feb FY28. 1.5M capacity by April-May; expects 1.5M+ compressors by calendar 27. Refrigerator 700k first phase target, 1.2M installed capacity. Approval timeline not guaranteed; depends on customer sign-off.

AC is largely urban product. Secondary sales very strong (stable channel inventory). Primary growth muted this quarter due to GST and seasonal factors. Expected decent growth H2; Q4 and Mar typically strong. No rural weakness signal; ag economy slowdown managed by tier-1/tier-2 city focus.

Electronics ₹550–600 Cr FY27 (vs ₹631 Cr in H1 run-rate suggests H2 slowdown). TV motherboards drove growth due to memory price appreciation, not volume. Normalization expected H2 as memory prices stabilize. Goodworth ₹800–900 Cr FY28 guidance.

Electronics components being localized; TV motherboards, controllers supplied domestically now. Compressor imports not allowed post-31-Mar-27 (government policy), so localization forced. In 2-3 years, will have in-house compressor capability. Copper tube, aluminum, compressor, motors to be local sourced by FY28.

Volume 20%±2–3% full year. Q2 primary sales muted; secondary strong. H2 recovery contingent on channel conversion and no further macro weakness. Jan price increase factored in.

Already at ₹1k Cr run-rate H1. Strong order book; secondary sales momentum. Non-seasonal, consistent growth.

H2 slowdown expected as TV memory prices stabilize. Q2 growth driven by pricing, not volume. Normalization expected H2.

TV pricing strong but seasonally weaker H2. Depends on market sentiment and supply chain stability.

Margin improvement from Jan onwards as commodity passes through. Contract mfg model means percentage margin may lag; per-unit margin to be managed. Electronics mix and inflation headwinds remain.

Will share EBITDA margin once trial production stabilizes and volumes scale. Timing subject to customer approvals and ramp-up pace.

Compressor and refrigerator plants largely complete. Priority is profitability improvement and running new projects efficiently. Next major CAPEX (compressor line 2, refrigerator phase-2) deferred to FY29+.

Copper, aluminum, plastic prices inflated. BOM of AC moved ₹14k to ₹18.5k (2 years). Customer price acceptance uncertain; margin pass-through expected from Jan but contingent on execution and no further inflation.

Compressor trial Nov (on track), mass production Jan-Feb, 1.5M capacity by April-May. Refrigerator trial Jan-Feb, 700k FY28 target. Both dependent on customer approvals, which are not guaranteed. Delays would defer FY28 revenue uplift.

Q2 primary sales 'muted'; secondary sales (distributor channel) very strong. Revenue growth driven by inventory build at channel and price increase, not sustainable primary demand growth. Channel inventory normalization could deflate H2 order book.

Electronics grew 90% but contributed much lower margin due to TV motherboard memory inflation. Memory prices subject to global supply swings. Goodworth TV business exposed to price fluctuations. Margin normalization dependent on memory price stabilization.

Q2 NPM 1.4% vs prior 1.1%. Benefited ₹5 Cr FOREX swing (vs ₹8 Cr loss last year) and ₹3 Cr GST adjustment. Core profit growth much weaker. Operating leverage impaired by commodity inflation and mix shift. Sustainability risk if commodity costs persist or secondary channel inventory normalizes.