Record revenue, elevated margins mask normalization risks ahead

Revenue ₹1021.3 Cr exactly; confirmed as highest quarterly revenue

Q1 ADS ₹145.4 Cr; prior year Q1 base ~₹45-48 Cr estimated

EBITDA ₹1,961 Cr at 19.2% margin confirmed; prior year 17.2% confirmed

Reported PAT margin 8.6%; delivered result shows 8.4% (20 bps discrepancy)

Vikas Goel confirmed aluminum/consumable inflation, steel inflation limited, no pass-throughs realized yet

₹44.4 Cr at Q1 end → ₹57.5 Cr by Q2 (semicon equipment order ₹12.5 Cr, 5-year execution ₹1,250 Cr). Management now 'very bullish' on near-term additions.

Q1 showed 40% international revenue. US connecting rod facility plan remains on hold pending tariff clarity; meanwhile India sourcing demand from OEMs accelerating.

FY26 guidance was mid-teens growth; Q1 delivered 33%. Management now guiding high-teens to 20% for FY27 (implying 2H moderation expected but upside possible if momentum sustains).

Initial year-start guidance: reach 19% (vs FY26 18.1%). Q1 delivered 19.2% EBITDA but management cautions this was 'slightly elevated' due to forex and mix. Normalized run-rate likely 18.8-19%.

Existing semicon customer; order worth ₹1,250 Cr over 5 years, pushes customer to ~$75 million annual run-rate. Hari: ₹5,700 Cr executable by FY31, very bullish on aerospace and semicon RFQs in pipeline.

Domestic 2W and PV industry surprising everyone, strong demand Q2-Q3 visible. Exports traction on premium 2W, passenger vehicle, off-road. Began deliveries to energy segment (North America) from Q3. US facility still waiting for tariff certainty but India sourcing momentum picking up.

Q1 'slightly elevated' due to 40% international, strong mix, forex. Maintain year-start guidance: reach 19% from FY26 18.1%. Sustaining margin level and growth focus is the philosophy.

Exports and ADS operate 25-30% EBITDA; targeting higher north of high-20s as capacity utilization improves. Won't put specific figure but 'definitely between 25% and 30%.'

No wallet share loss; gained with TVS, Yamaha, Suzuki. Motorcycle business grew 12.5% internally (our numbers). Industry volume vs. our revenue are different metrics.

Limited material inflation primarily aluminum, consumables. Steel limited inflation; engaging customers for pass-through (in process, not yet translated). Forex cushion provided short-term respite.

Higher outsourcing opportunity from 2-wheeler OEMs for crankshaft facilities. Strong indications on passenger vehicle expansion. Crankshaft expertise developed; expanding forging, machining, heat treatment across northern plants.

Currently precision machining for ISRO, HAL, Israel exports (small batch). Targeting large defense orders in Europe. Adding sheet metal capability. New facility to enable more customers, sheet metal entry. Significant headway expected FY27.

Machine lead time is defining constraint (7-9 months). Significant revenues calendar 2027; peak calendar 2029.

Started year expecting mid-to-high teens. Current auto and ADS momentum suggests possibly high-teens to 20%. If business sustains current trajectory, could reach high-teens to 20%+.

Announced blisk order previously. Made significant progress on machining; first samples ready in month from call (late August 2026). Have multi-5-axis, 4-meter special process facility. Targeting NADCAP approval this quarter.

Aerospace: lower risk (Boeing, Airbus, increasing backlogs). Semicon: boom driven by AI/datacenters, forecasting busy until FY29-30. No current products at significant end-of-life in ADS.

Initial guidance mid-to-high teens; updated to high-teens to 20% if current trends sustain. ADS 75-80% growth + non-ADS mid-teens expected.

Q1 run-rate ₹582 Cr annualized already exceeds range. ₹5,700 Cr executable order backlog by FY31 supports multi-year visibility.

Long-term organic growth target; includes ADS ₹1,300 Cr+ aspiration, auto export growth, non-ICE expansion.

FY26 baseline 18.1%; Q1 delivered 19.2% but management notes elevated due to forex, mix. Normalized run-rate likely 18.8-19%.

Management targeting higher north of high-20s as capacity utilization improves; refused to put specific point estimate.

Multi-year aspirational target; not quantified for FY27-28 timeline due to mix/forex variability.

No specific FY27 capex number updated this quarter. New investments meet internal return thresholds. Funding growth-led capex.

Discussions to conclude August 2026; completion target ~June 2027; in vicinity of 500m from existing facility.

Comfortable asset efficiency metric; guides near-term capex ROI expectations.

Q1 EBITDA 19.2% benefited from ₹134 Cr forex gains and favorable mix; management expects normalization. Material cost inflation unresolved; pricing pass-throughs pending. Normalized run-rate likely 18.8-19%, not 19.2%.

ADS growth now 3x YoY, largely driven by semicon equipment demand tied to AI boom. ₹1,250 Cr semicon order represents ~18% of ADS backlog. If datacenter/AI capex moderates, semicon equipment manufacturers' demand could contract sharply.

Aluminum, consumables, labor costs elevated this quarter. Steel inflation limited. Customer pricing pass-throughs 'in process, not yet translated.' Risk: if customers resist price increases or if inflation accelerates, margin pressure continues.

Demand so strong that supply chain is stressed. Raw material and child parts availability constrained; customer intervention required to source materials. If stress continues or worsens, production delays and cost escalation possible.

Large capex program underway: 80,000 sq ft hangar, 100,000 sq ft build-to-suit facility, surface treatment plant, defense relocation. Machine lead times 7-9 months; Auto facility expansions 18-24 months. Delays in commissioning or customer validations could push revenue ramps.

New semicon order pushes single customer to $75 million annual (15%+ of estimated ADS revenue). Maruti represents ~75% of supply of certain components. If Boeing, Airbus, or semicon customer has production halt, demand cliff.

Q1 benefited from forex tailwind (₹134 Cr other income, 15% YoY growth). ~40% of sales from international revenue; INR strength would reverse gains and compress margins. Hedging strategy not disclosed.