Strong aerospace growth masked by severe PAT collapse

Delivered revenue ₹605.6 Cr, 15.5% YoY (₹22.4 Cr discrepancy vs call)

Implies gross EBITDA; PAT only ₹30.9 Cr (NPM 4.9%, down from prior quarter)

Segment revenue ₹123 Cr, EBITDA ₹26 Cr (21.2% margin); R&D fully expensed (temporary margin compression)

Segment revenue ₹444 Cr, EBITDA ₹61 Cr (13.8% margin); export ramp-up and cost initiatives drove margin expansion

Stated as of June 2026; provides capex flexibility

Strong RFQ pipeline (₹1,632 Cr) and order book (₹5,960 Cr 10-yr vs prior ₹2,350 Cr 5-yr) support claim

Call later admits logistics costs, tool/carbide costs, minimum wage pressures; mitigation via efficiency and customer pass-through

Aerospace order book ₹5,960 Cr (10-yr) vs prior ₹2,350 Cr (5-yr); reflects long-cycle aerospace business nature; 5-yr breakup ₹2,765 Cr (+17% QoQ)

Q1 FY27 EBITDA margin 21.2% vs prior 23.7% (Q1 FY26); R&D expenses written off to support 40% revenue growth. Management expects stabilization as new programs mature.

Guidance maintained at 25% YoY (call: 'a good growth'); Q1 delivered 40% but management frames as execution excellence, not guidance raise. Tone: cautious, not promotional.

Q2 FY27 launch of automotive aftermarket product line to diversify revenue; leverages OEM-grade manufacturing and B2C heritage. Expected contribution unclear.

₹1,000 Cr 5-yr capex (₹510 Cr aerospace, ₹430 Cr auto); Andhra Pradesh greenfield on track for late 2027 commercial production. No cost escalation disclosed.

Company keeping options open across aerospace, auto, and defence. Warrants provide flexibility for opportunistic acquisitions. Will update market when definitive deals are close.

Not yet exposed because critical-side castings/forgings not transferred to us. Supply chain constrained such that execution = competitive advantage. More backlog you clear, larger the backlog grows.

Daily growth business. RFQs and product development happen daily. Choice of which orders to take (not constraint-limited). Goal is margin/ROCE fit and customer satisfaction, not order count maximization.

Yes, expect same trend as now at consolidated level; better than prior year. Will maintain momentum.

Aerospace has higher growth rate than peers. Mgmt has committed 25% growth; we are 'a little bit ahead' in Q1 (40%), but 25% is a good growth commitment. Expect to keep momentum.

Definite goal to upgrade value chain. Mix of critical components and subassemblies will keep increasing. Adding heat treatment, special processes at Andhra facility for vertical integration and OEM confidence.

Just received medical device certification today. Most aerospace certifications already in place. Have build-to-spec design certification now. New customers come with their own certification requirements.

Aerospace businesses are long-term in nature. 5-yr period is small; 10-yr gives longer visibility on potential. Changed horizon to reflect reality.

All R&D is fully written off in same quarter. To achieve 40% growth, we accelerated new product development—all expensed. As products mature, efficiency and margins will normalize.

Aerospace: 1.8x–2.2x; Auto: 2.0x–2.5x. Target Aerospace EBITDA margin ~25% mature; Precision auto ~12%–13%. Balancing asset turns with margin expansion to maintain ROCE.

40%–45% with top 3 OEMs currently. Have 25+ global customers. Goal is to decentralize to 8–10 high-value customers over time. 40% concentration is quite diversified given limited customer pool in aerospace.

25% growth is healthy organic growth in aerospace. Have enough orders to sustain that. Outperformed Q1, working towards that momentum. Commitment to market is 25% increase.

Not in N1 yet (rotating parts). Predominant on engines (N2-N4). Asset turns decrease as you move up value chain; balancing mix to maintain ROCE. Safe to assume 50%–60% N4 now, rest N2–N3, goal to move higher over time.

Earlier estimates ₹600 Cr, but we now believe we will exceed that. Parivartan improvement mandate bringing a lot of change. Expected to exceed ₹600 Cr now.

Up to 6 months approval process. Look at FY28 for numbers to start, then slow ramp-up due to customer approvals. Precision auto starting in parallel. Making improvements to current facility to avoid slowdown.

Too early to share. Just received certification today. Will come back next quarter with plan. It's part of routine capability exploration; many such initiatives in progress.

Extremely sustainable. R&D pressure exists but will ease. Operating leverage from revenue growth is main driver; will continue as we grow. Product mix fluctuations possible but directionally stable.

Logistics costs up, tool/carbide/HSS costs up, minimum wage pressures. Mitigating via efficiency, operating leverage, and customer discussions. May see some margin pressure quarters but will ease as solutions found.

Bhanu Prakash Srivastava has joined. Working on Defence segment strategy. Will come back to market by next quarter or 2 with future plans.

Good for us. 22-yr headstart, among first with engine parts; leader status. Demand so high, will take years to worry about competition. Collaborative industry due to few approved sources. China Plus One benefits all India. Aerospace is high-mix low-volume, not everyone can do it.

Will continuously explore adjacencies for margin/product expansion. As plans get concrete, will share on calls. Nothing to share right now.

Not committing numbers. Scenario much more positive. Combining Tools & Hardware with aftermarket creates synergies. Leveraging brand and existing markets. Aiming for better margin expansion, higher value products. Will take every step for right synergies.

Prior guidance maintained; Q1 delivery at 40% signals execution strength. Order book and RFQ pipeline sufficient to sustain momentum.

Mgmt says expect same trend as Q1; better than prior year. However, product mix variability and cost inflation noted; not a ceiling.

Parivartan improvement initiative driving efficiency gains. No specific FY27 revenue guidance; baseline-to-FY28 may be more realistic given approval lags.

Q1 at 21.2% due to R&D write-off (temporary). Management expects stabilization as new programs transition to steady-state production. Path credible but dependent on R&D payoff.

Q1 achieved 13.8% on export mix uplift and cost initiatives. Operating leverage as volume grows will support. Product mix fluctuations expected quarter-to-quarter.

On track per management. Andhra Pradesh greenfield groundwork progressing; commercial production late 2027. Funded from internal accruals + net cash position.

PAT fell 99.4% YoY to ₹30.9 Cr (NPM 4.9%) despite EBITDA +14% YoY. No one-time charge flagged on call. R&D expensing is ongoing, not one-time. Suggests Q1 FY26 had much higher PAT, or Q1 FY27 margin collapse is structural.

Logistics costs up, tool/carbide/HSS inflation noted, minimum wage increases. Mitigation via efficiency and customer pass-through. Magnitude of cost inflation not quantified; timing unclear.

Andhra Pradesh greenfield on track for late 2027 commercial production, but 6-month approval processes expected. FY28 is realistic ramp start, not FY27. If regulatory/customer approvals slip, capacity expansion delayed.

Aerospace customer concentration at 40–45% for top 3 OEMs. While mgmt claims 25+ global customers, loss of a top OEM contract or design-win miss could materially impact growth. Diversification plan (move to 8–10 high-value customers) is aspirational, dependent on RFQ conversions.

Many Indian auto component players now adding aerospace divisions to presentations. Management dismisses this risk (22-yr headstart, few approved sources, high-mix low-volume moat). However, China Plus One tailwind benefits all India; competitors may gain faster if OEMs diversify supply.