Analyzing...
Yeah. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to the Q3 FY26 post earnings conference call of Rolex Rings from the management side, we have Mr. Manish Madeka, Chairman and Managing director, Mr. Mihir Madeka, and Mr. Hiren Doshi. So, without further ado, I would like to hand over the call for opening remarks, post which we can have a Q&A session. Over to you, Hiren bhai.
(0:37 - 18:37) Thank you, Mihir. We at Rolex Rings acknowledge the efforts of team Equirus for arranging this call for the earning updates for the quarter ended and period ended on, 31st December 2025. One good afternoon to all the participants thank you very much for spending your valuable time. I welcome you all. Before taking you through the numbers, would like to appraise the overall business outlook management perception for the approximate future. As you all are aware that recently the US has came out or rather declared the US tariff the US-India tariff deal, and announced that they have reduced to the import duties to 18% where it was 50% in the cases, would like to update over here that particularly what they have the notification what it has been issued by the US Gazette and US Customs from the president's office that they have removed this Russian oil penalty, which was levied in the somewhere in August 2025 by particular proclamation. And that particular notification is being withdrawn. Now effectively today is the first rather you can say a working day at US post announcement of this tariff structure. We are yet to get the final inputs or final outcome that how it would be 18% or what would be the rate on our products at US because in November 25, the reciprocal this Russian oil penalty has already been moved off from the particularly products or for use for medium and heavy-duty vehicles, parts for the medium and heavy-duty vehicles. So, till now, or rather from first November onwards we have been charged 25% duty apart from the regular base structure of 3%. Now it's yet to see how this 25% would come down to 18 or how it would be effective again, almost 40%, 43% of the days of the current or last quarter of this fiscal has already been passed when these announcements have made. So, there would be an hardly positive or rather pushing moment for this particular last quarter of this fiscal. But we are very much positive from the first quarter of FY27 that now the things are, things would be on a very streamline and US would be on track because till now, for last six to eight months, customers are very much in the state of you know, the wait and watch kind of situation. They hold on the entire, or rather more than 50% of their imports, and they were not able to. Rather, their customers are also not giving that feedback and entire chain has already been disturbed. So, we expect that you know, that hurdle to be overcome in the from the first quarter of next fiscal, that is April 26 onwards. And we hope that we will be on track, or rather US would be on a moving positively from the next fiscal. Coming to the quarterly numbers for the quarter ended December or other Q3 of FY26 would like to tell you that there is a quite positive movement in auto components in both the front domestic as well as export. Would like to tell that over quarter two, we had a growth of almost 14% on the auto component revenue in this Q3. Same in case of bearings we had a de-growth of 7.5% over quarter two. Further to drill down this improvement there is almost 10% incremental revenue in Europe exports over quarter two and which is, you can say almost 25% compared to my FY25 full numbers with the nine-month number percent. I'm talking in terms of percentage. So, there is a good movement and momentum at European market where we were struggling till like last fiscal. In the domestic front also, it is almost 5 to 6% upward trend compared to Q2 of this fiscal and with 15% improvement over the entire fiscal of fiscal 25. The only worry, or rather the way we got an hit is in the US market, wherein 10% downfall in the Q3 compared to Q2. And if you if we annualize it is almost 30% down in compared to fiscal 25 what we had so US is still under the shadow of tariff deal. And now we expect a some kind of U-turn of this downfall
from the Q1 of the FY27. On the other hand, as I told that domestic and European markets have been the positive curve and expect it to be continued to be improved from the first quarter onwards on the basis of the program, on the basis of the orders what we have received, forecast we have been given by the customer, we are very much positive as far as fiscal 27 is concerned. And in this last quarter couple of new customers have already been enrolled, or rather it has, SOP has been started to a marginal level. But down the line, from the Q1 of fiscal 27, it will be ramped up and further it will be increased. Now taking you to the numbers for the Q3 as well as nine months for this current fiscal.
Revenue from the operations for the Q3 of this current fiscal it has touched almost 275 crores, which was 271 crores in the last quarter this service 260 crore of the same quarter in the corresponding previous year, that is December 24. Here we had an growth of almost 10% in 6-7% on Q3 of FY25 versus Q3 of FY26. Compared to the previous quarter we had a marginal growth of couple of percentage only. In terms of EBITDA, we have we are maintaining or rather we are trying to improvise on the basis of the scale of this cost measurement and cost production area. In Q2 we had an EBITDA in terms of rupees almost 69 crore, which was 24.2 percentage of my overall gross EBITDA. And in this last quarter ended December 25 we recorded 75 crore rupee of EBITDA, which is consisting in coming to 25.7% of my gross revenue. If we talk about the EBITDA net of the other income, it is almost 21% in Q3, that is December 25, which was 20.2% in the previous quarter, and it was somewhere about 20.80 for the last fiscal, that is the FY25. For the corresponding nine-month period if I'll tell you we had this net EBITDA, netting of other income. It is 21.6% in the fiscal 24, and almost again on the same line, 20.77 percentage for the nine months ended on December 25.
Coming to operating PBT and PAT, in this Q3 of FY26 we have recorded 65 and a half crore as an profit before tax, which was 59 crore in the previous quarter, that is second quarter of fiscal 26. And the same, it was 45 crore in the Q3 of FY25, that is December 24 quarter. So, there is a sharp increase on an quarterly basis as well as on comparing to the previous year's quarter. Here would like to tell, there is a significant improvement because of the overall other income, what it has been increased in this particular quarter compared to previous quarter, as well as the quarter which was there in December 24. Profit after tax in Q3 for fiscal 26 it is almost 48 crore, which was 44 crore in the previous quarter, and again in December 24 it was 20 crore only because we had an exceptional item of ROR interest provided in that December 24 quarter. Here in this quarter also PAT is being reduced by almost two and a half crore rupees. That is by way of exceptional item which is for the impact of the new labour code which has been implemented from 21st November 25, wherein the potential gratuity liability it is supposed to be disclosed and valued and to be accounted in this December 25 quarter only. So that has been in valued at two and a half odd crore rupees which has been net of in this profit after tax figures. Revenue bifurcation bearing rings. It is almost 52% of my overall revenue of components 48% consist of auto component business. In terms of exports, it is 47% and domestic 53% percentage in this nine-month period. Certain business development, as I mentioned that 10% improvement on overall exports to Europe over Q2, 25%compared to fiscal 25 and again, 10% downfall in exports US over Q2 which is almost 30% down over fiscal 25 as I have informed before.
As I told that tariff hangover is expected to be normal from Q1 FY27 and we expect a sharp recovery in the US market. The downfall what we had, 30% of the revenue in this fiscal would definitely move further in a positive way. We do have a bit more visibility as far as the auto component business or growth in the auto component business on the basis of the orders or forecasts given by the new customers, particularly from the Europe. We have also added one customer from Mexico and one in from USA that would be starting somewhere about mid of fiscal 27 and one customer in quarter three of fiscal 27. On the bifurcation of my revenue split, rather it is 53% age of overall revenue. It goes to the passenger vehicle then it's 19% which is there for the industrial segments and 21% for the commercial vehicle and heavy commercial vehicle and EV almost 7.5%, 7.6% of my overall revenue.
Here would like to tell that 53% of this passenger vehicle share is because of good reduction in my CV and XCV portion. The US one of the main customers who is a vital or rather who is procuring good amount of auto components for the CV and XCV is under pressure because of this tariff. So actually, it's not like that we have reduced or rather we got the incremental share in passenger vehicle,
though it is almost on the same line, but the downfall in the commercial vehicle has gone up by percentage of my passenger vehicles. Total revenue in terms of operations for the nine-month figure it is 838 crores almost without considering other income. Other income is almost 47 crore, both put together 885 odd crore gross revenue has been decoded in this nine months of the current fiscal, which consists almost 365 crore revenue from the overseas business which is my exports as well as my export incentives and almost 473 crore in the domestic market which is including my product sales as well as scrap revenue which was in last year fiscal 24, it is totality, it is almost 1155 crores varying 553 consist of exports and exports, yeah, and 601 crore in domestic market. Would like to tell here we are almost on the same line or as I already informed that we would be having the same kind of numbers for the fiscal 26 what we had in fiscal 25. But let me tell you the EBITDA what we had in fiscal 25 which is 22.7% percentage. It has almost 24.9% in this nine-month period amounting to rupees 221 crore which was 269 crore for the full year. As I was mentioning earlier PBT and PAT for this entire nine-month profit before tax is almost 192 crore which was 226 crore for the full fiscal of FY25. Again, PAT it is 141 crore which was 174 crore in the full fiscal of FY25. Here we do have as I told you that here the PAT is bit improved compared to the fiscal 25 numbers and as well as PBT also it has increased by a bit compared to the overall fiscal of FY25. Operating cash flow we had for the first half it is almost 87 odd crore free cash flow what we have generated again within CAPEX of hardly 12 crore in terms of couple of furnaces and a small 4G client. As you are very much aware that company is having negative debt for last couple of years. Company is having surpluses which has been parked for to raise another income so overall there is a negative or rather debt equity ratio.
Coming to the ROCE return on equity it is 17% for fiscal 24. It is 16% for fiscal 25, and I expect to be in the range of 15 to 16% for the fiscal 26. These are the detailed numbers, what has already been shared with you people. Now I would like to request team Equirus to take it further and we can initiate Q&A session.
(18:38 - 19:10) Yeah. Thank you, sir, so thank you for the opening remarks. We'll now open the floor for the Q&A.
Anyone who wants to ask a question can please use your raise hand function. Once you have done asking your question, please lower your hand. We'll wait for a couple of seconds for the queue to assemble, and then we may start. Yeah, So the first question is from the line of Jason Jones. Jason, you have been unmuted, you can go
(19:12 - 19:14) Yeah, thank you. I'm audible?
(19:15 - 19:15) Yeah
(19:16 - 19:16) Yeah, Jason.
(19:17 - 19:29) Yes, sure. So, first I just wanted to know sir the numbers in terms of the segments, you know, export bearing rings, export. So firstly, the numbers for Q3 FY26 and then Q3 FY25.
(19:31 - 20:17) See, for the Q3 the domestic bearing ring we have recorded I'll tell you in terms of million. It is 953.69. Export bearing ring, it is 380.55. Domestic auto component, it is 397.80. Export auto components, it's 839.87. Scrap revenue, it is 149.11. And export incentives, it is 27.35. This all puts together 273.37
(20:17 - 20:17) Sure, sir
(20:18 - 20:21) For the Q3 of
(20:21 - 20:21) Sure sir
(20:22 - 20:22) December 25.
(20:24 - 20:29) Okay. And now, Q3 FY25, sir, which is the last year, corresponding?
(20:30 - 20:31) You want the full year or for the nine months?
(20:31 - 20:35) No, no. Only the Q3, sir Q3. The
(20:35 - 20:36) Okay. Q3.
(20:37 - 20:37) The last quarter.
(20:38 - 20:38) Domestic bearing ring
(20:39 - 20:40) Yeah. The one ending in December. Yeah.
(20:42 - 21:11) Domestic bearing ring, it is 730.39. Export bearing ring, it is 283.33. Domestic auto component, it is 386. Export auto components, it's 995.38.
(21:14 - 21:15) 995 you said, sir?
(21:16 - 21:16) Yeah.
(21:17 - 21:18) 995.38. Okay.
(21:19 - 21:20) Yes, yes.
(21:20 - 21:22) And so, scrap and export incentive?
(21:23 - 21:36) Scrap was 167.38. Export incentives, it is 36.42.
(21:36 - 21:37) 36.42?
(21:38 - 21:38) Yes.
(21:39 - 21:41) Okay. Sure, sir. Thanks for that
(21:41 - 21:44) So, it's 2598.82.
(21:45 - 22:28) Sure, sir. Thanks for that Now next just wanted to ask, sir. So, I mean, even in the previous con call last quarter, you had mentioned that you are expecting the tariff from the 53% to be reduced to 18 to 20% on auto components. Now just wanted to know that has you did speak in the opening remarks that although that is 18% has come but fine print has still not come. So just wanted some clarity, sir what exactly. And also, I wanted to know, 18% on the MHCV parts, which is basically the auto component parts, and bearing rings as well, right? So, both will be reduced to 18% the tariffs?
(22:29 - 22:42) See as I told you initially, for this auto components, till 31st of October, it was in totality 53% import duties were there.
(22:43 - 22:43) Right.
(22:44 - 24:30) From 1st of November they have given certain relaxations. That is from Section 232 which has reduced 25% duty from 53. And as of now, or rather till 7th of February, we have been charged at25% with the duty plus basic customs duty, what it was 2.97 along with merchandise fees and this thing.
So, now looking to the notification or rather the issued by the US government we are not sure whether this 25%, what it is applicable to us as of now, because we also got a feedback that it would be a zero also in certain auto components, it would be an 18% also on certain kind of this thing, or it may continue with the 25% also. But that is subject to the clarification and detailed notification along with the respective, you know, HSN. Then only we'll be able to know. And once we'll have some kind of clearance at US customs and we'll be able to know, maybe in next couple of days that how this would be implemented and what has been interpreted at that level. Because broadly they have simply told that on the one side they told that Russian import duty has been moved off, which was 25%. On the other side it is telling that duty would be 18%. So, we are bit not aware unless and until, or even not, we would like to comment unless and until we have something, you know authenticated on paper.
(24:31 - 24:57)
Sure, sir. So just to summarize, till 31st October you had 53% tariffs. Then from that first number to this point in time, you had around 28% tariff you said 25% plus some surcharge, etc which was coming up to 28%. And now you will wait for the fine print with the HSN, etc as to what exactly that will give us the clear picture. Correct? Correct, sir?
(24:57 - 24:58) Yes, very true.
(24:59 - 25:13) Correct. Correct, sir okay. And so, this, so again so auto components definitely must be going by a large number to the US. How about bearing rings exports, sir? What is that proportion? Is that a also significant proportion?
(25:14 - 25:33) Bearing ring, as I told you, if you see bearing ring in terms of exports it is, we can say up 15 to 16% of my overall revenue, which is there. And there we got a hit from you know, majority from the European market and
(25:34 - 25:34) Okay.
(25:35 - 26:01) Yeah, it has not been fully recovered. If you see my last three quarter or rather all these three quarters for this current fiscal, my bearing ring export of overall revenue, it is 13. It ranges in between 13 to 15%. But let me tell you in, say in fiscal 24, the same number is, was almost 23%. And in fiscal
(26:01 - 26:01) Okay.
(26:02 - 26:12) 25, it went down to 15%. And in this last three quarters, we are having average of 13 to 14% of overall export bearing ring.
(26:14 - 26:33) Okay. No sir, what I wanted to know is so see the tariff is basically emitting from the US. Now what I understand is the bearing rings is basically 55% domestic and 45% is exports. So, from that export component, how much goes to the US? Only I'm talking about bearing rings. I'm only talking about bearing rings.
(26:35 - 27:03) Okay, that portion of bearing ring to US let me tell you in terms of number, say for example, for this nine-months, I told you that export bearing ring was 112 crore, 113 crore. Out of that, the export to US is 32 crores.
(27:04 - 27:07) Okay, it's 32 crores. Okay sure.
(27:08 - 27:15) Yeah. So, you can say one third of overall bearing ring business rather export bearing ring business, that comes from the US.
(27:16 - 27:17) Okay. Okay
(27:18 - 27:21) And remaining is from Europe and Canada, Mexico.
(27:23 - 27:30) Okay. And sir, on this, the tariff is that also will be clarified? That's what you're saying.
(27:31 - 27:44) That there we expect, because you know we didn't have any kind of duty paid structure with the for the bearing ring business, but there we expect it would be coming down too, because it was 53 and now it will be coming down to 25.
(27:45 - 27:46) Okay, now you're expecting it to come to 25. Okay.
(27:47 - 27:47) Yes.
(27:49 - 27:59) And sir, revenue guidance 26, I think you alluded that it will be flat in terms of revenue and for 27, you still stick to the mid-high teen growth for 27 revenue wise?
(28:04 - 28:36) Yes. As of now we still expect and on the basis of the forecast on this end we expect in between you know maybe 16 to, or rather 15 to 18% of overall growth. See, because in US like 25% has been from 50, they have reduced to 25%. So, our customers in US they are happy with this 25% also. But now definitely it is going to be 80, but when? We are waiting for the announcement from US government. So
(28:37 - 28:37) Sure.
(28:37 - 28:51) And it, and it has already been declared, so it is definitely it is going to be there within a week or two weeks or something. So, once it is there, then there are more chance of getting more business from US.
(28:54 - 29:04) Sure, sir. And just lastly, one thing. Just wanted to know the revenue breakup between US, India and Europe and others for nine month.
(29:07 - 29:09) You want total revenue?
(29:10 - 29:12) Yeah, total revenue. US, India, Europe and others.
(29:14 - 29:17) I'll tell you broad percentage of that.
(29:17 - 29:18) Yeah.
(29:19 - 29:21) Say 54% is domestic.
(29:21 - 29:22) Okay.
(29:23 - 29:30) 22% is US. Same percentage it is there for the Europe.
(29:31 - 29:32) Okay.
(29:33 - 29:39) And remaining in between Mexico, Canada, Thailand, etc, might be couple of more for two and a half, 3%, something.
(29:40 - 29:45) Sure, sir. Thanks for answering my questions. Thank you so much.
(29:46 - 29:55) Thank you, Jason. So, our next question is from the line of Amar. Amar, you have been given the permission, you can go ahead.
(29:57 - 29:59) Hello. Am I audible, sir?
(30:00 - 30:00) Yes.
(30:01 - 30:06) Sir, I just wanted to ask you that what are the current capacities you have right now?
(30:08 - 30:25) See, in terms of metric tons, the achievable production capacity is somewhere about in the range of 105 thousand metric ton to 115 thousand metric ton per annum.
(30:26 - 30:33) Okay. And what's your order book including the additions in Q3?
(30:36 - 30:46) Order book as of now on a monthly basis, it is ranging somewhere about 95 to 105 crore for the next three months.
(30:48 - 30:51) Okay. For one quarter, right? This is for?
(30:52 - 30:54) Yeah. Last quarter. Yeah.
(30:56 - 30:58) Okay. And what is the total order book, sir?
(31:01 - 31:28) Total order book you know what happened? Sometimes my overseas customer gives us the forecast on for a six months or something like that, whereas domestic might be of couple months. But if you ask me Q1 what I am looking for, or rather on the basis of the forecast, what we are targeting is somewhere about 300 and you know 25 crore or something like that for the very first quarter.
(31:29 - 31:38) Okay. So, for the first quarter of FY27, your order book will stand at close to 325 crore? Is that what you're saying?
(31:39 - 31:40) 325 to 330.
(31:42 - 31:45) Okay. That will be your total order book as of Q1, right?
(31:46 - 31:47) Yes.
(31:49 - 31:52) All right, sir. That's all from my side. Thank you so much for answering my question, sir.
(31:53 - 32:07) Yeah. Thank you, Amar. We take the next question from line of Manish. Manish, you can go ahead.
(32:08 - 32:09) Yes.
(32:09 - 32:18) Yeah. Manish sir, you are not audible if you're speaking something. I would request you to
(32:18 - 32:18) I'm audible?
(32:19 - 32:20) Yeah. Now you're audible. Yeah.
(32:20 - 32:43)
Oh, Sorry for that. Sir first of all, good evening and congratulations for the good set of numbers. So, I have two queries. Now first query is, you know, what we have seen is promoters buying some shares and selling some shares in December quarter within a couple of days. So normally we don't see that happening. So, can we know the reason behind it?
(32:45 - 33:45) Its a let me tell you definitely you have not seen frequently in past, and again you will not be seeing the same in future. There is some kind of, I would say miscalculation or something, you know some kind of Initially promoters has acquired to, you know, increase his take only, but there were some kind of urgency where in the you know, the funds was supposed to be deployed in a day or two only. So that was the temporary option available to particular promoter. And that is why it has, and on the contrary promoters, you know had a loss in, you know setting up this tax implication was quite negative. But that was by way of some compulsion it has been done, but now onwards we would not be there
(33:47 - 34:03) No. Okay. No, I just asked because I'm its little weird promoter buying some share at 118 rupees and selling it 129 rupees. So that's the reason I asked this question. My second thing is, you know, we have seen the pledging from promoter first time. So, what do you know any reason for the pledge?
(34:05 - 34:39) Pledge? again they have given you know, or rather raised certain fund towards that security and which is some they have committed to invest somewhere. And but if you see overall quantum of the pledge against their holding, is of promoters holding, you can say it's hardly 4 to 5% of overall promoter stakes, less than 5%. And in terms of totality equity, it is somewhere about two and half percent, 2.7 something.
(34:40 - 34:41) Yeah, yeah.
(34:40 - 34:41) If you are
(34:41 - 34:44) That's what. The pledge is so small, that's the reason why
(34:44 - 34:44) Yeah, yeah.
(34:45 - 34:46) What is the necessity of doing that?
(34:46 - 34:52) That is the amount they have committed and maybe down the line, you know, three to 6% would be squared up also.
(34:54 - 34:59) Okay. That's all from me. Thank you, sir. Thank you for taking my queries.
(35:00 - 35:07)
Thank you. We have our next question from the line of Saurabh Jain. Saurabh Jain, you can go ahead.
(35:08 - 35:10) Hello? Yeah. Am I audible, sir?
(35:11 - 35:11) Yes.
(35:12 - 36:01) Yeah. Thanks for the opportunity. I have a couple of questions to begin with we sir at the beginning of the year, we had SOPs of 175 odd crore, which were supposed to get into schedule during the second half. So how much of that 175 odd crore you know, got registered in Q4? And do you still think that last time on the call you had mentioned that the SOPs of around 225 to 235 crore would go into FY27? because we had some orders, new orders of 40, 50 odd crores. So, if you can, you know, just throw some light on that.
(36:03 - 38:41) See your first part of your question say out of that 175-crore revenue what we have projected and you know, for the new program, new customers. Out of that, almost 60% of that volume, it has been started why 60%? it's not like that order cancelled or other order has not started. It has started with a low of take. And certain orders it has been postponed because of this let me tell you, two big customers based at US it was completely rather they have what do you say? Temporarily just closed down that particular plant where the import duty was 3% and thereafter phase-wise it has been to 53%. So, it is something what do you say? A very unviable factor for the customer of my customer. So those couple of programs have completely been hold, or rather you can say a zero supply as on date, which was significant amount and here again, as I told you initial part or maybe in the earlier commentary also that we had a loss of existing business maybe of that 20 to 30% of bearing rings as well as particularly from the US as I have just told that 30% of my US revenue compared to previous fiscal it has reduced in this current fiscal. Now these numbers whatever the reduction is there in spite of that we are having the same kind of flat you know, top line. So how I will be able to maintain that top line, that is because of the new orders, new customers. So, it's not that it has not moved. It has moved couple of reasons, as I told you that volume has been reduced. A few orders have been deferred to three to six months. Few ordered have deferred by almost a year or so. Coming to the second part of your question where you were mentioning that 225, 230 odd crore something for the fiscal 27. We expect, as I told you, that maybe we would be closing somewhere about you know, 1150 odd something top line in this year wherein I expect almost 200 odd crores, somewhere about 180 to 200 crore additional revenue from these new programs because something it has already been started. Right?
(38:41 - 39:02) Okay. yeah, that's helpful, sir just a follow-up to the previous question. You mentioned that we have a monthly order book of 95 to 105 crore for the coming three months. So, if you can, you know, just bifurcate that for us in terms of bearing rings and auto components.
(39:04 - 39:15) Sir bearing ring ranges are near to 45 to 48%, auto components again 50 to 55%.
(39:17 - 39:49) Okay. And sir another thing is of course you have mentioned about the tariffs and more clarity is required, but post the recent announcements of Europe FTA and recent developments with respect to
US tariffs, how has been the communication with our overseas clients like in terms of what kind of volume of take can we see in the coming fiscal if at all it comes to 18% and 25%?
(39:50 - 41:38) See, I told you na, this 18% number as they have announced somewhere on, you know 4th of Feb or something and they again came out that from 7th Feb it would be implemented. 7th Feb it was Saturday and today we are on the 10th afternoon which is you can say the first working day. It was 9th over there. So, we are yet to know how it is but as far as overall, we communicated and Mr. Mihir also conveyed that my customer as of now they are okay or rather they have already absorbed 25% of import duty and we think once the momentum starts or once the overall activity would be on back to track, we would be do not expect any, you know, negative impact on this thing. That can be managed because the kind of quality of the components and the range of the components what we are supplying, it would be difficult to, you know, get it from some other part, other countries on a very decent way or even in other countries as you must have seen the duty structure might be on a higher side compared to India. Coming to the other part Europe deal as you EUDIL definitely it is welcome and our customers have again starting reviving or rather revising their you know; certain calculations and they are in they have already indicated that they would like to source more from India. Now they are exploring what kind of components and how the value-added full components they can be import from the India and particularly from the Runex. That is what the feedback we got from the European customers.
(41:39 - 41:53) Okay. If I can ask this from other perspective what has been our capacity utilization in first nine months and how do you think it is going to play out in FY27 and 28?
(41:54 - 42:13) We are almost 62, 63% utilization of my overall the same and I hope or rather we expect it would be somewhere about, you know crossing 72, in between 72 to 75% of utilization in next year.
(42:14 - 42:47) Great sir and lastly if you can comment on profitability how do you see with tariffs moving and volumes going up as you mentioned that utilization is expected to increase from 60 to 63% to 70 to 75% so how do you see profitability? vis-a-vis if you can, you know, just you know, throw some light in respect to both the segments bearings and auto components.
(42:48 - 43:59) See, would like to, you know, comment on the net operating margin, because I'm not considering the other income margin it might be, you know, temporary, because it consists of certain my investment income and foreign currency gain, etc. But coming to the net operating revenue, or you can say a net EBITDA, which is somewhere about it ranges of 20 and in between 22 to, that is 20 to 21. And once I'll be having utilization up to, you know, 68, 70% or something like that, definitely this operating margin would touch maybe 22% or 22.5 even, we can achieve once we have that kind of scale of economy. Again, by forgetting into the bearing and auto components, definitely auto components we have better margin compared to the bearing rings because of the, you know, critical operations as well as multi operations and the high position level. But broadly, we can say bearing rings would be
(44:00 - 44:01) Started the web
(44:06 - 44:07)
One second.
(44:07 - 44:07)
(44:08 - 44:10) We'll wait for the participants to join.
(44:12 - 44:14) Mihir, am I audible?
(44:14 - 44:22) Yeah, you're audible. So, we can continue with the question of Saurabh. Ronak, you may allow Saurabh?
(44:31 - 44:32)
(44:32 - 44:34) You can go ahead. Sorry for the technical glitch.
(44:34 - 44:39) No worries. yes sir, you were mentioning about the segmental profitability.
(44:42 - 44:48) Mihir, I'm getting very low voice. I don't know. Just a second, please.
(44:49 - 44:50) Voice, I think is clear.
(44:52 - 44:53) Sorry?
(44:53 - 44:55) Voice is clear. Saurav, you can speak again.
(44:56 - 45:03) Yeah. So, sir, Hiren sir, you were talking about segmental profitability. Auto and bearing rings.
(45:04 - 45:45) Yeah. As I was mentioning, auto components will always be having, you know, better margin because of critical operations and the precision level. And even the application of the auto components for the EV hybrid vehicles obviously will carry a good amount of value-added processes. So obviously the margins are on a higher side compared to bearing ring. Traditionally or other bearing ring, if I figure it out, it would be somewhere about, you know one eight, 18% to 22% in some kind of net operating EBITDA, whereas auto components, it ranges in between 22 two zero, 20 to 25% of net EBITDA margin.
(44:45 - 45:50)
Okay. And any update on ROR, sir?
(44:51 - 46:33) ROR is you are aware that recently I have updated that the bankers. We met bankers, and we tried to convince them, and initially they got convinced that there is some kind of error, some kind of calculation, they need to revise it. So that's why they have you know reversed the rather they have called off the demand, what they have issued, and maybe in this week only we are again planning to meet executive director of the lead bank to take up this matter as quick as possible. And we are going to, you know submit that we would like to close this matter maybe before March 26.
(46:34 - 46:38) Thank you, sir. That's all from my side, and wish you all the best.
(46:38 - 46:39) Thank you.
(46:40 - 47:06) Yeah. Thank you. So, sir, one question from my side. Now with the Europe FTA also and in the opening remarks we had mentioned that we are seeing some auto contracts from the Europe side of business also. So, what do we see or how the things can move? Because what like, what I want to understand is what are the current duties which we are paying right now, and under FTA how would it impact us? Some color on that.
(47:07 - 47:13) I'm sorry, I'm not getting your question because in between your voice was cracking. Can you
(47:13 - 47:15) Yeah is it okay now?
(47:17 - 47:18) One moment, I'm trying to
(47:18 - 47:18) Is my voice audible now?
(47:20 - 47:22) Yeah, it's too low. Tell me. Yeah.
(47:23 - 47:44) Yeah. So, I was saying that due to this Europe FTA thing, now what are the current margin structure, what we are exporting there? And with the FTA what is something which we expect on our product portfolio? And with our interactions with few auto clients there, auto component guys there, are we seeing some kind of positive traction that we may see some order flowing here?
(47:46 - 48:23) Yeah, definitely I told you that couple of customers, our existing customers you know, they are in dialogues, but after post this deal with the Europe they are a bit more hopeful and expecting some more products, because the you better know the conversion cost and the production cost that Europe has significantly increased. So, we would be having that leverage over there. And whether it is Europe
or US, we are having more or less same kind of profitability, unless and until if it is a bearing ring and auto components.
(48:24 - 48:49) Okay. Secondly, sir in terms of the revenue numbers, the segment numbers which you had given. So, if we dissect that, the bearing segment on a year on year basis has seen a decent 30% kind of a growth. So, can you throw some color on how, what kind of traction will it continue going ahead as well, in terms of the growth levels which we are seeing on a YOY basis here?
(48:50 - 50:53) See the percentage of auto has increased. That is why the percentage of bearing has gone down compared to my overall growth in last two years, wherein we were bit having tough phase for the industrial application bearing rings and even the commercial vehicle application bearing rings. There we had a good amount of dip and even the particular one customer group where we were catering somewhere about 22, 23% of our overall revenue of total revenue, I'm telling, that has gone down to even 10, 11%. So, there is a significant you know, reduction of that particular customer who is mainly into non-automotive bearing ring segment. But now I think it's high time, and we are expecting some turnaround from there also. But bearing ring, apart from that in auto sector, we are getting good response. Couple of other domestic customers who were on a lower side, they have increased the existing volume as well as they have added new products also. The, couple of you know, main bearing manufacturers in the domestic market, they have increased their wallet share and they are contributing somewhere about 12%, 13%, 14% of my overall revenue, which was earlier 9%, 10%. But again, as I told initially also that my bearing ring export before one and half year was 22% of my overall revenue, whereas it has reduced to 13, 13 and a half percent in this nine month. So, export is a huge dip as far as overall bearing ring is concerned, but no doubt it would not come up as quickly as auto components because the new order book, what we have received, the new customers what we have enrolled their majority 60, 65% are from, for the different kind of auto components.
(50:54 - 51:16) Right sir, but exports is another story, but when I see your domestic bearing ring numbers, you're basically for the last five quarters, you have been growing at a decent kind of a growth rate like this year. This quarter also, year on year, it was up around 30%. So, is it that because we are seeing some traction from the new capacities of these domestic bearing ring players?
(51:16 - 51:56) That's what I told that another except that one customer, other three, four main players who have increased their number of components, who have increased the volume of that particular his thing, and adding the new facilities also. One of the customer who has yet not initiated, you know, one of its production capacity settled in Gujarat, now they have started to the extent of 30, 40% utilization. And where we got some chance over there. So those players are showing traction and it is on them, their expansion mode. And down the line six months, further we are expecting you know, the same kind of growth in the domestic bearing market.
(51:57 - 52:12) Okay. I'll take the next question. The next question is from Kush Nahar. Kush, you have been allowed, you can go ahead. Kush, you are not audible.
(52:18 - 52:19) Yeah. I'm audible now?
(52:19 - 52:19) Yeah.
(52:20 - 53:39) Yeah. So, couple of questions. So, first is, these new customers that we have added, as you mentioned, in Q3, FI23. So, this would be in which segment, bearing rings or auto components, and if it's domestic or exports? And just wanted to understand what was our right-to-win for these customers?
So, like you mentioned that there is an increase in wallet share. So, you know, are we cost competitive or, you know like, you know, just some elaboration on how we're replacing the existing supplier. So that is one. Second, I think that many of our bearing ring customers are expanding in India. So, like previously, we have mentioned that we have around 30 to 35% market share in the domestic bearing rings. So, going ahead in these new plants, do we see it increasing, you know, directionally towards 50, 55%? Like, are we benefiting from that expansion, since they all want to make India as an exporting hub also? And third, lastly, considering the volume normalization that we're expecting because of the trade deals, so more from a three to five-year perspective, any sense on the CAGR growth that we can do in terms of top line, considering the order book and the commentary of our customers?
(53:41 - 55:20) Coming to taking up your portion of the question, last portion that for next three to five years or something. See, let me tell you, it's very difficult to tell you the CAGR for the next, or rather beyond three years from now. But definitely the order book and the program tenure, what we have received we expect somewhere about, you know in between 12 to 14% CAGR growth on for the next three to five years. And down the line, if I tell you today we are there in March 26, maybe March 2030, we would be touching, or rather we in turn, we have a plan to, you know, almost double the revenue, what we have. That is the last portion. Prior to that I think I already told that domestic players who are in the expansion mode, particularly the bearing manufacturers who are utilizing or who are adding new products, who are, you know, adding products which they were initially, or rather earlier, they were importing. So, we got that you know, good chunk of that order, or rather good chunk from that particular segment. And even the existing one, that is why the three, four players for the bearing ring, the percentage or contribution to the revenue has increased. And overall, my domestic bearing ring business has increased. I don't know. Can you just repeat the first part of your question?
(55:21 - 55:23) Export market, where is it auto
(55:24 - 55:26) I think the new customer, what I was mentioning
(55:26 - 55:26) Yeah.
(55:27 - 55:41) What we have added in the you know, in this quarter, that both this customer are for auto components and maybe in this month, before end of February, one of the bearing ring customer would be started.
(55:42 - 55:56) Right. And so just some elaboration on the right to win. Like, you know, because you must be replacing the existing supplier. So is it the cost or is it that sourcing strategy where, which the companies are changing, that's why they are you know, more
(55:56 - 57:07) Generally, it is difficult to, you know, source the or other to intervene into the existing program. But one of my customer who has just, you know, who was, who is sourcing these components from the other country, and now because of restrictions of his customer, he is required to move to the preferred countries, where India would be. So, in that case, they have, you know, given us this order and in which they want immediate supply, maybe down the line six to eight months only. Otherwise, there would be a new program, new product development, new you know, the OEMs who are designing or other who are developing a new kind of vehicles that will attract the new vendor. And these companies already, if they are into certain program, they are in touch with the for the forthcoming programs to a potential forging player having wide range of capacity, wide able to offer a most valuable or rather the most value-added processes. So that's why we got a preference somewhere over to the other countries.
(57:09 - 57:10) All right, sir. Thank you for the answers.
(57:11 - 57:19) Due to limitations of the time, that would be the last question. So over to you, Hiren bhai, for the closing remarks, and we can end the call.
(57:20 - 59:29) Yeah. Thank you very much to Team Equirus, as well as the our investor analyst from the, that team.
As usual, would like to tell, would like to reiterate that management is very much concerned and dedicated for the development of this thing, though we had a couple of hurdles as far as you know, the overall performance that is execution of that thing because of certain geopolitical reasons or somehow some other factors which have restricted our, this thing. But would like to clarify that the challenges, what we are facing, it is not only to the Rolex Rings or something. This is the overall economy, or rather even the other players in the other segments, they are also facing the same kind of challenges.
But here, we would I’m pleased to say that we tried to manage the momentum. We didn't try to lose the overall you know, utilization as well as overall top line, and at the same time, we tried to maintain the net operating EBITDA, net operating margin, and it would be on a positive side. So, and on the basis of the, you know, the order program, no doubt it was there supposed to be executed in the fiscal 26 only, but as you all are aware that these are the situations where, you know, the complete calculations or rather the customers you know, the buying feasibility is being disturbed. So now we think it would be on a track or maybe from the next quarter onwards, as I was mentioning, we would be having that moment incremental moment and along with the same kind of profitability. And maybe in next year or so, again, we are going to, you know honour the expectations of our stakeholders in all way. That is what we are expecting, and that is what we would like to convey to our respectable stakeholders. Thank you very much for investing. Thank you very much for trusting. On behalf of Rolex Springs, again, I would like to acknowledge the all the investors and the participation along with the Equirus team. Thank you.
(59:30 - 59:31) Thank you.