PITTI ENGINEERING LIMITED (NSE: PITTIENG) Q2 2025 Earnings Call dated Nov. 14, 2024
Corporate Participants:
Akshay Pitti — Vice Chairman and Managing Director
Analysts:
Dipak Saha — Analyst
Charvin — Analyst
Sani Vishe — Analyst
Sanjeev Zarbade — Analyst
Dharmil Shah — Analyst
Akash Singhania — Analyst
Ishpreet Kaur — Analyst
Balasubramanian — Analyst
Mayank Chaturvedi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Pitti Engineering’s Q2 and H1 FY ’25 Earnings Conference Call. [Operator Instructions].
Before we begin, I would like to mention that some of the statements made in today’s call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation.
I would now like to hand the conference over to Mr. Akshay Pitti. Thank you, and over to you, sir.
Akshay Pitti — Vice Chairman and Managing Director
Thank you. Good evening, and a warm welcome to the earnings call for Q2 and H1 FY ’25. We will begin with a brief overview of the performance during the quarter, followed by the Q&A session. The past six months have been quite eventful for our company. As you know, we have completed the acquisitions of both Bagadia Chaitra Industries Private Limited and Dakshin Foundries Private Limited. We have also completed the merger of Pitti Castings Private Limited with Pitti Engineering Limited. Further, during the H1, we have raised INR359.99 crores through QIP.
On the back of these developments, we have reported our best consolidating performance in H1 FY ’25. Consolidated revenue grew by 37.1% to INR850 crores. EBITDA was up by 59.83% at INR124 crores and reported PAT was higher by 105% at INR57.38 crores. EPS was INR16.04. On a standalone basis, our revenue in H1 was INR768 crores. Our EBITDA was INR115 crores and PAT was INR52.57 crores. Sales volume from lamination and its assemblies was 24,952 [Phonetic] tons. Sales volume from casting and machine components was INR636 [Phonetic] tons.
Now coming to the Q2 FY ’25. Our consolidated revenue was INR455 crores. EBITDA was INR66 crores. PAT was INR38 crores, registering Y-o-Y growth of 44.39%, 48.27% and 72.74%, respectively. EPS was INR10.2. On a standalone basis, for quarter two FY ’25, our revenue grew by 28.44% to INR404.97 crores. EBITDA was INR59.49 crores, up by 33.51%, and PAT was INR34.05 crores, higher by 54.7%. Sales volume for the quarter for lamination and its assemblies was 12,514 tons. Sales of casting and machine components was 1,900 tons. The funds raised through QIP have been fully utilized towards the object as stated in the placement document. Consolidated net debt as of 30th September was INR330 crores.
Looking ahead, I’m confident on further improvement in our operating and financial performance as our new capacities become operational, and we continue to derive synergies from our recent acquisition and merger.
On that note, I would like to now start our Q&A session.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions]. The first question is from the line of Dipak Saha from K.R. Choksey Shares and Securities Private Limited. Please go ahead.
Dipak Saha
Hi, good afternoon. Am I audible?
Operator
Yes, sir. You’re audible.
Dipak Saha
Thank you. Sir, first of all, congrats on good set of numbers. So a couple of things. First, if you can help me understand the current capacity expansion that we are doing in Aurangabad facility. So once that is done, what would be our consolidated capacity overall?
Akshay Pitti
So for the lamination part of the business, once the full capacity in Aurangabad is done, Aurangabad will be 72,000 tons. Hyderabad, the lamination facilities will be decommissioned and the capacity in Pitti Industries Private Limited, or Bagadia Chaitra Industries will be 18,000. So consolidation capacity on lamination would be 90,000 tons.
Coming to the casting part of the business, Pitti casting has a capacity of 14,400 tons and the wholly-owned subsidiary, Dakshin Foundries has 4,200 tons. So on the foundry side of the business, we’ll have 18,600 tons as a consolidated capacity. And the machining capacity will increase from 5,47,000 machine hours to 6,50,000 machine hours by the end of March.
Dipak Saha
Okay, okay. And what would be our existing capacity overall for the lamination right now?
Akshay Pitti
So consolidated basis would be 64,000 plus 18,000, so roughly about 82,000 tons.
Dipak Saha
Okay. And the 72,000 lamination that we are talking for Aurangabad facility, it would be commissioned by FY ’25, right?
Akshay Pitti
By December, it should be commissioned. We are under commissioning right now. So by December, the 72,000 tons will be commissioned in Aurangabad.
Dipak Saha
Okay, okay. Sir, secondly, now we have travelled quite a journey, and kudos to the entire team for where we are today. So when we look to two years to three years down the line, so what kind of, I mean, specific numbers we should look in terms of EBITDA per ton or say, volume and PAT. If some, some color if you can share that, say, two years to three years down the line, what are the numbers that we’re looking for, for these specific metrics like EBITDA per ton, it could be a certain level right now and volume and PAT. So how can we comprehend this particular part going three years down the line?
Akshay Pitti
Yeah. So on the lamination side of the business on a consolidated basis for FY ’27, we should be looking at about 72,000 tons as our sales number. On the machine component side, we should be looking closer to about 15,000 tons to 16,000 tons as a sales number by FY ’27. And the EBITDA per ton would be a bad barometer going forward since you know, we have the casting, machining and lamination now, which are very large parts of the overall business when compared to lamination. The revenue projection on a constant raw material basis for this operating level would be in the vicinity of INR2,300 crores to INR2,400 crores on a consolidated basis. And your EBITDA margin should be around 15% to 16% of revenue.
Dipak Saha
That is over the long-term, that 15% to 16%, because I understand this year, there will be certain moderation because all the things coming and upfront cost getting born initially. So that 15% to 16% probably FY ’26, FY ’27, we should look for, right?
Akshay Pitti
Yes.
Dipak Saha
Okay, okay. And sir, I mean, sir, our understanding, we are probably already into the entire value chain of this motors, if 40% or 35% to 40%. Now is there any further plan to move deeper and commence our journey on the copper winding side as well?
Akshay Pitti
We are open to doing that activity. We are waiting for the right customer to partner with to explore that opportunity. The low voltage motors or the industrial motors, the competition is very intense in the motor industry in general. So that’s something we would not be interested to take up, because there the margins will be compressed. We would be more inclined to do it for something like renewable energy or power generation or locomotives. So we are just waiting for the right kind of customer to partner with on that activity.
Dipak Saha
Okay. And as you said, there is some kind of you’re looking for more of a margin accretive penetration going ahead. So given the current context, what is the trend you are picking largely from the big players within the motor space across different industries. Is there any slowdown or any, any sort of activity that your moderated activity that you are sensing from global OEMs?
Akshay Pitti
So first, let’s talk of India specifically and then globally. Barring the low-voltage motors, which is more like a commodity product, we are not seeing any kind of slowdown per se in any of our customer segments. If you look at renewable energy that is growing, mining is growing, locomotive part of the business also is growing. So only it is on the industrial motor side, where you have seen a slight amount of slowdown, purely on account of price.
Coming to the global scenario, we are predominantly exporting for locomotive business in North America and renewable business in Europe and North America. So there we continue to see growth as those countries are investing in green energy as well as their transportation networks.
Dipak Saha
Okay. And that’s really helpful. Sir, last question before I fall back on the queue. For the full year, I mean, two things, I think initially, you alluded to the overall volume numbers that, once again, if you can say, I probably missed it. And secondly, for the full year, FY ’25, what kind of numbers you are looking in terms of top line and bottom line. Some color if you can share, that would be really helpful, and thanks, thanks a lot for answering all questions in detail.
Akshay Pitti
So on the volume side for the full year on a consolidated basis should be about 60,000 [Phonetic] tons to 64,000 tons. We are pretty much on track to achieving those numbers if you see H1. On our revenue side, along with Dakshin Foundries and demerger, it should be about INR1,900 crores to INR2,000 crores top line, provided that the raw material prices is full. And if that is the case, you should be looking at an EBITDA margin roughly in the vicinity of 15.5%, on a standalone basis. And on a consolidated basis, it should be, I would say around the same. It will not make much of a difference.
Dipak Saha
Okay. Okay, sir. Fine. Thanks. And sir, for the quarter, if you can just give us a volume or capacity utilization numbers?
Akshay Pitti
So for the quarter, on a standalone basis, we did 12,500 tons, we did standalone, and consolidated would be 16,500.
Dipak Saha
Okay, fine. Amazing. Thanks, thanks, for all the answers that you provided in quite detail, sir. Really appreciate it. Thank you, and all the best for rest of the year.
Akshay Pitti
Thank you.
Operator
Thank you. We’ll take the next question from the line of Charvin [Phonetic] from Share India. Please go ahead.
Charvin
Yes, hello. Thank you for the opportunity. So my question was, what is the current order book the timeline of its execution? And any guidance on the future order book?
Akshay Pitti
Order book is not exactly relevant to our industry as I’ve explained in the past also in the conference call. We are more of a B2C, B2B kind of a customer, supplier to our customers, where we get our short cycle orders in the domestic side of the business. And on the export side, we have longer visibility. Overall, if I have to just give you a number on order book, it should be about INR800-odd crores of revenue, worth of order book executable over the next eight months to 12 months.
Charvin
Okay.
Akshay Pitti
However, we do get customer forecast, which are quite accurate. So that’s not exactly order book. It is a forecast that we received from customers based on which we do our capacity planning. So, if I look at that slightly towards a longer-term horizon, as I mentioned in my previous answer, we are looking at about 72,000 tons of sales by FY ’27 on the lamination side and about 15,000 tons on the casting side.
Charvin
Okay. And my next question was, what is the expected volume growth in sheet metal and castings for the second half of FY ’25?
Akshay Pitti
Sorry, your line was not clear, I could not understand the question.
Charvin
Sir, am I audible now? Hello?
Operator
Yes.
Akshay Pitti
Yeah.
Charvin
Yes. So I wanted to know what is the expected volume growth in sheet metal and castings for the second half of FY ’25?
Akshay Pitti
So, in H2, we would look to do about 25,000 tons from our own standalone basis sheet metal. And at Pitti Industries, the sheet metal volume should be roughly about 6,500 for H2. In terms of casting sales, consolidated casting sales should be about 5,000 tons for H2.
Charvin
Okay. Thank you so much for the answer.
Operator
Thank you. [Operator Instructions]. We’ll take the next question from the line of Sani Vishe from Axis Securities. Please go ahead.
Sani Vishe
Thank you. Thanks for taking my question, and congratulations on another set of strong numbers. I think you have answered a lot of questions earlier in detail. So I’ll just stick to one or couple of questions. That is, what are your expectations in terms of the working capital requirement, because given that there has been some restatement. So I would ask a question, or in absolute terms, so do we see the numbers for trade payables and receivables and inventory to be constant or similar around the current level?
Akshay Pitti
We should see a reduction from here on. If you see we’ve kind of just recently bought Bagadia and recently bought Dakshin. So as we integrate these companies, we shall be reducing the overall working capital at all our facilities, through our synergy process. So going forward, you should see the inventories coming down. Trade payables more or less remaining stable as well as your trade receivables remaining more or less stable. The inventory side should come down going forward.
Sani Vishe
Understood, understood. Helpful. And lastly, what are our debt expectations for the year? I think we are already seeing some reduction in this quarter for the full year, where do we see?
Akshay Pitti
We estimate that our net debt at end of the year should be about INR200 odd crores.
Sani Vishe
Okay. That’s it from my side. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Sanjeev Zarbade from DreamLadder. Please go ahead. I’m sorry, sir, your audio is not clear. May I request you to use your handset, please.
Sanjeev Zarbade
Is it audible now?
Operator
Yes, sir. Please proceed.
Sanjeev Zarbade
Yeah. I wanted to, regarding, regarding the incentive part, how much more incentives can be booked in the remaining part of the fiscal, that’s what I wanted to understand.
Akshay Pitti
So we are eligible for INR30 crores incentive on an annual basis up in FY ’26, we have accounted INR25 crores already. Remaining INR5 crores will be accounted in two tranches, which will be about INR4 crores would be the second tranche and the third tranche would be about INR1 crore, it based on the filing system with the Maharashtra Government.
Sanjeev Zarbade
Okay. And what are the various segments that are really driving the user segment basically? Is that driving demand for the motors?
Akshay Pitti
So for us, the generators in data centers, wind turbine and compact hydro mining locomotives. These three segments are driving the maximum amount of growth as of now.
Sanjeev Zarbade
And how is the demand shaping up from the IC and EV motors, EV vehicles part?
Akshay Pitti
So we have started with the IC product largely and the EV products are now getting developed. We see a demand ratio of 75% to 80% from IC and about 20% from EV.
Sanjeev Zarbade
Okay, sir. That’s it from my side. Thanks. All the best.
Operator
Thank you. The next question is from the line of Dharmil from Dalmus Capital Investment LLP. Please go ahead.
Dharmil Shah
Thank you for taking my questions and congratulations on the good set of numbers. My question was on, more on the consolidated volume number. And so, if we see Q-on-Q, it’s largely volumes are flat, and the numbers we had give for H2 as well are somewhat similar. So do we see the trend that volumes are going to be flat for next two quarters around 12,500 for standalone and –?
Akshay Pitti
Yeah. So, if you take our annual target Dharmil, as what we had guided to earlier, 48,000 tons on a standalone basis and about 14,000 at Bagadia. So, if you see, we have this time far surprisingly got a very equated quarterly number for our annual target.
Dharmil Shah
Right.
Akshay Pitti
So that’s a departure from the past, 40% was H1 and 60% was H2. This year, it’s like all the growth is kind of equally split across all the quarters and that is largely because of the product mix, again, changing. If you see like Bagadia Chaitra, we have the pump business, which typically works pre-monsoon that has given us volume in H1. In H2, that will dissipate, but then the appliance businesses would pick up. So the seasonality of some of the smaller segments have played very well in this consolidation.
Dharmil Shah
Understood. So would it be fair to understand [Speech Overlap]. Yeah, yeah. So this would be, I mean, this would remain constant for coming years as well, correct? I mean, the seasonality —
Akshay Pitti
We hope so. If some of our other businesses, like say example, wind energy picks up then again that imbalance on that seasonality would come. But if this product mix continues, we should see stability going forward as well.
Dharmil Shah
Understood. And yeah, again, I missed the part you mentioned about the other income. So there was some INR25 crores other income recorded during the quarter, INR26 crores. Was this pertaining to the incentive income from Maharashtra government, or I mean, if you can just quantify again?
Akshay Pitti
Yes, INR25 crores is the incentive income from Maharashtra government out of the INR25.59 crores of total other income.
Dharmil Shah
Okay. And how much would be booked in the remaining –?
Akshay Pitti
I think, the remaining one, cumulatively INR5 crores will be booked.
Dharmil Shah
Understood.
Akshay Pitti
Yeah. Quick return [Phonetic].
Dharmil Shah
Yeah. Thank you very much.
Operator
Thank you. The next question is from the line of Akash Singhania from AART Ventures. Please go ahead.
Akash Singhania
Yeah, hi. Congratulations, Akshay, for a great set of numbers. My question is on the sales breakup, which you have given in the presentation. So I have two queries over here. One is, I’m seeing that the high value-added assemblies have been declining over the last two years, whether it be on a quarter basis or half year basis, whereas the low value-added assemblies have been increasing. So any reason for the decline in high value add, because we were thinking that there would be a better and a richer mix.
And secondly, if you can also explain about side trim coils, which has been mentioned, which is the biggest component of the sales breakup. Like what kind of value add is there? And how does it compare with these between the high value add and low value-added assemblies?
Akshay Pitti
Thanks, Akash. I think that’s a great question. We wanted to actually bring some insight on this entire sales breakup that you try to do now. If you see vis-a-vis the past data, what we started giving now, we have broken up the sales of lamination into the lamination content and the child part and shaft content as well. So it gives you a clearer understanding as to how much shafts you are making and where it is going in terms of the assembly.
So earlier the weight of child part and shaft will be bunched into the high value-added assemblies, we have tried that out and segregated it. That’s why, if you see in quantitative terms with the prior period, it might look like a decline. But if you see this breakup that we have given, there’s a Y-o-Y increase only taking place.
Akash Singhania
Okay.
Akshay Pitti
If you see in FY ’23 there is NA for shaft and child part, because they were clubbed about.
Akash Singhania
Okay.
Akshay Pitti
So the top five line items would be the lamination assemblies in total.
Now if you come to the second part of the quantitative data, we did 1,057 tons of machine components in Q2, 635 tons of the raw casting sold, 213 tons of castings went in assembly of the state of sales. Because if you see that item, it’s a combination of casting, shaft, lamination, machining and child part. So if you kind of add that up in that line item, it would not be fair representation of the capacity in place. We kind of clubbed it with the casting business.
And then the last line item is craft and side trim coils. If you look at our manufacturing processes the thumb rule input output ratio is 1.75. So for every ton of lamination produced about 0.75 tons of scrap also is generated. So that’s what we call it the byproduct or scrap. The site trimming coils are if you take the big coil, which we used to buy from our steel suppliers, they typically come and say, 1,200 or 1,300 mms coil size. So we cut it to the size that we require for our lamination and the side trims, say, 100 mm, 200 mm, 300 mm, are not usable in our product or our product mix. So those used to be sold in the market. These are the coils that we are now selling in the market, selling to Bagadia and they are using it as raw material. Thereby, their profitability is improving.
Akash Singhania
Okay. Understood. It is very clear.
Akshay Pitti
I think breakup, would be very clear and transparent way of explaining to everyone the complexity of our business. And why the EBITDA per ton is not exactly a good barometer going forward with two subsidiaries and the merger.
Akash Singhania
Okay. I think this is very useful. There’s a very granular and a final picture. I have one more question on the subsidy part or the incentive part. I think last year, we had received the incentive in the March quarter. This time it looks like we have received it earlier in the September quarter. So just to understand, this year, overall, the incentive will be around INR30 crores out of which we have received INR25 crores. Is that correct?
Akshay Pitti
Yes. Let me just take you one step back. If you see in Q2 FY ’24, we had accounted INR12 crores, INR70 lakhs of other income. So that was also the incentive income. For our Aurangabad project, we had Phase 1A and 1B. So Phase 1A was running at the rate of INR12 crores per year for four years, seven years. 1B was running at the rate of INR18 crores for four years. So the eligibility certificate for 1B had not been received earlier. We have to finish the capacity addition and then apply for the incentive claim. So last year we accounted INR12 crores in September quarter and in one shot in the March quarter, we accounted two years’ worth of incentives for FY ’23 and FY ’24, INR18 crores into two INR36 crores in March. Hereafter for current year and next year, it will be INR30 crores only.
Akash Singhania
Okay. So FY ’25 and ’26 will be INR30 crores?
Akshay Pitti
Yes. And the way it works is, we get to account 75% on application and the remaining with the audited balance sheet and tax return and GST return, the remaining 25%. So that would typically be done in the second half of the year.
Akash Singhania
Okay. And post FY ’26, FY ’27 onwards, will the incentive be available? I think, was it for five years, seven years or 10 years, or it expires after FY ’26?
Akshay Pitti
No. The Phase 1 will be finished, then the Phase 2 will start. The ongoing capex, which will be capitalized by December, we are eligible to claim that starting FY ’27 for nine years, that will be roughly about INR40 crores per year.
Akash Singhania
Okay. Okay, understood. Okay. I understood. Thank you so much. Thanks for the clarification and great set of numbers. Thank you, Akshay.
Akshay Pitti
Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Charvin from Share India. Please go ahead.
Charvin
Sir, I wanted to ask like what is the current EBITDA per ton? And what will be the expected EBITDA per ton for the second half of the year?
Akshay Pitti
I’ll give you the current EBITDA per ton. But if you take on the same barometer as we took last time, because we didn’t have the subsidiary or the merged business. If you take the current EBITDA and take by the tonnage, it will not be very indicative. We did about INR59.49 crores of EBITDA on a standalone basis. And our standalone tonnage was 12,541 tons. So the EBITDA per ton works out to about INR47,436. But going forward, this would not be the right barometer. The barometer should be more like EBITDA margin on a constant raw material cost basis. We will be looking at about 15% to 16% EBITDA margin going forward.
Charvin
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Ishpreet Kaur from Relax Capital. Please go ahead.
Ishpreet Kaur
Hi, Akshay. Good set of numbers. Congratulations. Hello?
Akshay Pitti
Hello. Yeah, hi. Thank you.
Ishpreet Kaur
Yeah, hi. I just wanted to check, so leaving apart the new acquisitions, what would have been the sales growth apart from the new acquisitions?
Akshay Pitti
Sales, sorry?
Ishpreet Kaur
The sales growth number apart from the new acquisitions?
Akshay Pitti
On a standalone basis, we did about INRR379 crores of revenue.
Ishpreet Kaur
Okay. So just seeing the standalone numbers. Okay. Got it. So that would be the like-to-like —
Akshay Pitti
Standalone would also be the merged revenue of Pitti Casting, which would be coming in. There’s no way to actually look at it without Pitti Casting revenue now.
Ishpreet Kaur
Okay.
Akshay Pitti
So that merger was affected in 1st April ’23.
Ishpreet Kaur
But September ’23, the reported numbers they also have the Pitti Castings?
Akshay Pitti
Yeah, they are all restated. If you see the financials, they have all been restated, with effect 01/04/2023.
Ishpreet Kaur
Okay. Great. Right. And just on the incentive part that you were explaining. So from FY ’26 onwards, did you mention that it would be INR40 crores incentive for the next nine years?
Akshay Pitti
Effective FY ’27. We will be claiming for FY ’26 in FY ’27. So the accounting treatment would be given in FY ’27 onwards.
Ishpreet Kaur
So till ’26, you’re saying, it would be INR30 crores and the Phase 1 would get over and the new phase would come in with the new capex that you’re coming up with?
Akshay Pitti
Yes. It is estimated to be INR40 crores per year depending on the final capex that we actually end up spending.
Ishpreet Kaur
Including the 1B1 [Phonetic] that you just mentioned, INR12 crores, INR40 crores will be inclusive of that?
Akshay Pitti
Yes. No, excluding of that. The one would be, Phase 1A and 1B will close by FY ’26.
Ishpreet Kaur
Okay. By ’27 onwards –? Okay.
Akshay Pitti
Two will start effective ’26, but the accounting would be done in ’27. We have to finish the sales and then raise a claim on the government.
Ishpreet Kaur
Okay. Great. Got it. And are there plans for any further acquisitions or any white spaces that you see, like you mentioned, maybe if you want to up the value chain in terms of the motors? Or is there any other space that you feel that you can get into organically or inorganically?
Akshay Pitti
For the foreseeable future, I think we have our hands full with the two acquisitions and their integration and the merger.
Ishpreet Kaur
Right.
Akshay Pitti
We see great potential in kind of growing this business over the next one-and-a-half year. The only capex that we would be looking at would be to strengthen our tool room about INR40 crores to INR50 crores, that too over the next two years.
Ishpreet Kaur
Okay. Great.
Akshay Pitti
We look at any more opportunities about a year later once we have this in our control and stabilize all these parameters.
Ishpreet Kaur
Sure. Great. Thank you so much.
Operator
Thank you. The next question is from the line of Balasubramanian from Arihant Capital. Please go ahead.
Balasubramanian
Good evening, sir. Congratulations for good set of numbers. Sir, my question is regarding railways. We are seeing some slowdown on execution side, especially in our railways wagons, metro coaches and Vande Bharat also. So is there any impact on our business? So what’s your view on that?
Akshay Pitti
We are not seeing any impact as of now on our business. And also, any projections that you have received from our customers continue to remain encouraging. On the contrary, in absolute revenue terms, we are seeing a growth in our locomotive and Metro rail businesses.
Balasubramanian
Okay, sir. Sir, on the EV side, like we are engaged in a discussion with few of the customers for EV side. So what’s the progress on that?
Akshay Pitti
So it’s not only EV, it is automotive in general. We are not saying we will not do ICE-related products. The order books are encouraging on the automotive side, if you see year-on-year, quarter-on-quarter, our automotive revenue continues to grow.
Balasubramanian
Okay, sir. Okay. Sir, like in recent con-calls, like whether it’s a Cummins or Kirloskar Oil Engines they have mentioned they have witnessed a strong demand from data centers side, like a perfect traction on that side. As of now, right now, it’s around 2% to 3% kind of overall top line. So where we can see in coming years?
Akshay Pitti
If you see on a consolidated basis Y-o-Y, our data center-related business has more than doubled on the higher revenue, that too. So we continue to see that growth. And you’re right the Cummins and all of them are very bullish on this product. We have received similar indications of growth on that product line. In absolute terms, data centers, we see growing at least 2x further from here on.
Balasubramanian
Got it, sir. Got it. Thank you, sir.
Operator
Thank you. We’ll take the next question from the line of Mayank Chaturvedi from HSBC Mutual Fund. Please go ahead. Mr. Chaturvedi, I have unmuted your line. Please proceed.
Mayank Chaturvedi
Yeah, hi, sorry. Congratulations, Akshay, on a great set of numbers. Just wanted to draw more of your insights on this comment that you made that you’re witnessing a slight amount of slowdown in the steady motors purely because of price. Maybe if you can elaborate a bit on that, where exactly is the pain point coming from? Because as we understand, prices for low voltage motors have been subdued for the last six months to seven months. And is there an uptick that you’re seeing which is causing the slowdown? Any comments on that?
Akshay Pitti
So the prices of those motors continue to remain at rock bottom and therefore the customer expectation on pricing also remains rock bottom. We are seeing a lot of import possibilities from China, the raw material prices have kind of fallen off in China, and that typically affects this segment, because this is more of a commodity, like I mentioned. If you see the consolidated revenue, this segment was about 13.5% of revenue last year, Q2, it has shrunk to 11.5%. So while it does in absolute terms, not degrown, it has not grown like how the other sectors have grown such as power generation, data centers, renewables, mining, oil and gas. We are just slightly cautious about this segment going forward, while we are not perturbed by it, because the growth in the other segments is more than offsetting any potential losses in the future from this segment.
Mayank Chaturvedi
For sure, I’m not concerned about the revenue potential at the other segments do hold for you. I’m trying to make an analysis of the broader market trends for the Industrial Motors through your revenues. So just wanted to know, if there’s a volume shift that you’re seeing?
Akshay Pitti
At a broader level, the competition is intense. I mean, between our customers, I would not want to name them, but a lot of them, which offered in the low-voltage space. There is a market share moving from customer A to customer B, and that’s kind of causing a lot of churn in the whole, industry as a whole in the LV space.
Mayank Chaturvedi
Okay. All right. But on the broader overall volumes, you’re not witnessing anything as that, would that be a right understanding?
Akshay Pitti
Yeah, that’s absolutely right. Overall volume is not much a concern. But within the customer’s space, there is a churn.
Mayank Chaturvedi
All right. Okay. All right. Thanks. That’s from my side.
Operator
Thank you. The next question is from the line of Akash Singhania from AART Ventures. Please go ahead.
Akash Singhania
Yeah. Hi, Akshay, just one more query.
Akshay Pitti
Yeah.
Akash Singhania
You mentioned that the debt would be increasing, I think from INR330 crores down to INR400 crores by the end of the year. So how much of capex we are doing in the second half and next year? And what is leading to the increase?
Akshay Pitti
No, no, it will come down to INR200 crore, Akash.
Akash Singhania
Okay. Sorry. It will come down to INR200 crore.
Akshay Pitti
Yeah. The way we look at it, the incentives claim that we’ve done in April. So in March, we have yet to receive from the Government. We typically receive it by December, March. So that money will come in, while it’s accounted the cash flow has not come in yet. And the cash accruals on a consolidated basis, along with the inventory reduction will contribute about INR150 crores to INR160 crores of cash coming in, of which about INR50 crores is capital expenditure plan. So we see about INR100 crores, INR120 crores of net debt reduction taking place as a result.
Akash Singhania
Okay. Okay, sir. Thanks for the clarification. Fantastic.
Operator
Thank you.
Akshay Pitti
Thank you.
Operator
[Operator Instructions] Ladies and gentlemen, as there are no further questions we have reached the end of the question-and-answer session. And on behalf of Pitti Engineering, that concludes this conference. Thank you all for joining us. For further queries on visiting the plant, please be in touch with Mr. Rama Naidu from Intellect PR on 9920209623. I repeat, 9920209623. Thank you for joining us, and you may have a wonderful day. Thank you. And you may disconnect the lines.