Uniparts India Ltd (NSE: UNIPARTS) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Monali Jain — Investor Relations
Gurdeep Soni — Chairman and Managing Director
Vivek Maheshwari — Vice President, Investor Relations
Analysts:
Rushabh Shah — Analyst
Saumil Shah — Analyst
Nikunj Doshi — Analyst
Unidentified Participant
Richa Agarwal — Analyst
Mohammed Farooq — Analyst
Madhur Rathi — Analyst
Presentation:
Operator
Ladies, ladies and gentlemen, good day, and welcome to India Q3 FY ’25 Earnings Conference Call hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal in operator by pressing star on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Monali Jain from Go India Advisors. Thank you, and over to you, ma’am.
Monali Jain — Investor Relations
Thank you, Sagar. Good evening, everyone, and welcome to Q3 and Nine-Month FY ’25 earnings call of India Limited. We have on the call Mr Gurdeep Soni, Chairman and Managing Director; Mr Paramjit Soni, Promoter, Executive Director and Vice-Chairman; Ms Bagrodia, Director and Group Chief Operating Officer; Mr Rohit Maheshwari, Group Chief Financial Officer; Mr Vivek Maheshwari, Vice-President, Financial Planning and Analysis and Investor Relations. We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in addition of the risks that company faces. I will now request Mr Soni to take us through the financials and the business updates, subsequent to which we’ll open the floor for questions-and-answers. Thank you and over to you, sir.
Gurdeep Soni — Chairman and Managing Director
Thanks, Munari. Good evening, ladies and gentlemen, and welcome to the quarter three FY ’25 earnings call of Unipass India Limited. Trust that all of you are doing very well. As the end-market demand environment is being monitored closely, team continues to focus on operational endeavors, leveraging competitive strengths, including dual shoring manufacturing and flexible delivery model with onshore warehouses as well as proposed nearshoring options to optimize these opportunities emerging in the evolving operating environment. The team is navigating the challenging business environment cautiously and creatively, while continuing its unwavering emphasis on our core strengths. The company’s business continues to generate healthy cash flows, lending requisite strength to the balance sheet to propel growth ambitions organically and as well as inorganically. Let me now spend next few minutes sharing thoughts with respect to the current operating environment and business highlights. So starting with the construction end-market, as alluded during couple of preceding quarterly con-calls, there have been signs of softness in-construction equipment end-market in our key geographics of globally. Our largest global customer is witnessing early-to-mid double-digit decline in this segment. This impact on our sales to them is higher than that due to some impact of inventory destocking. So the healthy rise in business relationship with the global leader in-construction equipment as well as another young account in Europe is helping in offsetting some of the end-market weakness. The net impact of end-market weakness partially offset by increased business with couple of key clients is about mid-teens decline year-on-year for Unipart in the construction segment. Coming to large ag, the demand slugging in large agriculture equipment is hurting overall short-term demand in US and Europe. Some additional element of inventory correction. However, this is also throwing some new opportunities which Unipass is working on. In fact, our relationship with a leading tractor OEM is gaining good traction and we have got some new business with them. This is helping in offsetting the overall weakness in European end-markets to some extent. Coming to the North-America and Japan small agriculture equipment market, these are witnessing some further weakness in short-term, while small agriculture equipment market in Europe and India is stable to marginally positive. Our aftermarket segment is performing well post the inventory correction cycle and that part of demand is seemingly normalizing now. This segment is likely to grow 25% to 30% year-on-year in this fiscal itself. The addition of new customer during our last fiscal who has the second-largest group of retail stores in North-America is helping this growth and has more room to grow. The sales run-rate to this new account has been higher-than-anticipated. The company’s balance sheet continues to be net-debt free with net cash position at INR208 crores. Our business continues to witness healthy free-cash flows at about 16% of revenues from operations during this reported quarter. The new award pipeline remains encouraging with added traction in all product verticals, including PMP, large agricultural equipment assemblies, agricultural machinery in India and high-horsepower three-point linkage as well as further geographical expansion in below 70 horsepower tractors is also gaining traction. The end-market softness may have some bearing on the implementation timelines. And finally, our active evaluation and engagement towards inorganic growth options continues. But with this, before I hand over the mic to Vivek for financial details of the reported quarter. I wish to introduce Ms Bagrodia, who joined us in November as Group Chief Operating Officer and she is also a member of our Board of Directors. She brings with her extensive experience across diverse geographies and sectors, spanning financial services, automotive and startups. She will be in-charge of Unipart’s group-wide operations and customer service. Also, at this time I place on record my sincere gratitude to the outgoing Group Chief Operating Officer, Mr Sudhakar Kohli, for his valuable contributions and leadership. With this, I would like to hand over to Vivek Maheshwari to discuss the details of our financial performance during the reported quarter. Thanks, and over to you, Vivek.
Vivek Maheshwari — Vice President, Investor Relations
Thank you, sir. Good evening all. I would like to share following financial and business highlights of the quarter-ending 31st December 2024. Revenue from operations for Q3 came in at INR208 crores, which is a quarter-on-quarter change of minus 13.7% and year-on-year change of minus 19.6%. Reported EBITDA for Q3 was INR37.2 crores, which is a quarter-on-quarter change of minus 11.1% and a year-on-year change of minus 16.1%, while the reported EBITDA margin was at 17.9% for the quarter. Operating cash-flow generation for the quarter was approximately INR46 crores. The net working capital comprising of big three elements of inventory, accounts receivables and accounts payable as number of days of trailing-12 months revenue from operations stood at approximately 151 days as on 31st December 2024. Net working capital during the quarter decreased by approximately INR21 crores. Unipart’s balance sheet continues to be net debt-free with Group net cash position at approximately INR208 crores as also alluded by sir. Cash outgrow towards capex commitments during the quarter has been approximately INR11 crores. Total new business award value during trailing-12 months has been approximately INR203 crores, which represents annualized potential value of underlying projects. Inflationary pressure on operating costs remains in the medium-term to be partially mitigated through operational efficiencies. Macro concerns over global economic slowdown, geopolitical uncertainty, evolving global trade tariff environment and impact of persistent inflation as well as elevated interest rates continues to be key monetables. With this summary, I would like to hand the conference back to the moderator for question-and-answer session. Thanks very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Shah from Buggle Rock BMS. Please go-ahead.
Rushabh Shah
Hi, good evening. Thanks for the opportunity. Sir, my question is, you mentioned many times the top-10 customers that are in-construction side outside of China, five are your customers and you said that you are going to add furthermore. So what has happened, sir, have we progressed on that front?
Gurdeep Soni
Yeah, sure. I can take that. So I think the bigger one that is moving along is our — as alluded in the call earlier that our relationship with the largest one Caterpillar is really, really growing very rapidly and I think the way we are executing new projects there has been very, very-high. At the same time, we — I think we mentioned on our last call that we’ve taken some very large new awards on construction equipment from another large customer, which is for the Mexico operations as part of our nearshoring strategy. So in terms of like the new business that we’ve taken in, like Vivek mentioned about INR203 crores of new business got awarded, I think a significant portion of that is coming from the construction equipment side and from these customers itself. So the relationship with them continues to be very, very robust
Rushabh Shah
So my second question is, you are executing with many other divisions within Caterpillar. So earlier it was just building and construction product division. Now it is ground engagement tools division. And so there are different divisions of Caterpillar, which are now getting on-board. So how are we planning with other players also? Are we planning the same thing on as we are doing for Caterpillar?
Gurdeep Soni
Yeah. We are quoting other players as well. I think everybody is looking — so we are at this time processing some very large RFQs with Case New Hall in-construction as well. So we are processing these RFQs with all these other people and continue to grow horizontally within the existing ones as well. So that part of the strategy continues to remain.
Rushabh Shah
And all the other players have. No, with all the other players, we are doing the same strategy as Caterpillar, correct?
Gurdeep Soni
It’s always a strategy you first make an entry into a customer and then you horizontally grow within them. So our entry points with other customers, those endeavors are going on. We are already in Copelco. We are already working with on this. We are already working — we’re trying to extend our relation. We entered Holland and now we’re trying to expand that relationship. So it continues on all fronts over here.
Rushabh Shah
My third question is, you said that you basically know that the number of vehicles in the agriculture and construction equipment are limited. So they are not like automobiles. Yeah hello. Am I audible? Hello.
Gurdeep Soni
Yes, please continue
Rushabh Shah
So I’ll repeat the question. You said that you — that you basically know the number of vehicles in the agriculture and construction equipment are limited. So they are not like automobile. So your goal was to increase the content per vehicle. So what was it five years ago? What is it now? And how are you going to increase or maintain it going further?
Gurdeep Soni
So the way we are increasing — I can’t answer the numbers what was it earlier and what was it now because it’s different with every customer and different on every vehicle. But to give you a situation, we basically from a strategy on every vehicle was we had a strategy to stand around and say, hey, we are doing a three-point linkage on the below 70 horsepower, then we were going to go in the higher than greater than 70 horsepower tractors. And so this year, if you look at a lot of the new awards, they’re coming from that part of the strategy. So a lot of new awards and three-point linkage are coming in from the greater than 70 horsepower tractors, while we continue our geographic growth on the below 70 horsepower tractors. So for example, we’ve taken on some new accounts in Korea to do this and we are expanding that. At the same time on the construction equipment, again, we’ve expanded our capability for much larger size of parts and hence addressing the larger — big size excavators and mining equipment as well. We have added more capabilities on the fabrication side of our business, which is not even a full platform just now. But if you remember from our earlier strategy, we had identified three platforms, PTO, fabrications and hydraulics. So on the fabrication platform, this year, we’ve had some very large awards on that side of the business. And these fabrications are also going on some of these vehicles. So you are basically adding more systems next to the existing systems. Our strategy of shifting system boundaries continues to remain. And I think customers are preferring that because it helps them rationalize their supply-chain even more so. So we are getting more-and-more awards and I think we are seeing a significant amount of traction on the fabrication side of business as more-and-more issues emerge with China, I think you will see more-and-more India come into that place, so
Rushabh Shah
Fine, sir. Thank you so much. I’ll get back-in the queue. Thank you.
Operator
Thank you. A reminder to all the participants, if you wish to register for a question, please press star and one on your touchtone phone. Our next question comes from the line of Samil Shah from Paras Investment. Please go-ahead.
Saumil Shah
Yeah. Hi, good evening. So this quarter has been the lowest sales and lowest PAT in last 15, 18 quarters. And sir, quarter-after-quarter, we have been waiting for the revival in our industry, but we are not able to see. So by when you think we can go back to our earlier EBITDA margin of 21% and PAT of 14%. And what would be your guidance for FY ’26?
Gurdeep Soni
So Samil, thank you for the question. And I agree with you. I think the kind of markets that I have seen, I’ve never seen in my three decades. Having said this, the good news is the worst is behind us now. I alluded to it last — in my last call as well to say, hey, we will — quarter three is going to be lower and after that, we will start seeing the uptick, even though the markets are still soft. So if you look at the construction market, that’s still soft. For the large agricultural equipment market, that’s still soft. The small tractor while it’s still a little bit soft, at least the inventory correction has stopped over there. The aftermarket segment is really, really growing for us, okay. So as we go into this next quarter and Q4 itself, you will see the upswing happen. Part of that is seasonality as well, but the other part is you are seeing a lot of new projects come into line. So the key over here for us is while the markets will do what they are doing and I think we’ve got so much more new awards and new business going-in that as we go into our next year, a significant — a significant chunk of growth you will see come from the implementation of the new business. So even for the next year market, if I do the segmentation of what is going up, what is going down, even the markets are generally going down with our different segmentations in different geographies, we may see flat to maybe low-single digit of just the existing market growth. But I do believe we will see double-digit mid-teen kind of growth just purely from new business. So we will be outperforming the market completely. And so the last of the quarters, which was really, really low is what we’re thinking is over. Q4 is going to be better. I believe sequentially we will be significantly better than that. And the new projects, they’ll start-off, they’ll kick-off. So I do expect the first-half of next fiscal year to you start seeing the growth come in. And by the second-half of fiscal, you will see the new projects really, really blooming. So that’s how I see it just now.
Saumil Shah
Okay. Okay. Okay. And so basically Q4 you see — you are saying that it would be the best quarter-out of the 3/4 which had gone by?
Gurdeep Soni
So. I think it will be between the — it could be the second-best between whatever we were in-quarter one and quarter two. I think we will reach that point in any case. So you will see that swing back come over. And then I would imagine by the time we touch Q1 of next year, you will start to see the numbers go further because of the new projects being implemented. The end-markets are still tough. So some of the end-markets will — because the large agricultural equipment and the construction two segments are still tough. I believe the small tractor will start turning around in second-half of next year because it’s already been three years now that it’s down back-to-back and I think that is going to turn-around. Part of it is obviously related to some of the interest-rate regimes, we will see how that plays out. But the entire squeezing of that market is all over. I’ve never seen a downturn so bad in so many years. But the good news is we’ve managed to go through it. We managed to still maintain other than the operating leverage, still a reasonable EBITDA margin. And as soon as the thing turns around, you will start seeing immediately going back to the 20% because that’s just the operating leverage scenario and I think we’re prepared for our growth. The real good news is all the new business coming into play and it’s coming in exactly the strategic areas that we need them to. Even as you look at the global political environment with all the tariffs and everything. I think Uniparts is in a very good position because we strategically implemented all the — all the tools. We implemented the global sourcing model earlier, we implemented the dual-shore manufacturing, which is paying dividends. We are investing into the nearshore manufacturing in Mexico now. So the number of options we are providing customers to be able to deal with all these challenges seamlessly, I think Uniparts may be unique in doing this. And hence the new business, I think we continue to keep focusing on it. So the worst is and let’s put it that way.
Saumil Shah
Okay. So since the base is also low, at least we can expect mid-teens kind of revenue growth for next year?
Gurdeep Soni
I think so.
Saumil Shah
Okay. And sir, in last call, you mentioned that we are adding one more product-line. So any updates on the same?
Gurdeep Soni
I think the fabrication business definitely is continuing to grow. Like I mentioned, we’ve added a few new products over there and I think we’re seeing more-and-more traction over there. And so that part is continuing even like Vivek alluded earlier, the new customer we had added on the aftermarket with all the ex-new stores, they are performing much better, more and so they had about 800 stores and originally maybe only 400, 450 of those had come on-board. The rest of them are coming on-board. So you continue to see higher-growth over there. There. So with new product as well as new customers, I think it continues nicely. I mean, for you to see I’m — in the aftermarket in this year, if you’re giving about my guess is about close to between 25% to 30% of growth over last year, the market hasn’t grown that much. So obviously, we are way outperforming it. And that’s a good margin business as well. So that’s helping us.
Saumil Shah
Okay. Okay. So this is a new line business, I mean fabrication.
Gurdeep Soni
Yeah, fabrications is coming from a lot of new products which are coming in. So fabrications we’re looking at to develop it more into a serious platform itself. I think there is a need opening up in these markets for this. And we are seeing a lot of interest from customers on that side. Fabrication on the attachment side itself. So again, it’s synergistic to what we do. Like I said, already we are doing stuff which is attaching to the — we dual the vehicle and attaches equipment to it. And so now we’re trying to see how we expand with more fabrications in the attachment space itself.
Saumil Shah
Okay. And sir, my final question, are we following any dividend distribution policy? I mean, what we can expect every year?
Gurdeep Soni
I think that dividend distribution policy is stated and we are outperforming it every year. I think right now because the cash flows are very, very robust and so while I’m maintaining some cash-flow to see if I can fund some inorganic endeavors, but we are maintaining a very-high dividend ratio. Vivek or Rohit, can you give the numbers on the dividend policy and the numbers that we’ve had, Vivek?
Vivek Maheshwari
Yes, the stated policy is 25% of profit or above. While this year itself, the — with the second interim dividend, total dividend has been about INR14 or so which is very close to the YTD EPS as well. So right now we are giving out almost 80% to 90% of the profit because of the capital.
Saumil Shah
Okay, okay. So basically, okay, more than 25%. This year it would be —
Gurdeep Soni
We are doing more than 25%. The stated policy is that, but currently we have significant cash flows. So we are maintaining a healthy rate over there. So even despite the lower markets this year, I think our dividend this year is higher than last year as also.
Saumil Shah
Yeah, right, right. Okay. That’s it from my side. Thank you and all the best.
Operator
Thank you. The next question comes from Nikunsh Doshi from Bay Capital. Please go-ahead.
Nikunj Doshi
Yeah, good evening, sir. It’s nice to hear some positive — note this conference call. So congratulations on that. And just we’ve seen recent resolution about this some INR1,500 odd crore in — we can land or something. So are we looking at really large acquisition or something or what is it for?
Gurdeep Soni
I can’t really comment too much. I’m actively looking at acquisitions. I think it will be premature for me to give any numbers at this stage. But the acquisitions are going to be such that our I’m not for some very, very large things. We will manage stuff, which is we can manage easily, which fits strategically. And so I think our goals of criterias of what we are looking for, what size we will look for, I think are pretty well-defined. But
Nikunj Doshi
Because I think it looks very large in shift generated cover enabling resolution looks very large as well.
Gurdeep Soni
Yeah, the enabling resolution may be large, but I think we will be — for us, that’s more an enabling thing. What I’m actually working on or what the team is working on is more at a situation where it will be — it will be strategically very positive to the company. Let’s put it that way. All right.
Nikunj Doshi
And again, this acquisition we have been nearing for more than a year now. So is it still far away or we can expect in the near-future?
Gurdeep Soni
Well, it’s a very hard thing to answer. All I can say is it’s been consuming a lot of our time. So but — but we are putting a lot of effort into it. And I think like with all these things, it’s not done till it’s done. But I think I can just tell you that the team is spending a lot of resources on it. All right.
Nikunj Doshi
Okay. Yeah. Thank you very much. Thanks and all the best.
Gurdeep Soni
Yeah. Thanks.
Operator
Thank you. Next question comes from Dev Chandra Ramani. Please go-ahead.
Unidentified Participant
Hi, thanks for the opportunity. We are guiding next year for around 15% revenue growth. Can you split this growth between small tractors, large sectors, aftermarket and construction? It would be helpful. Thank you.
Gurdeep Soni
I think we have those numbers, but it’s coming from all. The bigger growth is coming from two zones. It’s the large tractor, the greater than 70 horsepower, which is where we said our focus used to be. So there is a very nice chunk of growth coming from there. There is chunk of growth coming in from the PMP construction side with the nearshoring Mexico strategy as well. And also from the aftermarket and new products, the leased growth is actually coming from the below 70 horsepower tractor because that we had high market shares in the first-place. There we are seeing some growth come in geographically from markets like Korea and all that. But the bigger stuff is coming from our strategic areas where we had room to grow and also from new platforms and some fabrications and stuff like that. So — but it’s coming — thankfully, it’s coming from all sides rather than just one-side. And more importantly, it’s even the robustness of the delivery model with the — how the amount that goes to the warehouse or through direct, I think that ratio is not changing significantly. It’s — the warehouse one still continues to grow, which was the better margin business in the first-place. And thankfully, this year, we’ve had the aftermarket grow, which also is a better margin business. So it’s — so it’s in areas where I think which are — which are good for us.
Unidentified Participant
Okay. But when I’m looking at our end-customers, specifically within North-America, I’m talking about sector customers. So most of the customers are forecasting 2025, CY 2025, maybe somewhere around minus 5% to minus 10 percentage and even construction customers as well, specifically our largest customer within construction side. So that is forecasting 2025 at somewhere around 5%, 6% kind of revenue growth. So I’m just trying to reconcile the numbers. The contribution from new business would be significant. That’s why we are forecasting for 15% growth or we will be gaining wallet share within
Gurdeep Soni
Absolutely. You had nail on the head. It is — like I mentioned in my comments earlier, the existing business that I have is only going to give me flat to small low-digit numbers. And frankly, a lot of that will also coming from the aftermarket as well. So the existing business on the OEM side is not going to drive the growth for me. The aftermarket is driving it, some new. But the significant large one, if you factor that like what I said, the trailing-12 months, we’ve had about INR203 crores of new awards. A significant portion of them and this is the trailing-12 month data has been going up and up. And so once you start factoring that in and you look at maybe another INR150 crores of growth coming from there, that gives you a lot of — lot of room to grow then and that is what’s going to drive it. So it’s the efforts we were putting in on implementing new projects, getting in new projects during this time. I think you will now — the next year, you will see us do better because of that. But that is traditional unit parts. The traditional unit parts is when the — when the markets have gone down, we still outperform the markets to some extent and it’s difficult when the inventory correction happens, so you lose a little bit more. But during that period, we’ve tightened our belt, we made sure our margins are reasonably protected. It’s very hard to protect 20% levels at that time, but protecting a 17% to 18% level is with that kind of downturn, I think the team has done a phenomenal job. Now when the market kind of picks back up, even if the market is flat, we will outperform it with the new business. And then at the same time with that the operating deleverage, which was causing an issue, some of it will go when the margins creep back up. So as the market cycle — and then literally when the market is coming back, let’s say, in a year or two after that, you will see the cycle that we will continue to grow. And what have we done in the meantime, we actually implemented — we are going to have implemented our Mexico strategy with the nearshoring. So another tool in the toolbox will be sitting when we are doing this.
Unidentified Participant
Okay. So basically within exist base business, more sectors, large sectors and construction will be more or less flat to-single digit. And since we have won so much business, specifically within last one year, that along with growth in aftermarket would be driving primarily this 15% rate guidance, which we are kind of projecting and that’s a fair assumption, right?
Gurdeep Soni
Yeah, absolutely. So it’s the new business, which is the key driver to this, not the markets. The markets are giving me flattish. Even though customers are down, the markets are flattish for me on the existing side. OEMs are actually down, aftermarket is up, so consolidated mix is kind of you know a small 2% to 3% growth, but the bigger growth is coming in from the new business in the next year.
Unidentified Participant
And within the new order wins, which Vivek talked about approximately INR203 crores and on the basis of trailing-12 months, would it be possible to classify new orders on the basis of maybe agriculture versus construction?
Gurdeep Soni
I think we have all of that data and — but I don’t have it off the top of my head. You can coordinate with Vivek and get that, but we have all of that separately. All right.
Unidentified Participant
Okay. Thank you so much. That’s it from my side. Thank you.
Operator
Thank you. The next question comes from the line of from Equity Master. Please go-ahead.
Richa Agarwal
Thank you for the opportunity, sir. Sir, I just wanted to know what is the delta between margin delta in aftermarket versus OEM?
Gurdeep Soni
So typically, for us the margin on the — on the OEM, again, my — the lowest margin I have is obviously the India OEMs who produced in India, sell-in India has always been the lower-margin, produced in US and sell-in US has also been the lower-margin. I think for us, the direct export was the — was the — our mid-level margins and our warehouse model used to give us the better margins. But to separate between aftermarket and OEM, I believe the delta, I don’t specifically look at it because we are more focused on our delivery model, but my consolidated guess is it’s at least a 3% to 4% better margin on the aftermarket.
Richa Agarwal
Okay. And sir, what would be the contribution of this sales from warehousing channels of all three channels like India versus and warehousing? What is the mix of warehousing as of now? Nine months?
Gurdeep Soni
I believe it’s in the region of 46% to 47% of our sales are coming from there.
Richa Agarwal
And is this a function of a slowdown in the market and could change when the cycle turns or is it likely to be on this growing trajectory?
Gurdeep Soni
Say that again, Richard, I could not understand it.
Richa Agarwal
So my question is that currently there is a down-cycle and we have seen a substantial expansion in the mix of warehousing. Is this linked to cycle in some way? So when the cycle turns, this number could again normalize because I think your warehousing has a better margin, right?
Gurdeep Soni
I think — I think this is lesser to do with cycles. It’s more to do with how customers look at their risk management. We’ve always said our global delivery model is the biggest thing we have and that helps customers mitigate risk in global sourcing. And I think ever since COVID has occurred, this is front and center in all customer strategy, how they are going to mitigate risk. So like I told you earlier, we had the dual shore manufacturing, we had the warehouse solution here to take risk out. Now with all the situation, customers were looking at a nearshore manufacturing. So we said, okay, we’ll put something in Mexico with for starters and we’ve been going with that. As we set-up more-and-more, my gut sense is customers want suppliers to manage all of this. So do I see the warehouse model go a little bit higher strategically, the answer is yes. I believe the challenge is going to be more — what do you produce in a country like produce in US and sell-in US, I think that’s going to be the challenge with the — with the cost pressures that everybody will face. So I don’t see that part growing as much, but then that was a lower-margin business in any case. And the Indian market again is dependent on how the Indian market grows. So to me, the direct export business and the warehouse businesses, which are slightly better margins are the ones which are — which are projected to grow better strategically and that’s how that’s what I see longer-term. So if you — when we — three years ago, we were sitting at about warehouse at maybe 42%, 43% of our sales. Said in five years, we’ll go to 47 48, well, we already did 47% now. I didn’t do anything to influence this. I can’t take any credit for this or this credit for it, right? It is what the market did. But it’s a testament to what I’ve been saying that customers will move more towards a more risk-averse situation asking the supply-chain to manage this and I think Uniparts does a good job at it.
Richa Agarwal
Okay. Okay. Okay, sir. Thank you for that detailed answer. Sir, my last question is, if you could just once highlight what kind of share you are looking at, let’s say, FY ’26 in higher HP tractors. I think it was in single-digits. Is this going to change meaningfully? And second question is, I know you have not shared a lot of details for acquisition because it might be premature, but what kind of strategic fit you are looking at? Is it a geographical diversification or is it into a different kind of product?
Gurdeep Soni
No, we are — I’ve always said that we have two platforms, which is 3 point linkage and PMP, and we had three identified platforms PTO, hydraulic and fabrications and I think strategically, we are looking at it to be in one of those. So it’s not a bolt-on thing, it’s something which will add more capabilities. It will leverage what we do with our existing customers. So I think we are looking at it in that context. And so it’s got to be an additional platform. It is my — our goal that eventually we will drive — drive revenues from multiple platforms. Right now, two platforms are giving us almost half-and-half of our sales of that is risk mitigated. I’m hoping to add another third platform, which gives us at least maybe 25%, 30% of our sales. And as we go-forward in another maybe one or two years, we’ll add another platform. So to me, it’s synchronous with the strategy where I said, expand system — shift system boundaries, wherever our product goes just now, what’s the next product next to it? Let’s take that to the customers, let’s add more value per vehicle. So it’s in sync with that. We are not changing course on our strategy at all.
Richa Agarwal
Okay. And sir, if you will also answer it, what kind of share you are looking at, let’s say, two to three years from now in higher?
Gurdeep Soni
We haven’t — we haven’t defined that as to what we are looking for as a share, but all our marketing efforts are going-in that. And if I look at the business awards and maybe Vivek can do some numbers with you later on that, but a significant chunk of the three-point linkage growth that is — the new business awards that have happened in this year is coming from that only. Like I said, the below 70 horsepowers, there’s some maybe geographical growth and because I already have high market shares in the US so — and in India, we have a reasonable market-share as well. So to me, I’m linked to the market or to some extent in these geographies. And in the below 70, we were sitting at like more than 25% of the market-share globally, whereas in the above 70 hospital, we were in single-digits, 8%, 9%. So over the next five years, could we be 20% 25% of the market? The answer is yes.
Richa Agarwal
Okay. Thank you and all the best. Yeah.
Operator
Thank you. The next question comes from Mohamed from Pearl Capital. Please go-ahead.
Mohammed Farooq
Good afternoon and thank you for the opportunity.
Operator
Sorry to interrupt, sir. If you’re using speaker mode, may we request you use the handset, please. We are not able to hear you you.
Mohammed Farooq
Can you hear me now?
Operator
This is much better, sir. Please go-ahead.
Mohammed Farooq
Okay. Thank you. Good afternoon and thank you for the opportunity. Before I begin, I would like to take a moment to appreciate the management team for engaging with the shareholders.
Operator
Even now again we are facing difficulties hearing you.
Mohammed Farooq
Can you hear me now?
Operator
Yes.
Mohammed Farooq
Hello. Can you hear me now?
Operator
Yes, sir. Please go-ahead.
Mohammed Farooq
Okay. So I would like to appreciate the management for engaging with the shareholders. In the last conference call, I noticed how well-prepared and confident you were despite the challenges, especially coming right after the IPO. Your transparency and commitment to keep the investors informed are truly valued. Okay. So now coming to my question, in the last meeting, management mentioned that a decline in revenues from the top client has impacted business. Could you provide an update on the performance of your most notable clients in the previous quarter, that is October to December. And additionally, how have orders intake trend evolved and what visibility do you have on client demand heading into 2025
Gurdeep Soni
Do you have to break-out on that or you want me to do it?
Vivek Maheshwari
Yeah, so Muhammed, I think there are few things that we can share with you and most of it is public data. So one of our largest clients and it’s a public listed company. So has — has been facing de-growth as well as the end-markets have soft. So they pretty much on a revenue basis declined about 20% overall and the largest chunk was coming from the agricultural market and while also some part was coming from the construction market. And as sir alluded in one of our — his responses earlier to another question that the impact on our sales to them has been — in some segments has been slightly more magnified because of some inventory destocking impact as well. So that’s how it is going on. But having said that, also how the markets are now panning out, as Sir elaborated little earlier, things are either close to bottoming out in certain segments or there is some more downside in certain segments, which may be witnessed in next two to 3/4 before things become better.
Mohammed Farooq
Okay,
Gurdeep Soni
Just to give you a sense, it’s a large agricultural equipment, the pain is not fully gone, Mohammed, some of that is still going to continue. And I think I alluded it earlier also, it’s going to probably get started, construction has started the downturn. So when the cycle start, it takes — it takes about a year, year and a half of the cycle to get-out of the way. The small tractor one, which had started as a cycle almost 2.5 years ago now, I would have expected — it’s lasted longer than I expected, but anyway, I am seeing green shoots on that already come out now, that at least that is behind us. The aftermarket was more coming because of the logistical challenge caused with shipping disruptions and all that and that cycle has gone through, all the inventories being cycled through and so you’re seeing some nice growth there. But two segments are still tough, the large agricultural equipment and the construction equipment. The good news is the new business awards over there. So despite this — so despite the market doing what it’s doing, I think the key is uniparts is going to outperform the market completely.
Mohammed Farooq
Yeah, that’s good. Okay. So now given the current demand environment, could you provide an updated outlook for Q4 revenues and margin expectation? And additionally, with the US imposing 10% tariff on Chinese import, do you see an opportunity for Uni parts to gain market-share? Have you observed any meaningful sourcing shifting from American buyers looking to diversify their supply-chain? And do you expect these to translate into a stronger order flow?
Gurdeep Soni
We said — the answer to your second question is very, very easy, yes. I think, again, but let’s be careful with this. If the tariffs come on India as well, that’s going to be a challenge, right? But at the same time, here’s the thing. I don’t care where the tariffs go. And the reason for that is wherever the tariffs go, Uniparts is in a better position than anybody else to deal with it. If I need to ramp-up in India, I’ll ramp-up in India. If I need to ramp-up in the US, I’ll ramp-up in the US. If I need to do something and with a dual shore mix of that, we are able to do that. If I need to do something in Mexico, but in six months’ time, I will have that tool in my toolbox. And so we will have more tools in our toolbox than any of our competition or anybody else in this field. So to me, the really good thing is the strategy that we have implemented and, if there is a 10% tariff on China, you will see more growth. I’m already seeing already increased stuff on all these new products. We were talking about fabrications earlier. I’m seeing a large shift happen because of that. So there is a threshold point that once you cross that threshold point, suddenly a larger amount of business becomes available. I think that is coming. We can already sense it. How long do customers take to actually translate that? I think that’s a moving target to some extent. But the number of RFQs we are processing just now in all of this is very, very-high. Here’s something else that I’m going to tell you. Anybody — most of our big OEM customers and if you track any of this, you will realize that they are putting more-and-more people and staffing more-and-more people in India. It doesn’t matter whether it’s deer, it doesn’t matter whether it’s you or it doesn’t matter whether it’s Caterpillar, anybody and everybody is staffing their India operations more. And the reason they are doing it is the shift out of China to India, right? So I think the large corporations are moving in that direction. So before these wheels move, we have to set-up the infrastructure to move it. I think that is already underway. So the second part of your question is very easy for me as to what is happening, right? Yeah. Let’s go back. I forgot what the first one was. Can you repeat your first question to me again, please?
Mohammed Farooq
The current demand environment, could you provide an updated outlook for Q4 revenues and margins? My next call,
Gurdeep Soni
We already spoke a little bit about it. We said the large construction equipment and for next year, like I said, it’s a — with the help of the aftermarket, I think we’re outperforming, otherwise the OEMs are not doing well on this, they are actually going to be flat to negative. The margin because of that, our existing business is just going to grow maybe next year 2% to 3%, but we are driving the mid-teens growth based on new business. So the existing demand is still soft, but despite the existing demand being soft, we are going to grow.
Mohammed Farooq
Yeah. And are you going to maintain the margin or there will be a slight increase?
Gurdeep Soni
I believe the margin will improve because as we grow the business, the operating deleverage, which was sitting a little bit lower is going to come back a bit.
Mohammed Farooq
Yeah. Okay, fine. My
Gurdeep Soni
Medium-term indication of the 20% plus remains. I think we are getting back to that.
Mohammed Farooq
Okay, that’s good. And with this, with any parts India shares in the past declined like 50% from its high despite the strong growth prospect outlined by the company. Now do the promoters see there’s any opportunity to increase the stake? Are there any plans for promoter stake enhancement to reinforce confidence among the investors.
Gurdeep Soni
We had considered that, but each time I tried to do something, you get stuck you can’t do this or you can’t do that, right? So there are so many laws around it. But to give you a sense, I would love to buy my own stock at this stage, let’s put it that way.
Mohammed Farooq
Yeah, I mean, we know that there is a strong growth in a growth coming in and we get it at 50% price now side of
Gurdeep Soni
So I don’t like it. I think it hurt people who invested in us and it’s fundamentally against my ethos to have that happen. So I’m going to be doing everything possible to see how this reverses quickly. I couldn’t help what the markets did, but I think we’re doing strategically what’s the right things for the business are. And I do believe as you continue to do this, it’s a matter of this coming back. And I think we still have the confidence of our customers, the strategy is still strong. So ultimately, all this has to — all the noise has to eliminate at some point. So that’s how I see it,. I think I don’t look at it short-term like that. Okay.
Mohammed Farooq
Okay. Thank you, sir. Thank you and all the best. Thank you.
Operator
Thank you. The next question comes from Madur Rathi from Countercyclical Investments. Please go-ahead.
Madhur Rathi
Sir, I’m trying to understand, is there any update on the UTV, ATV and some new projects that we were hopeful of getting new business from. So any update on that front?
Gurdeep Soni
Yes. So on the UTV LTV, I had said last-time that we had done the test pilot over there. It didn’t take-off as well and we were extending some new marketing program. So we have launched over there a complete marketing campaign in the different stores over there. We’re also now going to be launching our own online retail sales on that as well as tools to take it to the dealer distributor market. So there are marketing efforts going on. So it is going to take time. The market is there, but it’s taking me more time than I originally thought.
Madhur Rathi
Right, sir. And sir, also in recent times, steel prices are at five-year low and rupee is at all-time low. So are we seeing some benefit on the margin front or do we have to pass-on these benefits to our customers?.
Gurdeep Soni
So in the main the exchange rate with all these things used to be passed on, but what we’ve done has over the last few years is we tend to trade our inflation — the inflation that occurs in India versus the exchange rate we’ve tended to take that. So what it has done is it’s allowed us to compensate ourselves for all the inflationary movements that are happening. The fact that the Indian rupee is depreciating, I think obviously it keeps you competitive. But again, when I look at the depreciation of the Indian rupee versus the Chinese yuan, it’s about the same. So is it relatively changing that it’s not. But overall, is it helping us compared to, let’s say, US manufacturing? Yes, India is definitely more competitive now with the US dollar. So the foreign-exchange shift in general is good because otherwise for inflation, if you wanted to give price increases, that’s not a good thing, right? So I think just the avoidance of that and still recovering inflation is going to help maintain or improve the margin slightly.
Madhur Rathi
And sir, just wanted one clarification you mentioned earlier that for the 4th-quarter, you are expecting revenues between the first and the second-quarter of this year. Is that correct?
Gurdeep Soni
That is what I said, because somebody asked me, is it going to be the highest? I said no, but because the highest one was the first one, right? So I’m going to be somewhere in-between those and then I’ll come back-out of that. All right.
Madhur Rathi
Okay. Sure, sir. And sir, lastly, sir, you mentioned about the Mexico, sir, are we only — are we trying to do some manufacturing over there or it is just a stocking operation warehousing?
Gurdeep Soni
So step one is stocking. And once that has stabilized, Mexico is a new working environment for us. So we want to learn about the environment before we make significant bigger investments there. But our teams has gathered way more information on what opportunities exist. But a lot of our customers, the bigger customers are very excited that we are there and they are throwing more opportunities as us because we’ve gone there. So like, for example,, like I’d alluded, they awarded us a $6.5 million business, which is going to start in January 2026. So it’s not even — so some of the things that we were doing now, what we had done about a year-ago, you’re seeing the results now coming in for next year where I’m telling you new business is going to drive better growth. But already the seeds for ’26 are already being laid now so all that is already happening. And as we do this in the second phase over there, if it makes sense to produce something in Mexico, we will — we will consider it. My model is not going to be a low-cost country. My model is going to be best-cost country. If I can produce something in the US cheaper than India, that’s what I’m going to do. If India produces it cheaper than anywhere in the world, that’s what we will do. If Mexico is a better place for a platform, that’s what we will do. I’m not looking at — I’m not looking at a low-cost country solution. I’m only looking at a best-cost country solution.
Madhur Rathi
Sure, sir. And so also we had entered Korea and Japan. So any significant revenues expected from those new geographies?
Gurdeep Soni
In Korea, we took a pretty nice award from a major customer there. So Korea, Korea grows, Japan. Japan continues, Japan. Japan is seeing a little bit of a slowdown just now, but our new business has come from there, but the existing markets are slowing down over there. But Korea, we are seeing some significant jumps. So based on — all based on new business, all based on new awards.
Madhur Rathi
Okay thank you very much.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to the management for closing comments. Thank you.
Vivek Maheshwari
Thank you. Thank you, everyone. We continue to focus on our core strengths and build stronger business franchise by strategically partnering with our customers in their journey and success. Our focus and efforts are aligned towards achieving the targeted growth in coming years. With this, I would like to thank all of you for taking out your time for joining this call today. Thank you, everyone, and have a great evening and weekend. Bye.
Operator
Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.