Cyient DLM Limited (NSE: CYIENTDLM) Q4 2025 Earnings Call dated Apr. 22, 2025
Corporate Participants:
KRISHNA BODANAPU — Executive Vice Chairman & Managing Director
Anthony Montalbano — Chief Executive Officer
Shrinivas Kulkarni — Chief Financial Officer
Analysts:
Deepak Krishnan — Analyst
Vipraw Srivastava — Analyst
Mihir Manohar — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Scient DLM Limited Q4 FY ’25 Earnings Conference Call. 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 during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. Thank you. I now hand the conference over to Mr Krishna, Executive Vice-Chairman and Managing Director.Thank you, and over to you, sir.
KRISHNA BODANAPU — Executive Vice Chairman & Managing Director
Thank you. Good evening, ladies and gentlemen. I am Krishna Bodanapoor, Non-Executive Chairman of DLM and welcome to our earnings call for this quarter. Present with me on the call are our CEO, Mr Anthony Montanbano; and our CFO, Mr Srinivas. Today, we will be covering the quarter-four and the full-year performance for the financial year 2025.
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. A detailed statement in this regard is available on our investor website, which has been posted on our website.
We are two quarters into the acquisition of Altec and I’m happy to report that the integration is now fully complete. Our reporting is now seamless and so are the operations and the customer-facing functions. Reciprocal tariffs move by the United States government is offering several opportunities for us and many OEMs are showing interest in engaging with us and want to take advantage of our manufacturing presence in the US. In our last call, we explained about the revenue mix change to start showing up from Q4.
As a result, our margin profile is changing and the same is reflected in our Q4 performance. I’m happy to announce that we will be reporting double-digit margins in this quarter and we see a line-of-sight to continue these levels of margins going-forward. Higher tariffs imposed by the US on China is — is opening up new opportunities for us and several OEMs are looking at electronic manufacturing suppliers in India and we are well-positioned into tapping into these opportunities.
We have made inroads through discussions with several key OEMs. While it is an exciting opportunity, we’re also mindful of several economic uncertainties in the form of supply-chain vulnerability that can happen in the short-term. The industry continues to face disruption in global supply chains with geopolitical tensions, trade restrictions and such impacting the availability of critical components and decision-making of new program launches by the OEMs.
We are tackling these uncertainties by adopting a multifaceted approach. Actions that we are taking include diversifying our supply-chain by reducing dependency on a single-country for raw materials and components, leveraging governmental policies such as the PLI scheme in India and subsidies in setting up new facilities, expanding in the domestic market to create a good order inflow against the economic fluctuations in the rest of the world, et-cetera.
So I also want to acknowledge that the financial year was a bit of a challenge for us from a backlog perspective. While backlog has been down this year, we are very confident of building this back up into the new year since we see a Robust pipeline and we are confident that the pipeline will start to convert into orders very, very quickly. We will have a soft start to the year. But having said that, looking at the pipeline and looking at what our customers are telling us, I’m confident we will have another good year ahead of us in FY ’26. As we step into the year with a series of opportunities and a set of challenges, I believe we are going to benefit greatly for the reasons that I articulated. The journey is both exciting and eventful. And thank you very much for being a part of this journey with Scient DLM. I will now hand over the call to Anthony and Shrini to provide more details on business and finance and growth and the macroeconomic situation. Over to you, Anthony.
Anthony Montalbano — Chief Executive Officer
Great. Thank you,. So I’ll start with just down the business overview and one topic that’s been top-of-mind for many is the impact on US tariffs on the EMF industry. This is something that we’ve obviously are some on the pulse in discussion with what we’re seeing with our current clients, also what we’re seeing with our key suppliers and supply-chain and as it continues to evolve, it appears to have really more of a China plus one continuation in terms of the trend on this, right?There’s — when you look at the overall tariff situation as it stands today, you still have a scenario where a diversifying continues to be a strong part of many of our client strategies. This is aligning well as far as having a cost-effective solution that we can deliver out in India. The momentum in India continues to rise really as a preferred partner, even in the new landscape as things evolve going-forward and a lot of this is from a relative basis when you look at the global picture and how that settles out.
And also India’s competitive edge continues. We continue to see even throughout the whole fiscal year, right? We’ve seen continued momentum with not only the types of projects, but just the complexity and depth of the types of products that we are manufacturing in India today.
Some programs with new logos are in a space that provide very complex programs, including PCBA assemblies, wiring, electromechanical, extensive test. So these types of solutions are very much cutting-edge from a manufacturing perspective, you know, regardless of location.
So the India story holds very strong and continue to see that in our business and in our clients and in our pursuits. There’s also no question that the interest in the US market is very-high and we currently are seeing a significant spike in opportunities in our location in Connecticut and part of this is also due to the capabilities of that site, part of the premise for that acquisition was to provide similar type of DNA that our clients may be used to from our operations in India, very similar DNA to what you would find in Connecticut, really high-quality, low-volume, high mission, AG critical electronics, more of a focus in the medical and industrial aspects coming out of that location.
And so this really positions us very well where even many of the new opportunities are coming from our current clients that we’re supporting out of India and we’re now able to provide them options in the US and in India, and it’s really opening up the dialogue and really the portfolio that we can go after with these clients.
So that helps us really provide us — provide a cost-effective hybrid model, which is — which we anticipate will continue to scale. So when you look at our overall growth strategy, right, the core aspects of our business as we look-ahead beyond the current environment, which continues to evolve, you know, our core is still in India.
This is where we have most of our facilities, most of our capability and where we will continue to have a significant amount of our growth and investment. But the USA piece of this is a new addition, which we do see significant opportunity and momentum and also expansion opportunities there.
Again, this helps address some of the onshore proximity to our clients that like to have some of these more complex products closer to their R&D ventures and then also leverage that as products move through the life-cycle into offshore cost-effective manufacturing that we can provide.
And also it allows us to target new industries in North-America, specific aero and defense and ITAR work that this is a continuation of our level of expertise that we have within client DLM where we believe we are industry leaders in that regard. Our core business is really where we will continue to get a lot of our growth and that’s coming in more larger deals, larger transactions where we’re taking a broader engagement with our clients on specific programs.
Also the industry sectors are getting more diversified. So if you look at our business in our current fiscal year and then you look-ahead into what we look to deliver in our next fiscal year, FY ’26, we do see much more diversification in that, a little less dependent on aero and defense and a greater share coming in other sectors, including the industrial and medical in that regard.
Also the build-to-spec is a key part of some of these larger programs. We are scaling these programs today. This allows us really to leverage our science engineering capabilities within the group. This is really a unique value proposition we bring to our clients even multi-billion dollar EFS companies would not have that scale of capability.
So this is very much a core part of the strengthening our current business. And then also there is the inorganic aspect. Again, looking-forward strategically, we have made current move this last fiscal year that gives us — gives us capability, it gives us geography. And looking-forward, we do continue to have — this is a core part of our strategy.
We do see more of a technology focus and then there could also be aspects that are tied to expanding opportunities with specific clients and other aspects of the business. And so that can also include North-America, it can include Europe and other regions. So that can — we continue to look at that pipeline as part of the inorganic part of our strategy. Just some business highlights for the fiscal year.
We’ve had some notable awards from — from our suppliers. I think these are — I’m sorry, from our clients having us recognized as a top supplier for those, that some of these are listed here on the slide. And then also some industry awards as well and then also even in the areas we operate in as far as having business impact on the community.
So this continues to add to our reputation as a leader in this space. And of course, the acquisition of Altec was a key aspect as a highlight for FY ’25. This is something that has been worked for over a year and so timing, especially in the current environment does works out ideal as far as far as how it sets up, how far it sets us up strategically going-forward.
And then there’s also key deals and partnerships which we’ve announced that includes with some of the industry leaders here that you see, including Boeing,, Deutsche and others and so these types of programs are really indicative of the type of engagements we can have and also the Scale that they can potentially bring to the business. So one other key aspect, we’ve had really for some time, a little bit of a unique position where the majority of our clients that make-up our revenue are really what we call A-listinational OEMs that are industry leaders. So our strategy for the most part has been to grow our business with these industry leaders. We make-up a fraction of their spend and expanding that portfolio can provide a significant growth and runway going-forward. That said, adding new logos is a core part of that strategy. We don’t need to add 10 logos a quarter or more like some other maybe higher-volume or businesses that serve other sectors. But that being said, we are very proud of the six new logos that we brought on in FY ’25. All of these — well, of the six, five of the six are very large multinational A-list companies that are really leading in their relative sector. One of them is a — that is bringing some new product and technology to-market. So that will also start to impact revenue even in this coming fiscal year. So these — these types of opportunities really pave the way going-forward. Any one of these clients has the opportunity to be $50 million-plus a year-type of client for us as we build and scale the business with them So with that being said, let me turn it over to our CFO, Srinivas, to help address the finance updates.
Shrinivas Kulkarni — Chief Financial Officer
Thank you, Anthony. Good evening, everyone, and thank you for your interest in. Thank you for joining the call today. Let me walk you through the financials of Q4 first and then the full-year numbers as well, this being the full-year as well as the quarter close. In terms of revenue for Q4, we are recording a revenue of INR4,281 million rupees, which signifies a growth of 18.3% year-on-year.
And we have an EBITDA of INR574 million INR, which is a 50.9% growth year-on-year and I’ll explain some of the specifics in the coming slides. Our profit for the quarter is INR310 million INR, which is a 36.5% growth year-over-year. And EBITDA in percentage terms is 13.4%, which is a 290 basis-points growth year-on-year and EAT percentage is 7.3%, which is 96 basis-points year-on-year.
Now these are the consolidated numbers. On a standalone basis, the revenue for the period is at INR3,403 million INR, which is actually a degrowth of 5.9% year-on-year. Our Q4 margins are high due to a couple of one-off tailwinds that we received during the quarter, these are in terms of purchase price variance claims from customers and those are not accord — those are not quarterly events, right? So from a quarterly sustainable number, we should take-out about 250 basis-points from these numbers to see where we will land in future at these volumes.
Now this profit is the highest profit we’ve had in the last 12 quarters ever since we’ve done an IPO and no, the margin expansion is quite healthy even otherwise other than the assistance, the mix change of business is positively working in our favor as we had indicated before.
The only point of concern on this slide is the order backlog. We continue to show a decline compared to previous quarter. However, the large orders of the Indian customers have come to an end where the consumption was significantly higher than the intake and therefore hopefully we will — we should start seeing a reversal in this trend.
So just some key metrics on the trend. Revenue is a little bit lower quarter-on-quarter. But if you see the other metrics, we are at historical high. EBITDA is at INR574 million, which is the highest we’ve done in a quarter same with the EBITDA percentage. Of course, these two were more aided by the one-offs gains that I referred to earlier and same with the PAT as well.
So some key other metrics that we can look at. But just to highlight on the net working capital, while the net working capital has gone up quarter-on-quarter from 120 to 127 days, we have made a bit of progress in DIO and DSO. DSOs are more or less flat compared to the previous quarter.The DIO has reduced by about six days, right, and customer advances have increased by about six days. So those two metrics have helped us generate positive cash for the quarter. So we have generated INR530 million or INR53 crores of positive cash for this quarter. So we do see the order book trend that I mentioned. So that is definitely an area of focus for us as a company.
And as we look at going into the next year, I think we will be looking to reverse the trend of the order book. A quick look at some of the other mix changes in the business. Now this pie-chart on the left, which is the industry mix would look very different about two or 3/4 ago, right, where the aerospace and defense is a lion’s share of our business.
Now with the acquisition of Altec, this mix has changed more balance it looks more balanced now. I think we have about 25% coming from medical and about 14% coming from industrial.And therefore, I would say this is a much more balanced portfolio as we go forward into the next year. Now defense de-growth is due to the large order from the large Indian customer coming down, but continues to witness a very impressive growth at 53%, driven by the top customers there. The product category mix does not change much compared to the earlier quarters and years. Altech does bring in table mechanical and others slightly higher than where we were, but it’s not substantially different from the mix that we had. And therefore overall this pile looks the same.
The mix between exports and India market will undergo a change further as we go into the next year. Again, due to the one large order coming to NA and most of our backlog currently what will be service next year are in the rest of the world. So that change — that mix continues to change. We might have 80-20 mix sort of a number going-forward. Having said that, there’s a lot of traction in the India business.
We have a sales team now that’s focusing on India as a market. But immediately in the next year, the growth might be higher in the rest of the world for us. Now these are the detailed financials, just to get you a color on how the various other metrics stack-up. One question here is, when we look at the year-on-year numbers, now we have the Q4 FY ’25 numbers at a consolidated basis, including, which has a very different financial footprint compared to what we’ve had.
So when you look at the year-on-year numbers, for example, material cost almost shows flat, whereas the employee cost shows a huge increase and other expenses increase. So I think the right thing to do here is to not worry about those individual components, but look at EBITDA level, which is a comparable number and a profit level, which is a comparable number.
Moving forward, on the full-year basis, we have done INR15,196 million of revenue, which is a 27.5% year-on-year growth. I believe this is in-line with the rest of the industry, which is also growing at the same levels. EBITDA, these are adjusted numbers is at INR1452 million, which is 30.8% year-on-year.
Now that this adjustment is for the one-time M&A expenses, which happened in Q3. We had called this out in the previous quarter and there are no more M&A expenses in Q4 and there — but for the full-year, we will continue to show the adjusted number because that is the right number to look at from a comparison perspective.
PAT is at INR74 crores or INR740 million INR, which is a growth of 21% year-on-year. We spoke about the order backlog, which is at INR1906 crores and EBITDA margins are at 9.6% on an adjusted basis. This is a growth of 24 basis-points year-on-year. We were not targeting a 10% EBITDA margin for the year.
So this is a little shared under that. So we will work going-forward to get to that number. In fact, it will be a little higher than that if you look at the exit margin of Q4 even after removing the one-offs. And the reported numbers are on the right-side in terms of comments for you to take a look at. We also have a full-year financials from a consolidated perspective comparing FY ’25 to FY ’24, this again gives the same color, but at a much more granular level, I will not repeat these slides because these are the same metrics we spoke about in the earlier slide as a result. This is the EBITDA and PAT walk-through from reported to adjusted. So you have clarity on what those numbers are? Financial results that are reported will have a number which is in the lower row. And this we provided in Q3 as well, just for the full-year since we are providing — providing adjusted numbers now, we are repopulating this table so that it is clear from an adjustment perspective. And lastly, I’d say from an IPO proceeds utilization, we are — we have utilized 76.6% of the funds allocated towards a raise from the IPO. Now bulk of the utilization in the current year, as you are aware of the inorganic growth through the acquisition that we did for. And there is still about INR120 crores, INR115 crores of money left for the incremental working capital of next financial year. But the capex is the ones that is substantially underutilized because we have not really spent a lot of money on capex in the last couple of years. And so we might take a year or two to sort of conclude — complete that. For now, I think we are — this is compliance with what we had stated in the RSP and the monitoring agency report is also tabled in front of you in the stock exchange websites. So with that I sort of pause the presentation here and we will take any questions you may have
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 telephone. If you wish to remove yourself from the question queue, you may press star and 2. The participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assemblesfirst question is from the line of Deepak Krishnan from Kotak Institutional Equities. Please go-ahead.
Deepak Krishnan
Hi, sir, am I audible?
KRISHNA BODANAPU
Yes, you are. Please go-ahead.
Deepak Krishnan
Yeah. Just wanted to sort of check on the incremental — regarding the pipeline. Obviously, you’ve indicated we have a strong pipeline, but when do we sort of see most of this getting converted into order backlogs and how do we see it throughout the year? Is it more 2H or 1H?
And secondly, you indicated more activity from the US. Why it may sort of transferred into order inflows, is it more shorter-term, longer-term? And is there any disruption in execution in 1Q because of uncertainty around tariffs? Yeah, that’s my first question.
Anthony Montalbano
Yeah, I can go-ahead and take that. So the first question just regarding the pipeline converting into backlog. So that is still a part of our business that we continue to focus on with many key opportunities that really do need to get through the next phases into closure and develop into that.
So some of those have converted, but we’ve also continued to deliver in throughout the year and consume that. So the — we do need to get more positive momentum there. And as we close on some of the key deals that are in the pipeline, we do see that, that order backlog will start to build as those key deals close as we do count firm POs as part of that.
In regards to the second question on the US operation impact as it relates to tariffs, if I understood the question correctly, I think you’re maybe asking a bit on the timing on kind of how that comes in and the interest on that. So right now, I would maybe just give a bit of color there that we are active on several opportunities specific to our Connecticut US operation.
And as you look at the phasing of those, they still do fall into our core business of, you know, industrial, aero and defense and medical. And so these programs, you know, even if awarded relatively quickly still do take a bit of time to get into our operations and to start to impact revenue on that.
So of wins that we might announce in the next quarter, that would start to convert into revenue probably towards the later part of the fiscal year if you were to just take a guess. There could be some transfer programs or other programs which could convert more quickly, but our business is a little different than like, for example, a consumer EMS business where the certifications are not quite as high and you can transfer a program relatively quickly and even in the same quarter, be recognizing revenue on that.
Deepak Krishnan
Sure. Maybe just wanted to sort of once check on the operating cash-flow also. I think we’ve seen some improvement in the second-half of the year, but for the full-year as a whole, we are still OCF negative. So how are we sort of looking at operating cash flows at next year levels?
Do we see working capital going down in that aiding some operating cash-flow or do we still see some challenges in generating positive OCF.
Anthony Montalbano
No, I think for next year, we are targeting a positive FCF, Depo. I think this I think there is — there are several initiatives we are taking on DSO, DIO as well as DPO, which are all playing out well now. And therefore, we saw that impact in H2. So we’re quite confident of continuing that momentum as we go into the next year.
So we will see a positive cash next year.
Deepak Krishnan
Sure. Maybe just one final question. Any incremental upside that you’re seeing from the European increased spending on defense? Are we sort of potentially looking at more deals in the pipeline there? Anything or it’s more normal business, of course,
Shrinivas Kulkarni
So if your — if the question was regarding the incremental growth in the pipeline from European clients, is that correct?
Deepak Krishnan
Because that is in defense specifically?
Shrinivas Kulkarni
Yes. So actually, we are — we do have significant traction. Some of our top-performing clients in terms of growth into FY ’26 are indeed in defense and also partly European-based as well, this includes our current clients and also some new ones that we’re ramping-up. So today, our client base is primarily outside of the one large contract that we’ve just finished out this last quarter, the majority of our business does come out of Europe and the US.
As was referenced earlier, we are — we’ve had some focus on the Indian client market and that is starting to — that is now starting to build and come into the pipeline.
Deepak Krishnan
Sure. Thanks for answering all your questions.
Anthony Montalbano
Absolutely.
Operator
Thank you. The next question is from the line of Viprav Srivastawa from PhillipCapital. Please go-ahead.
Vipraw Srivastava
Hi, I’m audible right.
Operator
Yes.
Vipraw Srivastava
Yeah, right. On the margin. So even after moving 250 bps, we remain in double-digit, right, for this quarter, that sustainable margin.
Anthony Montalbano
That’s right. Yeah.
Vipraw Srivastava
Right. So going ahead, sir, I mean, how do you see this shaping up? I mean, obviously it is because the Indian defense line is now out-of-the order book. So ideally, margins should remain at this range or because of the higher margins on US business, export business mainly?
Anthony Montalbano
I didn’t follow the second part of the question, but let me address the first part. So in terms of margins, right, I think if you take the one-offs that are there that we have explained, the rest of the margin is a sustainable margin, which is already double-digit. Now the business exchange has a big bearing on the overall margin, right?
And therefore, the drop-in revenue because of the one large engine client, which was a drag on the margin is actually now sort of going to play itself into the margin scenario. But we should also remember that it’s a function of the absorption, right? I think so as long as the volumes are sustain and grow from here, that margin we will see upward trajectory going-forward?
What was the second part of the question, Victor? I did not follow that.
Vipraw Srivastava
Sir, second part was since US Export businesses higher margins, obviously, it should trend upwards, right, in terms of gross level, gross margin level.
Anthony Montalbano
See, I mean, but there are a lot of Indian clients also who — where the margin structure is quite similar. So I would not really equate that because of that. But the change in the export domestic is actually a function of that one Indian domestic client going down. So it is — that’s exactly strength.
Vipraw Srivastava
Right, sir. So quickly, I mean, obviously, this year growth almost noted on standalone consol antique question. But for FY ’26, any talents you have in terms of growth, what is the company looking at? Or if not bad, when do you see the order ramp-up of H2 or any specific quarter or anything like that?
Anthony Montalbano
Yeah, look, I think we definitely don’t want to give a guidance right now. I think we have sort of from giving guidance even in the past two years where the predictability was actually a little bit higher. So this is a business that is not at a level of stability where we can really predict — one deal can quickly change everything, right. So let’s see how it displays itself out.
We will have a soft start to the year, especially Q1, but we are hopeful that we’ll be able to recover and have a good year.
Vipraw Srivastava
Right, right. Sir, just I was to one of your main clients let us says, they were highlighting some of the supply-chain issues like 20 circuit growth shortage, which was resulting in even the order book is doing well, but revenue is not happening. So I think we’ve seen some supply-chain issues in the manufacturing part or is it limited to sales?
Anthony Montalbano
No, I mean, there are a few issues in the supply-chain, it’s not to reach the level where it’s going to impact us. But what we are also seeing is a lot of letters from the suppliers asking that the rates — the cost will go up and this is a direct sort of reaction to the tariff situation that we see right now.
But there is no shortage that we will come across yet and therefore the business impact is not there at this point. So — but we will see how this plays out. It’s quite dynamic out there to be honest. So if we hear anything, it will definitely come back.
Vipraw Srivastava
All right. And sir, lastly, obviously, since you mentioned tariffs, Trump has a clear agenda of promoting manufacturing in US. So I mean, if you look at the cost of metallics for, I mean, how would you sell-in terms of cost? I mean is it cost-competitive in India or how competitive should you compare to Indian operations for?
Anthony Montalbano
So offset on that type of operation, which is, you know, really more often associated with a regional type of EMS company, but this one is focused more on the — again, more on the high-value side of the business. So cost pressure on that side of the business is not what you would find in larger-scale operations.
Clients are usually going to that facility really more for products that are not running in very-high volume, they’re usually more complex. They usually want to have those closer to their R&D centers and key people. So that type of business tends to be less price-sensitive. I mean, you still have to be competitive, but it’s not as price-sensitive as higher-volume programs or even larger-scale programs overall.
Vipraw Srivastava
Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Mier Manoval from Carnardian Asset Management. Please go-ahead.
Mihir Manohar
Yeah, hi, thanks for giving the opportunity. Sir, you mentioned about the spike in the US US inquiry, which is coming in. I wanted to fundamentally understand this. Eastern Asia controls almost 18% to 90% of the value addition and in terms of global manufacturing. So how sustainable or how commercial sense is it going to make for US where to be there, it will be PCB part of the piece.
And these inquiries, I mean, what kind of customers — what size of customers are showing inquiries and what level of inquiries are coming in and how close are these just to get a sense around that?
Anthony Montalbano
Yeah, absolutely. So the — first, there’s the question on sustainability. This business has been in operation for over 50 years and has had a very, you know, a very solid base through yes, through times you know including — including the current times, which present a lot of changes. So the stability of that business is what we view as a key asset for it.
Regarding the types of opportunities that are coming in, you know the core the core types of opportunities that this site demonstrates when a client walks through is they see very-high reliability industrial and medical type devices there. And similar types of opportunities are coming in, in that regard. And so for example, we have, I’d say at least nine separate discussions, nine separate opportunities we’re looking at that are just simply are from our current clients that we are supporting in India today are very eager to have learned that we now have the US option and so we’re now quoting new products that were not really — that really we didn’t have access to before.
So that’s one part of it. And then also the clients — the clients that Altech and the Connecticut site has today there’s active discussions on providing those clients an offshore option and there’s cases as they continue to scale and in one case those clients are one of the top-lines of significant growth in their business in India.
So that of course, positions us well to provide an extension of that opportunity and to provide that client really more of a low-cost solution where before that transaction, they probably would end-up partnering with somebody else. So this is a synergy case we’ve taken a look at.
And the timing on things has worked out well because now there’s no question, there’s focus across many to continue and even expand the Made in America momentum.
Shrinivas Kulkarni
Second question would be a defense size European defense. I don’t know, three months there after the budgets have gone up for European defense. Now what are the actual inquiries that we are seeing from our European customers with respect to the defense manufacturing in Europe and then the beneficiary benefiting us so
Anthony Montalbano
That’s absolutely spot-on. There’s been some recent announcements regarding the defense I think even in the last 10 days, there’s been some notable headlines but we’ve actually been seeing really for the past fiscal year, you know, very robust growth on that vector on defense and then even on European defense just with our clients there.
So — and this has been also a focus for us on a couple of key opportunities. And as that business grows, those clients, they’ve gone through, they’ve looked at their supply chains and done consolidation activities. And we’ve take — we’ve been very aggressive on those and have done quite well and that’s actually what’s driving good growth for us on some of our existing accounts.
And we also have some new accounts come in that regard too. We’ve had two key new accounts come in that sector that we might not have had access to for.
Mihir Manohar
Sure. So are we seeing increasing after February or is that happening or is it not happening to
Anthony Montalbano
Now I would say it’s probably hard to pinpoint too many specific post February. I think most of this has really been ongoing. And so you know the headlines come and then the dialog and impact that usually follows that. But so-far the message I’d share is that this has been — we’ve seen this as an ongoing trend and positive impact of our business this last fiscal year.
If I take a look at our top-five growth clients year-on-year, two of those are again in that sector.
Mihir Manohar
Sure, understood. And last question was on the order book. Now when we see order book close to INR1,900 crores of order book, at the start of the year, we had INR2,100 crores, we executed INR1,500 crore crores. This is including the acquisition. But generally Considering our order book is like 18 months kind of a visibility, now does it mean that for this particular financial year FY ’26, given the fact that at the start of the year, our order book visibility is limited. So consequently, we will end-up reporting a flattish kind of a growth for FY ’26 versus FY ’25. Is that a reasonable understanding to have or will we have an order book show-up very soon either in 1Q or 2Q and that will help us for the full-year? Some clarity around that will be really helpful
Anthony Montalbano
Yeah, but Mir, I think the problem is, I think we are not able to comment on a full-year outlook and how it shapes up today. I think this is a dynamic business and as there are significant opportunities that have been the pipeline we are working on, right? Even one large order can change the dynamics quite a bit.
Yeah, I mean, obviously, you can make some model if nothing plays out in that regard, then there is a certain view. But I mean, we are all working hard to sort of convert some of those. And therefore, it’s not prudent to comment at this point. We don’t want to give out a full-year number. We don’t know-how the year will shape up. It will be a soft start to the year.
I think that’s the expectation we want to set. But having said that, I think there is also a point about the pipeline being very strong and there are several opportunities and especially now with the change dynamics where we have the US manufacturing operations with to us at our disposal, I don’t think we could have timed that any better, right, in terms of the acquisition and having a presence there locally.
All these conversations are pointing towards a hybrid model being the most effective model as we go into the next year. So yeah, I mean, look, if you take a static view, then there is a point-of-view on how the year will be. But if you look at the dynamics of how the world changes and how we can change, I think there is a different view. So we’ll refrain from giving out a full-year number, but yeah, yeah, I mean from where we see, I think things look very promising.
Mihir Manohar
Sure. Yeah. Any for my. Thank you.
Operator
The next question is from the line of Akshad from RSPN Ventures. Please go-ahead.
Unidentified Participant
Hi, am I audible?
Operator
I’m sorry to interrupt. MR. Aksad, you’re sounding a little distant. Could you come closer and speak?
Unidentified Participant
Am I audible now?
Operator
Yes, sir, better. Thank you.
Unidentified Participant
Yeah. So my question is on the capacity utilization, sir. Can you please provide a company-level capacity utilization data and maybe specific capacities segment-wise?
Anthony Montalbano
No, we don’t track it segment-wide. The overall capacity utilization of the company is around 60% right now, right? And it’s higher in my, the capacity utilization, lower in other parts of our business.
Unidentified Participant
But yeah, I think we don’t track it by segment, we track it by the plant. Got it, sir. And just one last question. So we have said that we have lost a big client in the defense segment. So any specific reason or can we see this client coming back maybe in a quarter or two?
Anthony Montalbano
No, I mean, we have not lost a client. I think it’s a client where the project has come to an end, the nature of the work is such that it was a 2.5 year project, which we signed-up on a long row and the natural we have delivered to the entirety of the project now. Now the client is dependent on further orders from the Ministry of Defense in India for the renewal, there definitely is going to be a renewal at some stage.
And we being an incumbent who has successfully delivered the first lot, obviously have a better chance as and when that RFP floats. It’s a public sector undertaking what they are working with. So they will go through their due process. It’s not an automatic selection, but there could be a time gap before that the next order comes in.
So it’s not like we’ve lost the plant, it’s just that the project has come to an end.
Unidentified Participant
Got it. So thank you for the explanation. That’s it from my side.
Operator
Thank you. Thank you. The next question is from the line of Rahul Deshmuk from LKP Securities. Please go-ahead.
Unidentified Participant
Hello, sir. Thanks for the opportunity, sir. So, sir, my first question was regarding the new logos that we have onboarded in FY ’25. So can you please elaborate on the ramp-up timeline or any potential contribution in terms of top-line as well as margins from these clients in FY ’26?
And adding to that, now is indicated on consolidated basis. So why — so what kind of operational synergies or margin improvements we are expecting from this acquisition in FY ’26 or FY ’27 as well.
Anthony Montalbano
Yeah, absolutely. So I’ll highlight a couple of the key programs. So these — of these logos, they are — they are coming in different product segments and industry segments. And so a couple of them that we are seeing impact in the coming fiscal year is on the medical side and then also on the industrial side.
Those are having, those are programs that are just running at a faster rate and then also just due to the sector that they are in, they just simply get to manufacturing quicker than quicker than something that you might find in A&D, for example. Now some of the — of the other logos that we’ve identified, one including a large A&D company and then even and then even one on the energy services side, even though there’s significant potential on there, the impact on revenue on FY ’26 might not be as significant as we definitely do see order book and backlog start to build from these clients.
So again on a couple of them, we will have some revenue impact definitely in the coming year, but then I think you’ll also start to see probably a bigger impact on the order backlog as we scale with those clients.
Unidentified Participant
Okay, sir. And some of the next question was on the — if DL tenders gets out in upcoming quarters. So are we going to bid for the tender as well as the previous deal order book was — the margins were not that good in the previous order, right? So any thought on that thing?
Anthony Montalbano
So we would classify it as we’ve had — we provided a very good service and been a good provider on that business. We feel that we are very well-positioned for future opportunities that come up in that regard. So again, right now that might take, that might take a quarter or two to realize.
And on the flip side though, that is a program that can ramp very quickly, right? So for example, we’ve already been making that product and there’s not anything to really qualify. It’s just a matter of starting to support demand if and when that comes. And so that’s kind of the nature of that business.
Now there wasn’t just part of your question as well, focus is on the on the margin side of it. And this last fiscal year, that was a pretty significant portion of our overall revenue. There were probably a couple of quarters there, maybe even more than a couple where that was making up 25% or over 30% of our revenue. So you do see — you do see a dilutive impact from a profitability perspective.
There also are some other aspects though on-net working capital, et-cetera, which are actually operate quite well on that type of a program. So going-forward, even with you know that type of program potentially coming back on, it would still be coming on into a more diversified overall business, right?
Our non-business — the growth in the rest of our business has been just shy of 40% year-on-year as we project out into the next fiscal year when you look at that. So again, it will be coming into a more diverse portfolio than where it is today.
Unidentified Participant
Okay, sir. Thank you so much.
Anthony Montalbano
Yeah.
Operator
Thank you. The next question is from the line of Karan Sanwal from Niveshay. Please go-ahead.
Unidentified Participant
Hello. Am I audible?
Unidentified Participant
INR35 crores for the quarter. Can you explain what is it related to?
Anthony Montalbano
Yeah, I’ll give you some color on that. So we have made — we had made an investment a couple of years ago in a company on one of the technology products we were partnering on them with, right? And then there is a — as per the accounting standards, we are supposed to do a fair valuation of it at the end-of-the financial year, every year, right, and to see how they are.
Now that company is into — again, into depend products and some of their orders have sort of right-shifted and what that does is in terms of the valuation of the company, when you do it independently from a fair-value perspective, you know, their valuation has dropped as a result of which we are making an adjustment in our books through the other comprehensive income.
It’s a — it’s a markup that happens either up or down depending on the fair-value of that company.
Unidentified Participant
But and also on the overall impact on one-off impact that you were talking about the margins, could you — hello.
Anthony Montalbano
Yeah.
Unidentified Participant
Yeah. So you’re talking about the one-off impact on the margins. So just wanted to understand like, could you repeat the same? And also on the sustainability of the margin, you said it would be about around a double-digit number. So it can be taken on the consolidated level, right?
Anthony Montalbano
Yeah, this is at the consolidated level. Just on the one-off events, these were certain purchase price variance or claims that we make with our customers as and when the material prices increase. Some of those we take into the P&L only after receipt, which is what we did in this case. I think we’ve raised the claim and the customer. There is a bit of a negotiation that goes on because it’s not very straightforward, but we were able to convince that we have the right to these claims. And those all came in Q4.
Typically these get spread-out during the year as well in many times. But in this quarter, we had a very higher-level of those claims coming in and impacting the margins positively. And yeah, so even taking those two out, the two claims out, our margin was double-digit and that is what we are seeing is a sustainable number. There will be seasonality within the year.
I’ll caution this. On a full-year basis, we will be at double-digit because we have a soft start to the year, you might see a lower margins in Q1 and — but as the year picks up, we will do — I think it’s exactly how it’s played out in the current year as well and the same thing will repeat next year.
Unidentified Participant
So on a full-year basis, it is around 10% to 12% is what you’re seeing, right?
Anthony Montalbano
I will just stop at double-digit, you have a peer rate be around that.
Unidentified Participant
No, thank you so much.
Operator
Thank you. Ladies and gentlemen, the next participant will be the last in terms of Q&A session. It’s from the line of Rajit Agarwal from Neal Investment. Please go-ahead.
Unidentified Participant
Hello. Good evening, sir. My question is related to the interest cost. So on a consolidated level, whereas the debt has gone up by almost 100%, we’ve seen interest cost remaining almost flat. Is it because the additional debt is in dollar terms? And if yes, then could you share the repayment structure of this loan and what will be the cost of this loan?
Anthony Montalbano
Yeah, you’re right actually. I think the — we had funded part of the acquisition through the debt as well, right? And this is a dollar debt and the interest rates are quite attractive. It’s linked to the SOFR rates, right? And other than this, I think our working capital and other loans have also come down. So from a quarter-on-quarter perspective, you may not see a big increase in the finance costs even though the debt levels have gone up. It’s a long-term debt.
There is in fact, a morator room of one year-after which the payment starts, but the interest is there in the first year itself, which is already accounted for in the books.
Unidentified Participant
Right. So for FY ’26, will it — I presume the interest cost will be similar or do you foresee that going up?
Anthony Montalbano
No, I don’t think it will go up for sure. In fact, we should see a reduction in the interest cost because we have restructured a lot of the loans that we are now relying more on the PCFC loans as compared to the working capital loans that has brought down the interest rates because we also be a net exporter in terms of the overall mix of the business as well.
So we are taking advantage of that mix change and that will help the treasury activity in terms of lowering the overall interest cost.
Unidentified Participant
Okay. That’s very helpful. And the last question is related to your top customers. So will it be possible for you to share the contribution from top two and top-five customers to the overall revenue?,
Anthony Montalbano
The top-five hasn’t changed. I think our top-five is roughly 80% of our business and that will continue even next year.
Unidentified Participant
And that kind of takes out the defense customer as well.
Anthony Montalbano
Yes, and even then the top-five will continue to contribute about 80%. That is right. There we have — the acquisition also has a similar mix to what we have. So the top 5%, 80% that composition doesn’t change much.
Unidentified Participant
Okay. Thank you, sir. That’s all from my side and best of luck.
Anthony Montalbano
Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today’s conference call. I would now like to hand the conference over to Mr Krishna for closing comments.
KRISHNA BODANAPU
Thank you. Thank you very much and thank you everyone for your time this evening. As we discussed, we had a strong end to the year. Of course, we do have a few challenges and — but more importantly, a lot of opportunity ahead of us. We’re working hard towards making sure that we maximize the opportunity, which of course starts with building a robust order book.
We are on path to do that. We are on course to do that for the course of the year. Like Srini said, we will have a little bit of a soft start to the year, but that’s not unlike any other year previously. So we’re quite confident that overall, we will have a good year like the previous years. Once again, thank you very much for your support and we will again speak at the end of next quarter. Thank you.
Operator
Thank you. On behalf of BLM Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you