Divgi TorqTransfer Systems Ltd (NSE: DIVGIITTS) Q1 2026 Earnings Call dated Aug. 08, 2025
Corporate Participants:
Unidentified Speaker
Jitendra Divgi — Managing Director
Sudhir Mirjankar — Sudhir Mirjankar
Dipak Vani — Chief Operating Officer
Satvinder Sabharwal
Analysts:
Unidentified Participant
Mihir Vora — Analyst
Kashyap Javeri — Analyst
Sumit — Analyst
Yash — Analyst
Kashyap Javeri — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q1FY26 conference call of Divgi Torque Transfer Systems Ltd. Hosted by Aquarius Securities. As a reminder, all participant clients 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 an operator by pressing 0 on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihir Vora from Aquarius Securities. Thank you. And over to you sir.
Mihir Vora — Analyst
Yeah. Thank you Vishada. So good afternoon everyone. On behalf of Aquira Securities, I welcome you all to the Q1 FY26 post results call of Devd Top Transfer Systems. From the management side we have Mr. Jitendra Dev, the managing director Mr. Nhirendra Dev the whole time director Mr. Surdi, Ms. Jankar, CFO and Deepak One CEO. I’ll now hand over the call to Jitendra. Sir. Over to you sir.
Jitendra Divgi — Managing Director
Thank you. Mihir, are you able to hear me clearly?
operator
Yes.
Jitendra Divgi — Managing Director
Okay.
operator
Yes sir.
Jitendra Divgi — Managing Director
So good afternoon everyone and a warm welcome to our Q1 FY26 earnings conference call for Deeply Talk Transfer Systems. As always, we appreciate your time and interest in joining us today to discuss our performance for the quarter ended June 30, 2025. On this call I’m joined by my colleagues Hiren Divgi, Whole time Executive Director Sudhir Mirjantar, CFO Satvinder Singh Sabarwal, our Chief Growth Officer and Deepak Mani, our Chief Operating Officer. And they will support me in making supplementary comments and remarks to give you a more comprehensive view of the status of the company. And of course we have sga, our investor relations advisors.
I hope you’ve had the chance to review our results and the investor presentation and come prepared. These are available on the stock exchanges as well as our company website. To kick things off, I will start with the key highlights of Q1FY26. As you are aware, we had a mixed performance in 25. But we entered the new fiscal with sort of a sharper strategic focus and several key learnings. Over the past few quarters we’ve worked actively to realign our business, expand our product offerings and deepen our presence in key international markets and of course improve the execution across the organization.
We also undertook a series of operational improvements and strategic course corrections to address industry challenges more effectively. I’m pleased to share that the initiatives undertaken have begun delivering tangible results with clear momentum building up from the last quarter of FY25 and carrying through to the quarter that just concluded. This quarter marks an important milestone for us. The volume uptake in our core segment transfer cases has rebounded sharply. Monthly average volumes are now at par with SI 24 levels following a prolonged period of softness over the past more than a year. This recovery is encouraging as the transfer case has been a key growth driver for the company and will continue to do so as we look at global markets.
This rebound is also a testament to the relentless, unwavering efforts of our leadership team and employees across our four plants and this brings us in particular immense satisfaction. Looking ahead we remain optimistic about the growth trajectory in the coming quarters supported by the sharp uptick in revenue from the transfer case segment. At the same time, we continue to actively explore new business opportunities and pursue our strategy of de risking our portfolio while intensifying our focus on the core business. We also made concerted efforts to strengthen and revive our EV and component segments. The EV business has begun to show and will show a steady volume uptick and we think it will stabilize.
Our component business especially witnessed a substantial jump. Quarterly revenue doubled from 9 crores in FY24 to 18 crores beginning FY26, which we see as a significant achievement. This performance underscores our capability to unlock the company’s full revenue potential through focused execution and speed and strategic agility. Looking at our performance this quarter, I’m pleased to share that we delivered the highest ever total income in the company’s history in a quarter more than 76 crores, marking a 29% growth year on year and a 20% sequential increase. Quarter wise, EBITDA stood at 19.1 crores, up 37% over the same period last year and 31% quarter on quarter.
Profit after tax came in at around 9 crores reflecting a robust 50% year on year growth and 67% sequential growth. On the margins front, improved capacity utilization led to stronger cost absorption and therefore enhanced operating profitability. We delivered good performance across all key metrics with gross margins well above 60%, EBITDA margins exceeding 24 and pack margins crossing 11% for the quarter. We also witnessed meaningful enhancements in operational efficiency and also across key metrics and KPIs of the company, highlighting the impact of our focused execution and disciplined operational and quality approach. These improvements are paving the way for a robust surplus generating engine that enables sustainable reinvestment and long term value creation.
My colleague and COO Deepak Vani later on will make a few remarks addressing this in a little more detail. Let me now take a moment to outline key developments, growth opportunities and focus areas across each of our major business segments. I’ll begin with transfer cases. We ended FY25 on a relatively positive note with a significantly improved performance in Q4 and I’m pleased to report that this momentum has continued into Q1FY26. The segment delivered a robust 34% year on year growth driven primarily by strong volume offtake from one of our key OEM customers. This strong demand not only supported top line growth but also contributed meaningfully to operating profitability as capacity utilization improved.
Notably, our gross margin expanded to over 60% in Q1 FY26. This performance underscores the rising demand, relatively speaking, for four wheel drive systems in the Indian market supported by successful new model launches and the growing adoption of four wheel drive variants. With a healthy pipeline of programs and increased potential traction in export markets, we believe the transfer case segment will continue to be one of the key drivers of growth and margin expansion going forward, especially as pickup trucks exported out of India continue to move ahead. Looking ahead, our key focus for the transfer case segment remains on driving growth across both domestic and international markets.
On the domestic front, we are actively collaborating with a leading Indian automotive OEM on their upcoming platforms. This engagement is expected to further strengthen our presence and expand our footprint in this segment. From an export standpoint, we’ve made meaningful progress. We are actively working on the globalization of our transfer case portfolio which has opened up promising opportunities across key international markets. As part of our long term strategy, we are also evaluating the feasibility of establishing a footprint in the US market. Also, we are currently working with an Indian OEM on a global vehicle launch. We secured the contract.
I think this was announced last year with an estimated life cycle revenue of over 800 crores to be executed over a seven year period starting from the second half of FY27 will be executed over seven years and in parallel we’ve also submitted a quotation for a high value transfer case program with a Korean multinational SUV manufacturer. These initiatives are aligned with our broader strategy of becoming a globally recognized partner for advanced drivetrain solutions and going forward we believe they will meaningfully contribute to the growth and diversification of this segment. Now coming to the EV transmission segment, this business as those of you who have been watching us know encountered headwinds over the past few quarters with volumes remaining range bound and Q1 FY26 was no exception.
The softness was primarily attributable to broader industry challenges and heightened competition among the players in this segment. While volumes have recovered somewhat, they continue to remain a little indifferent and significantly below what we believe is the true potential of the Indian market. Despite these near term pressures, we are confident about the outlook in relative terms for this year. We anticipate a substantial ramp up in volumes in the second half of FY26 led by one of India’s leading EV manufacturer, where we are now present across all their EV platforms. I’m particularly pleased to inform you that our overall quality performance in terms of the one metric that matters for EV transmissions, which is NVH performance, NVH standing for noise, vibration and harshness, has been fairly impeccable and flawless.
And that I think is extremely encouraging because it sort of prepares us to take on global assignments and bring solutions for EV applications across the world. So as part of our ongoing collaboration with this anchor OEM partner of ours, we’ve expanded our product portfolio and have multiple programs under development that are now approaching launch. These new offerings will enable us to support a broader range of vehicles both within the country and overseas, reinforcing our position as an integrated EV drivetrain supplier. Production volumes from these programs are expected to scale progressively through the second half of this financial year.
Moving forward, our key focus for the EV transmission segment is to enhance capacity utilization. We remain firmly aligned with growth opportunities across both domestic and international markets. So, for example, we continue to pursue opportunities in one of the epicenters of the EV industry, of the global EV industry, which is California. In India, we are witnessing strong demand with a leading EV focused OEM and are closely collaborating with them to support a significant ramp up across key platforms and as I mentioned earlier, this will improve capacity utilization over the remaining part of the year. Side by side, we are engaged in active discussions with other OEMs and tier ones who are bringing complete 3 in 1 or 6 in 1 solutions for OEMs.
On the export front, we are expanding our global reach to cater to international OEMs, aligning with their evolving platform requirements and strengthening our presence in key geographies, namely China, Germany and of course the United States. With a strong product pipeline, expanding global engagements and deepening OEM relationships, we are confident that our EV transmission business is well positioned for sustained growth in the coming years. These initiatives are part of our broader strategy to diversify our customer base and de risk the overall business while continuing to scale our presence across geographies. I want to now shift gears and talk a little bit about our components business.
This business continued its strong momentum in into FY26, delivering an impressive 72% year on year growth in Q1 FY26 primarily driven by higher volumes coming from exports. The performance reflects strong demand supported by ongoing platform ramp ups and a steady inflow of orders. The current tariff situation notwithstanding, exports which once contributed nearly one third of our revenue had dropped to negligible levels in the last few years due to a variety of reasons. However, through sustained efforts and a focus on critical product offerings, we have successfully regained our foothold in global markets, that’s to say, Europe, United States and also Mexico.
This has led to, I think, a resurgence in that part of our business. What has truly set us apart is our ability to deliver not just components of these parts, but integrated high value supply chain solutions that are better, faster and more cost effective than our global peers, including peers and competitors in China. This has translated into a sharp uptick in therefore export revenues which have now climbed back to double digit contribution levels. We view this as a key milestone and one we are confident of sustaining through the remainder of FY26. For the components segment, our key focus remains firmly on both strengthening global relationships and capitalizing on emerging opportunities.
On the export front, we are deepening our engagements with leading North American and European Tier 1 manufacturers of specialty transmissions. Alongside this, we have a strong pipeline of opportunities in development both for acquisition of new business contracts and engineering next generation components. These efforts are progressing well across several strategic markets including Japan, Thailand, China, Korea and India and are expected to be key drivers of our export led growth. Several new products are currently in the approval stage and we anticipate these will convert into firm orders beginning second half of FY26. I’m also pleased to share that we’ve commenced shipments on several new programs of our components business.
This initiative is expected to generate annual revenues of up to 90 crores with volumes exceeding 1 million parts, a significant milestone in expanding our global footprint. Domestically, we are actively involved in multiple development projects and are responding to a healthy pipeline of of RFQs. Importantly, many of these initiatives are strategically multifaceted, spanning technology collaboration, component exports and long term strategic partnerships with global companies. We’re currently in discussions with. We believe these strategic efforts will not only broaden our market presence, but also enhance the long term resilience of our business with robust RFQs, rising global traction and disciplined execution on both capacity and cost fronts.
We remain optimistic about the components segment continuing to serve as a key driver of growth and profitability in the near future. Let me shift now a little bit to address development work going on in next generation transmission because this has a bearing on our medium to long term growth. In the last three months we made some strong, sustained progress. What began as a sort of focused effort on automatic transmission has since evolved into a more nuanced strategy reflecting our deepening understanding of the shifting market landscape. As many of you know, we are actively involved in the development of a local state of the art automatic transmission while also exploring dedicated hybrid transmission solutions aligned with long term market trends.
To provide some context, let me highlight the encouraging progress we’ve made on our DHT or dedicated hybrid transmission where our research engineers and analysts have recently concluded a very important engineering consulting and simulation exercise for one of India’s largest SUV OEMs. These results have demonstrated notable efficiency improvements up to including more than 30% compared to conventional gasoline ICE configurations. This project is focused on improving engine thermal efficiency. These results underscore the strength of our hybrid transmission architecture and design and represent a key milestone in our strategy to deliver next generation differentiated powertrain solutions. This simulation has been matched and complemented by directional budgetary estimates that have been submitted to this OEM customer.
More broadly, this project reflects our ability to integrate cutting edge international technologies with localized customization and local curation, reinforcing our commitment to delivering superior value propositions in the evolving hybrid electrified mobility space. Looking ahead Our key focus in the evolving automatic transmission space now has sort of evolved to looking at the localization of an 8 speed instead of either a 6 or a 7 speed dual clutch transmission. As some of you may know, new CAFE norms and further evolution of on the Bharat stage emission norms is likely to come. It’s imminent and therefore we are currently working on the feasibility of this initiative which holds very strong strategic potential.
A commercial code has already been submitted to one of India’s leading OEMs and as part of our effort to bring about a greater market appreciation of this technology, we’ve conducted vehicle drive trials and I’m pleased to share that the feedback has been quite spectacular. You know there aren’t many players in the market offering an 8 speed dual clutch automatic. As far as we know, this will be the first in the market. The customer has also shared a strong expression of interest to move ahead to a proof of concept, a promising step towards deeper collaboration. Our value proposition lies in offering the latest generation technology with a high degree of localization ensuring strong cost competitiveness in the local market.
The competitiveness comes not only from cost, but better inventory management and the flexibility that we will bring in further evolving the design to meet evolving market needs. So this initiative in our view therefore marks an important step forward in building a robust and future ready automatic transmission portfolio tailored to meet the evolving needs of both domestic and potentially global OEMs. We believe this incorporates what we call deep localization. So it localizes not only assembly and manufacturing of key components, but also the manufacturing and design understanding of some of the core sub technologies that make up this automatic transmission.
Things like the hydraulic control unit, the dual clutch sub assembly and potentially the electronic controller. So I’m happy that the efforts of our teams continues to reinforce the pioneering, kind of a bold, pioneering approach of your company. In our manual transmission business, which architecturally in the way it is constructed is sort of similar to a dual clutch automatic in its structural content, our key focus remains on strengthening relationships with existing OEMs and building strategic supply chain solutions for them. Manual transmissions have been around for a long time and what OEMs are looking for is mature tier ones to bring supply chain solutions to reduce the in house complexity brought on by the increasing diversification of powertrains in the automotive industry.
So we have recently received an RFQ for a five speed manual transmission from one of India’s largest commercial truck manufacturers. Additionally, we are selectively engaging in programs that offer synergies with our existing component business so that there is a natural progression from components to systems. As part of this, as I said, we are currently assessing viability and engaged in negotiations on a high volume truck application with one of India’s leading OEMs. These engagements, we believe, are aligned with our broader objective of maintaining a strong and competitive presence in the conventional drivetrain space, providing us de risking on the investments that we are making.
From a geographic standpoint, our focus remains on strengthening our presence in the domestic market for manuals, but while also simultaneously maximizing export opportunities. Exports for Q1 FY26 contribute around 11% of our overall revenue. I’m happy to share that our export contribution has grown steadily from just 1% in FY24 to 5% in FY25 and it continues to scale up meaningfully. With multiple contracts already secured and a robust pipeline in place, we believe we are well positioned to double our export revenues in FY26. Looking ahead, we expect our export revenues to grow at a CAGR of more than 15% over the next three to four years.
This balanced approach between systems and components will not only enhance our growth trajectory, but will also improve risk management and resilience in the business. Lastly, we remain committed to enhancing both market share and wallet share through deeper customer engagement and a wider global footprint. On the operational front, we’re driving cost optimization through focused product engineering and increased localization. And finally, we continue to invest in R and D to develop a future ready product portfolio aligned with next generation mobility trends. Before I conclude I want to make a few remarks about our growth strategy and towards the end of this session my colleague Satpinder Singh will make some complimentary other additional remarks.
So, at the foundation of our strategy is financial discipline with a sharp focus on fiscal performance complemented by over six decades of our manufacturing and quality excellence and strong collaboration with global industry leaders. Building on this base, we are driving product and application diversity, covering both rear wheel drive and front wheel drive transmission systems and focusing on both customer and geographic diversity engaging with various segments across multiple regions. So for example, we are in strategic talks with players like Fiat, Powertrain, JCB in the UK and so on. On the innovation front the focus is on technology, both product and manufacturing, underpinned by fundamental research on transmission systems.
A product and application diversity spans, as I said, both rear wheel drive and front wheel drive configurations across multiple transmission technologies. So from manual to automatics to hybrids to EVs, we believe this multidimensional approach positions us convi to capture emerging opportunities and deliver long term technology driven value across global mobility ecosystems. So that brings me to the end of my remarks. I’m going to now hand the proceedings over to my colleague Sudhir Miljankar, CFO and he will dwell a little more on the financial numbers for the quarter. So over to you Sudhir.
Sudhir Mirjankar — Sudhir Mirjankar
Thank you sir. Good evening to everyone on the call. Before presenting the financial numbers for the Q1 FY26 I would like to highlight a few key points. Since the beginning of calendar year 25 we have been witnessing robust volumes growth across segments. This positive momentum we expect to continue in the coming quarter as well. This momentum is primarily driven by strong performance in our core transfer case and component business across both domestic and international markets. So now coming to the quarterly numbers for Q1FY26. Total income stood at rupees 76.8 crores reflecting a 29% year on year growth from rupees 59.4 crores in Q1FY25 and a 20% sequential growth from rupees 64.1 crores in Q4 of FY25 this marks our highest ever quarterly revenue performance driven by strong volume growth in the transfer case and component segments so on.
Revenue Mix the transfer case segment delivered a robust 34% year on year growth in Q1 of FY26 primarily driven by higher volumes from our key OEMs of customers. We remain confident that this momentum will sustain through the remainder of FY26 supported by ongoing ramp ups and strong demand. So the EV Transmission segment declined by 9% year on year in Q1 of FY26 primarily due to industry wide challenges as well as intensified competitive pressures faced by the key OEM customers. While these near term challenges have affected volumes, we remain confident in the medium to long term trajectory of this business.
We expect a meaningful ramp up in volumes during the second half of FY26 supported by stronger customer uptake and platform readiness. The component segment continued its robust performance releasing a strong 72% year on year growth in Q1 of FY 2016. This momentum is expected to sustain through the remainder of the year backed by a healthy order book from both domestic and export markets. Gross Margins stood at 52.9% in Q1 of FY26 expanded by 246 basis points over Q1 of FY25. This improvement was primarily driven by higher volumes and a favorable sales mix with increased contribution from high margin component exports further supporting overall profitability.
EBITDA for the quarter stood at rupees 19.1 crores reflecting a 37% year on year growth from rupees 13.9 crores in Q1 of FY25 and a 31% sequential growth from rupees 14.5 crores in Q4 of FY25. This growth was primarily driven by higher volumes which enabled better cost absorption and in turn led to a strong improvement in operating profit and margins. EBITDA Margins stood at 24.9% expanded by 140th decl basis over Q1 of SY25 pad for Q1. FY26 stood at rupees 8.9 crore reflecting a 50% year on year growth from rupees 6 crore in a Q1 of FY25 and a 67% sequential growth from rupees 5.4 crores in Q4 of FY25.
This strong performance was driven by enhanced operating efficiency and improved profitability across segments at margin stands at 11.6% expanded by 160 basis point over Q1 of that 25. That’s all from my side. I hand over to Mr. Deepak Vani CEO for operational updates.
Dipak Vani — Chief Operating Officer
Good evening everyone. It’s a pleasure to be speaking with you today and I’m proud to share that this has been an exceptional quarter for TipGate ETS. We have achieved highest operational sales in the company’s history for any quarter. This milestone reflects not just market momentum, but more importantly the collective commitment and the precision with which our operations team has executed our plan. Two product lines stood out as a key growth driver for this quarter. As Sudhir explained in his remark earlier, our transfer case system and export parts, their performance was driven by robust demand. But it was our internal capability from planning to execution that enabled us to fully capture this opportunity.
I want to recognize the Digi TTS operations team for their meticulous planning and relentless execution which directly contributed this record breaking performance. What makes this achievement even more commendable is that we also maintain 100% on time delivery to all our customers. A critical KPI in our business and a testament that our discipline and responsiveness. On the quality front we continue to expect benchmark. We proudly maintain 0ppm quality track record in our export parts and transfer case supply. In today’s competitive landscape, this level of consistency is not easy to come by and its reflection of a strong quality culture embedded across our organization.
From a financial perspective, our strategic sourcing and operation team has also delivered strongly on the cost front. We didn’t just meet our cost reduction targets, but we exceeded them driving down cost significantly, which in turn enabled us to achieve exceptional EBITDA margins for this quarter. This outcome was made possible by focused initiative across sourcing, productivity improvement and waste elimination. In summary, this quarter reflects the strength of our operational backbone decision in execution, consistency in quality and discipline in cost management. I’m confident that with this momentum we are all positioned for sustainable product profitable growth in the quarter ahead.
Thank you.
Satvinder Sabharwal
Hi everyone, very good afternoon. This is Satsinder and I’ll brief you on some of our growth areas. And thank you Deepak for the very impressive performance in Q1 and I’m very confident that momentum will continue in our Q2 as well. So with that let me take this opportunity to walk our shareholders and the investor community into the near future or into an area where we call internally as Chessboard Farm. Why Chessboard? Because you know, we keep evolving our growth strategy basis the inputs of the market. In fact, we very keenly look at the market trends which are continuously evolving.
That’s the way we we see as of now and accordingly we also analyze how our OEM customers are Reframing their strategy to meet the needs of the end customers. So that’s the chessboard that we keep looking at and the chessboard farm, because that’s a farm where we keep sowing our seeds for the growth for the future of our organization. In fact, this forms our baseline to prepare the deputy organization to be more agile, more adaptive and in fact thrive in this dynamic market. I will summarize in terms of our near term growth gems which are basically the efforts that we are taking for the next three to nine months.
And second part I will brief you on the long term growth gems that we are working upon on the near term growth gems. The first one where we continue to deepen our focus is the EV transmissions wherein while we continue to serve our market leader in the electric vehicle space in India, we are already in the ramp up phase. For the next three to six months we’ll see the ramp up of the launches that have already happened and we are progressing very well on the development of the transmission for the next vehicle platform which is also covered in our presentation that is loaded on the website.
In fact, very recently we submitted the prototype hardware to the EV customer on this new platform. And once this gets into an SOP in H2 of current year, I would, I would say this will be a record milestone, a record program for the DP team where right from an RFQ to an sop we will do the entire program development within less than 12 months. That’s going to be new record for the team and much harder to break than in the future. Our number two focus in the near term will continue on the component business where we have been leveraging the synergy of the various component technologies with the product businesses that we have so that synergy helps us to position us very competitively at our customers.
In fact on the component business as brief with the growth from the exports, it’s a very clear outcome of the global cost competitiveness that we are able to demonstrate as a company that we are winning businesses not just domestically but also on the global platform. We continue to have a very strong order booking on the component business so that momentum continues to remain very high within the near term. Our focus number three is on the core businesses or the core products of the transfer case, the automatic transmissions and the manual transmission. The Transferkit business has a very long proven for us, Transferkit is a non proven localized product and now we are looking to spread our wings on this proven capability, on this proven product beyond the domestic boundary and we are assessing opportunities on a global platform for transfer case business, for transfer case products on the automatic transmission, we continue to get further deeper in our engagement with the customer.
Having successfully completed the vehicle trial as sir already spoke, now we are looking forward in the next couple of months to secure from the Indian customer a proof of concept demonstrator contract with the customer on payarch. This will give us an excellent opportunity to prove this proven world proven automatic transmission technology to an Indian customer. And our differentiation lies on the fact that we are giving a state of the art technology with a very deep localization to market in India where nobody today is able to serve with that latest technology. On a manual transmission. We are seeing renewed pull from the Indian customers and I think that’s something that all of us can anticipate with our Indian customers getting too much, we will call them entangled.
With so many development programs, whether it is ICE or hybrids or EVs and a lot of work going around in terms of different types of powertrain, it would be just obvious for these OEMs to focus on their core strengths and give this opportunity of outsourcing different technologies to the suppliers in their core areas. So hence manual transmission is one area where we are increasingly seeing a trend of outsourcing by the OEMs. And our expertise in the component business has actually positions us very well in the manual transmission area as well. With this I would like to widen. The canvas now from near term to a slightly broader long term. And I will give you a flavor of the influx of RFQs that we are seeing where we are already engaged on. And one by one I would brief you on that. The first one on the EV business right now, while we are leading, while we are engaged deeper with India’s leading OEM in electric vehicle space, we are expanding our wings with the other tier ones and we are engaged on certain RFP opportunities at a global platform. We see this vertical at an optimist level can take us to an annual revenue level of about 250cr.
If I look at our component business, we already have a very strong order book and with about 7 to 8 more programs expected to be awarded by the end of this year, component business should take us to an annual revenue level of around 200cr. And on the other core products, mainly the transfer case and expected wins, expected contracts on automatic and manual could see this vertical on upper side to touch in excess of 1200cr annually. So all these product verticals are part of our initiative to build the company to be more adaptive. As you can see, the market Trends are still evolving in terms of ICE, hybrids and EVs.
So we as nifty organization are also building ourselves to be more adaptive by developing a diversified portfolio portfolio of products and in fact not just be surviving but in fact thriving in this dynamic market. So I briefed you on the growth gems, which is the products. I would also very shortly brief you on the guiding principles on which we have been building these growth gems, these growth products in our Chessboard Farm. The foundation of these principles are basically technology differentiation. Every product that we pick, we look forward for ensuring a technology differentiation versus the players in the market in the region.
The second principle is basically the product diversification so that we are ready, we are adaptive to the evolving needs of the market, we continue to leverage the strengths of our manufacturing excellence, of our procurement, of our technology, collaborations with the different partners and obviously the financial discipline. So that’s an overview to our investor communities on the Chessboard Farm at Divgi.
Jitendra Divgi — Managing Director
Thank you Satvinder, this is JITEM Divgi again and I want to bring this session to a conclusion with some closing remarks. So as you can see, Q1FY26 has been a strong start to the year, reflecting the results of the strategic operational commercial efforts we initiated over the last several quarters. With robust performance in our transfer case and component businesses and clear visibility on volume recovery in the EV transmission segment in the second half, we believe we are well positioned for sustained growth in FY26 and our forecast currently shows that that trend we can continue then onto FY27.
Our continued focus remains on exports, driving operating efficiencies, deepening OEM partnerships and accelerating global diversification. With strong fundamentals, a committed team and a healthy pipeline, we are confident in our ability to deliver consistent and value accretive growth in the quarters ahead. In conclusion, I want to thank you for your ongoing support, patience, understanding and faith in our business model as we move forward on this exciting part. Given the volatile, uncertain, complex, sometimes ambiguous nature of the market, there will be some slip ups and we are confident that you will have faith in the overall robustness of our business model.
I hope we have been able to answer, anticipate and address your queries in case you have any more questions or require clarification. My team and I will be more than happy to answer questions and of course you are also free to contact our advisors SGA for any further clarification. So with that I conclude this session. Thank you very much again for joining this call.
Questions and Answers:
operator
Thank you on behalf of Equerious securities that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Hello.
Jitendra Divgi
No questions.
operator
Oh, I’m sorry, I thought you should conclude. I thought we are concluding. I’m so sorry.
Jitendra Divgi
No, no, I said I’d be happy to answer questions.
operator
Sorry sir. 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 the touch tone telephone. If you wish to remove yourself from the question queue, you may Press Star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Kashyap Daweri from MK Investment managers. Please go ahead.
Kashyap Javeri
Thank you so much sir for the opportunity and congratulations for great set of numbers. Really remarkable to see that 70 crore kind of revenue for the quarter. I have three questions. The first is on our EBITDA margins. So on additional revenues of about 13 crores we did an EBIT of about additional 5 crores. So does that mean that going forward versus 19.5% our markets can explain further?
Jitendra Divgi
Yes. While that’s a reasonable expectation, one of the things is we have in addition to investments some amount of increasing operating expenses to the development of products, development of markets. So generally the convention in our company for many years has been to try and peg incrementals. Okay, that’s what we call incremental and decremental at or about 20%. So if I get a certain X amount of additional sales then I’ll try and manage my profitability at a minimum of 20% incremental. That’s been our convention and style of working. So yes, as we go along and capacity utilization improves, I can tell you one thing that this performance is with fairly.
We still have a lot of capacity in our system and that’s the good news because as we use this capacity, you know the sort of contribution margins, ebitda, whatever you’re calling them is going to go straight to the bottom line. So in general, yes, your observation is on track. The exact amount of course varies and as quarter to quarter we have different kinds of initiatives unfolding in because you know our playing field is right now the whole world. We have teams going all the way from Japan, China, Korea, Thailand, Portugal, Sweden, Germany, France, United States, Mexico.
That’s our playing field today. And so there are expenses involved as we take these businesses forward. But in general the 20% incremental growth is what our entire management team is committed to. Deepakwani as Head of operations, cfo, myself and our sales organization is also very conscious of this. So I hope that has answered your question on ebitda.
Kashyap Javeri
Yes. And second question is on our, you know, the business in the second half. Then on based on that, can we assume that the exit run rate of revenue can be about 90 to 100cr this year?
Jitendra Divgi
The what revenue?
Kashyap Javeri
The exit run rate of revenue can be 9200cr.
Jitendra Divgi
The exit run rate, you’re saying?
Kashyap Javeri
Yeah.
Jitendra Divgi
Q4 exit of this. Yeah, yeah, yeah. I, I must say you are quite a patient observer in you directionally, I think broadly you are correct.
Kashyap Javeri
Okay, sure. Thank you so much. I’ll come back in the queue.
operator
Thank you. The next question is from the line of Sumit from Parami. Please go ahead.
Sumit
Hello, Am I audible?
Jitendra Divgi
Yes, please.
operator
Yes.
Sumit
Good evening sir. Congratulations on good set of numbers.
Jitendra Divgi
Thank you.
Sumit
So I had one question regarding what has been presented. The 90 crore per annum from component business and 100 crore per annum from the transfer case business out of which how much is the new order and how much has been, has been a repeated order by oem?
Jitendra Divgi
Yeah, the export is all practically new and I would say almost 50%. I mean we are essentially more than doubling our transfer case production and that is all a new business. It’s coming from new models like the Cytor car and the things like that. Plus we have new customers that are coming in, albeit that is sort of low volume still. So yeah, a significant proportion of this is a very new business. And you’ll be happy to know that tracking the proportion of new business in our revenue stream is one of our KPIs. And the reason we have always done that for now almost three to four decades of our KPI management is to ensure that our revenue portfolio and the business model remains refreshed.
You don’t want the proportion of new business to go to a trickle because then that is indicative of a business model that’s kind of festering and then anything that festers eventually just dies out. So you want to keep your portfolio refreshed and therefore we actively manage that portfolio by playing to the KPI of making sure that a very significant proportion at least one third of our business is coming from or revenue is coming from business that was acquired in the previous three years.
Sumit
Thank you.
operator
Thank you. The next question is from the line of Yash from Artventures. Please go ahead. Mr. Yes, your voice is not audible. Hello.
Yash
Am I audible?
Jitendra Divgi
Yes, yes, go ahead.
Yash
Yeah. Sir, congratulations on a good set of numbers. Sir, I wanted to ask a Question on the components business. So how much of the business of component is coming from us and what will be the impact of tariffs on this?
Jitendra Divgi
Yes. So, you know, you can make out that because things have moved so fast, we, you know, I should have touched on this point in my main remarks, but so therefore, thank you for asking this question. In the short term, we do not expect any impact. And that’s because customers obviously do not have options. These are highly engineered, extremely precision. The quality specifications are in microns, the heat treatment specifications, the steel compositions. The knowledge is very, very esoteric. So it cannot just be wished away and you cannot develop alternatives. However, in the long term, the current chaos does have a specter of threat to it.
And as people who have operated in the US market for over 30 years, we know the strength of our US customers and the United States in general. You will underestimate the United States and at your own peril. Which is why in my remarks, I mentioned that we are actively investigating a US Manufacturing footprint because we believe that what is underway is a watershed, defining moment in global industrial history. The United States is going to impose minimum duties of 15 to 20% to correct a rapidly deteriorating fiscal deficit and a current account deficit. So I think people across the world would be well advised to actively look at options of how they can address the concerns of U.S.
customers. And I can tell you that as far as one of our risk scenarios that we have been monitoring in our risk committee of our board is the possibility, you know, such possibilities. One of them is, you know, a depreciating dollar. What do you do if the dollar suddenly depreciates and the other one is the tariff? Something goes wrong in tariffs or there is some other kind of geopolitical dislocation. And therefore, given that exports have always been significant, we have had customers with whom we have worked for close to 30 years. So these US customers and these plants have a lot of faith in us.
We are exclusive suppliers of some of these commodities at volumes that you would not get in India. 500,000 a year, 400,000 a year. Those are the kinds of numbers we are playing. And therefore, I think in almost the immediate wake of what I call these Trumpian threats, we have started putting the contours of a strategy to articulate our intent of how we wish to handle this situation. And the fact that we have some very substantial ideas itself is reassuring for our US Customers, even as in the short term, they have no options. So we have sales teams that are now getting ready to fly across to the US to meet with key decision makers.
We have a very senior gentleman who used to be part of Ford working with us in our Cologne, Germany office and he understands the Ford culture. A lot of the ultimate OEMs that consume parts we supply through the tier ones are obviously Ford, GM and Chrysler in the United States. So we understand the psyche, the psychology and the likely response initiatives that are going to come out of the United States. We understand that and we are trying to be extremely proactive and try and preempt any response that could have a detrimental effect on the long term prospects of our company.
So I want to assure the team that I don’t think any there are many other Indian or Chinese companies that will be responding so fast to what is emerging as a sort of dark cloud on the horizon. So this is sort of an ongoing work in process. Nobody knows whether the, the regime that Mr. Trump is threatening to roll out is going to be permanent or it’s a negotiating ploy. We will see. But whichever way this moves, we have some ideas and thoughts and we are in active dialogue with our customers. And that is the way to manage the anxieties and concerns.
Because if we are worried, I can tell you one thing, ladies and gentlemen, the American customers are completely terrorized by what is going on because ultimately it’s going to hit them and hit their cost structure and it will take them at least a year to year and a half to steer the ship of their procurement for many decades. They are used to product development processes that in our view have sort of ossified and these supply chains are not very nimble and agile in the US So that is what is bringing a sense of terror to these organizations and therefore suppliers who are fast, who respond, who come forward to do this kind of hand holding, they will be remembered long term.
So what the thought I want to leave with this audience. Our effort therefore is to convert this potential crisis into a very decisive opportunity for us and hopefully for India. Okay, Deepak, you want to add something?
Dipak Vani
So there is a strong goodwill and customer intimacy that we enjoy while working with our US Customers from past two decades. And in contrast to what you are hearing, our customer impact is giving us more and more opportunities for new business. And as we speak we are getting volume ramp up requests from them. That is a strong marker and indication that they are looking up strategically beyond these current affairs.
Jitendra Divgi
Yeah. So hopefully that has substantively answered this very, very important question, I think. And thank you for asking this question because I overlooked this point and I think the answer hopefully not only answered your Question. But also benefited the rest of the audience.
Yash
Yeah, thank you very much and all the best.
Jitendra Divgi
Thank you.
operator
Thank you. The next question is from the line of Kashyap Zaveri from MK Investment Managers. Please go ahead.
Kashyap Javeri
Just a follow up on the previous participants question. You know, now when we say we would be hand holding our clients and probably try to convert this crisis into an opportunity, does that mean that, you know, there could be significant forego on the margins on that side on at least export business to us?
Jitendra Divgi
No, see, it is too early. We have not completed the analysis. But actually for the last many years we’ve been looking at setting up a US Manufacturing presence. Covid dislocated that project a little bit. And now of course, this crisis had kind of elevated this idea right to the top of everybody’s consciousness. And because of the work that we had done, we believe that if the numbers. The analysis is still underway because Trump hit the additional 25, taking it to 50 just two days ago. So we are already, by early next week we will figure out because what we are noticing in some cases is at least at the 25% duty level, American manufacturing still cannot match Indian.
And with our competitive prices, you are seeing this kind of profitability. So India is in a very, very strong position. And the U.S. of course, if you’re willing to come to the U.S. whether it’s the federal government or the state governments, I can tell you one thing, they are more investor friendly than state governments in India. There is no doubt. So if the economics proves, and we will look at the numbers very closely, we have a very experienced and accomplished board of directors that is helping us in this regard. Many of them are seasoned chartered accountants.
Our chairman is Mr. Kaghle, former managing director of Tata Capital. And we have many other seasoned chartered accountants. So we have, between our management team and board, I am very fortunate to have an outstanding team of people that we are working with. And I can tell you we will find a solution to this. Mark John, who handles our office in Cologne in Germany, is a. He’s of English origin, lives in Germany, has worked in the US he was director of purchasing at Getras Ford, Ford’s largest transmission supplier. He understands the purchasing psychology and what purchasing strategists need to do to counter such a situation.
It is that knowledge and experience that we are leveraging in doing this. So we will obviously figure a way out our margins and find a solution for what appears to be an intractable problem.
Kashyap Javeri
But sir, we were looking at this one part of the component business via our earlier partner or technology partner to one of the largest EV OEMs in North America. Now in the light of this, that is, does that get postponed by at least a couple of quarters?
Jitendra Divgi
I didn’t understand the question. You’re saying the.
Yash
We were looking at some component supplies through, you know, our earlier tech partner. I mean we have already renewed that agreement with. But we were looking at, you know, component supply to them for eventual supplies to one of the.
Jitendra Divgi
Let me answer that. The programs do not get significant. What is likely to happen is that if the US government persists in this kind of duty structure, our concern is that it will lead to inflation. I mean, this is one of the points that I think this is economics 101 and that inflation could therefore depress market potential in the US So programs I don’t think will get delayed. People need to find solutions to. They need to get along with their business. People have made investments. So that will happen long in the medium term. So by, let’s say middle of next year, will the volumes remain the way that is the big question.
Kashyap Javeri
Sure. I’m done. Thank you so much, sir.
Jitendra Divgi
Thank you. Thank you, Tasha, for those really sharp questions.
operator
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Jitendra Divgi
Yeah, no, I, you know, we learn a lot from the questions you ask and the way you challenge us and that sort of keeps us enthused about how to be a little proactive in bringing and sharpening our value propositions. So my thanks to the audience once again and keep challenging us like this. We’ll see you in another three months, hopefully with better news, operations wise and in terms of our long term growth. Thank you so much again.
operator
Thank you on behalf of Equerious Securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Jitendra Divgi
Thank you.
Mihir Vora
Thank you. Thank you.