Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Elecon Engineering Company Ltd (NSE: ELECON) Q3 2026 Earnings Call dated Jan. 09, 2026
Corporate Participants:
Narasimhan Raghunathan — Chief Financial Officer
Deepak Dalwadi — Head Gear Division
Kaushik Patel — Head MHE Division
Analysts:
Harshit Kapadia — Analyst
Ashwini Sharma — Analyst
Sanjay Laddha — Analyst
CA Garveth Goyal — Analyst
Sunil Amanikanth Kothari — Analyst
Gaurav Nigam — Analyst
Raj Shah — Analyst
Neeraj Amanzekha — Analyst
Unidentified Participant
Saket Kapoor — Analyst
Rohan — Analyst
Sani Vishay — Analyst
Manish Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Ellicon Engineering Co. Ltd. Q3FY26 earnings conference call hosted by LRA Securities India Private Limited. As a reminder, all participant lines will remain 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 the operator by pressing Star then zero on your touchstone telephone. Please note that this conference is being recorded.
I will now hand the conference over to Mr. Harshit Kaparia from LRR Securities India Private Limited for opening remarks. Thank you. And over to you.
Harshit Kapadia — Analyst
Good evening everyone. We welcome you all for the Q3. FY26 and 19 FY26 earning Conference Call. Engineering Co. Ltd. Today we have with. Us the management representation. Head of your. Division, Mr. Kaushik Patel, Head of Nuclear Handling Equipment Division and Mr. Narsima Raghanasan. Chief Financial Officer along with his team to give us a convenient outlook. Over to you sir. Give us outlook for the quarter three on voting.
Narasimhan Raghunathan — Chief Financial Officer
Yeah. Thank you Harshit. Good evening everyone and a Warm welcome to Elicon Engineering’s Q3 and 9 months FY26 earnings conference call. Joining me today are Mr. Deepak Dalwadi, Head Gear Division. Mr. Kaushik Patel, Head MHE Division. The earnings press release and the investor presentation have been filed with the stock exchanges and are also available on our website. I trust you have had the opportunity to review them. I will begin with a brief overview of our business performance followed by a detailed discussion on the financial results.
Elekon Engineering today stands among Asia’s leading manufacturers of industrial gear solutions and material handling equipment. Built on decades of engineering excellence, deep domain expertise and trusted customer relationships, our Material Handling Equipment Division is emerging as a powerful growth engine for the company. Backed by over 75 years of experience, the division has unique capabilities to design and manufacture large, complex and high capacity equipments such as wagon tipplers, stacker reclaimers, crushers and specialized conveyor systems.
These capabilities are possessed by very few players in India, creating a strong competitive moat for elicon. Serving sectors such as power, steel, cement, ports, mining and fertilizers. The MHC business continues to deliver customized high value solutions that enhance customer efficiency and reliability. In our gear division, elicon maintains a leadership position in India’s organized industrial gear market. We offer one of the widest and most comprehensive gear portfolios ranging from heavy duty gearboxes to precision engineered components catering to industries such as steel, cement, sugar, power and defense.
Continuous investments in research and development and infrastructure ensure that Innovation, customization and life cycle support remain central to our value proposition. With a presence across nearly 95 countries, a strong global distribution network and long standing relationships with the customers worldwide, Helicon is well positioned to benefit from the ongoing capital expenditure cycle in India and international markets. With this, I now hand over the call to our gear Division Head, Mr. Deepak Dalwadi who will walk you through the performance of the Gear Division.
Deepak Dalwadi — Head Gear Division
Yeah, thank you, Mr. Nasiman. The gear division which contributed approximately 78% of consolidated or revenue in Q3, delivered a largely stable performance with revenue growth of 1.3% year on year. Both domestic and overseas businesses demonstrated resilience during the quarter. The mutated growth was largely due to timing related factors including delays in order inflows during the first half of the year followed by execution and dispersed deferments arising from customer driven dispatch schedules.
Importantly, the underlying demand environment remains healthy. We are witnessing strong inquiry levels and improving order inflows across domestic and international markets. Market sentiment is gradually improving supported by ongoing investments in power, steel, cement and a visible pickup in sugar segment. With this improving visibility, the Gear Division is well positioned to return to a stronger growth trajectory. To conclude the division performance, I now hand over the call to Mr. Kaushik Patel, head of MHE division.
Kaushik Patel — Head MHE Division
Thank you Deepak Ji. The MHE Division continue its strong growth momentum delivering 16% year on year revenue growth during the quarter. This performance was driven by robust demand from power, cement, mining and port sector along with steady execution. We remain confident that the MHE business will continue to perform well in Q4, FY26 and beyond, supported by a healthy order book, a strong project pipeline and deep customer engagement. With this, I now hand over the call back to Mr. Narsiman to provide further overview on Alicon’s financial performance.
Narasimhan Raghunathan — Chief Financial Officer
Thank you. I will now be walking you through the in depth financial performance for Q3 and 9 months. FY26 Financial Performance Q3 FY26 we are pleased to report a resilient and encouraging performance in Q3FY26 despite certain short term challenges. For the quarter ended December 2025, our consolidated revenue from operations stood at Rs. 552 crores compared to 529 crores in Q3FY25. Reflecting a year on year growth of 4.3%. The gear business reported a largely flat performance during the quarter primarily impacted by timing related delays in order receipt and execution as well as customer driven dispatch deferments.
However, the underlying demand environment remains healthy. We witnessed robust order inflows across both domestic and international markets supported by sustained enquiry levels, which gives us confidence in future order inflows. The domestic market contributed 76% of the consolidated revenue while overseas markets accounted for the remaining 24%. The consolidated order intake during Q3FY26 stood at Rupees 701 crores representing a 7% year on year growth. The order inflow combined with a healthy enquiry pipeline keeps us optimistic about growth prospects going forward.
Consolidated EBITDA for The quarter was 109 crores compared to 143 crores in Q3 FY25, translating into an EBITDA margin of 19.8%. Margins were temporarily impacted due to flat revenue performance, higher employee cost and a change in product mix. We expect margins to normalize as volumes pick up, operating leverage plays out and the order book converts more rapidly into revenue. Profit after tax for the quarter stood at Rs 72 crores representing a PAT margin of 13 percentage performance for nine months ended December 2025.
For the nine months ended December 2025 after adjusting for the one time arbitration of income of Rs 25 crores recognized in Q1FY26 in the MHE division, adjusted consolidated revenue stood at Rs 15. 95 crores compared to 14. 29 crores in nine months FY25 adjusted EBITDA for the period was 340 crores with an EBITDA margin of 21.3%. In addition to the Rs 25 crores recognized in revenue in Q1FY26, an additional 10 crores was recorded under other income as part of arbitration settlement. Furthermore, Rs.
80 crores was recognized as exceptional income below PBT representing unrealized mark to market gains from investment reclassification. As a result, profit after tax for nine months FY26 including these one time items stood at Rs 335 crores. Segment wise Performance GEAR Division the gear division contributed 78% of total revenue in Q3FY26. Revenue for the quarter stood at Rs 429 crores compared to 423 crores in Q3FY25 reflecting a flat year on year performance. Due to the aforementioned reasons, we expect a faster execution of orders to convert into revenue in Q4 which should support improved performance going forward.
EBIT for the GEAR Division stood at Rs 78 crores in Q3FY26 compared to Rs 118 crores in Q3FY25. The EBIT margin declined to 18.2% compared to 27.8% in the same quarter quarter last year, primarily due to higher employee cost and product mix. As revenues scale up, we are confident that margins will recover with operating leverage coming into play. Order intake for the quarter was Rs 464 crores and the open order book stood at Rs 811 crores as of 31st December 2025 providing strong revenue visibility for the coming quarters.
Material Handling Equipment Division the MHC division continued its strong growth momentum during Q3FY26. Quarterly revenue stood at Rs 123 crores compared to Rs 105 crores in Q3FY25, resisting a 16% year on year growth. Growth was driven by strong demand in the product supply and aftermarket segments particularly from the power supply, cement, fertilizer and port sectors. EBIT for the division stood at Rs 25 crores compared to Rs 33 crores in Q3FY25. EBIT margins during the quarter were impacted by product mix.
Order intake during the quarter was Rs 237 crores compared to 185 crores in Q3FY25. The open order book stood at Rs 561 crores as of 31st December 202025 reflecting strong growth prospects ahead. While there has been short term execution delays in the GEAR business, the fundamentals of both the divisions remain strong. The temporary mismatch between order intake and execution has impacted near term revenue recognition. However, our solid order book and execution pipeline provide clear visibility for growth in the coming quarters.
On the balance sheet front, we continue to maintain a robust financial position with a strong net cash balance of approximately rupees 600 crores, providing significant flexibility to growth opportunities. Execute our capex plans and navigate macroeconomic uncertainties. Our capex outlay for FY26 to 2028 is estimated at Rs 400 crores aligned with our long term strategic priorities. Though our financial nine months performance remains strong and demonstrate the underlying strength of the business.
Given the near term softness, we believe it is prudent to revise Our outlook for FY26 On a consolidated basis, FY26 revenue may be lower by up to approximately 5% and adjusted EBITDA margins may be lower by up to approximately 2% compared to our earlier guidance. That said, we remain confident about an improvement beyond the near term supported By a healthy order book, a robust enquiry pipeline and improving execution momentum. With that I would now like to open the floor for questions. Thank you.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, 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 two
Ashwini Sharma
Participants
Operator
Are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Sanjay Laddha from Bastion Research. Please go ahead.
Sanjay Laddha
Hi. Thank you for the opportunity. So my first question would be. Sir, we have seen order intake was the slowest in the last eight quarters. How are you seeing this and what’s your view going forward?
Deepak Dalwadi
Hello,
Sanjay Laddha
Can
Deepak Dalwadi
You hear me? Yeah. See now in near future coming quarters there is a good expecting business in the power sector. There is a substantial capacity increase going on this segment. So we are hoping good orders from the power sectors then even steel sectors are also now growing and overall trend for the steel sector is also showing in the growth. So we are also hoping good orders from the field segments. And as the sugar cane crop is very well in the last quarter so we are also hoping the good business in the sugar industry also.
Sanjay Laddha
Can you throw some light on the inquiries which you are talking about? So what I want to understand is when you say we have a good inquiries and we have a good bid pipeline so can you throw some light on how much is the big bid pipeline we have and how much is going to convert it into the order book so that we get to know that how much percentage it is going to accrue on you because from the last three four quarters we are mentioning that. But the order intake and the order flow has been quite a lower side on that front.
I understand the business dynamics but just wanted to have your views on that.
Deepak Dalwadi
See whatever orders we actually now the power investment has started and they have releasing the orders. So we also received very good orders from the say lnt, MHI and QLR and all. So we are getting the orders from the power industry and but at the later stage they want their requirements so that’s why it is to be executed in the next financial year. And also there are many inquiries floating from the power industries and they are in pipeline and we are hoping all inquiries to be converted into the orders.
So we have a very full confidence for achieving the good inquiries and all whatever in the pipeline it will be converted into orders which Will be useful in the next coming quarters.
Sanjay Laddha
So my another question. We are seeing comparatively better demand for the domestic market for quite some time. While when, while when we communicate to the. You know in our investor presentation we say that export revenue should be over 50% going forward in the by FY13. So how do you see, you know this divergence? Because how do you see export market will pick up? What is the growth strategy for export? Any inorganic acquisition? We are evaluating on that space.
Narasimhan Raghunathan
Yeah, at the moment we are not looking at any inorganic acquisitions. At the same time how we look at the export business as such. We have explained in many investors conference call earlier that we are putting lot of efforts, lot of activities has been ongoing for past three, four years. We also backed lined up OEMs and we have met the revenue targets of what we were looking for. And these are the OEMs. You are aware that they are going to give us a sustained business in forthcoming years. So overall the long term export growth or prospects what we are looking at
Ashwini Sharma
And
Narasimhan Raghunathan
Considering how we are at present the market share is and there is a huge potential. So all those aspects and internal what are the efforts which we are doing all are in place at the same time. We are aware that certain geopolitical situations and certain regions economic growth and other things, those are all the external factors which is presently impacting us. Having said that, for the efforts, all the activities which we have been doing for four to five years now and all the orders which you executed and how the customers are looking at presently based on the experiences which they had with us for three, four years.
We are confident that in coming years we will be able to reach our milestone of 50% revenue coming from the exports.
Sanjay Laddha
Sir, can you also throw some growth guidance? I’m not talking about a year perspective from that point of view. I’m talking about the longer, you know, three year time frame what the growth we are targeting. So last time we say that no, it’s 20% growth guidance we have lower down. That’s okay. That’s the business part of that. But if I see three year time frame, what are the growth prospects we are looking for?
Narasimhan Raghunathan
It’s around 20 to 25 percentage what we are looking at as a guidance overseas.
Sanjay Laddha
Okay, thank you. We’ll get back in. Thank you.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one also Ladies and gentlemen, in the interest of time we would request to restrict to two questions per participant. We take the next question from the line of CA Garveth Goyal from Serene Alpha, Please go ahead.
CA Garveth Goyal
Hi. So am I audible?
Deepak Dalwadi
Yes.
CA Garveth Goyal
Thanks for the opportunity sir. In continuation to the earlier participant only over the last one and a half year or two years we are continuously speaking or putting some emphasis on the export side. While we also received a few orders that were announced earlier, these have not been yet translated into materials in the larger volumes. So as a result if we benchmark Export export against FY23 phase the business has delivered only a marginal annual growth of around 4 to 5% despite a consistent effort and focus that we are putting into.
But at the same time, if we look at the domestic market, India appears to be in a strong capex cycle particularly across the sectors that we serve to. We have not heard from management a clear articulation around the incremental market share gains in India and maybe targeting at 25 30% kind of growth at least in the domestic market while exports are muted, we are in Indian market. Even in the Indian market we are currently growing at 15 to 20% kind of number. So I. I agree that the margins can be a thing you as a management try to protect.
But anyways, if we look at last two quarters, margins have also started falling. So I just wanted to understand from you like why we are not aggressive on the domestic side. And number two, despite the cautious take that we are taking on the domestic market, why are we facing a fall in the margins? Is it because even within the existing market share that we are speaking about continuously around 40% we have started facing the competitive pressure, sir.
Narasimhan Raghunathan
Yeah, yeah, I’ll address it. So while we continue to focus on our export market, we have been very strong in the domestic market. As you know that nearly 40% of the organized market market share is what we hold that still continues. We continue to be the leadership leading the market in the Indian scenario. And we are taking all the efforts to. While we may not go for aggressive market increase from now on which comes with an additional competitive scenario and compromising on the margins etc. At the same time we continuously look at how we could enhance the product, upgrade our products, reduce our cost, all those aspects and how to retain the current market.
Like you see that what are the incremental business segments like power sector and things like that which is happening, we are able to continuously improve our revenue on account of that. So therefore our domestic approach continues to remain robust. We got a separate team who are continuously bagging those orders and approaching the market. So all those efforts are also are always there. And in terms of margins we see more that it is a scenario which is playing out due to the lower turnover in the first three quarters once we see in the fourth quarter.
While of course a turnover from a point of view as what we have given the guidance, there has been a little bit of a lower outlook in the current year in terms of margins overall margins, how we see it gets normalized when we approach the Q4. So we remain on the same, more or less same this thing. Of course, considering the market in the current year, our marketing team generally uses its flexibility to increase and decrease the price at which we sell the products. So at the same time overall our approach towards margins remains the same in the domestic market.
CA Garveth Goyal
So now you are saying going ahead also we will be focusing on maintaining the market share instead of focusing on increasing the market share in domestic market. Is that understanding correct?
Narasimhan Raghunathan
Yes, your understanding is correct. Viewed recently tried to increase the market share. But if it comes within a very aggressive competitive scenario, then we would like to look at maintaining the margins.
CA Garveth Goyal
But in that case how we will. Be able to grow.
Operator
No, it’s just a follow.
CA Garveth Goyal
It’s just a follow up actually. All
Operator
Right, please go ahead.
CA Garveth Goyal
In this particular case, like I’m not understanding. At the same time we are speaking about 20 to 25% growth, right? And we are aware like geopolitical tensions are there. So export is bit on toast right now for us. So if we are not looking to grow in Indian market maybe at more than 25% then how we will be able to achieve that guided numbers. So that I’m not able to understand.
Narasimhan Raghunathan
Yeah. See the growth what the export growth, what we had indicated to be around 20 to 25% is how we see it. At the same time we will have to factor in the geopolitical situations which are beyond our control. At the same time our efforts definitely would be there to reach our milestones subject to the geopolitical considerations. At the same time our approach towards export market in terms of adding new clients, identifying growth opportunities in different markets, approaching different markets with the different approaches, connecting with the OEMs, consultants and distributors in different regions, all those efforts and expanding our network of branches and wherever required, if there is assembly centers sort of thing we will have to establish, we are keenly looking at.
So therefore all the efforts are on to improve that to reach that milestone of export projections.
Operator
Thank you. We take the next question from the line of Sunil Amanikanth Kothari from Unique pms. Please go ahead.
Sunil Amanikanth Kothari
Thanks for opportunity. Sir, my question is to Kaushik Bhai, basically looking at the power sector opportunity which is seems to be materializing thermal power mainly. So just wanted to understand your thoughts for next two, three years how you see MHE division’s opportunity, how prepared we are because I think some year, for some years we were not investing much in MHA division. So in terms of team technical capability, our investment in machines, little bit detailed thought process on MHE’s preparedness to capture the growth and possibility of growth will be very helpful.
Kaushik Patel
Okay, first of all I will give you the updates on the market. Yes, presently as you mentioned there is a good opportunity for us as MHE to grow and to cater the business in the power sector because there are many projects as have already been announced by the various end users like NTPC and other state government bodies. So I think few orders has been finalized and out of it. We got the good business in current year so in couple of years yes there is a good visibility for us to grow further and apart from the power of course other sector also helping us to grow because most of the end user has already announced their capex investment and of course some capital investment also there to upgrade their existing equipment.
So we are hoping good growth in next two, three years.
Sunil Amanikanth Kothari
And regarding concept by our preparedness.
Kaushik Patel
Capability we have been in this business for more than 75 years. We have our own manufacturing setup over here we have a design dedicated design team for our equipment. In fact we have upgraded our equipment considering the present market requirement and customer needs. And as far as the manufacturing is concerned if you see our most of the products require the fabrication activity although we have our internal setup for for the fabrication but for fabrication we have been now outsourcing to get the things done only to get it machining.
We have a internal process and apart from the upgrading our existing machines we have a capex plant near to 35 to 40 crore and out of it few machines. We are expecting to get it in next quarter. Next quarter means Q1 of next financial year. So we are also investing in our machinery as well as the as well as the expanding our capacity to meet the near future opportunity or grab the opportunity to that I hope.
Sunil Amanikanth Kothari
Yeah. Yes. Yeah Mike, second question is on the competition. I mean compared to say previous cycle of 2000, 2007, how you see the competition, competitor pricing and what I mean ability we have added in terms of maybe product or are we again planning or thinking about entering some maybe EPC or something. What’s your thought process for future growth? That is my last question.
Kaushik Patel
Okay, let me make it clear. We have adopted the Strategy that we should focus on equipment supply and providing the after sales service. And that will continue over the next two years. Means we don’t have a thought to enter into EPC business. But looking to the present market needs, I think for us we have ample opportunity to put our equipment in the new projects which is being announced by the end user. Reason is only that many end users have changed their strategy for closing the tenders. And those strategies are favorable to mhe.
In fact favorable to ELICON to supply the equipment in the market or for particular projects. As far as the competitor is concerned, you must be aware about the market scenario that few players McNeely Engineering, then the TRF they are McNally become bankrupt. TRF has already announced to shut down their material handling operation. So only few competitors are there like LNT and tk. But again if you see the business strategy of LNT and tkal, they are more focusing on the EPC projects. Of course we have a competition with them.
But not to the extent at every sector. And alicon being the first equipment manufacturer for material handling equipment. Most of the PSU’s preference is with Alicon.
Sunil Amanikanth Kothari
Okay, thank you and my good wishes to Mr. Persimmon for future career. And thank you very much.
Narasimhan Raghunathan
Thank you sir.
Operator
Thank you. Ladies and gentlemen, a reminder. Please restrict your questions to two per participant and rejoin the question queue for follow up questions. We take the next question from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Gaurav Nigam
Yes, sir. I have one question. On the gear division. What was the mix of engineered gears in this quarter’s revenue? And on the gears specifically you mentioned about the revenue difference which happened. So would you quantify how much was this revenue deferral that we are talking about?
Ashwini Sharma
Yeah, just. Just a minute.
Narasimhan Raghunathan
In terms of revenue deferral it is around 30 to 40 crores. Where some of the dispatches, what is where we try to squeeze before December that is getting extended to January or February.
Ashwini Sharma
So the revenue mix in the EP and CP. So the CP is 52% this quarter again and the remaining is 48% EP for this quarter.
Gaurav Nigam
Understood, sir. So that. That was question number one. Just to click on the question. Second question on the export side. I mean we had indicated our OEM count that. That we had acquired had tie up. Can you update on that business? What is the status and how much business did we do with them in this quarter or in nine months? Whatever you are comfortable?
Narasimhan Raghunathan
Yeah, it is around 18 OEMs where we are tied up with. Having tied up with 18 OEMs the revenue what we got during this nine months is around 31 crores. And what we look forward in future is that repetitive business which could come in future.
Gaurav Nigam
Got it, sir. This is great, sir. Thank you.
Operator
Thank you. We take the next question from the line of Raj Shah from Enam amc. Please go ahead.
Raj Shah
Hi sir. Am I audible?
Deepak Dalwadi
Yeah, yeah.
Raj Shah
Okay. Sir, my first question is regarding the gross margins. So if you see the gross margins of 43% that we reported in this quarter is lowest in last five years. I know you cited some reasons relating to customer deferments and product mix. But can you throw some light on exactly where which customers were they visit international or domestic and product mix changes. As you mentioned engineered products in DS business of 52%. I fail to understand why the 600700 dips fall in gross margins according this quarter.
Narasimhan Raghunathan
Yeah, the gross margin see the product mix is around 52% from catalog products and 48 percentage from engineered products. The gross margin largely while in certain things like for example exports during this quarter we had little bit low where the margins are better off. Then the product mix sometimes keeps fluctuating between catalog products and engineer products. So that’s also one of the sort of. We would say that it’s a more of a timing and specifically we are also few orders, specific orders which we are executing presently.
This is for sort of indigenously developed product for the Indian Navy which is of. Though it is of a smaller order value. Since it is being done for the first time by us. It has got higher sort of manufacturing cost which is more towards the learning and understanding and designing and things like that. So that is also again from a one time point of view. At the same time overall there is no significant gross margin in long term. It is impacting us. Only thing is that probably 0.5 or 1 percentage.
As what we had explained. Considering the competitive scenario, our marketing team how we have viewed how our approach towards that we look at the pricing of the products and accordingly factor those things. But otherwise gross margin per se in gear division as well as of course MHA division is strong in the gear division. The overall gross margin levels remains the same. Except for during this year it has been on the lower side.
Raj Shah
Okay. Okay. So just to follow up to that, you said 1% you attribute towards competitive scenario. Now the. The amount that you told regarding the Indian Navy order. If you can attribute some percentage to that and whether this will be beneficial for us in the future orders of Indian.
Narasimhan Raghunathan
Yes, it is around the 0.5 percentage. Definitely that is A thought process that by bagging those orders which is of a significant for us in the first time when we execute we are this thing. But once we establish our credentials then there is a potential that such orders could come in the future. And whatever the learning cost which we incur in the first year, obviously we will not be incurring it for a similar product in future years. And we are eager to back those orders. And while in the initial years it could be a little bit on lower side on the margins.
Definitely there is a huge prospect for such orders.
Raj Shah
Okay. Sir, any update on Raj? I would request
Operator
You to rejoin the queue for follow up questions. That was
Raj Shah
A follow up question. This is the second question.
Operator
Okay, please go ahead.
Raj Shah
And next generation missile version in defense.
Narasimhan Raghunathan
Yeah see one is that it is getting a bit longer time so probably Mr. Deepak Dalu, you can explain.
Deepak Dalwadi
Yeah that new generation Corvette that is we are expecting the GSL and GRSC are expecting the orders anytime and we are expecting RFP by the Q3 of next financial year. Hello,
Ashwini Sharma
Sorry,
Raj Shah
Aircraft carrier order.
Deepak Dalwadi
Yeah. And the regarding this indigenous aircraft carrier that follow project is expected to be given to the shipyards in coming future. And for that we can get the rfp in the Q1 of financial year 27.
Raj Shah
Okay sir, this is not a question but if you can just be more detailed in guidance regarding the segment rise guidance. Last year, last quarter it was 650 crores in mhe 2000 crores in BS similar data if you can that would be great.
Narasimhan Raghunathan
Yeah. It’s broadly around 700 crores from MHG and the balance is towards gateways.
Raj Shah
Okay, thank you sir.
Operator
Thank you. We take the next question from the line of Neeraj Amanzekha from White Pine Investment Management Private Limited. Please go ahead
Neeraj Amanzekha
Sir. Two questions. One is on the margins front I think you have discussed that. But if you remove the Indian Navy margins how much would the margins for the gay division come back to?
Narasimhan Raghunathan
Sorry, can you repeat again?
Neeraj Amanzekha
If you remove the exceptional lower margins in the Indian Navy, how much would the margins come back to? On the. On the gear side.
Narasimhan Raghunathan
You’Re looking at gross margin or net margin,
Neeraj Amanzekha
EBIT margin,
Narasimhan Raghunathan
A bit margin. If we, if we remove that.
Neeraj Amanzekha
If you remove the lower margin of the Indian Navy how much would the adjusted margin for the gears big division be?
Narasimhan Raghunathan
Yeah. So specifically probably we will come back to you on clarify to you specifically.
Neeraj Amanzekha
But you said to be useful if you discuss here because how will the public know? Because public forum or you can just tell us some broad range, you know because the margins fall has been quite large in the last five quarters or in the company. So that’s the reason I was asking you.
Narasimhan Raghunathan
It is around 2 to 3 percentage.
Neeraj Amanzekha
Okay. The other question is in the last few quarters or orders for these order intake has been good in the gas division but the revenue reported for the gas has not increased. So our cumulative order book from March Is increased from 583 crores to 811 crores. But our run rate of GA revenue has slowed down. What might be the reason and can we also correlate that a margin will be lower in the existing orders because there is a. As you said employee cost and other cost increase or those have been taken care of.
Deepak Dalwadi
See for the question to your first answer to your first question. The whatever orders we have booked in Q3 they are measured for the power industries and their requirement are at the later stage. So all year all these orders will be executed in the next. I mean next financial year. So that’s why the order books are showing high. But the order executions they have been deferred by the customers in the next financial year.
Neeraj Amanzekha
I got it. Any. Any timeline you have a thought on when it will start those revenues? Because the run rates have gone to. Quite low
Deepak Dalwadi
From Q1 itself.
Neeraj Amanzekha
And so last question on the. On the US tariff on the export, how are you managing it? Like would you be impacted if the tariff status quo maintains.
Narasimhan Raghunathan
You’re asking of the tariff and impactless?
Unidentified Participant
Yes sir.
Narasimhan Raghunathan
Yeah. Yeah. Broadly you know that as economy. US economy per se is not growing. Well at the same time while we are not. While we are looking at more growth opportunities, the present revenue is not that much impacted. We are able to manage that due to the tariff implications.
Neeraj Amanzekha
Okay so. And the question you did not answer. Neeraj, I would probably.
Operator
The
Neeraj Amanzekha
Question was not answered. Just one second. Was that the orders that you have in hand, do they have higher margins or do they have lower margins orders of 811 crores on the gear side.
Narasimhan Raghunathan
We will work out that and clarify a little later. Point.
Neeraj Amanzekha
Okay.
Operator
Thank you. Ladies and gentlemen, in the interest of time we request you to restrict to one question per participant and rejoin the question queue. We take the next question from the line of Saket Kapoor from Kapoor and Company. Please go ahead.
Saket Kapoor
Yeah. Hope I’m audible.
Deepak Dalwadi
Yeah,
Saket Kapoor
Yeah. Firstly the small point is about our existing order book. The closing order book is at 1372 crore. So if you could just give us some color. What is the execution cycle? I think so you mentioned about some power companies order which is There in the order book but they will get executed for Q1. And then sir, you have also spoken. About some product mix and absorption of cost because of the increased employee cost and others. So if you could just give us some color. Participant have asked how is the margin profile likely to be on the existing on the existing order book.
And lastly sir, on the utilization level. Since we have already done capex and we are also emphasizing further addition, what. Is our current capacity utilization levels for both the divisions?
Deepak Dalwadi
See for the your answer to your first question. Actually mostly orders are for EP division so their execution cycle is around five to six months. So all orders will be executed mostly in the next financial year and starting from the quarter four. So few orders will be executed in quarter four and maximum orders in next financial year.
Operator
Thank you. We take the next question from the line of Rohan from Invasion Capital. Please go ahead.
Rohan
Hello sir. Thank you for the opportunity. So sir, my question was broadly on the impact of increasing commodity price metal prices. So how does that impact our existing order book in terms of margins going forward? Thank you.
Deepak Dalwadi
See as such because of this demand situation in the existing market, the price trends are more or less stagnant. So there is no such increment in the commodity markets. And because of that our raw material prices are almost stagnant. So there is no much impact because of the raw material prices for getting the orders from the market.
Rohan
Sure sir, but for our existing order book, you know some of the metal we purchase right. In the future and at a higher price. So will we be able to pass this on to our customers?
Deepak Dalwadi
I don’t think in the near future also there will be a price increase in the market for the metals and all the major commodity items. We don’t see any increase because normally we look look forward for the six month onward for the raw material prices for the booking the orders as well as the study of the markets and that we find that there are no. It doesn’t seem any increase or I mean major change in the raw material prices of the major category items of the this commodity materials.
Rohan
No, no, absolutely sir. So I am talking about the increase in commodity price that has already happened the metal prices that have gone up in the last 12 months. Talking about that.
Ashwini Sharma
Yeah, if you see. But we
Deepak Dalwadi
Are also managing and having a good relationship with our suppliers. So we are managing the prices.
Rohan
Okay. Okay, thank you.
Operator
Thank you. We take the next question from the line of Aman Soni from Invest Analytics Advisory. Please go ahead. Aman, please unmute your line and proceed with your question.
CA Garveth Goyal
Hello, Am I audible now?
Operator
Yes, please go ahead.
CA Garveth Goyal
Clarification on the guidance part you mentioned most of the order book in the gear segment will be getting executed much clear. Right. But at the same time we are targeting for this year maybe if that number we need to do around 575 cr in last quarter. Right. So out of the existing order book of 800cr if we have to execute 575 that means we have to execute a significant portion in Q4 itself, isn’t it?
Deepak Dalwadi
Yes. So we have lined up because now we are having good orders on hand. So we have lined up all our manufacturing activities and we are confident that we will achieve all the numbers what we have guided.
CA Garveth Goyal
No, no. Actually I’m asking while you are saying out of the existing years order book significant portion will be executed in next year. Right. Then how we will be managing like 575cro education in there within Q4.
Deepak Dalwadi
See we for that what I talked about that was for the engineering product. But for the catalog products we are having a less manufacturing cycle of say one month or 30 days or 60 days. So for that we are getting the orders and we will execute orders and there is a very good orders in pipeline. So we will definitely execute these orders in the shorter lead time.
CA Garveth Goyal
So does that mean in Q4 also we will be particularly executing more of catalog product. And that’s why margins can be on lower side. Because product mix is not getting things then.
Ashwini Sharma
No, no, it is not likely. The CP orders which we are getting we are executing in the same quarter. The EP products orders we are we get in September months in Q2 it will be delivered somehow in Q4. And some orders we received in Q3 for the EP product it will be delivered in Q4 only. So the myths of the CP and EP would be similar in Q4. But the sub products which we got in the December month only that would be spillover in Q1 next year.
CA Garveth Goyal
I would request
Operator
You to join back the queue for follow up questions.
CA Garveth Goyal
Margins but means in last two quarters we have been speaking again and again about like product mix is getting impacted. Product mix is getting impacted. So I just wanted to understand like when this picture will get cleared. Like if that is going to be the case. Like if we are facing any delay in execution of our engineering products then our total margin profile is going to be suffered, right?
Ashwini Sharma
Yeah, this is the one case. The other case is that if you see the product and the service which so that also includes in the margins. So this this quarter that is another one Case the service portion from the revenue that also impacted the margins. But we have the good order in the service business also. So that will be executed in Q4. So that is not the case. Q3, the margins are lower in the Q4 that the EP products, CP products and the service that will be mix of all the things. So margins. It will not like that it happened in Q3.
Unidentified Participant
Thank you. We take the next question from the line of Sinthil Kumar from Joint Ray Capital Services Ltd. Please go ahead.
Operator
Please unmute your line and proceed with your question. Since there is no response, we will move on to the next question which is from the line of Sani Vishay from Access Securities. Please go ahead.
Sani Vishay
Yeah, this is kind of a follow up on the earlier question, the question from the earlier participants. So at the end of Q2 also we had a very strong order book and we were very confident about achieving good revenues in Q3 and Q4. But as it went, there were some external factors which were beyond our control and we could not achieve it in the Q3. Now again we have a good order book and we are expressing confidence and very good performance in the Q4. So what is the change? What gives us the confidence that this time it will happen?
And are there any similar risks that we will not be able to achieve this guidance?
Narasimhan Raghunathan
Yeah. See, what happened is like what Ms. Ashish also said for catalog products. What. We whenever we project, we factor in that from the time we inquiry to the execution, it takes about one month or so. So based on that, we considering the market scenario, we get the understanding of how the market is performing and accordingly factor that and more. Since for the engineered products there is a more clarity, we are able to provide better clarity on that aspects. So therefore, depending upon how for that quarter it is fluctuation, we factor both the order on hand, how it will be executed, plus the order intake, what we will be getting for catalog products which will be delivered in the quarter.
So this sort of mix and match fluctuates and that is what will be factoring in when it comes for revenue.
Sani Vishay
Okay. So simply for the confidence level of achieving this guidance is higher compared to the earlier, is that right?
Narasimhan Raghunathan
Yes, the guidance, whatever we have spelled out with revision, you would know what we have spelled out that is such achievable. Definitely.
Sani Vishay
Okay, sir. Thank you.
Operator
Thank you. We take the next question from the line of ashwini Sharma from MK Global Financial Services Ltd. Please go ahead.
Neeraj Amanzekha
Yeah, my questions have been answered. Thank you.
Operator
Thank you. We take the next question from the line of Juhi from Aryan Capital Markets Ltd. Please go ahead. Juhi, please unmute your line and proceed with your questions. Since there is no response we will move on to the next question which is from the line of Manish Gupta from Equinox Investment Advisors. Please go ahead.
Manish Gupta
Yes sir. Am I audible?
Operator
Yes.
Manish Gupta
Sir. With US trade deal being delayed again and again and there is rather no clarity when it will be fine, what are the geographies where you are more optimistic about growth?
Deepak Dalwadi
Yeah, we are more expecting the Middle east and the Europe.
Manish Gupta
And since China is also facing tariffs in US they would be competing hard in these geographies as well. So how is our competitiveness compared to China in these markets?
Deepak Dalwadi
See you may be knowing that China though they are competing but they are not very good in the after sales service. So that’s why we are not facing any competition from China in terms of the order executions and getting the traction from the Europe and Middle east because in the after self service we are having upper age compared to the China.
Manish Gupta
Okay, and my second question will be said you moderated the financial year 26 guidance. So beyond financial day 26 what would be your guidance in strength of top line as well as how would you expect the margins to behave in periods after financial day 2016?
Narasimhan Raghunathan
Yeah, probably in another in the current quarter we will have to do the budgeting exercise wherein we get the inputs from all the both the divisions and different markets and then we’ll be able to spell out how we look at in the next year.
Ashwini Sharma
Generally we do we give our guidance in Q4 Congol so we will maintain the same and we will spell out the next year guidance in Q4 on call. Thank you.
Manish Gupta
All right. Considering that private capex in India is just not taking off and geopolitics is kind of very very volatile as far as export markets are concerned so do you feel there is a downward risk to growth in coming years for you or do you expect things to normalize sooner rather than later?
Deepak Dalwadi
The power industry has started now performing and they have now released, I mean investments government is releasing investments in power so we are hoping good traction from the power industries and even sugar industries are also expecting to pick up in coming months. So we are expecting good traction from the sugar industries and also from the steel industry and cement also started now showing some expansion so we are expecting good attractions from all these segments.
Narasimhan Raghunathan
Since we are also spread out fairly well in different industries across this thing. Any uptick on the downtick on few industries we are able to manage that and that’s how we are optimistic that the growth will be better.
Operator
Thank you ladies and gentlemen. We take that as a last question and conclude the question and answer session. I now hand the conference over to the management for their closing comments.
Narasimhan Raghunathan
In closing, I would like to thank all of you for joining us today and for your continued trust and support. While the GEAR division delivered a resilient performance during the quarter, we are particularly encouraged by the strong momentum and long term potential of the MHE division which brings balance and incremental growth to our overall business. Even as we revise our near term guidance, our focus remains firmly on disciplined execution, prudent capital allocation and strengthening our leadership in high growth segments.
We are confident in our ability to build on the current momentum, navigate short term challenges and continue delivering sustainable value for our shareholders and all stakeholders. Thank you once again for your participation. Should you have any further questions, please feel free to reach out. Have a great evening. Thank you.
Operator
Thank you on behalf of LRR Securities India Private Limited. That concludes this conference call. Thank you for joining us and you may now disconnect your