Gabriel India Limited (NSE: GABRIEL) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Atul Jaggi — Managing Director
Rishi Luharuka — Chief Financial Officer
Analysts:
Jay Kale — Analyst
Amit Hiranandani — Analyst
Aditya Khetan — Analyst
Mumuksh Mandlesha — Analyst
Viraj Kacharia — Analyst
Chetan Gindodia — Analyst
Abhishek Jain — Analyst
Jeetu Panjabi — Analyst
Alisha Mahawla — Analyst
Jyoti Singh — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning, and welcome to the Gabriel India Limited Q3 FY ’25 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on-date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict.
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 now hand the conference over to Mr. Atul Jaggi, Managing Director of Gabriel India Limited. Please go-ahead, sir.
Atul Jaggi — Managing Director
Yeah. Thank you so much. Good morning, everyone, and very warm welcome to all the participants who are there on the call. With me today, we have Mr. Rishi, our CFO; and SGA — our Strategic Growth Advisor, our IR Relations Advisor.
We have uploaded our results and the presentation for the quarter ended 31st of December on the stock exchange and the company website. I hope each one of you had a chance to go through the same.
I would like to begin by highlighting the India’s recent acquisition of assets from Marily Auto Suspension Park Private Limited, that is MMAS through an asset purchase agreement. So MMAS is a Puna-based joint-venture between Europe and Marasan International Limited, basically specializing in the design, production and marketing of shock absorbers, front struts and the gas springs for cars and commercial vehicles. This acquisition helps us to improve our position in the suspension market, enhances our capabilities and expand the product portfolio, which will help us drive our growth trajectory.
With this move, we have also added an and additional capacity of 3.2 million shock absorbers and 1 million gas spring units. A gas spring unit — will actually be a new product-line for us. Additionally, we are also entering into a technology assistance agreement with Suspension Systems Italy to further help in the advanced suspension offerings for the future OEM requirements.
Now I’ll provide a brief overview of the operations and key highlights of the automobile industry. The standalone operating revenue for quarter three grew 14% year-on-year, reaching INR924 crores, driven primarily by higher volumes and improved sales in the two-wheeler and the passenger vehicle segments. EBITDA during this quarter stood at 8.6%.
In Q3 FY ’25, in Alpha, Gabriel Sunroof Systems reported revenue from operations of INR92 crores with PAT margins at 6.7%. The Sunroof business continues to experience strong demand up primarily by the rising volumes, the customer preference for the Sunroof product and the new vehicle launches. Our well-time entry has helped us strategically and we are now set to double the capacity by the calendar year ’25 to meet the growing customer demands.
Coming to the industry highlights, on the passenger vehicle, in this quarter, the last quarter, the sales volume grew by 6.6%, reaching 12.6 lakh units. The UV segment saw a very robust 16% Y-o-Y growth, primarily driven by strong demand on — and aggressive launches in the SUV segment. We also saw some improvement in the passenger car segment. The slowdown that we saw in the first-half of the year in the PV segment has significantly improved post the festival season and we see that trend continuing even in the remaining part of the year.
On the CV side, the last quarter saw a muted growth of 2.2%, primarily due to the retail volumes declining Y-o-Y by 1.3%. This is primarily attributed to the delayed fund releases from — on the infrastructure product — projects from the government. Despite this, the OEM seems optimistic on the improvement in the demand in the — in this particular quarter.
On the two-wheel side — two-wheeler side, we saw a year-on-year growth of 7%. This was led primarily by the scooters at 13% and followed by motorcycles at 4.5%. The three-wheeler demand, however, saw a muted growth. The trend in the two-wheeler continues to be strong, while we saw a month-on-month decline in the month of December, but this — this seems to be a temporary phenomenon. We remain optimistic about this moving forward in this quarter and the further quarters coming up.
On the EV side, this — this theme industry is into the transition phase while the penetration continues, the replacement of with the PME drive program has reduced the direct subsidies per vehicle, which has led to the decline in the overall two-wheeler volumes, while the volumes on an annualized basis have grown, but yes, we are seeing a month-on-month decline in the last couple of months. However, in the increasing PLI incentives for battery production, which will impact on the lower battery cost will significantly sort of reduce the battery cost and this will improve the EV affordability and the demand of — hopefully would remain positive moving forward.
So on this note, I come to the end-of-the — of my opening remarks. I now request the moderator to begin the question-and-answer session.
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 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Once again, a reminder, ladies and gentlemen, if you wish to ask a question, please press star and 1. The first question comes from the line of Jay Kale from Elara Capital. Please go-ahead.
Jay Kale
Yeah. Good morning and thanks for taking my question and congratulations on a good set of numbers. Sir, my first question is regarding your suspension acquisition. Just wanted to understand this entity has been kind of EBITDA breakeven and a marginal PAT loss as per the reported numbers. How are you seeing the turnaround of this entity? What are the kind of synergies that you have with this entity? Where — where are the low-hanging suits to improve profitability and any timeline of when you could take this entity to closer to your existing business margins?
Atul Jaggi
Yeah. So thank you. Thank you so much. See, in terms of synergies, there are clear synergies on the product side, there is a very similar product-line, very similar customer portfolio that is there. So there are clear synergies. As I mentioned earlier, the gas spring, the gas dampers is a new line for us, which we sort of we always wanted to enter into. So this gives us — this gives us a clear benefit there.
In terms of the customer portfolio, the customer portfolio is quite good with Tata Maruti being and obviously Renault being the top three customers and some exports also would help so I think building the synergies is not a big challenge to be honest with this. Yes, we also get access to the technologies that are available and we also get access to better product range that is available there.
Rishi Luharuka
So and Jay, on the margin profile, you’re right in terms of what you’ve noticed, but there are lot of one-time adjustments which are required to look at the numbers in the — on an ongoing basis. Second is obviously the operating leverage that will happen with the increased synergies.
In terms of timelines that you asked, well, we have a plan, which at this point in time, we are not able to share, but we have clearly curated a plan in terms of improving the margins and bringing it to the levels that will be at.
Jay Kale
Okay, understood. And just on the technology side, what is the kind of technology that they — because you all have been in the suspension market for quite long and you are one of the leaders over there, but what is the kind of incremental technology that you could benefit from this acquisition? I understand you all are working on semi-active and made the semi-active suspension from your R&D globally as well. But any more new products that your — any new global clients that you all can leverage from the relationship?
Atul Jaggi
So as I mentioned, mentioned a is a running client, which is — which is a global client that is there. In terms of technologies, I just mentioned earlier, gas spring gas damper is one-product which where the technology is already available there, the product is running and there are enough opportunities in the market to ramp-up that, so that definitely helps.
And again, within the shock absorbers, you know every company uses a different technology, right. So there are always some pros and cons of every technology there. So some add-ons we see where we can — we can utilize some of some of them on the — say on the commercial vehicle side as an example.
Rishi Luharuka
So Jay, on the — this particular point, couple of things to note. One is as a new product. A good scope there with increasing SUV population, the core balancer requirements are going up and up. That’s one. Second is that the territory is largely India and the export that currently this entity was doing. So in terms of synergic benefits, added helps.
In terms of the technology piece, there are designs which are different and have different or similar capabilities, which adds to the product basket in terms of what we can offer. And as just right now mentioned, on the CV side also, there are such opportunities.
Jay Kale
I understood. And you had mentioned historically that in the next two to three years, at least one or two more new products. I’m assuming that this — this acquisition is more of a consolidation is seen more of a consolidation from your side and not necessarily one of the two new products that you maybe plan to do it in the next one or two more years. So I think that trajectory is expected in the next one or two years. I’m assuming that if you can just clarify on that.
Atul Jaggi
Yeah, so we — so see, M&A is not an event, right? It’s a journey. So we are on that journey. We are certainly not saying that we are pausing. This is one of them which came across and we were able to conclude it. As we speak, there are other opportunities that we are evaluating and we’ll come back to the market as an opportune time.
Jay Kale
And just one last question, if I may squeeze. On the Sunroof margins, if you could throw some light on how have they — if you see consol standalone, I’m assuming that there is some dip on a Q-o-Q basis, while Q2 was substantially higher, what should be a sustainable margin on Subgroup? And if you could also, you know, consistently kind of disclose those numbers, that will be really helpful for us to crack the subgroups.
Atul Jaggi
So with one subsidiary, Jay, I don’t think it’s a simple math right conso minus standalone. There are other reasons why we have taken it out-of-the investors presentation directly. So kind of request you to you all to bear with that.
As far as the numbers are concerned, it was a good quarter. The sales was — was as per the budget that we had anticipated. We are also in the process of now going SOP for the AY program, which is the platform. And with that, we are now anticipating to ramp-up the production. We’ve already mentioned that we are looking at doubling the capacity and the orders for that is already in-place and very soon, we will be in a position maybe in two years of time where we will be almost exhausting that capacity as well.
So in terms of the pipeline, it’s looking as per the plan that we had casted out, in fact a little more aggressive than what we had planned for.
Rishi Luharuka
Coming to the margin profile, you are very right, last quarter was an abnormally high-margin. This quarter there has been some one-off cost to the extent of INR22 million, but to answer your question on sustainable margin, it will depend upon the product mix and what plays out, how much TV is, how much BLDAs, what is the proportion of that, which are the customers that we are going to add. As we all know, competition is also heating up on that. And with localizations, the prices ideally should go down, but we are clearly looking at a margin which is accretive to Gabriel in the range of 12% — 12% to 14% is what we had mentioned always. Does the endeavor to keep it at that level going-forward?
Jay Kale
Okay, thanks and all the best. I’ll come back-in the queue for more questions. Thank you.
Operator
Thank you. The next question comes from the line of Amit Iranandani from PhillipCapital. Please go-ahead.
Amit Hiranandani
Hi, team. Thanks for the opportunity. Sir, continuing on the ongoing acquisition, which is going on. So by when we are going to have the technical agreement signed with them? And secondly, continuing with that, what is the penetration of semi-active suspension in India and where do you see it moving in the next five years? And presently what is the penetration level for the same in the developed market, please?
Atul Jaggi
I’ll take the first one, Amit, so the technology license agreement and the technology assistance Agreement are all sort of clearly agreed between both the parties. Once we have finished the conditions which are required customarily for closing a transaction, we should be able to enter into that and make it effective. So that — and again we’ve already specified the long stop date in our disclosures. So that’s a timeline that we are working with on the semi-active.
Rishi Luharuka
Yeah, see on the semi-active, while it is too early to sort of start giving a percentage to the penetration there because this is one-product which is while I think a lot of discussions have happened in the past, but the EV that was launched, the EV, one variant of that has come up with this particular suspension, the semi-active suspension, which is sort of locally assembled here. Yes there are couple of models the top-end models where as a CKD or a CPU they have this suspension so this is just starting in terms of where this will go again very difficult at this time to put a percentage to the penetration but yes because Mahindra has launched a variant with this, there are other customers also who have started discussion on this particular topic and they are quite interested in this.
Amit Hiranandani
And sir, any idea what is the penetration level of semi active in the developed markets?
Atul Jaggi
We can come back to you.
Rishi Luharuka
We will come back to you on this.
Amit Hiranandani
Sure. And sir, can you please help us with the basic financial of margin, like how much was the EBITDA margin and loss in FY ’24 and current capsid utilization of this entity? And also do we need to incur any CapEx post the acquisition.
Rishi Luharuka
So past records we really cannot share given that we have an asset purchase. So that is something that you will have to sort of enter yourself. Second question is with regards to the asset utilization. Well, the entity has done INR200 crores INR260 odd crores in the past. You can check that from the filing and with that, broadly the Emper is fully utilized and 60% 70% would be utilization for suspension. And as we’ve always mentioned, these numbers are subject to bottleneck and capacity enhancement will depend upon what is the bottleneck. And as regards CapEx, well, it will all depend upon what kind of program we are able to synergize and add this entity or add this asset. So typically in Gabriel, we have done asset turnover of INR5 and we don’t see any reason why it should be anything lower than that.
Amit Hiranandani
Right, sir. But sir, are we on-track to achieve the doubled EBITDA margin for the standalone even after the acquisition of this mother since entity?
Rishi Luharuka
We’ll have to see there will be some stress because of that for sure, but in terms of track, yes, we are pushing order.
Amit Hiranandani
Okay, sir, I’ll come back-in the. Thank you so much.
Operator
Thank you. The next question comes from the line of Aditya Khetan from Institutional Equities. Please go-ahead.
Aditya Khetan
Yeah, thank you, sir, for the opportunity. Sir, my first question was onto the Sunroof business. I believe, sir, there is a drop-in margins and even the top-line has reduced on quarter-on-quarter basis. I believe, sir, the volumes — so we were looking to ramp-up the volumes. So any particular reason like — so why the top-line has dipped?
Rishi Luharuka
Last quarter was the festive quarter — last quarter. So there is a very, very marginal number. So from a revenue perspective, actually, it is poised to grow now that we are going to add — we’re going to start the SOP for the new program of Kia. And on the margin, we’ve already mentioned now that there was a one-off in this quarter, but on a sustainable level, we are looking at anywhere between 12% to 14% of EBITDA.
Aditya Khetan
Okay. And sir, in terms of competition, so do you see in the longer run, so many players have now started to like expand into the business. Is there any like number which you can put so whether the growth could be slower or the ROCEs could come down in the longer run into the business?
Rishi Luharuka
And so it’s difficult to say the competition that you’re mentioning is still to pan-out and see what they are going to do. One of the competition is going to be up north where we are not there yet. We are in South and most likely in West. But to that extent, we are sort of competing with, which was already there in this space before in our came to India. Well, on the ROCE, if you look at the steady-state margin, you can sort of assume that we will be able to retain the steady-state ROCE as well.
Aditya Khetan
Okay. Sir, on to the — so the recent acquisition, sir, so ports are ramping-up the complete business, sir, what is the — so peak expected top-line and EBITDA from this business?
Rishi Luharuka
As of now, we are not able to share those information. This is going to be — as it’s an asset purchase, it’s going to be a plant of Gabriel once we have completed the customary conditions. But you can look at the past numbers and given that we have acquired the full business, some assumptions can be wrong.
Aditya Khetan
Got it. Sir, just one last question, sir, on to the base business of our suspensions, is it possible to share the volume growth on Y-o-Y and on quarter-on-quarter business and also the absolute value, if we can share it?
Atul Jaggi
Because the absolute value obviously is there segment-by-segment in the investor presentation. On the volume, we do not share that information given the sensitivity of the price and realization for sort of global.
Aditya Khetan
Okay. So sir, at least at what — so utilizations, so level we would be operating that plant as of now?
Atul Jaggi
Which plant? We don’t plant there or…
Aditya Khetan
Sir, the base business plant of suspensions.
Atul Jaggi
We have eight plants. So see, again, every segment has a different utilization, every plant has a different utilization, so it is very difficult to sort of put one number, one number to that 270 is the number that we keep. Again, the logic — being logic being very different for every segment because say if you take a two-wheeler segment, the festive demands are so high that on a — on a normal year level, we keep it at around 65% to 70% so that we are able to service the customers well there. But mostly on the assemblies we look at a two-shift kind of a demand working panic.
Aditya Khetan
Okay. Sir, just one last question, sir. Is there any scope for further increase in-market share in the two-wheeler and the passenger vehicle segment?
Atul Jaggi
Yeah, definitely, yes.
Aditya Khetan
Okay. So, sir, in the next, you can say so two to three years, any number sir so we are targeting?
Atul Jaggi
Yes, may or be with some acquisitions, we are seeing — seeing some growth. There are some more businesses that are there in the — in the pipeline. So the — say, in the case of two-wheeler, the share of business has been continuously improving. We see that trend continuing. Again, putting up a number also becomes little difficult because it also depends upon — because the penetration is very different with different customers. So it also sometimes depends upon how that customer sort of performed in the market. But yes, there is a healthy business pipeline and from even at a customer-to-customer level also, we are seeing a share of business improvement in most of the two-wheeler customers where we are and again key customers like Maruti in the case of passenger car segment.
Rishi Luharuka
Yeah. And Bajaj was, as we had disclosed in the past, Bajaj was one of our endeavors in terms of increasing the weekend with now two new programs, the and the Pulser, we are sort of now there with them deeply entranced. So that will certainly help our shareholders.
Atul Jaggi
And just to also share with you like with Yamaha recently, we have got — we have won a new scooter business, so that will again help us a little bit more on the Yamaha side. And so similarly, again, this continues. So there is a good healthy pipeline that is that is there. Got it. Already shared with you, Maruti, I think two launches are already planned this year.
Aditya Khetan
So got it, sir. Thank you, sir. That answers my question.
Operator
Thank you. The next question comes from the line of Mumkesh Mandlesha from Anand Rathi Ins Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir, for the opportunity and congratulations on the good growth in the recent acquisition, sir. Sir, continuing on the suspension new order wins, you have also mentioned some TVS order wins across the CNG, EV four-wheeler and the electric three-wheeler. Can you talk about this opportunity, sir?
Atul Jaggi
On — with customer you said?
Mumuksh Mandlesha
TVS motor with the CNG and the electric four-wheeler electric three-wheeler, which you — mentioned in the presentation.
Atul Jaggi
Yeah, yeah. So these are all sort of these are all the confirmed businesses under development. So I don’t know exactly what information you are looking at.
Mumuksh Mandlesha
Was very elaborate question for us. I mean just in terms of the size of the opportunity, if you can indicate what could be the opportunity size for this and the — when the business would start SOP of this order, sir.
Atul Jaggi
So the again,, you are aware that we are bound by the contract not to share the SOP and neither the volumes currently, but we can certainly share the orders with.
Mumuksh Mandlesha
Got it. Got it, sir. Sir, this quarter exports have seen a very good growth. Can you elaborate what has led to the growth and what would the outlook ahead for this?
Atul Jaggi
So in this quarter, we — there are a couple of reasons for that. We saw a better growth in the aftermarket orders and we also saw a much better pull from the Latin-America market so these are the two primary reasons for that.
Mumuksh Mandlesha
And going ahead, how do you see the growth pattern?
Atul Jaggi
So we see — we see reasonable number again exact numbers will be very difficult to share, but yes, we see a good demand continue.
Rishi Luharuka
So, we have been always saying that our endeavor is to achieve a 10% export of the total revenue. There have been unfortunate situations like the Renault and then the Russia issue. But we are getting more-and-more entrenched with DAF in terms of improving their export and looking at some other opportunities as well. And now with the asset purchase that we have done, some bit of export will happen from that acquisition as well.
Atul Jaggi
So there are two or three sort of opportunities that we are exploring in addition to what comes with the. So we are very hopeful of converting them into orders.
Mumuksh Mandlesha
Got it. And sir, M&A, exports part would be like in the PVN sir, which customer would be you?
Atul Jaggi
It is Renault. Renault is one customer and Elantis is another customer. So these are the two customers that are there.
Mumuksh Mandlesha
Got it, sir. Sir, on the Sunroof, sir, for the recent additions with and the Creta EV model, I mean, just can you indicate what kind of volumes could we see for this two models and any update you want to share in terms of new order wins or any new orders in stage which could executed in the coming quarters?
Atul Jaggi
Looks are you right with Creta EV as well as with the AY, there is uptick in the volumes, which we are noticing now. And with that, we will go into the 4th-quarter. In terms of order wins, we’ve spoken about BC4T and BC 4i last-time, the small export to Turkey as well. This quarter there has been no new wins in terms of programs. The RSQ discussion obviously is confidential and cannot be shared at this.
Mumuksh Mandlesha
And sir, the new capacity will be ready by end-of-the calendar year, right, sir.
Atul Jaggi
Okay. That is right. A little before that.
Mumuksh Mandlesha
Before that. Okay. Got it. And sir, on this M&A, you mentioned about the gas spring suspensions. Just want to understand what kind of a size of this opportunity market is there in India. And can you just elaborate on this product, sir?
Atul Jaggi
So the market size for this particular product in India is quite large and to be honest, even globally also, there is a huge demand for this particular product. There are not too many players who are there in this product. So in India like Suspa is one company which controls the maximum market-share but approximately it must be say maybe 19% plus there so the opportunity definitely is huge there. And as Rishi mentioned, with more-and-more SUVs, the product also gets upgraded, the opportunity size also improves because again the cost varies between sort of segment to segment in this. And in terms of we also see moving forward, we also see export opportunities in this product.
Mumuksh Mandlesha
Got it, sir. Sir, in the presentation, you mentioned about the e-bikes, a new traction there. Can you — I mean, update what’s the new opportunity there, sir?
Atul Jaggi
So see as you are aware that we have been working on this product for quite some time. We have — we have been able to — we have — basically, I think we are doing three things on that. One is on the product side, on the technology and the product side where we have a — we have a dedicated team of sort of working to develop more product range here. We have couple of experts from this industry whom we had hired. So they — that part is being done.
A second is on the customer side we are again working with multiple customers to sort of explore opportunities and now we are quite hopeful with some product range already available with us and some good customer connect, we are quite hopeful. Rather when I speak, the team is already in Europe right now, again, are working on the same with multiple customers. So we are quite hopeful of something materializing very soon in this particular segment. Again, the segment sort of offers good opportunity, both in terms of product, in terms of technology, in terms of the size of the market that is available. So we are quite optimistic about it.
Mumuksh Mandlesha
Got it, sir. Just lastly to…
Operator
If you can please join back the queue.
Mumuksh Mandlesha
Sure. Thank you.
Operator
Thank you. The next question comes from the line of Viraj from SIMPL. Please go-ahead.
Viraj Kacharia
Hi, thanks for the opportunity and congratulations on good set of numbers in such a challenging environment. Three to four specific questions. First is on the acquisition which we announced. So just to clarify, if we check which we would be having with, that would primarily be for which…
Atul Jaggi
Your voice is, we are not able to hear you at all.
Viraj Kacharia
Am I audible now?
Atul Jaggi
Yeah. Much better.
Viraj Kacharia
Yeah, hi. So just the first question is pre-tech license agreement, which we will be entering into with that will primarily cover the existing product range or it will also cover much more, say, other advanced set of products in suspension.
Atul Jaggi
We cover both current as well as add-ons.
Viraj Kacharia
And does that — would that have a no compete outside of India?
Atul Jaggi
There is a territory restriction and — but includes the current exports.
Viraj Kacharia
Second question is, in terms of the product which we will be adding to the portfolio in suspension, can you give some color in terms of the addressable opportunity it kind of adds to the existing suspension business?
Atul Jaggi
Currently small, Raj, and I’ll let here. But as of now, we are obviously not sharing what is the potential that we have internalized the numbers with, but the current opportunity in terms of the overall percentage to give real consolidated numbers is small.
Viraj Kacharia
No, so basically where I was coming from is if I look at the product and look at penetration, say, outside of India. Just to get a flavor, what kind of penetration these product categories we see in mature markets, just to get a flavor, not giving exact numbers or you know, just an indication.
Atul Jaggi
So Virat, these are these are primarily the which are there in terms of penetration or in terms of opportunity there the sort of the entire world is open for us. I think we have been discussing about exports from Gabriel for quite some time. So…
Rishi Luharuka
But I think the question is on the door balances.
Atul Jaggi
So on the — you’re talking of the gas?
Viraj Kacharia
Yeah, I’m just trying to understand the product which we added to the portfolio, what kind of penetration.
Atul Jaggi
To give you the content per vehicle, there are two for the rear boot. There is — there could be one for the front bonnet that’s the minimum that vehicle can have.
Viraj Kacharia
Okay just two more questions. One is if you look at the said asset which we are purchasing, they have had issues in terms of ramp-up and a quite a higher rejection rate. Do you see any possibility of higher provisions related to warranty or any product liability risk, which we would be facing once we take-off?
Atul Jaggi
Even it’s an asset purchase, we are not taking over any liabilities for the period which have belonged to entity. So there is no liability.
Viraj Kacharia
Okay. And last question is on the suspension. See, if you look at the contribution margins which we are earning right now, it’s an environment where small commodity prices are very winning and certain high-margin segments are relatively doing well for us, aftermarket two-wheeler. Still our contribution margins are still around 25%-ish compared to the past where it has even gone to, 27% 28%. So would it be right to say that margins what we are earning in the business which kind of growth we have seen over investment would still remain in that 8.5%, 9% given that in the past, we have been slightly more aggressive in some ways and that’s how on a portfolio basis, this is for the margins to be in that?
Atul Jaggi
Your voice was dropping, but if I have understood your question correctly, looking at my contribution margins, yes, obviously, the product mix plays a big role. And you have rightly said, we have been working on the mixes which are of a higher contribution. 75% is raw-material cost, as you are aware. So that has to be factored into when we are looking at an increase in the EBITDA margins to a double-digit. We are sort of short of 1.5% there at this point in time. So some part of that will have to come from contribution and some part of that will have to come from operating leverage. And we’ve already spoken about the 90 program. So under that all aspects of cost as well as revenue and income are sort of taken into consideration. So you can sort of assume a fair split between cost elements and the income elements.
Viraj Kacharia
Okay. Thank you very much and wish you good luck and the team.
Atul Jaggi
Thank you.
Operator
Thank you. The next question comes from the line of Chetan from PGIM Mutual Fund. Please go-ahead. Chetan, please unmute your line from your end and ask your question.
Chetan Gindodia
Hello.
Operator
Yes, Chetan, please go-ahead.
Chetan Gindodia
Yeah. Sir, firstly, congratulations on a great set of numbers. Firstly, sir, any new labels that you are added other than, say, Hyundai or Kia, which has been our base customers for the Sunroof business or any other OEMs we are in discussion with?
Atul Jaggi
Yeah, we are in discussions with other customers and others are Hyundai and Kia, can’t share the name, unfortunately, Jay, sir?
Chetan Gindodia
Okay, got it, sir. Sir, for the Sunroof business, can you share any kind of revenue targets or any guidance you have for this business, especially given that we are doubling our revenue capacity over here and you said that you already have the customers for the expanded capacity as well. So any guidance if you can share on that side?
Atul Jaggi
See, when we had gone live with this entity, we had mentioned that we are clearly looking at INR800 crore to INR1,000 crores in five years of time and that will be our — that is the continued endeavor.
Chetan Gindodia
Okay, great, sir. And sir, lastly, of that, we have already done two sort of acquisitions, firstly with the Sunroof business and now with the new plant that we have acquired. So is there more to come on the inorganic side going ahead as well? Are we — or is this more or less done for you now?
Atul Jaggi
No, I think as we mentioned earlier also think this is an ongoing journey. So there is no full stop to it. So as we speak, again, one or two discussions are going on, how they materialize, we will see in the next sort of due course of time, but our focus remains there. Our efforts remain.
Chetan Gindodia
Okay. Great, sir. Thank you and all the best.
Atul Jaggi
Thank you.
Operator
Thank you. The next question comes from the line of Abhishek Jain from Alf Accurate Advisors. Please go-ahead.
Abhishek Jain
Thanks for opportunity and congrats for a strong set of numbers, sir. Sir, in base business, we have seen a very impressive growth in the two-wheeler side, that is 19% versus the muted growth in the industry. Is it because of the higher-value from the electric two-wheeler side from the Ola and…
Atul Jaggi
Sorry, Abhishek, your voice is not clear, so…
Abhishek Jain
Are you able to hear me?
Atul Jaggi
Abhishek, you need to take the mic a little away from your mouth. It’s very muffled.
Abhishek Jain
Hello, sir. Yeah, it’s fine.
Atul Jaggi
Yeah, better.
Abhishek Jain
So in two-wheeler side, basically we have seen a 19% growth Y-on-Y and we outperformed industry growth. So is it because of higher revenue from EV side from Ola and TVS?
Atul Jaggi
Again it is not only from the EV side, it is also supported by the new launches that are there from TVS, better offtake from Bajaj and other customers and obviously the EV plays a role there.
Abhishek Jain
So had you mentioned that you are winning new business from the TVS and plus Bajaj also won the new business from the Yamaha and plus that there will be significant growth on the EV side where you have a market-share of around 87%. In this case, how do you see two-wheelers growth in FY ’26 if the industry growth would be around 5% to 6%?
Atul Jaggi
So again, we will not be able to share the sort of projected numbers that we have, industry growth. As you rightly said, we are also expecting around 6%, 7% industry growth in this, but the effort is to continue to be better than the — than the industry.
Abhishek Jain
Okay. And in a four-wheeler side, basically, there is a 14% growth there. Is it because of the higher revenue from the UB side where your market-share is at 29%?
Atul Jaggi
Yeah, you see the growth in the UV market anyway has been much better in this quarter. The overall growth has been, I think, 16% in case of UVs. So that impacts us also positively.
Abhishek Jain
And how much the difference in the content per vehicle in the four-wheeler UVs versus…
Atul Jaggi
It’s not a straight math here and unfortunately those numbers cannot be shared but to give you some help on that usually you can look at the proportion of the car cost also.
Abhishek Jain
Okay. And as you mentioned that you are going to double your capacity in the. So how much current capacity and capacity utilization?
Atul Jaggi
So we are currently at 180,000 roofs per year capacity. That’s the one-line capacity that currently with the new program we will be exhausting that capacity.
Abhishek Jain
Hello.
Atul Jaggi
Yeah, did you hear me?
Abhishek Jain
Yeah, yeah. Okay. And in a railway segment, what is your — what is your plan and what kind of the revenue projections for the medium-term, yeah.
Atul Jaggi
Well, again, projections we don’t share a small part of our top-line, but a very important part, given that the segment we want to be present as well as it’s — from a profitability perspective, it’s a good margin product. And we have the entire product range. And railway, as you know, it also depends upon how many coaches are finally built and it is a tender business. So it is never a single-source business in railways.
Abhishek Jain
So okay. And my last question on the side, how much the royalty payment you are doing at this point of time?
Atul Jaggi
Put the bodies taken together 5%.
Abhishek Jain
5%.
Atul Jaggi
Both the parties.
Abhishek Jain
Both parties. Okay. Thank you.
Operator
Thank you. The next question comes from the line of Jitu Panjabi from AM Capital Advisors. Please go-ahead.
Jeetu Panjabi
Yeah. Hi, Mr. Jaggy, thanks for all answering all the questions. So I have one — just one big question, right? You’ve taken over the mantle a few months ago, you’ve kind of seen this acquisition happen, you’re also kind of working through the Sundroof business. Can you articulate what’s your vision for the business? Where do you want to take it over the next two, three, four, five years? How do you plan to spend energy — like what will be the focus and the energy focus going into different segments? And is there anything different you intend to do from what Manoj was doing over the years?
Atul Jaggi
Why has always good question. So I think last — even in the last call also while it was my first day, the second day rather this question was asked. So see, as you know, I was away from Gabriel only for eight months there. So even the last strategic plan, so I was apart working with Mr. there. I completely believe I think the four pillars that we have been talking about in terms of the domestic dominance, in terms of focus on exports, our focus on M&A and the technology. I think they remain intact.
The vision is very, very clearly defined what I intend to do and what the effort has been till now in this new role and which will continue or rather I’ll say it will sort of I’ll try to bring more focus to that is bringing pace to these things. So like I think we have been talking about exports we all understand export is very important because it helps in the better mix. So how can we — how can we speed-up some acquisitions that we have been working on the export side, how can we do more in terms of bridging any technology gap that is there. I think has been the focus and will continue to remain the focus.
Jeetu Panjabi
Yeah. So okay. And anything different you intend to do from where you are on status quo as you think as you think through your vision for the business?
Atul Jaggi
So as I mentioned, I think two things. One, on the on the current four pillars that I said, more renewed focus, better resource allocation to expedite these things. Another area that definitely I would like to focus would be to also see that can we have better synergies and get into some different even in the suspension side, also in two different product range like we discussed some time back on the e-bikes. It presents it is a different segment, but it presents a good opportunity.
I think at some stage, we spoke about some of the industrial products also. Can we bring more focus to that so that we have a better mix both in terms of the customer in terms of the market, the segment profile. And yes, I think there will be more focus on how we can sort of get more product to M&A or to anything else.
Jeetu Panjabi
Thank you so much. Hope to meet you in-person at some point. Thank you.
Atul Jaggi
Looking-forward.
Operator
Thank you. The next question comes from the line of Alisha Mahawla from Capital. Please go-ahead.
Alisha Mahawla
Hi, sir. Good morning. So just a couple of clarifications. Earlier we had a target for revenues for Sunru for the current financial year to INR400 crores. Will we be able to meet that aspiration? And also you mentioned earlier in the call that there was a one-off of about INR22 million. If you could just maybe clarify what was this pertaining to?
Atul Jaggi
So first question, yes, we are — we will be able to meet our target for sure. Second question, these were one-time costs in terms of some price agreements with the customer.
Alisha Mahawla
Sorry, I couldn’t hear you clearly.
Atul Jaggi
These were price settlements with the customer as well as some other costs which are in nature.
Alisha Mahawla
Understood. Okay, sure. Sir, next question is margins on the business, while you did spell out that there are a couple of steps that we can still take and like it was asked earlier, the recent asset purchase that we have done. Will this mean that the double-digit margin that we’ve been working towards since the last multiple quarters will now probably be slightly more back-ended.
Atul Jaggi
One is that in terms of the total top-line it’s not very significant as compared to that’s one. Even if we do a weighted-average it should not be impacting significantly. The idea here is not to get not to find reason to delay the pursuit. We are still on the target and we’ll continue.
Alisha Mahawla
We still stand-by FY ’26 to hit double-digit margins on the — in the standalone business.
Atul Jaggi
FY ’26, you said two years. So yeah.
Alisha Mahawla
Understood. And lastly, net working capital or working capital cycle has been inching higher. It used to be 20 sub-20 days, now it’s 26 days. What is leading to this change and where-is this number now expected to settle?
Atul Jaggi
The 20 days was an aberration, I would safely assume it to be in the range of 21 to 22 days. You are very right that this quarter we have a little higher working capital. That’s largely owing to the holiday season in China to some amount of inventory buildup was required to maintain supply-chain on the imported inventory and some amount of increase in the finished goods. On a steady-state basis, we would always expect it to be in the range of 20 days.
Alisha Mahawla
20 days.
Atul Jaggi
Yeah, some part of that was planned.
Alisha Mahawla
Okay. And just one last question. The acquisition that we’ve done, you did mention that maybe at least they are operating at almost full capacity. So are we looking at doing any incremental capex there? Is there anything that we would really want to spell out currently?
Atul Jaggi
So I think what was mentioned was that in terms of the gas temper, we are working at almost the full capacity in terms of the other shock absorbers and the struts, we are available there. We will have to definitely gas damper presents — presents good opportunity. So we will have to look into the bottlenecks and then see what kind of capex is needed to enhance. But yes, the capacity enhancement would be needed in that particular segment or not on the other product.
Alisha Mahawla
Capacity utilization?
Atul Jaggi
Should be around 60% or maybe 55% to 60% should be the number.
Alisha Mahawla
Okay, great. Yeah. Thank you.
Operator
Thank you. The next question comes from the line of Joti Singh from Arihant Capital Markets. Please go-ahead.
Jyoti Singh
Yeah. Thank you for the opportunity. Sir, I just wanted to clarify on the e-bike side as you keep mentioning that it’s a very good demand. So we are basically seeing for the Europe or any other reason that we are targeting and what kind of opportunity we are seeing and margin contribution on that side, if you can?
Atul Jaggi
The market that we are looking at is Europe. We are not looking at any other market as of now. We are looking at Europe as a market. Europe is the biggest e-bike market in the world and so that is the market that we are looking at and this is where we are working with multiple customers right now.
Jyoti Singh
And what kind of margin we are seeing sir from this segment?
Atul Jaggi
Margin profile at this point in time cannot be shared. At this point in time the idea is to enter the market and then to scale it up.
Jyoti Singh
Thank, sir. And sir, another question on the Sunroof side, like earlier you mentioned you are in active discussion with the Indian OEM like M&M and other players. So still it is in the pipeline or any you know, active discussion on that.
Atul Jaggi
Active discussions are going on with rather, I would say and but yes, as Rishi mentioned, there is no firm LOI as of now, but yes, technical discussions are going on.
Jyoti Singh
Okay. Thank you so much.
Operator
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. for his closing comments.
Atul Jaggi
Yeah. So I take this opportunity to thank everyone joining the call. I hope we have been able to address all the queries. For any further information, please get-in touch with us or SGA, our IR advisors. Thank you so much for joining the call again. Thank you.
Rishi Luharuka
Thank you.
Operator
Thank you. Ladies and gentlemen, gentlemen, welcome conference of India Limited thank you for joining us. You may now disconnect your lines.