Hind Rectifiers Ltd (NSE: HIRECT) Q1 2026 Earnings Call dated Jul. 30, 2025
Corporate Participants:
Unidentified Speaker
Suramya Nevatia — Chairman and Managing Director & Chief Executive Officer
A. K. Nemani — Chief Financial Officer
Analysts:
Unidentified Participant
Manish Goyal — Analyst
Prolin B. Nandu — Analyst
Naman Parmar — Analyst
Divyansh Gupta — Analyst
Akshay Kothari — Analyst
Yashovardhan Banka — Analyst
Anand Shreya — Analyst
Ankur Kumar — Analyst
Ankur Gulati — Analyst
Prem Luniya — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Hind Rectifiers Limited Q1 and FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call please select the signal and operator by pressing Star then zero on your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suramya Nivetya Chairman, Managing Director and CEO of Hind Rectifiers Ltd. Thank you. And over to you sir.
Suramya Nevatia — Chairman and Managing Director & Chief Executive Officer
Good morning everyone. Good morning everyone and thank you for joining us for the Q1FY26 earnings conference call of Hind Rectifiers Ltd. I am pleased to be joined by our CFO Mr. A.K. nemani and strategic Growth Advisors, our Investor Relations advisors. I would like to start with an overview on our company post which I will ask Mr. Nimani to share our financial performance. Hind Rectifiers was established in 1958 through a technical collaboration with Western Law’s Break and Signal of uk. We began as a manufacturer of semiconductors and over the decades we’ve transformed into a leading provider of power electronics and traction systems for Indian Railways and diverse industrial applications.
We operate two advanced manufacturing units both of which are in Nasik, One at Satkor and one at Sinhar along with dedicated R and D centers. The flagship at our Banduk campus in Mumbai and R and D Software center at Hyderabad. Our product portfolio is classified into three broad verticals. First is traction transformers. We are the market leaders in this division at Indian Railways with a market share of approximately 40 to 45%. These are essential components in electric locomotives. Second is our Power Electronics division which includes IGBT propulsion systems, hotel load converters, battery chargers, vehicle control units, driver display units and a variety of other power electronic equipments.
Third is our electromechanical systems which includes panels, traction motor and H VAC systems. Beyond railways, we also serve critical industrial applications through electrostatic precipitators for pollution control, industrial rectifiers and power supply solutions for sectors like cement, steel mining, thermal power and more. Our core customer remains Indian Railways which contributes around 90% of our revenue. We supply directly as well as to leading OEMs such as Alstom Siemens and BHEL. While the domestic market remains our primary focus, we are steadily building our international presence. Let me now take you through the key operational highlights of the quarter.
Our order book reached an all time high of more than10.22 crore as of June 30. This includes two major orders of 127 crores and 101 crores secured from Indian Railways for locomotive products. These wins are a strong vote of confidence in our technology and execution capabilities. During this quarter, we have successfully commissioned our indigenously developed propulsion system. This marks a major step forward in our product roadmap. This system has now been assigned to Western Railways and is ready for field trials. This puts us firmly on track for scale development or scale deployment in the months ahead.
Further, we receive a significant order from Indian Railways for the next generation of propulsion systems. These are designed specifically for passenger locomotives. While actively pursuing additional opportunities beyond the existing order book, the Board of Directors has approved the preferential issue of warrants amounting to 27.4 crores to the existing promoter group subject to the approval of the shareholders of the company. This will facilitate to propel growth across the key business segments. With strong tailwinds from government initiatives such as make in India’s railway modernization and electrification, we are well positioned to capture emerging opportunities and scale new heights in the power, electronics and rail transportation sectors.
Let me now invite our CFO Mr. AK Nimani to walk you through the financial performance.
A. K. Nemani — Chief Financial Officer
Thank you, Suranya. Let me present a summary of our finance results for Q1FY26. Revenue from operations grew 58.5% YoY to INR 214.8 cr. In Q1FY26. EBITDA stood at INR 24.2 crores reflecting a growth of 66.9% on OIYIs. EBITDA margin stood at 11.3% in Q1FY26. As high as 10.7% in Q1FY20 which r eflects an increase of 60bps. PAT stood at 12.8 crores reflecting a growth of 85.5% on a YoY basis, PAT margin stood at 5.9% compared to 5.1% in the same quarter last year which reflects an increase of 80bps. The strong performance was driven by continued focus on order book execution and scale benefits, cost optimization, operational and financial discipline. This is all from my side. I now open the floor for question answers.
Questions and Answers:
operator
Thank you. 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 participants are requested to use handsets while asking a question. The first question is on the line of Manish Goyal from Thinkwise wealth advisors. Please go ahead.
Manish Goyal
Yeah, very good morning. Thank you so much. I have a couple of questions, sir. First I’m just to understand better on the propulsion system. You alluded to two things. One is that the propulsion system is now approved for free trial. So while on other side we have said that we have received orders for advanced propulsion system. So is this order for development order or a trial order? And on other side have we completed the 50,000 kilometer trial runs so as to qualify to get the order. So that was one set of questions. If you can give us more perspective on the propagation system.
And second question is around the two orders what we have received from railways. So like what we see is that electromechanical segment has seen a jump in the order. So is it due to batch WAC system orders? We have received number one and number two propulsion system in cloud order inflow. What was the size of that? How many systems have we received and will it qualify under the electrical division? Sir, thank you. I have some more questions. I’ll come back.
Suramya Nevatia
So thank you Mr. Manish Goyal for your question. So firstly the propulsion system field trials are to begin shortly. We have not yet finished the 50,000km trial. There are certain procedures to be done before that. Which includes approval from the bridge department and the signaling department of which we have received approval of the bridge. And now we are going to receive approval signaling maybe today, tomorrow and then we can start the field trials. The other order that we have received for advanced propulsion systems, the one that is for passenger locomotives, we have received their development orders.
But actually this is something which is new even for Indian Railways. And we have received one order and hopefully we are targeting one more. But while we are at this stage where we are eligible for the field trials it means that your propulsion system has been designed and developed. So that is the key word that is being used by Indian Railways. And once you have that mark of approval that you are designed and developed, you are in position to get such kind of orders.
Manish Goyal
So sir, we’ll be able to participate. Sorry to interrupt, sir. So like with the recent vendors which are open for clw, we will be able to participate for the development orders?
Suramya Nevatia
Yes, of course we will be able to participate.
Manish Goyal
Right, sir. Okay.
Suramya Nevatia
And that brings question which was running the two orders received. The orders received are largely for transformers and that’s pretty much what they were. There were some smaller components as well but largely it was transformers.
Manish Goyal
Right sir. And sir, what is probably given to understand that there is one more company, a north based company which is also probably successfully develop the propulsion system. So do you see the competition intensity increasing and probably currently who are the major suppliers for the propulsion system? Like last year 1400 locomotives were there. So just want to get a perspective from you on the market competitiveness.
Suramya Nevatia
So the competitors in proportion system are all the big multinational companies like Siemens and ABB and Alstom. And apart from that there are big Indian companies like BHEL and Quantum Greaves and Metha from Hyderabad. So I think that’s fine. There’s enough space for all of us to coexist. And yes there are new entrants who are trying to build this technology but it’s not easy and we will wait and watch how the newer entrants perform in this field. But even if they do, there is we actually have a lot of competitive advantage over everybody else. And we are not really worried about getting orders for professional.
Manish Goyal
And sir in hotel load converters also like recently Cummins India announced their entry into it. And so again my similar question like competition increasing and probably the market size is relatively smaller. So how do you see that?
Suramya Nevatia
So again it’s the same answer. We have a competitive advantage because of our backward integration in house electronics own technology. There’s a lot of factors that gives us a very strong position and that will also come into effect once more guys try to enter this field.
Manish Goyal
Sure sir. And sir, beyond locomotives, any product developments for Metro rail or say like Vande, Bharat, Emus, Memus, Cochise and how is it progressing? When do we see the order inflow from beyond local markets?
Suramya Nevatia
So for other rail applications we are supplying to other OEMs such as Alstom and Siemens and BHEL who are making these different kinds of trains like one day Badas and Metros and all different kinds. So we are tier two suppliers there as of now, not tier one.
Manish Goyal
Okay sir, I have a few questions. I’ll come back in with you sir, thank you so much.
operator
Thank you. Before we take the next question we would like to remind the participants to press star and one to ask a question. The next question is on the line of Prolin B Nandu from Edelweiss Public Alternatives. Please go ahead.
Prolin B. Nandu
Yeah, thank you for giving me the opportunity. I have a similar question to Manichi’s question right on propulsion system. So see last time you mentioned that the trials are already going on, right? And you might be able to complete that 50,000 kilometer mark sometime in June. And that will help you to get, I mean to probably participate in some of the tenders which will come. Right? So, so now, I mean, is that trial underway? You mentioned that once you get an approval from let’s say bridge and signal authority only then you will go to trial.
So can you help me understand, you know, what is the status of this propulsion system that we have supplied to the locomotive part? And then I’ll probably have some questions on the passenger propulsion system as well. So where are we in terms of field trial and when are the orders due? And will we be be getting that approval at the same time completing 50,000km as well or it will start. I mean this field trial of 50,000km will start after we get the approval.
Suramya Nevatia
Sure. So let me clarify basically what has happened. Our propulsion system was commissioned in Eastern Railway. Sorry, in Eastern India in one of their vision. And then we were, we started the field trials. But then the Indian Railways decided to move our locomotive to Western Railway at I think Valsad Shed. That’s where the commissioning is going on. So because of this we had to wait and there was a delay since the locomotive had to come all the way from East India to West. And again we had to start the process of the approvals of these bridge and signaling and stuff like that.
And we now expect to restart our field trials where we need 50,000 kilometers to be done. And hopefully we should be able to start this in next two, three days. And this 50,000 kilometers should take maybe two months to three months time to finish.
Prolin B. Nandu
Okay, but the orders would be coming before that, right? So this year in terms of propulsion system.
Suramya Nevatia
Orders are coming because we already have designed and developed the product and we have already supplied the product. Now it is not commissioned. But that is not in our control at the moment because it is already supplied to Indian Railways. Unfortunately it took them time to allocate the local that was suitable for this propulsion at that time. But as far as Indian Railways is concerned, we have designed it, we have developed it and we have supplied it. So yes, I think development quantities is not. Is not a problem.
Prolin B. Nandu
So the. So you will actually.
Suramya Nevatia
We already have orders actually.
Prolin B. Nandu
Oh, you have orders already. But this is before the development, right? Development would not be like a installation, right? It will still be trial orders, right? It won’t go live in any of the locomotives. Is that understanding correct in terms of development order?
Suramya Nevatia
No, no, no, that’s incorrect. Development order basically means that you are restricted to 20% of the tender quantity. Because you are not an approved source, you are a development source. But that does not mean that your products don’t run full scale in the field. So that is not a roadblock for us. In fact, if you go to speed, we are the strongest, sorry, we are the strongest player in the development category. In fact, I doubt there is anybody else. And we can target 10% or even more of the total tender quantity. So at this point it is sort of an advantage for us to be in development.
Because while there are maybe five guys of six guys in approved source, there’s just maybe one or two in development.
Prolin B. Nandu
Okay, so when you say 10%, we are talking about around 1400 locomotives. And the cost of a propulsion system will be anywhere between 15 to 20% of the overall cost, right? So you are probably targeting 10% of that 15 to 20%. Am I correct? In the target market for you that you are targeting.
Suramya Nevatia
I’m sorry, I didn’t understand the 15 to 20%. But what does that mean?
Prolin B. Nandu
So I’m saying that there are around 1500 locomotives, right? So you will be targeting 10% of that, right? 150 or propulsion system is the target that should be work for the upcoming tenders. Am I correct?
Suramya Nevatia
Right. That’s what you’ll be aiming for.
Prolin B. Nandu
Okay, understood. And now on the proprietary system for passenger vehicle, passenger locomotive and sorry, passenger trains. So in there what is the. Is the approval process same and how big can be the market there? Right, because the market for locomotive is let’s say 1400, 1500 annually. How big can be the market for the propulsion system that you are developing for passenger trains?
Suramya Nevatia
So the total locomotive market size is about 1500 locomotives of which maybe 300 to 400 are for passengers. So presently they already have a propulsion system which is the one that we make the regular propulsion system which is being used in passenger locos. Now this is an advanced propulsion system where they are doing a lot of changes, merging multiple technologies. And this new propulsion system is going to benefit Indian Railways also in power saving efficiency and I mean whatever it’s helping them with. And since it’s new, it’s sort of a level playing field and they want to try this product very quickly.
So we expect very quick and expedited approvals for this. So since there is development, a new development for railways, they want to try it, experiment and if it works then they will use this for all passenger locals going forward.
Prolin B. Nandu
Okay, so then 300 to 400 is the size, right? In terms of propulsion Systems that we are aiming to target. I mean the market for this new. Development that we are doing, right?
Suramya Nevatia
Yes, but only for passenger locals. And this same advanced propulsion can be used for different types of trains.
Prolin B. Nandu
Okay. And so just one last question on propulsion system. Right. So are we doing anything for this one day Bharat as well? Is this the latest one also targeted at that those opportunities?
Suramya Nevatia
No. So as I mentioned earlier, we are a Tier 2 supplier to Vande Bharat type trains. And we are giving other components to OEMs who are doing Vande Bharat.
Prolin B. Nandu
And do we want to become tier one there is that something which is there in the pipeline in terms of R and D. Right. Just like we did it in the other parts where we used to already supply some of these equipments that go into propulsion system to Alstom and other companies. Do we also want to become tier one and is that something that we are aiming for for some of the other emus and one day by the train?
Suramya Nevatia
Yes, definitely.
Prolin B. Nandu
Okay. Okay, I’ll come back in the queue. Thank you so much for this.
operator
Thank you. The next question is from the line of Naman from Nivesha. Please go ahead.
Naman Parmar
Yeah. Good morning sir. Thank you so much for the opportunity. So firstly I wanted to understand currently what is the capacity we used to have and what is the revenue potential from the current facility you can do.
Suramya Nevatia
So we are not bound by any capacity constraints at the moment. Since these are not very machined products we can scale up and scale down capacity as per product requirement as long as it is within reasonable limits. So I don’t see any challenge for capacity at the moment. We will be able to fulfill our orders for next couple of years.
Naman Parmar
Means it’s fair to say that you can do around thousand to twelve hundred crore of revenue from the current capacity and new capex you are living. I think by next one year you are already investing. I think 40, 50 crore.
Suramya Nevatia
That is something else. That’s not for existing products. That’s a new product range. But yes, I mean going to 1200, 1500. See I can’t put a number because it also depends on the product mix. But I don’t see any challenge for capacity for the foreseeable future.
Naman Parmar
Okay, yeah, understood. Secondly, on the industry side only. So as you mentioned that propulsion system you will be targeting around 150 propulsion system. Right. But on the one day Bharat, on the one day Bharat side, how big would be the industry size? Like I think 200 train government target is there to launch every year. So how big the Industry would be on their that side.
Suramya Nevatia
I mean I think you just said it’s 200 Vandevara trains. So pretty much that is the industry size for Vandevarat.
Naman Parmar
No, but I think in the Vandabad there is a motor coaches also. Right? If there is a 16 course train then eight coaches are majorly motor course. So the requirement for the equipment increases. So the opportunity size for increases from the regular trains to in the Vandevarat train.
Suramya Nevatia
Not the opportunity increases not in terms of quantum but it increases in terms of value. And the number of competitors are very, very less. So yeah, I mean it is, it is. And that’s where the future is. I mean Indian Railways is going to build more and more Vande Bharat type trains and different type of trains that going forward. So it’s going to grow. Right now it’s just starting.
Naman Parmar
Okay, understood. And lastly on the total opportunity size on the locomotive. So if we say that the one locomotive cost around 8 to 10 crore. So how much percentage of the cost w e will be able to cater means 20%, 30%. How much total cost will be taken?
Suramya Nevatia
About 50% or so.
Naman Parmar
Okay, 50%.
Suramya Nevatia
Okay. Yeah, that’s it.
Naman Parmar
Thank you so much.
operator
Thank you. Participants who wish to ask a question may press star N1 at this time. The next question is from the line of Divyansh Gupta from Latent PMS. Please go ahead.
Divyansh Gupta
Hi, I am actually on the 50,000 propulsion system that we have launched. I had a very basic question. If you can just give the various processes and also we developed a propulsion system. We gave it to Indian Railways. Now we are going to test and they are going to test again. So how does it move into the whole commercialization by Indian Railway? And you had mentioned that let’s say we launch these trials in a couple of days. Let’s say 1st of August also you said it will take 2 to 3 months for Indian Railways to sort of approve the system.
Then how will we be able to participate in the September tenders that you had mentioned?
Suramya Nevatia
So once the field trial starts for 50,000km and once 50,000km are complete, they gave us a letter saying that your field, that the initial field trials are 51km are done but they keep continuing to run the loco. And then that’s how it gets commercialized in the field. Actually even when it’s going for 50,000 it is in the field because the trials in the yard and in the sheds and all have been completed. So this is actual commissioning and commercialization of the local. And as I answered earlier that irrespective of this 50,000 participating in tenders and targeting orders is not a challenge.
Divyansh Gupta
So the follow up question is let’s say the test goes and hopefully it is all positive for us. But doesn’t only tender actually say that you should be already approved for? Let’s say basically 50,000 is still yet to be completed. Right. So the question is that if we are not.
Suramya Nevatia
No, we are not targeting approved quantities any which ways. We are only targeting development.
Divyansh Gupta
Okay. So how does the development versus, let’s say, an approved deferred, the tenders…
Suramya Nevatia
Development sources get 15% to 20% of the tendered quantity.
Divyansh Gupta
Basically 20% becomes a market.
Suramya Nevatia
Yeah.
Divyansh Gupta
And once we have let’s say approved once the approval comes and we can. Target the whole hundred percent. But then we’ll also be competing with these customers that we also supply to.
Suramya Nevatia
Yes, but that’s fine. But getting that approval to go into approved category, that’s the long process that you have to complete the full field trials where Indian Railways have separate routes for separate products. Which is why the barrier to entry is quite high. Even in the products that we do now, it’s not very easy for new entrants to come in.
Divyansh Gupta
I wasn’t asking for the new entrants. I just think let’s say Siemens and abb, Bombardier and all of these guys at whom we currently supply as a 2 to Indian Railways. We can only let it target their PI. Only when we are approved. Till we are not approved, we target the 20% Commission of Development order. That is the. That is a fair understanding, right?
Suramya Nevatia
Yes.
Divyansh Gupta
And for let’s say targeting the whole bunch, how much of further testing or time does it take?
Suramya Nevatia
It will take about a year’s time.
Divyansh Gupta
Got it. And does the testing need to be done by each of the railway zones or once you are approved by the Western zone, it is at par for all of those or basically does it become.
Suramya Nevatia
It doesn’t which zone it is. It is actually controlled by the central authority which is rdso. It’s just that the commissioning is happening at Western Railway. That’s all.
Divyansh Gupta
Got it. So once Western approved we can target all the market in one shot. There’s no reapproval by another.
Suramya Nevatia
Pool is from rdso, the centralized governing authority.
Divyansh Gupta
Got it? Yeah, that. That’s my question. Thank you.
Suramya Nevatia
Thank you.
operator
Thank you. The next question is from the line of Akshay from Envision Capital. Please go ahead. Mr. Akshay, are you there?
Akshay Kothari
Hello. Am I audible?
operator
Yes, sir.
Akshay Kothari
Yeah, just wanted to understand on the capacity bottlenecks in your sense in terms of bandwidth and in terms of utilization, what could be the bottleneck we are facing currently or. There is no bottleneck currently.
Suramya Nevatia
So the bottlenecks that we face are not related to capacity. The bottlenecks are related to components. We are not able to get enough components or the right quality or the right price. So it is actually the supply chain which is a problem for us because of the scale and the growth that we’re trying to achieve. Our vendors, or at least reliable vendors are not able to have that same growth. So that is the challenge that we are facing and because of which we are taking a lot of initiatives for backward integration to make sure that our growth is not affected by external or by other companies or our vendors internally.
There are no bottlenecks in terms of manufacturing or capacity or space.
Akshay Kothari
Okay, and what, what sort of margins. Margins can we make on the propulsion system side?
Suramya Nevatia
We don’t disclose margins product wise.
Akshay Kothari
Okay, now you did mention that propulsion systems have 4, 4 subcomponents. Traction converter, auxiliary vacant control driver, display unit. Now out of the traction converter is the most critical one. And is my understanding correct?
Suramya Nevatia
Yes, that’s true.
Akshay Kothari
Okay, and currently we do we supply traction converter to any of the OEMs or railways?
Suramya Nevatia
No, no, we don’t supply traction converter to anybody else. We supply auxiliary converters. I don’t think, I mean I’m not sure, but I don’t think railways will allow you to outsource traction converters from anybody because that is the main heart and soul of the entire locomotive that has to be yours.
Akshay Kothari
And is there some sort of seasonality in terms of tendering of these propulsion systems by railways or is it throughout the year?
Suramya Nevatia
No, it is. So the big tenders come out around this time and then throughout the year you get tenders from different zonal railways. You get tenders for somebody who’s not able to supply, so their quantum is retender. So the big tenders come out now in Q1 and Q2 and then small tenders keep coming out throughout the years.
Akshay Kothari
Yeah, that’s it. From my side. Thanks and all the best.
operator
Thank you. Ladies and gentlemen. In order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to three per participant. The next question is on the end of Yash Banka from Tiger Assets. Please go ahead.
Yashovardhan Banka
Hello sir. I just wanted to understand what sort of fixed investment are we looking at in the next couple of years?
Suramya Nevatia
You know, at present we are in this year we are targeting around 50cr the capex in this year.
Yashovardhan Banka
Okay.
Suramya Nevatia
This is mainly for our background integration which we have declared earlier also.
Yashovardhan Banka
Okay. And this is funded via debt or.
Suramya Nevatia
Yeah, partially by — y eah, I can say approximately 2/3 by debt and then 1/3 by has occur.
Yashovardhan Banka
Understood. Answer on the current order board. Thousand odd crores. What sort of is the execution time for the same?
A. K. Nemani
12 months.
Suramya Nevatia
12 month. It’s about 12 to 18 months.
Yashovardhan Banka
Right, got it. Sir, about just one last question about the propulsion system. So what is the average, I mean. Order size that we’re expecting and what. Is the market share that we’re targeting?
Suramya Nevatia
Initially we will target a much lower market share. Maybe 10% is what we are looking at. And I think propulsion system is on average sells for about 1.8 odd crore, something like that. 1.8 crore something maybe sometimes 1.7, sometimes 1.9 and yeah, so that’s. That’s what we’re looking at.
Yashovardhan Banka
All right, Got it. All the best.
Suramya Nevatia
Thank you.
operator
FThank you. The next question is from the line of Anand Shreya from AF Capital. Please go ahead. Yes sir, you are.
Anand Shreya
Okay, my first question is from the proportion system. So you mentioned that we will targeting 10% share. Is it only for the. Local passenger? Local which is around 300 to 400. So are we targeting some 30 to 40 locomotives? Is that the right understanding?
Suramya Nevatia
No, we are considering 10% of total standard quantity which would be between 1400 to 1600.
Anand Shreya
Okay. Okay. And like is the trial for happens for all kind of locomotives or do we like there are some specific locomotives like that and vac7 and all like the trial is for any specific plan. Do we have the, do we have to apply for the separate approval for each kind of locomotives or is it. A single approval for all?
Suramya Nevatia
No, you don’t apply, you don’t apply separately. It’s just one approval for all kinds of locomotives.
Anand Shreya
And do you see that the locomotive. Produced by year will increase over the next five years or will it be at these kind of levels? Do you see at 1.5 years.
Suramya Nevatia
It will be at sustained levels. We have the plan that railway board gives us and gives out to all the industry, to all the companies. I mean it’s pretty much 1500 to 1800 is what they’re targeting over the next four to five years.
Anand Shreya
Okay, my next question is from the traction transformer. So are the traction transformers approved for all kind of locomotives? Also EMU and memu. And what is the replacement cycle of this? Traction transformers.
Suramya Nevatia
So traction transformers. We are predominantly doing low cost but we do EMUs as well. Again EMUs is a Tier 2 supplier which we have supplied to multiple OEMs. Because again EMUs and train sets are all bought as kits. They’re not bought individually like the locomotives. So we are supplying it to the others. And your second question was regarding replacement? I think there is a rule for over 25 years. 25 to 30 years. 25 to 30 years you have to run the locomotive and you’re not allowed to scrap it before that.
Anand Shreya
And do you see the tax and transformer grow every year like at around 15% or do you think we’ll grow at 5 to 1%? But what kind of growth you expect. In the transaction transfer model year on year?
Suramya Nevatia
Our goal is basically to fulfill our requirement every year and we are targeting to do 60 transformers every month and we want to maintain that.
Anand Shreya
So do we expect growth in that segment or will be flattish over next 12 years?
Suramya Nevatia
I’m not sure. I’m not sure about the segment and how it will do. But all I know is that we want to secure our quantum. And again here also we are doing backward integration. So we will ensure that we get the quantities that we need irrespective of whether the industry is growing or staying the same.
Anand Shreya
Next question is from hotel.
operator
Sorry to interrupt sir, but I may request you to rejoin the question queue for follow up questions. Thank you. The next question is from the line of Ankur Gulati from Genuity Capital. Please go ahead. Ankur sir, are you there? The next question is from the line of Alpha Cap. Ankur Kumar from Alpha Capital. Please go ahead.
Ankur Kumar
Hello sir. Thank you for taking my question. Then my first question is on the order book execution. In earlier call you were saying it’s like 12 months of execution time. But in this current call you said 12 to 18 month execution. So is there any slowness from the Indian railway side or how are we thinking on that? Sir.
Suramya Nevatia
I’m saying 12 to 18 months because we have new orders, new products, they have a gestation period for development. So that takes 18 months. Like I just mentioned, the advanced propulsion system, that will not go within 12 months. That will take maybe some more time. We’re not sure. We have some new variants of existing product that all will take more time. So 12 months is your regular production, your regular product and but some of it goes up to 18.
Ankur Kumar
And so in terms of total order book, can you comment? How much is the regular product and how much is the new product which will take longer time.
Suramya Nevatia
So let’s say approximately, I think it would be a split, 80, 20 split or maybe 75, 25 split between regular products and new products.
Ankur Kumar
Got it sir. And sir, in terms of margin side earlier you were saying we can go to mid teen type of margins. So that will be coming this year. Can we expect some improvement this year or like when new products will start contributing from next year we can improve something. Expect some improvement.
Suramya Nevatia
See, we are improving every quarter and every year we are improving the margins. And I made that very clear earlier that we have to be patient. We can’t expect it immediately, but that’s the target and we’ll get there eventually. It will take some time but we’ll get there.
Ankur Kumar
Sure, sir. Thank you and all the best.
operator
Thank you. The next question is from the line of Ankur Gulati from Genuity Capital. Please go ahead.
Ankur Gulati
Thanks. Can you also touch upon. There was some discussion on hydrogen, green hydrogen tie ups. So any progress on that side?
Suramya Nevatia
We have already partnered with a Swiss company for green hydrogen. We are now working on a breakthrough of how to get into this business in India. So there is nothing concrete yet and it’s all at exploratory stage. So these things that we are doing, we are actually doing a lot of new things but not everything will pay out. But we are very bullish on hydrogen and whatever plans we have, whatever the forecasts are, all of these new initiatives are not part of that plan. If anything materializes, all that becomes additional bonus. So we continuously keep exploring newer things, but it’s not what the dependence is on.
Ankur Gulati
And any development on Coinage Studios and the Middle east power sector initiative or they are still on the pit road?
Suramya Nevatia
No, it’s all in progress. We will keep updating everyone as we reach some new milestones.
Ankur Gulati
Last thing, how’s the battery charger for high semi high speed trains shaping up?
Suramya Nevatia
You good? It’s good. It’s in the field, it’s running and.
Ankur Gulati
Any orders there on the. I mean are we.
Suramya Nevatia
Have orders? We do have orders, yeah. And that’s on track.
Ankur Gulati
All right. Okay. Thanks. All the best.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is from the nine of Nilabja Day. An individual investor. Please go ahead.
Unidentified Participant
Thanks for pretty good results and I am attending the call for the first time and I understood the company so I know you are in significant, significant reliance on the, on the payloads orders and everything and but yesterday we are listening to another companies who are pretty much obviously the MNC one and they supplies a lot of power equipment across the across domains. How you are de risking your reliance on railway? Because we know how power these orders 2/4 they may just stop anything. Are you doing anything on this on other sectors? Because in India across the sector power is moving whether it is majorly, obviously the equipment suppliers.
So can you just show some lights your how you are. Is there any strategy now to de risking the entire reliance on the railway sector?
Suramya Nevatia
Sure. So firstly, yes, we are continuously working to diversify two other domains and to other segments. We have already built certain products which we started pushing outside to other industries and we are now going to launch very specialized and specific products. In fact, I think those announcements will be made very soon, maybe within the next six to eight weeks about the new products that are being launched. So we are making efforts because we understand yes that it is risky to be dependent on just one industry. But on the other hand it is not a risk today because we already are aware of the plans that the Indian government has for Indian Railways.
There are a lot of things which are in pipeline. There are a lot of things which the railways or the government has made tremendous progress on. And I don’t think they can just cancel it or scrap it. At this moment looking at the visibility and the vision, they’ve just almost completed the entire electrification. You have to buy locomotives, you have to buy trains if you’ve done electrification. But nonetheless, yes, we always know it’s a risk. So we are working towards diversification.
Unidentified Participant
Thanks. Thanks a lot.
operator
Thank you. The next question is from the line of Agam from Agam Investments. Please go ahead.
Unidentified Participant
So how is the other pipeline looking like currently? So we are setting a problem for an order book. So down the line with this kind of an order book with no light on how the order book will fit for all our products and you can say in terms of three years are coming. So last year being, you know, 600 crs. So in terms of diversification and maybe quantitatively you can say that was the milestone over which.
Suramya Nevatia
Thanks for the question. I couldn’t clearly understand what it was. So I think you asked about order book.
Unidentified Participant
And currently being thousand crore. So end of the year will be at the same level or three years down the line. The second question for coming, let’s say we are at current 600 crore. So and you said you are planning to introduce new products and do diversification. So what kind of segments we continue and possibly.
Suramya Nevatia
Okay, so let’s take it step by step in pipeline. Yes. There are enough tables that are coming out Some products have big tenders coming out in August and September. We are hopeful of getting good quantities. They are our products. We are approved in a lot of them. So there is no challenge in the visibility of tenders or orders that we can expect to end the year. We are not sure where we will end it. It should be the same or better. So I think, yeah, we try to maintain these levels and looking at the future, of course we have very ambitious plans.
In fact, we’ve been saying that this year officially is the start of our journey of growth. Until now we’ve just been sort of struggling to turn things around and get our foundations built. And now I believe we have a very good strong foundation that we have built in terms of technology, manufacturing, all these things. And now we are just looking at scaling this our existing product portfolio and doing the diversification. Very tough to put numbers but all I can say is that, yes, it’s just looking upwards. That’s all that I’ll say on that.
Unidentified Participant
Last quarter you said 30% so this should be the 33 the next few years. I’m sorry, last quarter you said you’ll be growing this year for 20%. Yes. Yeah, so. So berries should we grow for next years in this range 25 to 30%?
Suramya Nevatia
Yeah, hopefully. Hopefully, yes.
Unidentified Participant
Okay, thanks a lot and wish you the best.
operator
Thank you. Thank you. The next question is from the line of Prem lunia from Astute Investment Management. Please go ahead.
Prem Luniya
Hello. Thank you for taking the question. Sir, just a few questions on what would be the realization difference between a new gen passenger loco propulsion system which we have developed now and we would be in the airport order. And also how much time will is this. This will also go through a complete cycle of approval and we can expect larger orders from this side.
Suramya Nevatia
It’s about I think realization value is I think 60 to 80 lakhs more than the existing propulsion development time or when it can go in the field. Could be anywhere between, let’s say 10 to 18 months. It all depends on how quickly we are able to because we already have the technology. Just depends how quickly we can deploy it and how quickly we can get the external tests and all these things done and we can look at some good quantities for this going forward from next year onwards.
Prem Luniya
And sir, are there any other competitors who have also developed a similar technology or are in the trial phase?
Suramya Nevatia
Yes, but there are much fewer.
Prem Luniya
Okay. And also sir, I wanted to understand your view on the exports which we are doing. Can you see this number growing significantly and what would be the specific Products which we would be catering to in exports.
Suramya Nevatia
So we are continuously looking at growing our exports. We have exported transformer to Germany and power electronics converter which will be exported to the US in August or I think August or September. And these are both for railways. And this had not been done before until now. Before that we were only exporting to Sri Lanka and Congo and you know, these smaller countries, if I can say. But we had never got an opportunity to export into Europe and US and that marks a big sort of entry into that geography for railways. So we are pursuing with them and we have more opportunities and more inquiries.
So let’s hope we can convert that. And on the industrial side.
operator
You can continue.
Suramya Nevatia
Sorry. I said on the industrial side it is the same as it was. About 1.52 million euros approximately is what we are doing. But we are building new products which will have more export potential and that will come into play. So before we have the products ready, we are trying to build our sales channel and sales pipeline globally.
Prem Luniya
So this would be a tier 2 level of supply like we used to do in India first.
Suramya Nevatia
I’m sorry, can you repeat?
Prem Luniya
So this would be in a way a tier 2 level supply chain for international business?
Suramya Nevatia
No, it is, it is direct to the customer. Yeah, it’s through the OEM and then Google then give it to the railway.
Prem Luniya
And also I wanted to understand like there are 1500 local order which comes out of every year. But I understand that there is a concentration between few months. Can you please specify how much is the concentration and when are these months and when we will be able to apply for all of those?
Suramya Nevatia
I don’t understand the question. Can you please repeat what the question is?
Prem Luniya
So out of the 1500 locals, locals which are ordered, there is a concentration of these professional orders in few months in the year. Right. So how much is the concentration every year? Would it be like 40, 50%? And when we will be able to cater and out of these the remaining quantity then we will be able to apply for the 20%. Right.
Suramya Nevatia
Look, can you explain what you mean by concentration?
Prem Luniya
So the Indian Railways comes out with the orders, right. So I guess in the few months between September and I guess you mentioned in the last call that there’s a concentration of orders and then there are significant the smaller orders which comes up every month of every few weeks.
Suramya Nevatia
Yeah.
Prem Luniya
So what would be this concentration?
Suramya Nevatia
So majority of the order or let’s say tenders come out in Q1 and Q2.
Prem Luniya
Right.
Suramya Nevatia
And then you have other tenders coming out throughout the Rest of the year. Okay.
Prem Luniya
So it would be around 50, 60% of concentration on these Q1 and Q2.
Suramya Nevatia
No, no, it will be like 90%, 95%.
Prem Luniya
Okay. So for the remaining 10% we will be able to apply for the orders which we are looking for because we are right now under trial.
Suramya Nevatia
Actually it’s cyclical. So what happens is based on the previous year’s pending deliveries, Railways comes out with tenders in Q1 and Q2. Let’s say if last year spending deliveries for traction transformers are quite high. So they will reduce the tender size in Q1 and Q2. And once the pending deliveries are fulfilled then they’ll come up with another tender in Q3 or in Q4 and then that could be of larger quantity. So it’s all very subjective based on how the suppliers are providing the products to them. But in general, if everybody is at the top of their game and able to supply on time, then yes, Q1.
Q2 is when the maximum tenders are are offloaded and then the smaller ones come. But realistically that does not happen. So you keep getting some big tenders even in Q3 and even in Q4.
Prem Luniya
Sure. And just a last question on the battery chargers which we supply to Zande Bharat. What would be the cost of this business and where do you see this growing in the next two, three years?
Suramya Nevatia
Valande Bharat trains need battery chargers and we have started supplying it through an OEM and we have orders for that as well. And it will continue to stay. I mean there is no shortage of requirements for battery chargers.
Prem Luniya
So how much would be our supply of equipment per onedebhad which is launched out of the 200 per Vandit. How much is RSF?
Suramya Nevatia
Presently it is just the battery charger. And now we are working for the H VAC systems and transformers.
Prem Luniya
Sure, sure. Thank you.
operator
Thank you. The next question is from the line of Rohit, an individual investor. Please go ahead.
Unidentified Participant
Hi sir. Am I audible? Hello.
operator
Yes sir, you are audible.
Unidentified Participant
So congratulations on a great set of numbers. Sir, in the last call you had given a conservative guidance of 30% growth. So considering Q1’s performance, would you like to revise this guidance for FY26?
Suramya Nevatia
No, I don’t believe we gave any guidance. We were asked a question and we said yes, we will do minimum 30% and we stick to the same.
operator
Okay. Okay. Thank you.
operator
Thank you. The next question is from the line of Manish Goyal from Think Wise Wealth Advisors llp. Please go ahead.
Manish Goyal
Yeah, thanks a lot for another opportunity. Just A couple of questions. So just to clarify that we are developing propulsion system for both good strength as well as passenger train separately and we have already got one trial order for passenger and meanwhile we are looking for ordering for the locomotive which is the traditional area. And also related question is that this advanced propulsion system is the one which you were earlier mentioning is the integrated propulsion system and like what additional products go into from traditional four items. That was the first question. Second question sir was on the backward integration.
We have done some capex last year and we are planning some more this year and promoters are also increasing funds. So like what are the plans in the integration, what are the products we are targeting and how much of outsourcing will be reduced? How much can it meet your internal requirements? Just a broad perspective sir. Thank you so much.
Suramya Nevatia
So regarding the differences between the propulsion systems, the new one which is a more advanced one is more technologically advanced. Firstly there is newer technology being used and there is an addition of different types of additional converters which are not part of the existing propulsion system. So just to clarify, the existing propulsion that we do that is used for goods and passenger loco both. Okay, so it’s not like it is not used for passenger, it is also used for passenger. Now railroad has come out with a new and advanced propulsion exclusively for passenger which is more high tech in nature with more additional converters involved.
So that’s the key difference. It does not mean that the one that we have now is not used for passenger. I wanted to make here. And secondly, regarding backward indignation, we cannot disclose the products at this stage. But as and when the products are ready and they’re being commercialized, we will make announcements and we will inform everybody. We don’t want our vendors to stop their support to us so we can’t make things public.
Manish Goyal
Sure sir. Thank you so much.
operator
Thank you. Ladies and gentlemen, due to time constraints, this would be our last question. I would now like to hand the conference over to Mr. Suramya Navettiya for closing comments.
Suramya Nevatia
So thank you everyone for your participation and for taking the time to join us on today’s call. Q1FY26 has set a solid foundation for the year. The consistent execution, strong traction in our indigenously developed propulsion system and encouraging momentum in newer verticals like our H Vac systems. Our increasing scale of delivery supported by backward integration and automation is steadily enhancing our responsiveness, product quality and delivery timelines. I would once again like to thank everyone for joining the call today. In case of any further queries, please reach out to our investor relations advisors, Strategic Growth Advisors.
Thank you.
operator
Thank you. On behalf of Hind Rectifiers Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. It.