Kaynes Technology India Ltd (NSE: KAYNES) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Ramesh Kannan — Managing Director
Jairam P Sampath — Whole Time Director & Chief Financial Officer
Analysts:
Unidentified Participant
Nikhil Kandoi — Analyst
Nitin Arora — Analyst
Ankur Shah — Analyst
Sonali Salgaonkar — Analyst
Manish Ostwal — Analyst
Vipraw Srivastava — Analyst
Nikhil Kale — Analyst
Aditya Bhartia — Analyst
Siddhartha Bera — Analyst
Praveen Sahay — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Kainese Technology India Limited Q1FY26 earnings conference call hosted by Access Capital Limited. 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 the conference call, please signal an operator by pressing straddle zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Nikhil Kandoi. Thank you. And over to you sir.
Nikhil Kandoi — Analyst
Thank you, Anushta. Good morning everyone. On behalf of Access Capital, I would like to welcome you all to the Q1FY26 earnings phone call of Cahoons Technology India Limited. We have with us the management today being represented by Mr. Savita Ramesh, Chairperson of the Board Mr. Ramesh Kannan, Managing Director. Mr. Jayaram Sampath, Full Time Director and Chief Financial Officer Mr. Rajesh Sharma, Chief Executive Officer. Now I’ll hand over the floor to the management for their opening rems post which we’ll open the floor for Q and A. Thank you. And over to you sir.
Ramesh Kannan — Managing Director
I am Ramesh Kannan, Managing Director, Keynes Technology India Limited. Good morning everyone. On behalf of Gains Technology team, I would like to welcome everyone to the Earnings call for Quarter 1 FY26. I have along with me Mrs. Savita Ramesh, Chairperson of our Board Mr. Jayaram Sambad, Old time Director and CFO Mr. Rajesh Sharma, CEO Mr. Sumit Verma, Investor Relationship and Musg ir our Investor Relationship partners. Let me now walk you through our performance for Q1 of FY26. Our total revenue stood at 6735 million reflecting an year on year growth of 34%. Operational EBITDA for the quarter was 1130 million marking a strong growth of 69% compared to same period last year.
This translates into EBITDA margin expansion of 350 basis points over quarter one FY25. Similarly, our profit after tax came in at 746 million rupees representing a PAT margin of 11.1% which is an improvement of 100 basis points year on year. Our order book continues to show steady and healthy growth increasing from 50,386 million in Q1FY25 to 74,011 million in Q1FY26. Reaffirming the strength and visibility of our business pipeline. Our projected acceleration in revenue growth reinforces our trajectory as a resilient long term value creator and a consistently high performing company in the industry. With a solid foundation and clear strategic direction.
We are confident in our ability to sustain this performance and deliver predictable long term growth, positioning Keynes as a company that all our stakeholders can rely on well into the future. This year our performance has not only been strong in absolute terms, but is also setting industry benchmarks for the growth of EMS companies in India. Despite facing macroeconomics, headwinds and global uncertainties, Keynes has stood resilient consistently delivering on our strategic priorities. This underlines the strength of our diversified business model, deep customer relationships and relentless focus on execution. We continue to sustain profitable growth while driving efficiencies across operations.
Our growth momentum spans across all business verticals with particularly strong traction from new clients in the electric vehicle industries and aerospace sector, industrial sector and rail sector. This underscores our vision to build a future ready, robust and profitable business portfolio. We are also witnessing a strategic shift from being a pure EMS company to becoming an integrated ESDM company. This revolution positions us to serve high volume customers across sectors which enhanced ownership of product life cycle and deeper strategic engagements. Our international expansion strategy is yielding results. With acquisition of August Electronics in Canada, we have slightly scaled our EMS capabilities in North America, gaining a manufacturing footprint and access to large high margin customers.
This strengthens the Canada India value proposition as a reliable and strategic alternate to China based sourcing offering global clients both proximity and flexibility. On the infrastructure front, we are pleased to share that our OSAT facility in Samon is almost there with proto products for AOS and is on track to be fully operational for commercial production by December 25th. Similarly, the multi Layer HDI PCB plant in Chennai has also reached the final stages with building construction complete and operational readiness expected by January 2026. These projects are critical in advancing our vertical integration and enabling end to end solution within India.
The KAVAS development program is progressing well and is currently nearing pilot implementation. We are hopeful of receiving the necessary clearances shortly and beginning commercial operations soon thereafter. We continue to explore new geographies and capabilities through a well balanced approach of organic expansion and strategic acquisitions. Expanding into new regions is critical for any company’s global growth. It allows us to tap into diverse customer bases, reduce market concentration risk, assess local talents and supply chains, strengthen our ability to serve global clients more efficiently. This multi market presence also enhances resilience and position us to capitalize on emerging opportunities across different economies.
Before I conclude, I want to thank all our investors for their continued trust in our vision. We remain committed to delivering on your expectations, driving innovation and building a resilient future Ready Enterprise. With that now I hand over the call to Mr. Jayaram Sambath to walk you through our financial performance. Yaram, over to you. Thank you.
Jairam P Sampath — Whole Time Director & Chief Financial Officer
Thank you Rameshji. Good morning to all the participants here. My name is Yairam Sampath. I’m full time Director and CFO at Keynes Technology. Thank you all for joining today’s call as we start a new quarter. I’m extremely happy to share Keynes Technologies financial results for the first quarter of FY26 and we’ll present some of their highlights and then of course there’s a PPT available which has been uploaded and you could refer them for more information. For the first quarter FY26 our consolidated total revenues were at 6735 million representing a 34% year on year growth. The consolidated EBITDA for the Q1 FY26 was at 1030 million showing a 69% year on year increase.
EBITDA margin for Q1 FY26 stood at 16.8%. A consolidated PAT for the quarter was 746 million rupees up 47% year on year and PAT margin for the quarter stood at 11.1%. Consequently, our ROE and ROCE for the Q1 FY26 at 15.4 and 13.7 respectively. Our order book has grown substantially on a year on year basis. Last year came quarter end it was 50,386 million and Q1FY26 end the order book stood at 74,011 million networking capital. Days for Q1FY26 stood at about 132 days with inventory going up from 113 to 115. The increase in receivables contributed to increase in net working capital which was based on the profile of sales during the quarter.
We remain focused on further optimizing our working capital with a clear long term plan to collaborate closely with the suppliers and bring down inventory levels. As part of this effort we are also implementing strategic initiatives such as supplier managed inventory, collaborative forecasting, demand planning, production planning and scheduling and also we’re working with our customers to make sure that we are able to collect monies on time. These measures are expected to bring meaningful improvements to our capital efficiency by the end of FY26. As far as the new plant projects are concerned, OSAT plant in San and Gujarat and the PCB plant, the HBI Multi Layer PCB plant which may are in full swing of construction and as Ramesh explained to you, we’ll see some significant progress in terms of their ability to start operational and get customer approvals during this fiscal and we will start doing some billing for the OSAT business this year and PCB business will start commencement of operations from early next year A recent acquisition of Wagons Electronics Canada marks a significant step in our journey of inorganic growth.
This acquisition not only strengthens our presence in North America but also enables us to build synergies in capabilities and customer segments. Where Keynes had limited presence earlier, it opened doors to high margin customers and enhanced our ability to serve global clients, especially the North American clients, more comprehensively. For a fast growing company like Keynes, inorganic expansion is a strategic necessity and it allows us to accelerate our entry into new markets, diversify our portfolio and access critical technologies and talent. All of this increase the scope of our sales and also improve the profitability. We remain committed to identifying and executing such value accretive opportunities as we continue to evolve as a global player in the electronics sector, The Indian EMS industry is entering a new phase transitioning from being a pure play manufacturing service provider to an integrated DSTM company.
This evolution is vital for India to enhance its position in the global electronics value chain, enabling the country to move beyond cost competitiveness to become a hub of engineering and product innovation. Keyence is proud to be at the forefront of this transformation and we are leading this transformation in many areas. We are not just participating in industry shift, we are helping to lead it. We are building deep capabilities in embedded systems design, prototyping, high end electronics system integration and we are evolving, as I have indicated earlier, from an EMS provider to a strategic thought partner to our customers.
This allows us to co create the next position of production offer end to end solutions from concept to production. With this I complete my initial remarks and I would like to place on record my heartfelt thanks to Access Capital for hosting this earnings call. I would like to thank all the participants for making their valuable time for attending this call. Over to you Nikhil.
Nikhil Kandoi — Analyst
Anisha. Please open for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star in one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Mitin Arora from Axis Mutual Fund. Please proceed.
Nitin Arora
Hi sir, Good morning and thanks for taking my question. The first question is on the revenue side is we started on our 34% growth and I just wanted to gauge your confidence on meeting your guidance which is about 4,500 crores. How? Because it’s like achieving about 65% growth for the next nine months to nine months last year. How’s the progress panning out? How confident are you that eventually these orders will get executed? And when you give your guidance of. 4,500 crore it is purely organic or inorganic. What you have done is also a part of it. So that’s my first question and then I’ll come on the second question.
Jairam P Sampath
Thank you Nitiji for your question and also time for attending this call. So firstly this 4550 was the kind of number that we projected. It has three components in it. 4250 was the component which is our traditional quote unquote, traditional EMS business, ESGM business. And then about 100 crores we projected for our whole business because we probably start operations and consulate of operations by the last quarter. And about 175 crores are supposed to come in from our business acquisition in Canada. So from the perspective of the EMS business we hopefully will catch up by the end of second quarter.
We probably exceed another thousand crores of EMS business in the second quarter. And then of course we, I’m happy to tell you that we’ll also integrate the business from office electronics from our second quarter itself. And by all accounts the business of POSAT seems to be on schedule. So we maintain our what I call the guidance of 4,500 crores plus on a console basis. And we’ve also seen an upward movement in the EBITDA number as you know from first quarter itself. We probably are having a product profile which is leading us to a higher ebitda.
So you could expect a similar thing going forward for the entire year.
Nitin Arora
So what are you trying to say? The margins, what you have reported, about 17%, 16.8 or 17%. You think this mix will continue because. Your guidance to margin is 15 plus 50 basis points. So this inefficiency will continue. That’s what you’re trying to say over the next nine months?
Jairam P Sampath
Yes, yes. Yeah. So for the remaining nine months you can expect an EBITDA similar to the first quarter if not more. And we’ll update that sometime during the first half or maybe the third quarter when the actuals will be on the board. Yes.
Nitin Arora
So just last part on the cash flow. I understand companies growing very fast and also improving the profitability. But I think all investors asked to you even at the time of qit was when do we see the cash flows emerging in the P and L and the cash flows coming? So can you throw some light from which quarter or from rather which direction one should look that the company will start generating cash flow part as well, which is a big ask rate from all the investors to you. That’s my last question. Thank you.
Jairam P Sampath
Yes, fundamentally like I explained earlier too, so there were some receivables which we had acquired which were receivables but not due and we are trying to convert them into collections and I had taken time until the first half. So hopefully we will do that during the first half. So you can expect in FY26 positive OCF and significantly positive OCF not just barely crossing the threshold and the current small spike in the working capital basis in preparation for the second quarter. Like I said, second quarter is about 1,000 crores, significantly higher than our first quarter number.
And as we go forward the third quarter will also increase and so on. So this is a natural ramp up process. So in between the quarters in our, especially our industry, because of cyclicity, the first quarter is small, second quarter is a little larger, third quarter even larger and the fourth is the largest. So by the time we reach the end of the year, I think we would probably perform on the expectations in terms of both OCF and as far as the as well as the working capital base, let’s say coming sub 70. So that has been our objective so that on a steady basis if we can keep it there then we would have excellent ROCE and ROE too.
So we are on track from whatever we see operationally and we have taken some steps, etc. Yeah, there’s been a delay for a couple of months in implementing certain strategies. But then we need to balance out our effort on business development and also on operational improvement. So you can expect some good improvement maybe in the first half, one tranche of improvement and by the end of the year you will see significant improvement.
Nitin Arora
Thank you very much sir and team, all the best.
Jairam P Sampath
Thank you Matini.
operator
Thank you. The next question is from the line of Ankur from HDFC Life. Please proceed.
Ankur Shah
Hi, this is Ankur. Good morning and thanks for your time. Just following up on Nitin’s question on the cash flow. So while I understand on the inventory side the buildup is for Q2, could you also help us understand what’s happening with the debtors? Because there’s a big jump both YOY and on a Q on Q basis on the debtor side in terms of number of days and I Think you mentioned something about the change in mix driving that if I heard it right. So if you could please help us there.
Jairam P Sampath
Yeah. So fundamentally what happens is the better. As you know the April typically is a very muted quarter. So first quarter May always you’ll see us a bit of a spike, especially on a growth trajectory. We did have a spike in the working capital because a lot of billing should be. April is smaller months than May, May is smaller than June. June is a fantastic month. Then you see July is bigger than June. So all through the year, from April to the next March, every month on month there’s an increase. So obviously quarter end results will reflect that data’s position.
And I had explained earlier, as I had explained earlier, there was this other current assets which is basically essentially receivables that we had received as part of the acquisition. And I had taken time till the first quarter to get some resolution on that. So that you know the abnormal spike that is shown on debtors because of this particular reason is about 350 crores. So once that goes out of the reckoning then I think we are quite good in. In fact we have made a lot of improvements and efficiencies too. So like I was explaining to Nitinji, we can see an improvement in first half one branch and by end of the year significant OCS positive will be there.
And the good news is that we also probably by the end of the year we will improve the asset utilization too. So from the point of view of having to put in more money to support next year’s business etc. I think you will see less propensity towards that and the company will start improving efficiency also generate resources for any further investments.
Ramesh Kannan
In this area we have been working closely. My name is Ramesh Kannan. In this area we are very closely working closely working on the inventory side also. So a combination of inventory and receivables should help us to achieve what we want to do. Whatever engineering and homework we have done on the engineering side have started producing results.
Jairam P Sampath
And also just to add to Ramesh, the effort has been earlier to make sure that we get the cost profile right because that’s a long term thing and the other working capital related improvements can can be done on an ongoing basis. That’s what we have been focused on. So you’ve seen the result of one effort which is the cost reductions. So you will see the effort of effect of other results by like I said, first half end and then more fully during the year. Thanks Ankur.
Ankur Shah
Okay, second question on the PNL one was on the top line where clearly, you know, at 34% growth is much lower than what typically we guided to, especially on the automobile segment where I think the growth is now down to more like 24, 25% for the quarter. So one, if you could help us understand why this slowed and guided growth. Were there any customer specific issues? Just trying to understand when you are saying full year it will pick up any reason for Q1 being soft and also what is driving this big jump in margins on a yu y basis? Yeah, okay, thanks.
Jairam P Sampath
Yes, so our assessment is of course there. I mean I’m sure you get numbers from other peer companies and other automotive sector companies and you know the reality of the automotive sector too. But ours is a diversified portfolio. So one particular sector dimming does not dim our total. It takes about a quarter to kind of readjust our execution direction. And so that’s why we are pretty confident with the order book coming in etc. And also automotive also we see now some good traction. I think some destocking has happened in the pipeline perhaps I’m just guessing here and I think we will surely be back on track with a good, let’s say better growth than what you have seen in first quarter.
The good news there is that the margin expansion has been across all sectors. It has not just been driven by one or the other, not just industrial, across all sectors evenly. We have seen at least 200 basis point improvement in gross margin level and that is what helps us to kind of post these numbers. And that’s why we are pretty confident based on the order book profile that we have with us, we’re pretty confident that this margin expansion is here to stay for at least medium term until some significant changes happen in our portfolio. As you know, second, third and fourth quarter we start executing some more of aerospace and some railway products and so on.
And so that will also probably be a more healthier growth of our profitability, etc. If this answers the question, we can move to the next question.
operator
Yes sir. Actually the participant is out of the queue. We’ll proceed with the next participant. The next participant is Sonali Sargavkar from Jefferies, India. Please present. Proceed.
Sonali Salgaonkar
So thank you for the opportunity and congratulations on a great margin again this quarter. So my first question would be an update on OSAT in terms of, you know, how much CAPEX has been utilized. When will you. When are we sort of targeting commencement of the operations at what utilizations? Probably anything you would like to share with in case of customers and also what kind of sales you expect in FY27 28.
Jairam P Sampath
Thank you Sonaliji for your time and nice question. So we already have explained to you that we have two major clients. One is an American client, I think most of you know who they are, Kos. And the other is our own Indian client who has acquired a Japanese business. And we have the third client which has been lined up now and it’s a German client. And so from the perspective of business, I think we now have a good, let’s say mix of businesses from three different countries. And so this is pretty much better than what we had expected.
The construction is well on its way and by the, by the first week of August at least the first building will be ready along with the design office and so on. And by let’s say September or so we’ll have operational the let’s say phase 0.09 if you will. We’ll start shipping commercial as we have promised in the fourth quarter. But maybe it will happen sooner than that. So as far as OFAT is concerned now we have three good major clients and these are clients which any company would be proud to have in their portfolio. And of course we do have MoUs signed with another four clients.
So by end of FY27 or so, when we do bulk of the, let’s say almost 50% plus of total capex of 3400 will be consumed by FY27. We probably have those clients also on board and some of those clients with whom we are working also very well rated, especially in silicon, photonics and so on and so forth. They are unlisted companies but they have got a very good, let’s say investments into those companies. They have large number of clients. So on the advanced packaging side also we are having excellent traction and so it’s going the way we anticipated.
And the problem is a little better because now we have three good clients, at least in the first phase. See, half of the capex gets implemented by end of FY27. We’d have excellent capacity utilization. And since these clients are all global clients and they are all leaders in their area, we also expect the yields to be good because clients have committed to help us to set the process for their respective products. So it’s a kind of a technology transfer and business transfer activity.
Sonali Salgaonkar
Understood. So just confirming one thing right now as a company in our core EMS business, we are hardly exporting anything, probably 10% of our overall sales. But are we aiming to majorly export the OSAT output or will it be Used equally for domestic import substitution and for exports as well.
Jairam P Sampath
Yeah, so finally it will get targeted as an import substitution. But being a semiconductor, it goes into semiconductor supply chain which is outside of India typically. And as you know, this is also semiconductors are generally outside the purview of most of these tariffs etc. Because of cross dependence. There are 72 countries which have to work together to make a semiconductor work. So whether it’s us, whether it’s China, everybody is careful about not putting semiconductors under the purview of these things. So from that perspective we think that it will increase technically the exports, but all the consumption will be bulk of it will be driven by India because India is going to become a large consumer, electric vehicles, industrial production and so on, you know.
So going forward I think you can see a huge amount of indigenously produced chips being consumed in India.
Sonali Salgaonkar
Okay, so the. So initially you are going to export it, but ultimately that product will again be probably after some add ons imported in India. Is that a fair understanding?
Jairam P Sampath
Yeah, either with add ons or even it may be supplied just as a chip to Indian manufacturers.
Sonali Salgaonkar
Got it sir. Very clear sir. And my second question is again on your guidance. Just wanted to confirm what you said to the earlier participants. Query. You are as of now retaining your FY26 guidance, right. On the sales and margins because you are expecting to catch up in the coming quarters. Okay, so in terms of the working capital days, are we targeting to reduce them at about hundred odd days by the end of the year or do you think it will be slightly elevated given the first quarter was about at 132 days?
Jairam P Sampath
No, it will be lower than that. Actually effectively speaking it’s already lower than that. It’s just that there was an extra item which was due to our acquisition of one company subsidiary. So that amounted to about 350 crores. And we are finding some solutions, financial solutions for it, financing solutions for it. So which we think that we can probably complete it by the first half. Once we do that we if that portion of the receivable with 350 crores removed, then we are already around somewhere around 70 days on an average in that working capital. So we think that.
And also Ramesh explained that we are working with suppliers also so that we can ask them to keep inventory locally and then so that the burden on us to fund the inventory at least bulk of inventory till it gets balanced out etc will be lower. So you can expect even better than 100 days, et cetera, obviously by end of the year. If this extraordinary item of 350 crores is dealt with, we probably around 70 days and lower.
Sonali Salgaonkar
Got it. So very clear. And just one last question from my side on the order book. So. Order book.
operator
Ms. Sonali, I would expect you to go back.
Jairam P Sampath
Yeah, we can go ahead. It’s a short question. You can go ahead Sonaliji.
Sonali Salgaonkar
Sir, order book. Thank you sir for accommodating this on the order book. Year on year growth has been definitely very strong. But QoQ, we have seen about just 12% order book growth. Is that because of the high base catching up or do you think that sequentially as well order book will start accelerating from the coming quarters? That’s it. From my side.
Jairam P Sampath
Yeah, yeah. No, no, actually even earlier if you see the monthly order inflow, sometimes it comes down, sometimes it goes up. It is more like timing of the order placement rather than any trend. But if you see broadly if you take a moving average of three months or something, you’ll always see a significant increase. So opening at 7,400 is not a bad thing because now bulk of the orders in the other sectors are also coming in. So our assessment is that this is a strong order book. It’s still growing.
Sonali Salgaonkar
Sure sir, Perfect. Thank you so much and all the best to the team.
Jairam P Sampath
Thank you Hanali.
operator
Thank you. Before we proceed with the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. The next question is from the line of Manish Oswal from Minimal Bound Securities Private Limited. Please proceed.
Manish Ostwal
Thank you for the opportunity and good set of numbers. Given the macroeconomic condition globally and locally. My question on the recently raised capital. So can you talk about the in terms of area of future investment in terms of category organic or inorganic, where we see the investments?
Jairam P Sampath
Yeah. So as of course the objects state all the possibilities in terms of investments that we can do, including debt reduction. There are some things like inorganic, etc. So we have taken omnibus kind of, let’s say definition for our investments. But broadly we would like to go more and more into the area of inorganic acquisitions. They are on three fronts. One is in the geography front and then second is of course we want to strengthen our design portfolio. We have done some small, small investments. Like we have talked about it earlier also we always do a small investment first as a test and then we probably add more to it.
It’s more like a nibble, a small morsel and then meal. So that we have done in geography expansion. So you can see some significant acquisition in perhaps North America geography going forward. Europe is a fundamental talent for design. So we are going to strengthen our design play, especially ODM play and places like railway, industrial, etc. So next level of investments will go into that. And then of course the third one is to deepen the technology footprint by suitably adding better integration into some of the niche areas so that we can reduce cost in our total consolidated portfolio.
So all of these efforts, whatever money that we have raised is to add fresh initiatives so that we can increase the scope of our sales by adding geographies, we can increase the valuation by adding ODM and then we can reduce cost by doing backward integration.
Manish Ostwal
Yes sir, the second question on the I just confused with your comment on the working capital side earlier you said the sub 70 is the number we will achieve by F26 versus 87 reported in F25 and the current quarter is 132. So and then you said sub 100, it is better than the 100 days. So can you just clarify what is the actual aim to achieve the working capital side for 24 by the management?
Jairam P Sampath
Sir, our target is 70 days without any extraordinary items. So the extraordinary items as you have studied last year’s balance sheet also. So there’s a 350crores which we have got it from acquisition receivable, which is receivable but not due. So we are trying to find financing solutions for it and most probably in the first half we will find it out once the 350 crore goes away because it’s a definite item which has nothing to do with our regular operations. So once that goes away we are already consistently at about less than 70 days of net working capital.
And in order to keep it there we will also work with some of the supplier partners so that some of the inventory burdens, especially the balancing inventory burdens can be transferred. So our target is 70 days without this extraordinary item. Hopefully we’ll find a solution for it before the second half starts.
Manish Ostwal
Okay sir, thank you for taking my questions and all the best for delivering the cash flow outcome for this particular year. Thank you.
Jairam P Sampath
Thank. Thank you Maniji.
operator
Thank you. The next question is from the line of Viprav Srivastava from Philip Capital. Please proceed.
Vipraw Srivastava
Yeah, hi, I’m audible. Hello, I’m audible.
Jairam P Sampath
Yeah, you are audible.
Vipraw Srivastava
On the margin side. So if I heard correctly you were saying that you will be maintaining each level of gross margin in coming quarters. So is the understanding correct that you know you end up higher than your guidance which is Credit for In Q4 you are upgrading your margin guidance. Is understanding correct?
Jairam P Sampath
Yeah. So, okay, let me put it this way. We had guided for about 4,500 crores on a console basis including all our subsidiaries and so on. And we had said that 15.6% or so was the EBITDA expected. We are saying that looking at the first quarter, the EBITDA might exceed the guidance of 15.6%. Now how much exactly we exceed. You can probably make a better estimate by in first half yearly results as far as the numbers are concerned. We maintain the guidance that we have given. And you’ll see a significant acceleration in the second quarter.
Vipraw Srivastava
Got it, sir. And so secondly, if you can give some color, what’s the reason for this margin expansion? Why haven’t happened after Q4? What has changed any color on that? It will be very helpful, thank you. Yeah, yeah.
Jairam P Sampath
So the margin expansion is a direct consequence of two factors. One factor is the gross margin which has something to do with the material cost reduction visa vis the pricing. And the second one is what is called operating leverage. So you’ll see both of these in action. We have, like I said, there are of course more the business in portfolios where there is better margins. That is a significant contribution to increase in EBITDA number. But in addition to that we have seen increasing gross margins across the board. That means all the six verticals, the orders have anywhere between 50 to 100 basis point increase in the gross margin level.
And going forward from first quarter to second quarter, obviously the sales will keep going up. So. So we can see an effect of better operating leverage too. So that’s why we are confident that whatever estimate that we had made on the margin because of these two factors, one is gross margin across different sectors going up, certain sectors doing well, where margin is good, plus operating leverage. We think that we can have a significant increase in our replica number by the end of year two compared to the guidance.
Vipraw Srivastava
Sure, sir. Thank you. That’s all from my end. Thank you.
Jairam P Sampath
Thank you, sir.
operator
Thank you. The next question is from the line of Nikhil Kaye from Invesco. Please proceed.
Nikhil Kale
Yeah, thank you for taking a question. Just one clarification I wanted. Sir, can you just help me with the absolute receivable number that you have as of end of Q1, including the one time thing that you talked about the acquisition related receivable that you want.
Jairam P Sampath
Can you repeat that question?
Nikhil Kale
Just wanted your absolute receivable number in rupees million as of end of Q1, which is the age you have given. But if you can help me with the absolute number.
Jairam P Sampath
Yeah, just one second. Hold on. Yeah. So the other non current Items which is 390 odd crores plus 858 is our regular receivables which is based on our regular business. And it’s add higher because the profile of sales keeps going up. So April sales is lower than May is lower than June, June is lower than July, like that. So March is. So as we go up there’ll be some impact. But hopefully the non current portion, other non current assets portion will deal with it by end of first half. So that the 300 and whatever crores is there, that will get addressed.
In which case then the numbers significantly come down. And I think we are also working with some of the newer customers in terms of factoring without recourse. And they have their own financing companies. So that’s why we are confident that we can probably keep this under check. But of course as the business grows the absolute number keeps going up.
Nikhil Kale
Understood. But sir, even if you exclude that your receivable days would have gone up, right? Even if you exclude this.
Jairam P Sampath
June sales were a little higher. Sales are lower. So this happens always in the first quarter. For whatever reason I am not able to say price should happen. Logically it should not. But what happens is March is a big quarter, right? So most customers would take a little more than what they required in March. So that their ability to exceed their numbers is not impacted for lack of material. And then sometimes they will adjust the April number. And also on top of it April numbers also the industry related things also will play up. So all of this has played up.
But by the time we adjusted our delivery schedules etc, it was June. So hopefully now you will start seeing a routine. So June numbers, June billings will get paid up between July, August etc. So if you add one more month we could have probably been lower. But anyway that’s how the sales profile is. And that’s the reason why we see a little more than expected receivables. Which in our opinion is a good thing because it shows that there is traction in the marketplace.
Nikhil Kale
Okay, thanks. I’ll get back.
Jairam P Sampath
Thanks.
operator
Thank you. The next question is from the line of Aditya Bhatpia from Investec. Please proceed.
Aditya Bhartia
Hi, good morning sir. So my first question is on gross margins. Again if we look at standalone gross margins those have not moved up dramatically. On 450 crore rupees of revenues we have somewhat a similar gross margin of 28%. It is subsidies with roughly 220 crore rupees of revenues wherein we appear to be making almost 150 gross profit, which is almost 68% gross margin. So just trying to understand why is it that margin bump up has been so sharp on the subsidiary side and what is the change in product profile versus let’s say the preceding quarter which is kind of contributing to such a sharp jump? That’s my first question and maybe I can go ahead with my second question as well.
So we defer receivables of 350 crores that we are speaking about are not included in this. 858 crores. Right? This 858 crores is pure receivables which at the end of March used to be, I think somewhere around 570 crores. So there is a significant increase in base receivables also. And that’s something that I would like to understand what is really contributing to that.
Jairam P Sampath
Last question. So obviously I had explained that the June sales were pretty high and as we go forward every month that sale is higher than the previous month. That’s the nature of the business profile here. And also we, like I said, the other special item of receivables will somehow deal with it in first half and then going forward we are also working with some of the newer clients, especially in the aerospace and all the other more remunerative areas. Also we are working with them on without recourse to factoring and hopefully we will get that successfully done.
So what will happen is the additional accrual of sales that happens will not always increase the number of days of receivables. That’s one point. The second point is the margin that you talked about on standalone etc. So we have several entities sometimes participating in one particular company’s one particular product sales. So there are companies which are some portion of the year one company might have manufactured and then supplied to another company and so on. So after elimination, margins will fall where they do. But you should look at consolidated and let me explain to you one by one, in automotive the gross margins have gone up by about 2%.
And in electric vehicles we have a stable profile, maybe 1% or so increase. Industrial, of course there is a significant increase contributed by certain product profiles. I cannot pinpoint which product profile for obvious reasons. But otherwise industrial is one area where we are having good increase. And going forward you will see increases in railways, you will see in aerospace, especially when the quantum of sales increases. So that’s why we are confident that this number is not driven by one product but across the different Verticals, a series of products, not just one product. So within. So just to explain to you how this entire blended margin works, so the consolidated margin is a blend of all the subsidiary businesses, not really subsidiary legal entities, but businesses.
So there’ll be EMS margin going forward into future, there’ll be margins from semiconductor assembly and there’ll be margins from PC board. And most probably those margins will be higher than what we do in ems. But of course there are other things in those businesses, they are capital intensive, etc. So when you come to EMS business, EMS business is a blended margin of different verticals. You have automotive, you have industrial, you have electric vehicles, you have four other places like railway, electronics, medical, we have aerospace, defense and outer space. And then of course it IOT and others.
And within each of these there are different product categories that contribute to margins. So if you take automotive, there are switches and control systems, there are dashboards, there are lamps, etc. So similarly in industrial, there are power products, there are energy meters, there are various other things, instrumentation and so on and so forth. In electric vehicles there are two wheeler, four wheeler, etc. So just not to confuse you further on, but this is a blended margin. It’s not just that one item that we do has done well, so we’ve increased the margins. That’s it. It’s my.
Since I have, I am privy to all the information but I am unable to share it by customer. But I can tell you that across the board, across the board we have increasing margins. And that is if you ask me why it has happened now, because last two years, ever since we listed, I think one of the strategies was to work on cost reductions. So slowly those cost reduction efforts are also giving us some, let’s say, results. And also if you see the amount of ODM in our portfolio earlier, it will see the 10% or it’s 20%.
That means we do have more control on the bill of material on 10% additional 10% of our sales. So there also the margins are better. So the odm, that means our own design cost reduction with suppliers, different blended products within vertical and different blend of verticals within the total portfolio is contributing to the positive tailwind on the margins this year. And going forward, obviously the other two businesses will kick in. So you’ll have multi layer hbi, PC board, they come at a much higher margins and you’ll have semiconductor assemblies and so on and so forth.
And then of course add to it the margins of other geographies, like decidedly better margins are there in America, especially for technology products and lower volume products, et cetera. I cannot go deeper than this on this topic right now.
Aditya Bhartia
Sure, sir. And so if you could just also tell us the 10% stake that has been given to US Tech India Private Limited and 8.25% to AOS in the OSAT subsidiary. What exactly is the agreement like? Do we have some offtake arrangements with. With technology partners as well? Who all are our technology partners on the OSAT side? Anything on that would be very helpful. Thank you so much.
Jairam P Sampath
Yeah, so I think that the fundamentally the partnership is like a marriage, right. You need to cement it with some economic benefits going to each of the parties. Right. So in some cases, if you have noticed, when we acquired the business from this LNT and LNT and Fujitsu, we purchased their equipment so that we make sure that they have to come to us as far as that particular product category is concerned. So we invested some money similarly for the other. They are supplying us material, but material they are supplying us with critical equipment which is a bottleneck equipment from their point of view.
And we want to cement the relationship. So we offer them skin in the game. But in any case, we will limit the trophy skin in the game to less than 20%. The idea is that when we have more and more customers and more and more technology partners on your side, then there is also effort from their side to improve the business prospects. So that’s the broad thing. And then of course they do come in at a valuation which is low at this point in time, but not lower than what we have invested. And then going forward they also benefit and there is a lot of interest in them to move businesses to us and probably even profitable businesses because they stand to gain as their investment value also goes up in the company.
And so this is to give them an economic incentive to partner with us and also to give them a slightly better control in the relationship with us. So an untethered relationship generally also means that he can go to somebody else. But relationship which is bound by investments and bond by some other arrangements likely to be long term.
Aditya Bhartia
Understood, sir. And they’ll also be interested equity.
Jairam P Sampath
Sorry.
Nikhil Kandoi
Thank you. I just, I was just asking. They’ll also be intuiting equity because you mentioned that valuation would not be lower than what Keynes has invested one of.
Aditya Bhartia
Them equity ust global or something. And so, so that equity, whatever they choose is much lower than what eventually the valuation of this percentage will be. So our, our intention is to. For them to use technology manufacturing partner for bulk of their activity, especially the newer generation of activity.
Aditya Bhartia
Perfect. That’s understandable. Thank you so much.
Jairam P Sampath
Explain to you. I think since this question is very relevant. We invested into a company called Mix Technology. Obviously it’s a minority investment in some of the rounds we picked up some stakes. The company is worth a lot more today and they are very near to getting their photos out and so on. And they work with large companies like Nvidia, meta, google, etc. So now from that perspective. So that investment which we did about more than a year ago has now paid dividends in terms of strengthening our business portfolio for advanced strategy. Thank you.
Aditya Bhartia
Thanks.
operator
Thank you. The next question is from the line of Siddharth Bera from Numara. Please proceed.
Siddhartha Bera
Thanks for the opportunity sir. I had some queries on the revenue sub segment. For example, how is the ramp up in Smart Meter happening current quarterband going ahead over the next couple of years and second is on the EVs as well as on the aerospace and railways because we haven’t seen much there happening at least in the current quarter in aerospace and railway. So if you can just highlight some of these subsequent. How should we think about the ramp up for the year?
Jairam P Sampath
Hi Sid. So thank you for your question. So Smart Meter, like we said we are aiming at about 15% of the total market and every year we definitely minimum thousand to thousand two hundred crores of business we should probably end up doing in that area because there is, there is also a limitation to field implementation and so on and so forth, you know, so. And also we don’t want it to be a huge portion of our total revenues. So Smart Meter will now probably it is going at the speed and Smart Meter is not a cyclical thing.
Right. Once you grab the order every quarter we have a fixed amount of implementation, installation and go live and so on. So that goes by different this thing. So as far as electric vehicle is concerned we’ve got significantly we got one of the largest two wheeler manufacturers, the client now and the evaluation phase is completed last year and now we’re getting some very good orders in the two wheeler segment and already existing clients are there and even in four wheeler segment we are working with some of the upcoming model launches, etc. So this quarter we have worked a lot in terms of getting new customers on board.
So you will start seeing some traction. Obviously EV2 Wheeler is a stronger segment and at this point in time and four wheeler when it becomes standardized in the country we probably will also have reasonable traction there. As far as aerospace is concerned. Lots of new orders have come in in Fact for one large client of aerospace we have got referrals so we work with three divisions. One in the automotive components area, the other one will be in some one of their US based businesses. And third is of course aerospace. So this you can call the first quarter as a quarter where we have got a lot of clients on board in aerospace other than this large OEM client we got one more with client.
I’m unable to give you the name because I don’t have the consent but they are all $10 million initial orders and so on. So aerospace. In fact the biggest business growth has happened in aerospace this year even though we have not done billing because billing will start off probably second quarter, third quarter, fourth quarter. As far as railway is concerned with Kavaj project Amazji mentioned we are into pilot phase and hopefully maybe it takes a few months and after that we start getting routine orders. And our design is of course based on German technology. There are two German partners for this design and we have also acquired companies like Synsonic in the railway area.
And another recent acquisition was also announced. We invested about 40 crores of money into another company, she’s into railway ODM. So going forward we will start seeing more and more. Bismet as a percentage of of total. First quarter of course was predominated by automotive, industrial and EV segments. The second quarter aerospace will increase so that for the year you can see aerospace to be about maybe around 8 to 8% or so of the total. And the railway also should exceed about 10% 10 12% of the total sales by the end of the year. It also depends on how well the other segments do.
Siddhartha Bera
Answer on the capex. Sir, if you can highlight.
operator
I would go back to the queue as there are several participants waiting for their turn.
Jairam P Sampath
Yeah, so those who are unable to get clarification now you could, you could set up a call with us and we can definitely come back to you later.
operator
Thank you. The next question is from the line of Praveen Sahai from PL Capital. Please proceed.
Praveen Sahay
Thank you for opportunity. Sir, can you give so far how much of the capex in the OCET and the PCB we had done just like you had a given for the QIP money around 313 crore is already utilizing the the offset or 114 for the PCB. So how much of the total Capex you have done in these two registers?
Jairam P Sampath
Just one second. Yeah, for Osip the actual spend so far is about 313 crores. We have another 443 balance which we have raised in the QIP. Similarly for PC board, about 114 crores have been spent. And of course we have, we do have some left. This is a. This is a running account. Right. So every, every day there’ll be some thing or the other happening. The. The UIP which funded these was the previous uip CIP number one.
Praveen Sahay
Yeah, yeah, right sir, those things are there. I just wanted to know that there is a. No government funding so far you had received related to the osat. These are the only two by the money.
Jairam P Sampath
So what happens is the land and buildings, the government funding is not too much. It’s all planted machinery normally and so plant and machinery orders have been built. The moment they come, we’ll start getting government funding. It’s already a proven case. I think the other peer groups you refer to, the other awardees of this subsidies, they all started receiving it. And that is the central government subsidy is pari passu. That means when we raise the order at that point in time, the funding is done. And we said the state government one is of course based on commencement of production.
So that comes with a delay of about six months. So that process. Yeah, yeah. There’s no reason why.
Praveen Sahay
And one small question related to the Transmion.
operator
Hello?
Praveen Sahay
Okay.
Jairam P Sampath
Yeah, yeah.
Praveen Sahay
Okay, cool.
Jairam P Sampath
We could get into another part later. Please check with Sumit and then we can fix clarifying calls. It’s all there in the public domain, but anyway we can point those informations to you.
operator
All right, thank you. Ladies and gentlemen, due to time constraints, we take that as the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Jairam P Sampath
Thank you very much and thank you for attending this particular earnings call. And also I would like to place on record my thanks to Access Capital team. Also for enabling so many of key investors and analysts to attend this particular call. And if anybody has most of the information is already public. So if there are any clarifications you require on those, you could reach out to us and then we can set up a call or a meeting so that we can then explain to you what has happened. Okay, so thank you very much and all the very best to all of you.
operator
On behalf of Access Capital Ltd. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
Jairam P Sampath
Thank you. We log out. Bye bye.