Kirloskar Oil Engines Ltd (NSE: KIRLOSENG) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Gauri Kirloskar — Director
Sachin Kejriwal — Chief Financial Officer
Rahul Sahai — Chief Executive Officer
Analysts:
Amit Shah — Analyst
Jason Soans — Analyst
Teena Virmani — Analyst
Charanjit Singh — Analyst
Mihir Manohar — Analyst
Darshil Jhaveri — Analyst
Parikshit Kandpal — Analyst
Sagar Parekh — Analyst
Mohit Pandey — Analyst
Sourabh Arya — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Kirloskar Oil Engines Limited Q3 FY ’25 Earnings Conference Call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during this conference, please signal for an operator by pressing star followed by zero on your touchstone telephones.
I now hand the conference over to Mr Amit Shah from Antique Stock Broking Limited. Thank you, and over to you, sir.
Amit Shah — Analyst
Thank you, Fara. Good afternoon, everyone. On behalf of Antique Stock Broking Limited. I welcome you all to the 3Q FY ’25 post-earnings call of Kirloskar Oil Engines Limited. To discuss the results, we have senior management team of the company represented by Ms Gauri Kirloskar, Managing Director of the company; Mr Rahul Sahai, CEO of the company; and Mr Sachin, Chief Financial Officer of the company.
I would now hand over the call to Ms Kirloskar for her opening remarks, post which we can open the floor for Q&A. Over to you, ma’am.
Gauri Kirloskar — Director
Thank you. Thank you, Amit. Thank you, Sara. Good evening, everyone. I am Gauri Kidoskar, Managing Director of Oil Engines. Thank you all for joining today’s call. Rahul Sahay, CEO; Sachin, CFO; Samrad Gupta, CEO of ARCA; Amit Gupta, CFO of ARCA; and Fara Irani, Company Secretary are also on the call with me.
As usual, I’ll start with business updates, followed by a financial overview from Sachin and then we’ll take your questions. On the B2B side, Q3 has seen subdued results, mainly due to our performance on the PowerGen business. As the effect of the CPCD4 transition plays out, we saw a correction in-demand and market volumes on the low and medium horsepower segments, that is the segments of the market that we are strong at. This was expected after pre-buy and the emission norms change.
The demand for LMHP is expected to pick-up in the coming quarters and we expect this to come back to the pre-emission norm change levels. We also saw some decline in our market-share on the LMHP side, and I see this as a temporary change and I’m sure that we will recover our earlier market shares once the market stabilizes on the demand-side. On the high-horsepower side, the market demand has been very strong and we are slowly making progress. We have seen an improvement of our market-share in this segment, but it is still early days here and we will continue with our growth in this segment in the coming quarters.
From a product standpoint in PowerGen, we now have the largest range of from 3 KVA to 3,000 KVA. And through Industrial, we offer specialized industrial power systems with 6.3 megawatt. Our range of products continue to show promise with very positive feedback coming from the market with the portfolio starting from 117 KVA going up to 3,000 KVA, this has the best-value proposition for most of our customers. On the B2C segment, we have completed our plant transition this quarter.
As I have briefly mentioned in our earlier calls, it was a complex transition, wherein we have consolidated five of our manufacturing units in Ahmedabad to a single plant at Sanat. This entire transition was a complicated one involving planning over quarters, we had to build significant inventory to take care of the blackout period of no production and transition to the new plant while moving machinery, manpower and materials. As expected, this has some impact on the numbers. However, the entire shifting process is complete and our new plant is fully operational. With the production ramped-up, we are now manufacturing at the levels that we had planned for. We will see improvement in performance in the coming quarter.
On the international side, as I had mentioned in my earlier calls, building out the right model for international business is our focus, whether it comes to channel, people or processes. We will continue on this journey and while we have made some critical steps in some key geographies, it will take time in-building out this business to ensure that we are making sustainable moves. With all of these complexities in the backdrop, for the standalone business, we witnessed 3% growth as compared to the same quarter last year. B2B sales grew by 3%, while B2C sales dropped by 3%. These are the highest Q3 numbers we have achieved. On the margin front, EBITDA at INR117 crores registered a 10.1% margin. Net profit for standalone was at INR65 crore.
Now coming to year-to-date performance, sales for the nine months year-to-date is INR3,672 crores, a 7% growth. EBITDA is at INR438 crores, which maintained a double-digit margin at 11.8% and standalone net profit was INR280 crore, that’s a 10% growth year-on-year. The numbers are after excluding the effect of one-time provisions or reversals. Now coming to business updates. B2B sales for the quarter were at INR1,006 crore. Power gen sales were at INR418 crore.
As I mentioned earlier, this is primarily due to the pre-buy effect in the segments where coal is traditionally strong. The overall market of these segments corrected by — and by corrected, I mean contracted by around 40%. We see the demand levels coming back to the earlier levels in the coming couple of quarters. On the industrial side, we continue to witness double-digit growth. Sales were INR268 crore for the quarter, registering a 16% growth year-on-year. With CEV BS5 going-live from January 1 of this year, we continue to see strong demand from the infrastructure sector.
Distribution and aftermarket business at INR208 crore registered a 15% growth for the quarter, driving service penetration and improving the capabilities of our service dealers continue to remain key focus areas for us. On the international side, the same quarter last year had some large onetime orders, which gave a significant upside to the numbers then. This quarter did not see a similar impact and hence at a quarter level, we saw a slowdown with sales at INR112 crores, which is a 17% decline year-on-year. The primary focus for our international business continues to be setting up sustainable operations across channels, people and process.
On the B2C side, standalone sales were at INR148 crores, marking a 3% year-on-year decline. WMS sales grew 3% year-on-year. The business is steadily growing. We saw some headwinds with demand in the agri sector and supply concerns, however, overall, the business is making steady progress. International B2C grew by 18% to INR10 crore primarily driven by growth in agri engines and pump exports to Middle-East and North Africa, Africa and the Americas region. The export side of the B2C business is showing steady growth and we expect the same to continue in the coming quarters as well.
On the farm mechanization business, as you all know, profitability of the business was a concern for some time. We have taken a conscious call to address this issue and in that process, we are evaluating the way we approach that business, including our manufacturing strategy, product-line, channels and our overall business strategy. As part of this, we have taken a pause in some of the sales that we do and we are in the process of getting our business model corrected for this business. As a result, farm mechanization sales nearly halved from INR19 crore to INR9 crore this year.
Moving to the consolidated business update, revenue from operations for the quarter was INR1,454 crore, showing a 4% year-on-year growth. As I mentioned, the complex start of consolidating our manufacturing plants at Ahmedabad was completed in Q3. This has had some impact on the Q3 numbers as we were not able to produce at the levels to meet the demand. Given where we stand now, we are past that phase and the LGM plant stabilization is going as planned. Overall, the B2C business consolidated revenue from operations for the quarter were at INR224 crores, witnessing a 14% decline year-on-year.
Our financial Services business, Arca’s quarterly revenue grew 43% year-on-year to INR212 crores. As of December 31, 2024, the assets under management stood at INR6,740 crore. I’m also happy to share that the Board of Directors has approved the interim dividend of 125%, that is INR250 per share. This concludes the quarterly update. At an overall level, the quarter has been challenging for us, both on the B2B and the B2C side. However, I see these as temporary bumps in the road in our journey and I’m very confident that we will recover along with the market in the coming quarters. Overall, our business fundamentals remain intact.
Our product portfolio caters to the entire range of the market. Our products have performed well in the post-remission non-change. Our channel remains strong and resilient and we have a very strong post-bit and aftermarket channels. All of these continue to remain strong for us and therefore, I see a strong future in front of us. The coming quarter is the last quarter of our 2x journey and I’m very proud and excited of our journey so-far and we will see where we land against what we envisaged three years ago.
We have already announced our next five-year strategy and at Q4, we will give you an update on our journey, our learning, what went well and what could have been better. Making sure that we have a strong end to the 2X3Y journey is a focus area for all of us, and I’m sure that together as a team, we will achieve that. Thank you for your continued support and commitment.
With these key business updates, I now hand over the call to Sachin for a quick financial overview.
Sachin Kejriwal — Chief Financial Officer
Good evening, everyone. Thanks, Cory, for the update. I will now give a quick walk-through of the financial performance for standalone and consolidated business. The results and the presentation for today’s call has already been uploaded on the exchanges and our website. Q3 topline registered year-on-year growth of 3%. There was a degrowth of 3% quarter-on-quarter.
Coming to the financial performance, I will start with the standalone performance first review of Q3 FY ’25 financial performance. Net sales at INR1154 crores for quarter three FY ’25 versus INR1,125 crores for quarter three FY ’24, that is 3% increase year-on-year. EBITDA at INR117 crores for quarter three FY ’25 versus INR128 crores for quarter three FY ’24, that is 9% decline year-on-year. EBITDA margin at 10.1% for quarter three FY ’25 versus 11.3% for quarter three FY ’24.
Net profit at INR65 crores for quarter three FY ’25 versus INR79 crores for quarter three FY ’24, that is 17% decrease year-on-year. Cash-and-cash equivalents as at end-of-quarter three was INR159 crores. Please note the cash-and-cash equivalent is net of debt and includes treasury investments. With payables of 70 days and receivables of 43 days, we are maintaining comfortable working capital levels. Power inventory level at 77 days is on the higher side due to CTCB norm changes and the upcoming upgradation for the industrial engines. However, we continue our efforts to bring this down.
Now here is the further breakdown of the standalone sales for the quarter. The B2B sales were at INR106 crores, that is 3% growth year-on-year. Bidding B2B power gen was at INR418 crores, which was 2% decrease year-on-year. Industrial at INR268 crores, that is 16% increase year-on-year. Distribution in aftermarket was at INR208 crores, 15% increase year-on-year and IBT, that is our international business of B2B was at INR112 crores, that is 17% decline year-on-year.
So the B2C sales were at INR148 crores, registering a 3% decrease year-on-year. Within B2C, WMS was at INR129 crores, that is 3% increase year-on-year. International business of B2C was at INR10 crores, that is 18% increase year-on-year and FMS business at INR9 crores witnessed a 55% decline year-on-year. Now looking at the consolidated performance for the quarter, revenue from operations stood at INR1,454 crores for quarter three FY ’25 versus INR1391 crores for quarter three FY ’24, that is 4% increase year-on-year.
Net profit at INR58 crores for quarter three FY ’25 versus INR108 crores for quarter three FY ’24, that is 37% decrease year-on-year. Please note these numbers are excluding exceptional items and provision reversals for overdue receivables made-for a customer towards sales made in previous years. And the number for the previous periods have been regrouped wherever is required to make them comparable with those of the current periods.
Let us have a look at consolidated segment performance now. B2B segment revenue for the quarter was at INR1,018 crores with a 3% growth year-on-year. The segment PBIT was at INR91 crores, reflecting approximately 14% decrease year-on-year. B2C segment revenue for the quarter was at INR224 crores, which is 14% year-on-year. The segment registered a loss before interest and tax of approximately INR21 crores.
Financial Services segment revenue for the quarter is at INR212 crores, reflecting 43% year-on-year growth. The segment EBIT including — excluding exceptional item was at INR29 crores, that is 23% decrease year-on-year. With this overview, I would like to conclude that Q3 was subdued performance as we moved into second-quarter post the emission norm changes.
As Gori also mentioned in her remarks, we believe it will take a couple of quarters more to see the powers and demand going back to original levels. We are confident in our products and ability to quickly react to changing marketing market dynamics. We remain focused on the key strategic areas like high, Jensic market and international business in key geographies.
With this key update, now we will open the forum for Q&A session.
Questions and Answers:
Operator
Thank you very much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may enter star followed by one on the touchstone telephones. If you wish to remove yourself from the queue, you may enter star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the queue assembles.
The first question is from the line of Jason Sones from IDBI Capital. Please go-ahead.
Jason Soans
Yeah, sir, thanks for taking my question. My first question just pertains to the Octoprime TV series. I just wanted to know-how is the demand outlook tracking plus we are into the high-horsepower segment through this series. So just wanted to know and take an update on how is the demand outlook tracking from be data centers or the high-power requirements in various infra verticals?
Rahul Sahai
Thanks,, for that question. So the product range is has been very exciting for us. We are getting not just a lot of interest, but also a lot of confirmed orders that we are executing and that those orders are honestly starting at 417 KVA and today we are executing orders of about 2,500 KVA also. So that range is very large. And we completely and truly believe that with this product, the value proposition of flexibility, better cost of ownership that is offered to our end-customers, especially if you look at the segment that you mentioned of real-estate or even data centers, I think that is a — that’s a big differentiator.
So there is going to be effort needed to explain the solution and sell it because as you’re aware, this high-horsepower market operates through not just customer and us, but then there are other people also involved like consultants and contractors and things like that. But I’m fairly confident that it’s a product that our customers would value and we are — we’ve seen a lot of interest and our order board is pretty strong.
Jason Soans
Sure. Thanks for that. Just my next question pertains to just wanted to know, I mean for LGM or large arger machines. You know, the last-time around when we look at the financials, for FY ’24, we have clocked in around INR540 crores and a PBT margin of 6.4% and a PAT of around 4% — so we clocked in around to INR47 million. So I understand that this time around in FY ’25 has been a consolidation into and all those onetime restructuring has taken place. So would it be possible to share the numbers for nine months ending FY ’25 for LGM in terms of PAT or PBT and revenue as well.
Rahul Sahai
Sure, we’ll just give us one minute we just checked the numbers and get back to you. I think we can just move to the next question. We will update on this response shortly.
Jason Soans
Sure, sure. Okay. Okay. Now okay. So my next question pertains to just wanted to understand, see, from — I mean, we started the year pretty strongly. We clocked in — I’m just talking about a standalone basis, we’ve clocked in a PAT of INR135 crores. And from then on, of course, CPCB 4 4+ has kicked-in and we have seen a performance on profitability sort of weakening. So here from — just from a broader sense, I understand Gori did touch upon it. But so the outlook for Q4 FY ’25, this has been historically a very strong quarter for capital good companies and lot of infraactivity tends to pick-up in that quarter. So what are we looking at? How is the year-end looking at, especially after a subdued Q3? Just wanted some qualitative commentary on it?
Rahul Sahai
Sure. So just qualitatively speaking, because otherwise that is proprietary. But just qualitatively speaking, we are expecting the early indicators seem to be positive. Whatever residual inventory of may have been there in the channel and the larger ecosystem, all of that has been consumed. So we are fairly positive that we’ll — we should see a better Q4 and we will work towards that.
Jason Soans
Okay, okay. And just from this — from a demand perspective, in PG, in powergen and industrial segments, but which are the verticals you are seeing good traction in? And just lastly, just a clarification, Gauri did mentioned a 40% number. That was a volume decline for PG. Does that pertain to that? Just a clarification on that perspective as well. And what any sort of verticals are we seeing good demand in both PG and industrials industries right.
Rahul Sahai
So if you look at PowerGen, I mean if you broadly just say you look at KV as LHP 50 as NHP and above 750 as HHP, that’s just a broad classification what seeing is that the LHP and the MHP side, the portion of the portfolio that is influenced by PBCB norms, that has regrown in terms of market demand by close to about 40% to 45% and I mean we are fairly positive we’ll come back to normal levels but for these for the immediate last two quarters we have seen that happening and a lot of it is also because there is a residual inventory available in the channel somewhere and so that all of that has to go off because we are coming off a fairly hot period. There was a lot of pre-buy happening before these emission norms changed. So there will be a cooling off, which in my opinion, has happened over the last two quarters and which — so we should see a better Q4.
If you look at the HHP business, that has grown from a market standpoint pretty rapidly. It’s not a segment where traditionally we’ve had a very strong portfolio in. And while we are seeing positive impact of that, but the overall product mix that we have is largely on the LHP, MHP side in terms of the power gen revenue base. So even if I compare it to our industrial business, which is growing at double-digits, so we are seeing improvement on construction side, we’re seeing improvement or significant demand coming from our defense business, but the sheer size and scale of the PowerGen business basically influences the overall blended EBITDA. Sure, sure. Thanks. Those are all my questions. Thank you so much for answering that. Thank you. Just coming part to your question on LGM year-to-date performance. Yes, on a year-to-date basis for LGM, we did a sales of INR350 crores with EBITDA of 1.4%.
Jason Soans
EBITDA 1.4%.
Rahul Sahai
Yes, EBITDA 1.4%.
Jason Soans
Okay. So sure, sure. Thanks for that.
Rahul Sahai
Thank you.
Operator
Thank you. And participants with questions may enter star followed by one on the handsets. The next question is from the line of Tina Virmani from Motilal Oswal Financial Services. Please go-ahead.
Teena Virmani
Yeah, thanks for taking my question. Rahul, this question is for you on the Power Gen segment, like you mentioned that volumes have degrown by 40% to 45%, particularly in the LHP and MHP range. So when we compare the Power Gen segment revenues versus 3Q of last year, but there is a decline of nearly 2%. So what could have been the pricing impact because the pricing has not increased to an extent of 40 — or 35% 40% in the LSP and MHP ranges. So I mean, I just — I just want to understand the growth or the growth like flattish trend if volumes have declined by 40% during the current quarter. So what is the impact of pricing in this?
Rahul Sahai
Yeah. So I mean, if I just look at a, I would say you can take 35% to 40% increase in scope of the product because the CPCV4 product is very different compared to what it was in. And if you look at on an average about a market dip of about 42% to 45% in terms of volume, that will give you a broad understanding of what happened in the last quarter?
Teena Virmani
So is there a portion of HHP sales also in this particular quarter, which may be higher in 3Q ’25 versus 3Q of ’24?
Rahul Sahai
There would be portions of HHP sales, but because our portfolio is so heavily, I guess on the LHP and MHP side, that HHP tail will not have a significant or will not be very significant in terms of the impact. So the HHP, I mean because of the HHP, we’ve not degrown drastically on the powergen side, but it wouldn’t be something very significant at this point.
Teena Virmani
Okay. So when we look at overall demand, how is the demand scenario currently panning out, particularly in the month of January and let’s say, 10 days in February, are volumes coming closer to the volumes of same-period last year or they are still down by 15%, 20% or any number which you can attribute to?
Rahul Sahai
Okay. So if you look at — and I’ll try and-answer this question as clearly as I can. See, if you look at Q2, the overall volumes that the industry had in Q2, they were 28,000 units. Now in Q3, the volumes have increased to close to about 32,000 units, but bulk of the increase has happened in telecom segment. And telecom segment, as you’re aware, is extremely commoditized, price-sensitive segment where we are cautious around where we want to participate and where we don’t.
And if I look at Q4, I would — I mean, I can’t really give a clear forecast here, but I would see a further improvement to the 32,000. So we would — I mean, I would say we should be in the range of 36,000 to maybe 38,000. If you look at last year same time, the overall industry demand was upwards of 40,000. We were operating in large pre-by in quarters and the demand was in excess of 40,000 units. So that just to give you a sense of what’s going on.
Teena Virmani
Okay. But has the pricing normalized now overall in general, not particularly referring to telecom segment, but general pricing has it normalized or there can still be some kind of pricing impact maybe in this particular quarter, quarter-four?
Rahul Sahai
I mean we’re waiting for all the forces to play-out, but at this point, we do see that there is a general convergence of pricing in every node. So we’re not really seeing too many unknowns at this point.
Teena Virmani
Got it. And my last question is regarding the other expenses and gross margin trend going-forward for the company. So we understand that there were some costs associated with this B2C division also and even B2B margins were also down. So what can be the normal range for other expenses for the company going-forward as a percentage of sales or what can basically be your target to maintain on the gross margin side and even on the other expenses side going-forward. So once things normalize, let’s say, from Q1 or Q2 of FY ’26 onwards.
Rahul Sahai
Peter, in terms of our raw-material cost and the other variable-cost, we don’t see much variance and we are able to maintain our contribution margin to the same level as we were maintaining in the earlier quarters. However, we have seen impact on EBITDA because of operating leverage loss due to lower sales and will recover that in coming quarters on the sales will come back.
Teena Virmani
Because last few quarters you had margins in the range of broadly around 12% or so taking into account the adjustments also. So can we go back to those 12% type of margins maybe in 4Q.
Rahul Sahai
I will not be able to give you any specifics, but definitely with higher sales will see a better operating leverage gain and that will improve our margins.
Teena Virmani
Sure, sure. Thank you so much. I’ll come back-in the queue. Thank you.
Operator
Thank you. Participants at the request, please limit your questions to two questions per participant. The next question is from the line of Charanjit from DSP. Please go-ahead hello.
Charanjit Singh
Hello, everyone. Good afternoon. So my first question is regarding the power gen itself. So you have talked about the inventories in the system. So how are the inventories now for the CPCB2 in the system? Because when we look at the other competitors, they have said that inventories have now completely depleted. So if that is the scenario, can we see our market-share again inching up? How is the product from the LHP and the MHP segment from the other competitors who have been in this market. So that’s my first question.
Rahul Sahai
Hello can you hear me?
Charanjit Singh
Mr Rahul yeah, yeah,, I can hear you please.
Rahul Sahai
So what I was saying is that if you look at our market-share for the last quarter in Q3, we were at roughly at about 30.3% excluding telecom segment. So just removing the telecom side of that business. But so market-share as such, we are — I mean, while it’s something we track very closely, we are not as worried about the market-share per se, but there are opportunities on the HSP side where we have to focus on to ensure our growth. So that’s perhaps the one key point for us as we move forward. So while we are growing, but the market opportunity is much larger on that — on the HSP side and that’s something that we have to work on.
Charanjit Singh
So CPCB-2 product inventory in the system, is it still there or is it like totally depleted? So which can help you know, players like ourselves who have better product in scale-up and regain that market-share?
Rahul Sahai
Yeah. So we are not allowed to keep CPCB to — I mean, as a manufacturer, I cannot sell-in the market. So the CPCD2 inventory in our system is completely consumed. As far as the entire, I mean, the larger industry is concerned, we did see different players liquidating CPCP2 in the last two quarters also. But all of that seems to have depleted now.
Charanjit Singh
Okay. And sir, when you talked about that the growth can resume from Q4. So how we should look at this kind of growth in terms of Jan, Feb from the industry perspective itself, how you are seeing the growth momentum?
Rahul Sahai
So what we’re seeing is that there is a improvement in — so if I look at Q3 versus Q2, we have seen an improvement in the overall demand scenario for the — for PowerGen. So if you look at the Q2 volumes, they were at about 28,000, which is extremely subdued for this industry, which used to operate at about 40,000 to 45,000 gensets per quarter.
Now in Q3, we see that number has increased to about 32,000 units from an overall demand standpoint. And in Q4, our anticipation is we’ll be closer to around 36,000 to 38,000. That’s the anticipation. So we are seeing improvement. The segment that is growing rapidly is the HHP side of the business on PowerGen and that is where we solely have products built-out and we have to focus more on from a sales standpoint.
Charanjit Singh
Okay. So just lastly on the HHP side, in terms of our product portfolio, so if you can touch upon like which are the most prominent nodes we have and from the data center perspective also, we remember that there was discussion on the certification being there. So from a ramp-up perspective, it could take six months, one year. How is the pipeline of the orders for the HHP segment right now?
Rahul Sahai
Yeah. So we are seeing a strong pipeline in the sense — in the context of what we do. So I just want to make sure the context is clear. See, we are largely a company that has historically been in LHP primarily and who had some products in MHP. Now over the last say 2.5 years, three years, we have very aggressively built-out and refined a product portfolio. And today we are executing orders of 2,500 KVH insets also and 3,000 KVH insets also.
So it’s just that the contribution of HHP is relatively smaller in our overall revenue mix. At this moment, what’s panning out is the HHP market is growing rapidly. So if you talk about the portfolio that we have today in HHP, we start at a 750, 910, 1010 at, 1,250, 1,500 and then with our range of products, we go up to 3,000. So we have a fairly strong portfolio is what I would say, but there is a lot of internal, I would say upskilling that’s needed to be able to sell these products and that’s what we’re working on.
Charanjit Singh
Thanks all for taking my questions. I’ll circle back-in the queue. Thank you.
Rahul Sahai
Yeah. Thank you.
Operator
The next question is from the line of Mihir Manohar from Asset Management. Please go-ahead.
Mihir Manohar
Yeah, hi, thanks for giving the opportunity. You mentioned in the opening remarks that there was some declined market-share for us. What led to the declining market-share? Is it because of competition getting aggressive on pricing or because of lower inventory available for buyers? I mean, how to understand this and why should one see that reversing back?
Rahul Sahai
Hi, this is Rahul. So if you look at the Q3 market-share, we have improved our market-share over last year and marginally, I mean, last year in Q3, we were at about 30%. This year we are at 30.3% in the same — I mean Q3 to Q3. So I mean I’m not quite sure about the question.
Mihir Manohar
I think in the opening remarks, mentioned that on a Q-o-Q basis, you saw a decline in-market share.
Rahul Sahai
So in — so we’ve not seen a decline in-market share.
Mihir Manohar
Okay, sure. Yeah. Just second was on the pricing side. I mean, how — have we held the pricing over the last three months, six months for our LHP and MHP, CPCB 4 products?
Rahul Sahai
Can you just repeat the question?
Mihir Manohar
On the pricing side, so basically the CPCB4 plus products for the MHP and LHP segment, I think what is the change in pricing which is there over the last three months, last six months?
Rahul Sahai
So if you look at CPCB 4 versus CPCP 2, the pricing difference is about 30% to 40% —
Mihir Manohar
Only for CPC before. I mean CPC before like-to-like for last three months. Are the prices same for you or have they gone up or gone down?
Rahul Sahai
So there is there is a process of price discovery that I’m sure each organization is doing. So note by note, there are various trends. In some cases, the prices have gone down. In some cases, maybe revised upwards.
Mihir Manohar
Sure. Sure. That’s it from my side. Thank you.
Rahul Sahai
Thank you.
Operator
Thank you. The next question is from the line of Darshal Zaveri from Crown Capital. Please go-ahead.
Darshil Jhaveri
Hello. Good evening, sir. Thank you so much for taking my question. So I hope I’m audible. Hello. Yeah, you’re audible. Yeah. Hi, hi, sir. So, sir, just wanted to from what we gather, I think Q4 we are expecting things to go a bit better. So just wanted to ask like we mentioned our like five five-year or next plan, but in terms of revenue growth, what do we expect like it to be in the next one or two years, if you could help guide for that like maybe a shorter-term FY ’27 target for — in terms of revenue and margin, that would be helpful, sir.
Rahul Sahai
I’m afraid I won’t be able to give out that information that’s suppetry at this point. But we will strive to move towards the target that we had mentioned last-time.
Darshil Jhaveri
Yeah, okay, okay. Fair enough, sir. And sir, just in terms of our market, like in terms of Q4 like will be better than last year’s Q4, or how should we look at it so
Rahul Sahai
Unfortunately, yeah. Please go-ahead. Please go-ahead.
Darshil Jhaveri
Yeah, like just qualitatively or even if no numbers, but then just how do we see if you’re comparing because you’re saying last year I think there were lot of more units in play, right, than currently. So just wanted to see if how would sequentially will we be better or last compared to last year will we be better Q4? If you —
Gauri Kirloskar
Currently can’t answer that question even qualitatively, it becomes a forward-looking statement. So we won’t answer that.
Darshil Jhaveri
Thank you. Okay. Yeah, that’s it from my side. Thank you.
Rahul Sahai
Thank you.
Operator
Thank you. Participants with questions may enter a star and one on the handsets. The next question is from the line of Parik from HDFC Securities. Please. Please go-ahead.
Parikshit Kandpal
Hello. Can you hear me? Yes, we can. Please go-ahead, sir. We can hear you. Yeah. And sir, just on the Power Gen business, so you said that market was around 40,000 units plus and now it’s about, 34,000 35,000. So is the difference attributable to the 2+ inventory still being in the system for the last two quarters?
Rahul Sahai
Yeah, so right, in the last quarter, the market was about 32,000. In Q2, it was about 28,000. And the last six months, we — because of the transition, there has — and there was a pre-buy prior to that. So there was some surplus inventory in the larger ecosystem in the industry I’m saying, not with us in this case. So it has taken some time for the overall demand to normalize. So we are seeing improvements quarter-on-quarter in terms of the demand. And we’re expecting that in the quarter-four, the demand will be better than what it was in-quarter three. So we may end-up at about around 36,000, 38,000 units. But we are slowly inching back to the pre before the transition took place. So we expect the market demand to normalize soon.
Parikshit Kandpal
So my question was more on like what in your internal assessment would be last two quarters CPCB-2 plus engine supply in the market just to get a sense on actual how much demand is down because of that and how much it is down because of actual slowdown in.
Rahul Sahai
I am afraid I don’t have that answer clearly a lot of this information is also anecdotal because formally you cannot sell CPCP to?
Parikshit Kandpal
Yeah. But your target customers, they won’t be buying, right? Now I mean at least in there — I mean, they are in the clinging system, so they won’t be buying the CPCB2 engines anyways, right? So your target TAM would not get impacted because of the CPC 2+ engine still being sold-in the market for last two quarters?
Rahul Sahai
No, it could because if you look at a lot of the retail business that we do on the Power Gen side, the TAM definitely gets impacted if you know depending on the state and depending on the level of enforcement of the emission change. The TAM definitely gets impacted.
Parikshit Kandpal
Okay. And second question is on the pricing side. So on the demand-side of the pricing, seeing now with these notes being introduced by most of your peers. So do you still think that the market of the customer has absorbed the pricing or still just believe that there’s still some pushbacks on the pricing side?
Rahul Sahai
Or I mean, pricing will keep playing out. We’re not seeing any significant change or significant pushback. We’re also very practical when it comes to pricing.
Parikshit Kandpal
Okay. And just last question, incrementally on the per unit of CBCB 4 plus engines being sold. So do you — the profitability will be better than the CPCB-2 plus per unit gross margin super unit profitability?
Rahul Sahai
I think at a overall system-level, I would say the profitability improvement opportunities will be there because of CPCP 4 and this includes both in terms of the product and the aftermarket opportunities that it provides.
Parikshit Kandpal
Okay. Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Sagar Parik from OneUp Financial. Please go-ahead.
Sagar Parekh
Hello. Yes, sir, please go-ahead. Yeah. Some clarification which I wanted on the market that you mentioned. And you mentioned that sequentially the market has improved from —
Operator
Sir, your voice is breaking up. You’re not able to hear you very clearly.
Sagar Parekh
Yeah, am I audible now?
Operator
Yes.
Sagar Parekh
So when I look at your sequential power gen numbers, the revenue has gone down from INR481 crores to INR418 crores, right? When you said that the market has gone up sequentially and you mentioned that you have not lost market-share. So can you just help me understand what exactly is this?
Rahul Sahai
Sure. We’ll just check the question. We’ll take another question and we’ll revert back to this question.
Sagar Parekh
And secondly on the export market, we have not been able to scale-up meaningfully as we had envisaged when we charted out our three-year plan where we had — we had envisaged that our export revenues would be INR1,500 crore to INR2,000 crores broadly. What exactly has gone wrong? Why is it taking so much time and what is the outlook on this going-forward, if you can highlight on that, that would be helpful.
Rahul Sahai
Thanks. Sure. So when we started out with a ambition, we were — we looked at different ways and levers that we could deploy for the growth. And if I look-back, largely a lot of the bets that we made have gone in our favor. Certain areas where which didn’t pan-out the way we thought were the time taken and the level of engagement and deliberation required to develop channels outside India and the mature — the maturity sign that they take. So I wouldn’t say that things have been there is a major issue or anything of that sort. It’s an ambition and if you look at the 2SPY journey that we’ve had until now, we’ve done fairly well against that ambition.
Sagar Parekh
But export, export for us is still about dropping annually. Any qualitative outlook on which you know which geographies you are seeing some growth maybe in the next two years, which can help us gain some exports.
Rahul Sahai
Yeah. So if you — and I’ll just go back to the previous question-and-answer in context of that. If you look at where exports were when we started this journey, we have doubled our exports more or less if you look at this year versus FY ’22. Now good years and bad years will happen. I mean the — for instance, we had demand in South Africa, which was coming in and the power deficit situation in South Africa has improved. So we will have those changes play-out, but directionally we have definitely moved in the right direction. Exports definitely, I mean we’ve almost doubled our exports.
Sagar Parekh
US and Middle-East still continue to not see meaningful change in revenues. Is it fair?
Rahul Sahai
Yeah, I mean, correct. So at this point, perhaps not. But if you look at Middle-East over the next few quarters, we are pretty confident that will pick-up sooner than what the Americas will.
Sagar Parekh
Okay, understood. And if you can answer on that Power Gen sequential, when you said that the market has gone up sequentially, our revenues have not gone up. So if you can provide some clarity on that would be helpful.
Rahul Sahai
Thanks. Yeah, that’s just a mix honestly. So there are certain orders that we execute on HHP. But if you look at the overall volume base, sometimes, I mean, there is a mix change that happens and which is why you see that difference.
Sagar Parekh
But the difference is significant as in the — there is a sequential growth in volumes, whereas there is a 20% decline sequentially or maybe 15% decline sequentially in the revenues,
Rahul Sahai
I mean I just — so are you asking the market-share information doesn’t seem to correlate to the revenue?
Sagar Parekh
Yes, yes, something of it seems. Yeah.
Rahul Sahai
Yeah, I mean, so at this point, what I can answer is that it’s a mix change. Yeah, that’s the
Sagar Parekh
28,000, 32,000, whatever numbers you’re referring to is basically below 1,000 KVA market, right?
Rahul Sahai
It’s all of it but if you look at the lower-end of the — say, if you look at say below 750 KVA, the large volumes are there. And as you move upwards that there is an inverse relationship, the volumes become lower, but revenue is much higher.
Sagar Parekh
Because you also said 40% decline in the volumes. So even if I correlate that 40%, that should be about 50,000, 55,000 kind of volumes, then if it’s down 40%, then it comes to 32,000. So something — and you’re saying that the average market is about 40,000 45,000. So something is not right. I mean math, it’s not working out.
Rahul Sahai
So if you see, there were periods of pre-buy also. So we we’ve had — I mean we’ve had quarters where the demand has been at about 48,000 also. So right now, the numbers I’m giving to you are initial estimates that have come in from our own research agencies, but the formal reports are not out. So something doesn’t add-up, up. These are directional inputs. Okay. We’ll move on to the next question.
Operator
Thank you. The next question is from the line of Mohit Pandy from Macquarie Capital. Please go-ahead.
Mohit Pandey
Yeah, sir. Thank you so much for the opportunity. Sir, firstly on the domestic power gen business, just wanted to understand if there is any seasonality also in the business. So would it be fair to say that from here on, we are entering into seasonally strong quarters you know, adjusting for any CPCB impact as well. So would the April to June quarter be the strongest typically because of weather, et-cetera. Is that a fair understanding?
Rahul Sahai
Generally, we have seen the demand be strong in-quarter fours. So I wouldn’t necessarily attribute that to a specific seasonality per se, a lot of times there are budgets available for capex and people try and consume it in-quarter four. So that’s the way I would see it.
Mohit Pandey
Understood, sir. That is very helpful. And sir, secondly, I just wanted to understand your comments on the HHP market a bit better. So you mentioned it’s going — the demand is strong there. So beyond data centers, what is driving this demand strength, if you can qualitatively give color there?
Rahul Sahai
Yeah. So I mean there is real-estate infrastructure growth that is driving a lot of this demand too. So that’s another segment that is contributing to this?
Mohit Pandey
Okay. And within infra, HSP would be consumed majorly by which the sub-verticals for you, sir? That would be my last question.
Rahul Sahai
Okay. Sorry, within infra.
Mohit Pandey
Yeah, any particular verticals where traction is stronger for your offerings because infra is very vast, right?
Rahul Sahai
So for example, you know real-estate developers, IT, IT plugs, you look at basically all these real-estate companies, the large corporate ones, they and larger projects, so they take-up a lot of HSP.
Mohit Pandey
Understood, sir. Thank you so much and wish you all the best. Thank you.
Operator
Thank you. Thank you. The next question is from the line of Saurab Arya from Capital. Please go-ahead.
Sourabh Arya
Yeah, hi. Hi, Rahul, can you hear me? Yeah, I can hear you. Yeah. So I have couple of questions. First is, what do we — I mean to say think about industrial segment now when government has reduced certain capex, etc for this segment. So in that context, obviously, industrial has done very good till now. So what are our expectations, let’s say, going ahead?
Rahul Sahai
So if you look at our industrial business, it’s actually comprised of a few key segments. There is construction. So we partner very closely with our construction OEM there is our defense business, there’s a lot of work that we do with the army and the Navy there is railways and then we have other segments such as mining, oil and gas, etc.
So if you look at each of these segments, defense continues to be a strong growth area and we are fairly bullish in that segment. We are partnering very closely with the armed forces. We don’t expect any major softening to happen there. From a construction standpoint our emissions change that has happened, so we’ve moved from CVBS 4 to CVBX5 and that emissions change has helped us gain market-share with our — with the construction OEMs too. And we find ourselves in a spot where a lot of companies want to work with us with our offerings. So some of these segments and of course, there’s a lot of work that we’re doing in railways, we’re not expecting any immediate slowdown. We do think that from a demand standpoint, these will be growing segment.
On the railway side, maybe in the medium-term, we do see an impact of electrification. So the power car demand may potentially go down, but we are looking at different avenues to — for driving growth in that segment.
Sourabh Arya
Sure. Thank you. This is helpful. Second is, like we used to mention about HSP market-share like I think you mentioned a couple of quarters back that market-share is 12% for us. So can you give some qualitative or maybe you know, any quantitative also would be very helpful. How is our market-share in HHP?
Rahul Sahai
Sure. So unfortunately, I don’t have all the information on the market data yet. We’ll try and compile that. But if you look at our HHP market-share, in the last quarter, we have seen some deterioration on the HHP side, but there’s — it’s not — I mean, it wouldn’t impact the overall business too much. So there is some deterioration that has happened on the HHP side.
Sourabh Arya
Okay, perfect. I have one question on B2C also. So maybe going back to the — maybe on the margin side of it on B2C. There, like obviously, last quarter, we had minus 2%, minus 3% in this quarter, obviously it came around whatever minus 9%. So — and I asked something similar last quarter. So how would be this normalization towards normal margin in B2C business? Will it be sharp going ahead from Q4 now that everything is normalized or it will be a slow journey of going towards 8%, 9% what we were thinking to achieve?
Rahul Sahai
I would say that now the fact that this consolidation has happened at the plant, we should see a recovery back to the pre-consolidation levels as far as the EBITDA profile was concerned.
Sourabh Arya
Okay. So immediately it should jump towards —
Rahul Sahai
Yeah. So if you look at, say, quarter two and quarter three, these were the transition quarters. So if you look at the margin profile prior to that, we should get pretty close to that.
Sourabh Arya
Okay. Okay. Okay. Maybe very lastly if I could squeeze something on the export side. So Gauri, maybe you mentioned in the call that there was some one-time impact in last year Q3. But how should we think about export going ahead? Is this the base of exports from which growth should be visible or I meant to say this is still not a base — this is still not in the base, I mean to okay,
Rahul Sahai
Can you just repeat the question?
Sourabh Arya
So I’m so like I think Gauri mentioned that last year Q3 there was some one-off order which impacted the export growth in this particular quarter. So this quarter number becomes the base on which there is no one-off left or how should we think about it?
Rahul Sahai
So you’re saying if I remove the one-offs or the one-timers from last quarter, yeah, how would the performance of this quarter be?
Sourabh Arya
Yeah.
Rahul Sahai
So I mean honestly, it’s a little hard-to-do, but last year we had executed some one-timers of about, say, INR40 odd crores.
Sourabh Arya
Okay. Sure. So adjusted for that also. Okay. Fine. That is fine. That is helpful. Yes. Yeah. Thank you. Thank you very much.
Operator
Thank you. Ladies and gentlemen, that was the last question. I now hand the floor over to the management for closing comments.
Gauri Kirloskar
Thank you very much for your participation and questions, and we look-forward to speaking with you again next quarter. Thank you.
Operator
Thank you. On behalf of Antique Stock Broking Limited, that concludes this conference call. Thank you all for joining us and you may now disconnect your lines. Thank you.