Kross Ltd (NSE: KROSS) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Sudhir Rai — Chairman and the Managing Director
Kunal Rai — Whole time Director & Chief Financial Officer
Sumeet Rai — Whole time Director
Analysts:
Mihir Vora — Analyst
Pritesh Chheda — Analyst
Shaurya — Analyst
Nikhil Kale — Analyst
Mohit Chugh — Analyst
Taha Ansari — Analyst
Richa Agarwal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to The Cross Limited Q3FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need. Assistance. During the conference call, please signal an operator by pressing star and one on your touchstone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihi Vora from Equerrius Securities. Thank you. And over to you sir.
Mihir Vora — Analyst
Hi. Good morning everyone. On behalf of Aquarius Securities I welcome you all to the Q3FY25 post results conference call of Cross Limited. From the management side we have Mr. Sudhir Zai, Chairman and Managing Director Sumit Rai, full time director and Mr. Kunal Zai, full time director and CFO. So without further ado, I now hand over the floor to Sudhir sir for his opening remarks. Over to you sir.
Sudhir Rai — Chairman and the Managing Director
Thank you. Good morning everyone and thank you for joining us today for our Q3 and 9 months FY25 earnings call. Along with me I have Mr. Sumit Rai, Whole Time Director. Mr. Kunal Rai, Whole Time Director and CFO. As well as senior team members from our Investor Relations Advisory Strategy, Growth Advisors and the Aquarius Security team. Before we dive into the highlights of Our quarterly and 9 months performance I would like to provide a brief update on some key business developments. As previously guided, we have made significant progress in the expansion of our axle beam extrusion plant.
The new extrusion machine is expected to arrive by early March and commercial production scheduled to commence shortly thereafter. I would like to also add that this machine, the entire set was tested at the manufacturer’s end by our engineers and team. This advanced technology will increase our capacity to 7,500 units per month up from our current 5,000 trailer capacity for axles and suspension assemblies. We are confident that with this investment we will not only enhance our current operations but also open up new growth opportunities particularly in the tag and dead axle segment where we currently have no presence.
Furthermore, we expect this expansion to improve product quality and drive higher margins. Additionally, we have announced our plans to enter the seamless tube manufacturing segment at a new facility in Aditpur industrial area in the Saraikila district of Nharpur. This will involve an investment of 167 crores and this will be funded through a mixture of debt and our internal accruals. Seamless tubes are produced by converting steel round billets of an appropriate size through a series of specialized processes. To achieve the required outer and inner diameter, we have chosen a mill size ranging from 115 mm to 220 dia. That’s the maximum, commonly known as mill 219, which is ideal for producing high quality seamless tubes and in particular for our requirement. What we are focusing on in the coming years, the automotive sector, including our own trailer, axle and productions, will see a shift from fabricated beams to seamless tubes, making this a significant part of our captive requirement. This move will help us achieve greater backward integration, reduce our reliance on external vendors, lower our production costs and ultimately enhance our overall productivity and profitability. The surplus production capacity will meet after meeting our captive requirements will be used to meet the growing demands of seamless tubes in sectors like oil and gas, where India’s continued investment in pipeline infrastructure, seamless tubes are expected to play a crucial role in the transportation of crude oil and gas, reducing reliance on road and rail transportation. Additionally, seamless tubes have major applications in circular components such as gear blanks, ring gears and bearing rings where they are cut to precise size. To capitalize on these expanding opportunities we plan to enter, we plan to place orders on key imported equipment by the end of this financial year. We anticipate the completion of this project within 18 months. Targeting mid FY27. Now moving to the performance highlights of Q3 and 9 month FY25. Despite industry challenges, particularly the slowdown in infrastructure projects that led to the subdued demand in MNHCV segment, we delivered a performance and outplaced the broader industries. Looking ahead as the government continues to prioritize infrastructure projects and road network, the demand for high performance commercial vehicles is expected to raise. Presenting significant opportunities for suppliers like Cross. Our strong position within the value chain will with a focus on precise engineering components such as axle, suspension, system and other critical vehicle parts position us well to meet the growing demands.With this, I would like to hand over the call to Kunal to update you on the financial performance of the quarter and nine months ending 31st December 24th. Kunal.
Kunal Rai — Whole time Director & Chief Financial Officer
Hi, good morning everybody. Whoever who’s joined the call, I’d like to just brief you on the financial performance we start off with the quarter 3 FY25 performance. Our revenue stood at 150.1 crores compared to 148.6 crore crores in Q3 FY24. Our EBITDA stood at 19.7 crores compared to 20.8 crores in Q3 FY24. On the margin side, our EBITDA margin on the quarter declined by 83 basis points from 14% in Q3FY24 to 13.1%. Our PAT stop stood at 13.6 crores registering the overall growth of 16.8% compared to 11.6 crores in Q3 of FY24. Our PAT margin for the quarter improved by 123 basis points increasing from 7.8% in Q3.24 to 9.1%.
Moving on to our nine month FY25 performance, our revenue stood at 435.4 crores compared to 437.2 crores in nine months FY24 the contribution from trailer, axles and suspension business was at 42.5% while the component business contributed to 57.5%. 9 months FY25 our export sales are now at 3.4% of 9 months FY25 revenue. The EBITDA stood at 54.5 crores compared to 54 crores in 9 months FY24. EBITDA margin for the period has increased by 15 basis points from 12.4% to in 9 months FY24 to 12.5%. Our PAT stood at 30.9 crores registering a 8.9% growth compared to 28.4 crores in 9 months FY24. Our PAT margin for the period has improved by. 60 basis points rising from 6.5% in nine months FY24 to 7.1%. That’s all from my side on the financial performance for the quarter and our nine month FY25.
Operator
So should we begin with the question and answer session?
Kunal Rai — Whole time Director & Chief Financial Officer
Yes, please.
Questions and Answers:
Operator
We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment. While the question queue was we take the first question from the line of Pritesh Cheddar from Lucky Investments. Please go ahead.
Pritesh Chheda
Sir, can you give some quantitative comments on the excellent suspension volume number, what you did in quarter three and what you did in quarter two?
Mihir Vora
Sure. In quarter three and quarter two we have done approximately between seven and a half thousand to eight thousand trailer axles. It basically it has varied month over month. We saw very strong October, we did close to 3,000 axles. In November the industry slightly dipped and we went back to 2,200. But in December we’ve seen again a better response. We’ve done close to 2,800 and total suspension systems over the quarter.
If you look at it, it’s at approximately between the mechanical and the air suspension it’s approximately 2,200 set. And you have to give us similar number for quarter two as well. Yes. So similarly for quarter two also our revenues between quarter two and quarter three on the actual side haven’t been very different. It’s almost been the same. So number wise we’ve done very similar figures. In July we did approximately 2,600. August it’s at 2300. September we’ve got a good recovery, approximately 2800 suspension systems. Also between the mechanical and air the mix is quite similar. So overall on the axle side, between quarter two and quarter three you could say an average of approximately.
Operator
7,500 to 8,000 axles per quarter. However, we’ve seen a good growth in the month of January and our order book of February is approximately of 4,000 axles. So you’re saying that between quarter two and quarter three there is no growth, there is no incremental volume number in Excel and suspension. No, we haven’t seen quarter two. There was quite a dip in the trailer side. However, we’ve made some good stocks over there and in quarter three there has been a little bit of recovery again. So our overall volume on axles and suspensions between quarter two and quarter three has more or less remained stable.
Pritesh Chheda
Okay, can you give us the excellent suspension revenue growth or yoy and components revenue growth yoy. So in your 1% revenue growth yoy.
Mihir Vora
Yeah, yeah. So our excellent suspension revenue growth if you look into our nine months in FY24 was 183.9 crores and this year in nine months has been at 185.1 crores. So that’s approximately.
Pritesh Chheda
So basically 185 crores versus 183 crores. Y
Sudhir Rai
Yes sir. So, and I believe the trailer segment has dropped by close to 8 to 9%. And if you look into our revenue component in the component structure it is again very much the same. It’s 253 was of our nine month performance of last year and 250 has been of nine months FY25 that that holds at approximately 57.5%.
Pritesh Chheda
Okay. And my last question is what is the progress on the export orders that we have talked about during the ipo? So there were a couple of component export orders which were supposed to ramp up incrementally, I think valuing some 150, 200 crores. So what is the status?
Sudhir Rai
So the export orders are in fact going on faster as to how we have been able to maintain our component business the same as last year even with the industry dropping as basically coming from the export business. Because that’s the business which has been increasing with customers in Sweden. It’s completely on path. We are delivering the required quantities of one of the product families. The second product family is going to be starting within this quarter. So we are in line with it as far as. Percentage wise, if you look into in FY24 our overall contribution was just 1%. In this year we plan to have at least 5% coming in from exports. So it’s going in line right now it’s at around 3.5% in our nine month figure. So we expect the quarter four slightly to be even better with our peak capacity reaching on the product family that we are doing business in. So we’re looking at 5% around 25, 28 crores revenue coming in in this year from the export front.
Operator
Thank you sir. So looks like the line for the previous participant has got disconnected. Before we take the next question, a reminder to all the participants. If you wish to ask a question you may press 1 on your Touchstone cell. The next question is from the line of Shaurya from RJF Partners. Please go ahead.
Shaurya
Hi, I’m audible.
Operator
Yes, yes sir, please go ahead.
Shaurya
Sorry if you answered I got disconnected. So what are we planning to close in terms of revenue in FY25?
Sudhir Rai
So as you can see 9 months has been quite flat. Okay with the industry drop also. But we’ve got a good strong quarter four coming in the sense volumes at the OEMs have picked up. The overall MNHCV sector has been down 5%. The previous quarter was also quite soft. But we are seeing a better quarter in this year. And that is how if you look into year on year it’s a very similar trend that has happened. So if this continues till the month of March then we still look at ending at better than what we have done in the previous year. And what posed that like FY26 and 27, what kind of growth are we expecting?
See in FY26 we still don’t know as to how the commercial vehicle sector or the tractor sector is going to phase out. But what is important is we are focusing on our upcoming projects. We’ve got a lot of new developments coming up. Especially in the trailer axle business is our new extrusion plant. We are going to be offering the TAG axle to our OEM customers. The exports which were at 1% last year now at close to 5%. We want to grow that because that is where our focus would be. Plus a couple of more new developments with the existing customer would be also. Starting. So if everything goes well, then we’re looking at growth of at least 15, 20% for the next year with these new products coming in pipeline. Okay sir. And we had an EBITDA margin of around 13% in Q3. So is that what you take forward or should we see some improvement in that? No, if you look into our last year EBITDA margin of this quarter, it has been at around 14%. It has slightly dropped to 13.1%. But within quarter four and going ahead, we will see better EBITDA margins coming in. And especially with the exports going up, we would deliver better EBITDA margins and profitability as well.
Shaurya
Okay, sir, thank you.
Operator
Thank you. A reminder to all the participants. Anyone who wishes to join the question queue May Press Star N1 on their Touchstone telephone. Ladies and gentlemen, if you wish to ask a question, you May press star n1 on your Touchstone telephone. The next question is from the line of Nikhil Kale from Invesco. Please go ahead.
Nikhil Kale
Yeah, thank you for the opportunity. So I just wanted to get some clarification. The trailer axle and suspension volume numbers you mentioned, Q. There is not a lot of change but it seems on the revenue side there is a decline. Right. So please correct me if I’m wrong. Revenues for quarter three are around 56 odd crores versus 63 odd crores in the in Q2. Right. So around 10%. All kind of a decline, is that correct? And if that is the case, what kind of crore?
Kunal Rai
Down from 63 crores to 60 crores. Sir, actually it’s actually 59.8 crores in this quarter. It’s also because of raw material prices, steel prices also softening over the last quarter. But on the volume front we don’t see a major shift. In fact in quarter two there was a subdued demand on the trailer side. We built up some stocks over there and that’s how quarter two has performed quite well. But quarter three has been good as well. And more Importantly, we see Q4, the demand from the trailer business is quite good, quite strong.
Nikhil Kale
Okay, understood. And if I’m not wrong, I mean now going into Q4 while you’re seeing kind of a pickup in the numbers, I think the base for last quarter last year is also quite steep. Right? I think you did around 78, 79 odd crore in Q4, FY24. Is that correct?
Sudhir Rai
You’re talking about the monthly sale.
Nikhil Kale
No trailer action, quarterly sales in Q4, FY24.
Sudhir Rai
Yes, absolutely. That was something we had done in the month of March. But. We’re looking at approximately 4,000 axles per month in the month of February. That is what our order book looks like. And see we’ve been producing close to two and a half, 3,000 operating at around 60% capacity. What’s important is now that we’ve reached to a level where we’ve basically reached 80% of our capacities now of 5,000. And the new line which is coming in of the extrusion will not only enhance our capacities on the axles but it’s also a better product to be given to the fabricators. So we’re looking forward to the uptick of business from that angle as well when the extrusion line gets in.
Nikhil Kale
Got it. So fair to say that sequentially we might see an increase but on a Y basis it might still be a decline next quarter.
Sudhir Rai
Next quarter?
Nikhil Kale
Yeah. Q4.
Sudhir Rai
No quarter four decline. There won’t be a decline in the business of the axles and suspensions. Last year we had done close to 260 odd crores on our trailer axle and suspension business. And in the nine months we have done 185 crores in this year. So we don’t see a decline in the overall business of the trailer, axle and suspension. Overall it will only increase in fact.
Nikhil Kale
Okay, understood. And secondly, just wanted to understand the staff costs have gone up substantially on a wire basis, close to 28 odd percent. So can you just maybe throw some light on them? Watch what scan is.
Sudhir Rai
So this is the employee cost from basically 7.6 has increased by 2 crores to 9.7. But this is, you could say it is a one off case in this quarter. It’s going to be back at our previous percentages from, from the coming quarters. There were certain employee arrears and slight revision in the wages. It was basically a one time settlement with certain people in the workforce. So that has what has basically given it a slight increase. But on, on the number of people and everything it seems quite stable. And we would be going back to the earlier percentages from the coming quarters.
Nikhil Kale
Okay, understood, thank.
Operator
Thank you. Sir. The next question is from the line of Mihirvora from Equity securities. Please go ahead.
Mihir Vora
Yeah, hi, thank you for taking my question. So basically my question was first on the domestic industry. So in the Q4 are we seeing a decent, you know, ramp up in orders from the OEMs and the company? Part of the business as well. Like you mentioned, trailers are doing good. But what is the case in the component business? Is it still slow or has it picked up?
Sudhir Rai
The component business is getting better. Volumes at OEMs are getting better. We’ve seen in the previous quarters the entire industry being very cyclical. That means we see one month performing better than the better than the other two months. Especially if you take quarter three as an example, we saw good October, November and December demand was quite soft. But at least in quarter four, what we have seen is January has been better and February also. Up to now things have been good. So if this trend does continue up to March, then we will surely see an increase in our domestic contribution of components and also on the export front.
Mihir Vora
And on the trailer axle business. So sequentially we have sort of underperformed the trailer, tractor trailer production of the industry. So while any reason here that you know why there was like year on year we may have outperformed, but sequentially there’s a steep decline in our volumes compared to what the production volumes have been. So any reason here like what would be the reason our share of, you know, trailer axle supplies have gone down in the quarter?
Sudhir Rai
We are continuously expanding our reach on our axle front. There have been a few states where we’ve got a good demand already and we’ve reached a good percentage of share of business with in the states like Rajasthan and Chhattisgarh, there are certain states where basically our presence has not been there, especially in the south and all. And if there is anything that we have missed out, it would have been missed out in these segments also from a product line perspective.
Very recently now we have launched our 18 ton axle also and that is basically coming in this quarter itself. We just launched it a few months back and there are one or two more axles which are there in the product segment which will be soon planning to launch. So very soon we’ll have the entire product launch product mix there to offer to all the customers plus the reach. Also we are expanding to regions where the presence is not there much overall into overall volume front. Especially as to how we have performed in the quarter two and quarter three, we are quite happy with that. And it is only. Going to grow. And specifically if you look into our nine months performance, we haven’t dropped on any volume and we have not dropped on any revenue front. Also if you look into the previous nine months of the last year on our axle and suspension business, even though the industry has dropped by 7 to 8%.
Mihir Vora
So my last question would be on the capex, like what has the capex been for the 9 month FY25 and what is your estimate for the full in terms of FY25 and then if you can provide us items for FY26.
Sudhir Rai
So I’ll have to look into the exact capex on it. But we had basically from the proceeds of the IPO we had set out approximately 70 crores on our capex. This is mainly on the, on the enhancement of our forging capabilities and our new line in the foundry and as well as new machines for us to equip us to ramp up on our production of our exports. And we are completely in line to whatever we have we had planned during our IPO stage. The major capex plan which would be coming in in FY25, the, the last quarter and FY26 would be on our seamless tube project. We would be starting our investments in quarter four for the seamless tube plant and the majority of it would be done in FY26. But the total value of the capex on the seamless tube project is approximately 170 odd crores.
Mihir Vora
Okay. All right. Okay, that’s all from my side. Thank you.
Operator
Thank you. Before we take the next question, participants, if you wish to join the question queue you may press star and one on your touchstone telephone. Ladies and gentlemen, if you wish to ask a question please press star and one on your touchstone telephone. The next question is from the line of Nikhil Kale from Invesco. Please go ahead.
Nikhil Kale
Sir. My question was again on the trailer axle and suspension business. More on the competitive side of things. So I think Mr. Forgings in their conference call spoke about almost a 27, 28 all crore kind of a quarterly revenue from this business and they seem to be operating in the same regions that you are in, you are operating in. So I mean has that kind of hurt your market share?
Sudhir Rai
Are you there online? You want to take it?
Sumeet Rai
Yeah, I’m there online. There have been a few players that have entered the market. There have been a few multinational companies also coming in. But we feel that we have, in the areas that we have been present, we have maintained our market share and in certain areas even grown our market share in areas like Rajasthan. So of course if they are getting business, they are getting it from somewhere. Because the overall trailer industry has been flat year on year. In fact, volumes of the trailers have slightly maybe dropped over last year. So that business is going somewhere. But we feel that we are in a good place to grow. The order book is increasing. End of December and January has been a good order book for us and February is even better. So we feel our market share is still the same what it was over last year.
Nikhil Kale
Okay, understood. And in terms of the products that you have versus say what RK is kind of offering, any particular configurations who are there and they are not present or is it like a complete overlap that they have?
Sumeet Rai
See, as far as the product range is concerned, there is a certain product range which caters to about we can say 70% of the market. And that is the product range that every player in this field has. What sets us apart is we have gone in to the higher tonnage market, off road market where a higher capacity of suspension and axle is used. So that launch has happened two months back and we have got pretty good response there. We have also gone into the segment which is on the lower capacity front where the trailer does not carry the 55 tons gross vehicle weight that is allowed, but rather it uses a lower rated prime mover which is used in container applications and such. And so in the month of January, actually we launched that suspension. So that also sets us apart.
And in the coming months in this quarter we will be launching our accident suspension for the car carrier. So that’s another segment which for us till now we. We have not been catering to and we expect the volume growth with that as well.
Nikhil Kale
Understood. And in terms of your expansion across different regions. Right. So I think you’ve spoken about there were certain regions where you not present to that extent. So what are the plans over there or are you waiting to kind of get additional capacity before you expand into some of the other geographical regions?
Sumeet Rai
There are two, three things which we are working on to expand into certain regions. Of course, having a dealer network and sales network and service network is very crucial to getting into new regions. So that is something that we are working on to set up these sales channels and service network to make sure that we are there into a region for a longer term. Also the expansion in product categories with the higher tonnage and the lower tonnage suspension and axles. This will help us getting into these other regions like Gujarat and certain areas in Maharashtra.
So it is the expansion in product categories and also work on our sales team and service team and then with the extrusion plant, which is we are hopefully going to start in the next three, four months. This we hope will be a game changer in this industry. And the acceptability towards the acceptability of this product will be much more than a conventional product because that sets us apart from the others.
Nikhil Kale
Thank you.
Operator
Thank you. The next question is from the line of Mohit Chuk from Shublab Research. Please go ahead.
Mohit Chugh
Hi sir. Am I audible?
Operator
Yes, sir, please.
Mohit Chugh
Hi sir. As you said that you are backward integrating through seamless tools. So I just want to know like what percentage of cost can we save through that facility and what EBITDA margins are we expecting in future?
Sudhir Rai
You there? Yeah, sorry, I was on mute. That’s right. The EBITDA margins will also improve a lot in the sense that the prime reasons. For putting up this new technology. I’m sorry, your question was on the seamless tube and the effect of it on our EBITDA margins? That’s right.
Mohit Chugh
Yes sir. Like what percentage of cost can we create through seamless tube facility?
Sudhir Rai
Okay, so currently most of the seamless tubes which are coming in for our requirement is from an import route. Okay. And through the import route we have got two major fluctuations. One is the overseas demand and number two is the our own currency. So looking at all this, these are the add ons which we will be having on our EBITDA margins. Now the effect of it will be about 3 to 4% on the cost of the product. If we go in for our own backward integration and use the tubes which we manufacture ourselves, they will cost about 3 to 4% lesser than our existing boat needs.
Mohit Chugh
To take the new products that you said earlier like you will be working on in future.
Sudhir Rai
Can you come again please.
Mohit Chugh
Sir? I was saying that if you can. The new products you said earlier like you will be working on future in new products in excess and suspension segment.
Sudhir Rai
Yes, I’m sorry, I’m not able to hear you.
Mohit Chugh
I was saying that if you can please repeat new products that you will be working on in excellent suspension segment that you mentioned earlier to the last participant.
Sudhir Rai
Okay. Okay, fine.
Sumeet Rai
Yes. So basically the launch, the new products that we have launched in the past two months have been number one, an 18 ton axle which is suited to more heavier duty application. That’s number one. Number two, we have launched two mechanical suspensions. One, a 20 ton suspension which again is suited to go with the 18 ton axle for the heavier duty applications. And number two, a lighter duty suspension, a 13 ton suspension which is suited to the lower GVW vehicles which have a GVW of about 45 to 49 tons. So these are the two mechanical suspensions. That we have launched already. What we are going to get into in this quarter will be the launch of the car carrier axle and suspension. This product aims at trailers which are specifically designed to carry cars and bikes from the OEM to the various dealers and everything. So this is a segment which till now we have not entered into. But in this quarter we’ll have the product range complete in that as well. So, sir, this segment, that is the car and carrier bike segment. So are there any other competitors also that are working in this segment? In India, the market for this is largely dominated by who is currently the market leader in the trailer segment, which is York. And they have more or less like a monopoly in this segment. But we are hopeful that over time, having this product category in our portfolio, we’ll be able to penetrate in this.
Mohit Chugh
Okay, sir, thank you, sir, that is so much.
Operator
Thank you very much. The next question is from the line of Taha from Tara Capital. Please go ahead.
Taha Ansari
Hello, I’m audible.
Operator
Yes sir.
Taha Ansari
Are we seeing any slowdown in the European market as far as our exports are concerned? And any guidance can you provide for FY26?
Sumeet Rai
Sorry, your first question, I think the voice was slightly breaking, but was it on the export side?
Taha Ansari
Yeah. So the first, the first part of the question was are we seeing any slowdown on the export business? And any guidance if you can provide on FY26 export?
Sumeet Rai
The thing is that, you know, for us we are only increasing on our export business because our earlier contribution towards exports has been negligible. Right. So this is a new product line, new customers that we’ve onboarded and for us it’s increasing many folds this year. As I mentioned, it’s at 3 point. Sorry, at around 4.5 to 5% of export contribution, which will be only increasing because they’re tight. Now we’ve just started off one product and in the coming quarters there are three to four more product lines which we are going to begin. So, and on the other question, second question of yours, I think it was on the FY26 guidance. Basically, if you look into how the commercial vehicle M and HCV segment has performed, it’s approximately on an average 5% down in this year and in the coming year. Obviously, we’ve not got a lot of guidance yet from the OEMs, but we’re not considering a very, very high growth in industry volumes. However, it is important that we focus on the areas where we are planning investments. One would be on the trailer axle suspension front, which contributes 43% on our revenue. Second is our exports, which we want to grow to double digit in the coming few years. So the new products which we are in talks with our customers, that is where the focus of the company would be.
Taha Ansari
Okay, okay. And so my second question is on the new line of business, like you mentioned, you are entering the tag Excel. So if you can just provide some insights on how big is the industry, what kind of margin you can make and as by when it will contribute significantly to our top lines.
Sudhir Rai
See, basically for the extrusion line that we are going to be starting is going to, number one, be used for our trailer axle application and number two, we can be in the business of supplying dead axles to the OEM customers. Now, the OEM customers for their rigid body vehicles use these tag axles. There is, I think put together between all OEMs, they do produce close to 5,6000 tag axles. They use 5,6000 tag axles per month. That is the volume system which is there obviously with the oem. The process of validating it and testing it is a process. So once we have the product ready, we would be in touch with them for further validation, testing.
Taha Ansari
Okay, got it. And it will be a similar margin, 13, 14%.
Sudhir Rai
Sorry.
Taha Ansari
It will be of similar margin this business, right? 13, 14%.
Sumeet Rai
Absolutely. It will be approximately of similar margins.
Taha Ansari
Okay. Okay. Thank you sir.
Operator
Thank you. The next question is from the line of Richa from Equity Master. Please go ahead.
Richa Agarwal
So, thank you for the opportunity. So my question is, what if you could quantify the opportunity in 18 turn Excel, that would help and what kind of market share, considering that we would be the second player, are we planning to corner in this.
Sudhir Rai
Sumit? You could take that call.
Sumeet Rai
Yes. See it’s. It’s difficult to quantify a market share in a particular segment which is dedicated to higher load capacities and rougher terrains. But we are seeing with this launch in product, we are seeing an increased demand for it. It’s just been about two months since we have launched this product. So I can’t really answer exactly what the market size is and where we stand on that. But there is definitely a market there for the higher tunnel capacity axles.
Richa Agarwal
Okay. And my second question is on the export opportunity. Like if we look beyond FY25 considering that, you know, so far I think you had two tie ups with one with a Sweden based player, another with Japanese. So what is your visibility on, you know, exports? If you could share some kind of numbers like where it could go from 5% to maybe for over the next two years, where do you see the share of exports? And also in addition to that, how are the margins different in export versus domestic markets?
Sumeet Rai
So as I mentioned.
Sudhir Rai
Yeah, sure.
Sumeet Rai
Okay. So export, you know, is something. There are, there are a couple of catalysts which are working in our favor. One is this new China plus one which is playing in everyone’s mind and we are seeing a lot of effect of that. The number of inquiries we are getting from this China plus one story is very encouraging. That is one aspect number two, the western countries of course. Find it very, very difficult to make forged parts or casting parts, auto components. They have gone beyond this category of parts because of certain their own cost of manufacturing. And the second one is of course on their fuel costs, which is exorbitant and on environmental issues. So keeping these two, we are focusing a lot of attention on our growth factors and it will take us about two to three years where we will see a double digit growth and we’d like to take it to something close to 15% in the next two, three years. Our export targets. So one, of course you mentioned the Swedish company and we are on good platform with them and we have a couple of other companies also where we are trying to get into a good alliance. How would the margins be different in export versus domestic? Okay. The margins fortunately are much better. I mean if we are to draw our balance sheets only based on export business, we would be running with a EBITDA of 20 to 22%. So it’s, you could say a little less than double margins. It’s still now fortunate that in spite of the long period of realization, the margins are still much, much better. If you look into auto component business and you see it’s not only just this, with this extrusion plant coming in, we will even have the opportunity to export this. Currently no one exports trailer axles from India because they are made from the fabricated route. But world over the world only uses an extruded axle. So we will have this opportunity with this new one. This will open a new revenue also for us.
Richa Agarwal
Okay. And I’m not sure if I got it right. I think in a previous response you perhaps suggested or gave a guidance of around 15% growth. Is that assuming, you know, no significant recovery in the broader markets, Are you counting on domestic market recovery?
Sumeet Rai
Can you please come again? You said 15%.
Richa Agarwal
Yeah, I think you mentioned 15% growth with the new components and export opportunities. So what kind of domestic.
Sumeet Rai
Yes.
Richa Agarwal
Yeah. Please correct me if I’m wrong. And also. So is that was it considering, you know, some flattish domestic market?
Sumeet Rai
I’m sorry, when I mentioned 15%, it was about the growth in the next two to three years on our export front.
Richa Agarwal
Okay.
Sumeet Rai
Be able to get 15% of our revenue from exports. That is what we are targeting. 15% of our revenue coming in from exports in the next two to three years. That’s what I.
Richa Agarwal
Okay. Okay, fine. Thank you.
Operator
Thank you, ladies and gentlemen. We take that as the last question for today. I would now like to hand the conference over to the management for closing comments.
Sudhir Rai
Yes, we thank everyone for joining in and asking their questions. We appreciate your participation in our earnings call today and we hope that we’ve addressed to the queries. And should you have any further queries, please feel free to reach out to our investor relation advisors that Strategic growth advisors. And thank you from our side.
Operator
Thank you members of the management, on behalf of Equeria Securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Sumeet Rai
Thank you.