PITTI ENGINEERING LIMITED (NSE: PITTIENG) Q1 2026 Earnings Call dated Aug. 08, 2025
Corporate Participants:
Unidentified Speaker
Akshay Pitti — Vice-Chairman & Managing Director and Interim Chief Financial Officer
Sandip Agarwala — President – Operations & Marketing
Analysts:
Unidentified Participant
Sunny Kumar — Analyst
Deepesh Agarwal — Analyst
Mohit Jain — Analyst
Rahul Kumar — Analyst
Balasubramanian A — Analyst
Naysar Parikh — Analyst
Het Choksey — Analyst
Shyam Maheshwari — Analyst
Abhijit Mitra — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q1FY26 earnings conference call of PITI Engineering 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 this conference call, please signal an operator by pressing Star then zero on a Touchstone phone. Please note that this call is being recorded. A brief disclaimer. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and it may involve risk and uncertainties that are difficult to predict.
With this, I now hand the conference over to Mr. Akshay Pitti, managing Director and Chief Executive Officer of PITI Engineering Limited. Thank you. And over to you sir.
Akshay Pitti — Vice-Chairman & Managing Director and Interim Chief Financial Officer
Thank you. Good afternoon everyone and a very warm welcome to the Q1FY26 earnings call of PITI Engineering Limited. Along with me, I’m joined by Mr. Chaita Sundaresh, Deputy COO Mr. Sandeep Agarwala, COO for Motor and Generator Components, Mr. Rishabh Gupta, COO for Machine Components and Mr. Pawan Kumar, CFO. Along with us is also SGA, our Investor Relations partner. We have uploaded our results and related documents on the stock exchanges and company’s website. I hope everybody had an opportunity to go through the same. I would like to note that unfortunately there’s an error on slide number 19 of the investor presentation related to FY25 volumes which will be rectified and uploaded shortly.
Over the years, we have transformed from a specialist in electrical steel lamination into a comprehensive provider for engineering solutions. We have expanded our capabilities and diversified our offerings to include a wide range of high value added components and sub SMBs for rotating electrical equipment. Our operations are now structured around two key verticals. Rotating electrical equipment and machine components. Supported by our dedicated foundry division, we offer a broad range of services including machine castings, core building, shaft manufacturing assembly, laser cutting, precision machining, tool manufacturing, fabrication to name a few. Serving a wide range of industries. Our integrated end to end supply chain enable us to provide seamless delivery and exceptional value to our customers.
FY25 marked the transformation of the year for Piti. We successfully completed the acquisition of Bagadia Kshetra Industries Private Limited and Dakshin Foundry Private Limited. Along with the merger of PITI Castings, these strategic moves are said to significantly enhance our product portfolio and broaden our industry reach. Increase in capacities and capabilities and strengthen our customer base. Additionally, they support backward integration enabling a more seamless and efficient manufacturing process. With this consolidation, we are now positioned as one of the most integrated engineering solution providers in the space in the country, offering a comprehensive product range and the ability to serve a wide spectrum of industry.
Our strategic priorities moving forward include seamless integration of the acquired entities to realize the synergies and drive operational efficiencies enhance productivity and efficiency to improve our consolidated margin profile, investing in R and D and automation and lean manufacturing to reinforce our presence in high value high margin product segments. Let me give key specific highlights for this quarter before dwelling into the financial performance. Based on the current run rate we expect Based on our current revenue run rate and FY25 projections, we expect to operate near peak capacity for the fourth quarter for the current financial year.
To support the next phase of growth, the Board has approved a capital expenditure of rupees 150 crores to be deployed over the next 18 months. This investment will enable the following capacity expansion. Sheet metal Capacity will increase from 90,000 metric ton to 1,8000 metric ton per annum. Machine hour capacity will increase from 6,48,000 machine hours to 7,20,000 machinas annually. Casting capacity will expand from 18,600 metric ton to 24,600 metric ton. This CAPEX is a strategic step to ensure we are well positioned to meet growing customer demand and capture emerging business opportunities. In the previous call we had mentioned the commissioning of the revolnishing line.
We are pleased to share that technical approvals have all been received and commercial production and supplies have commenced. We are seeing strong global demand from data centers and have successfully secured a second platform with an existing customer. The development of this alternative component will begin shortly. At peak revenue potential, this platform is expected to generate more than 20 crores of recurring annual revenue.
Now to share the operational and financial highlights I will hand over to Mr. Sandeep Agarwala.
Sandip Agarwala — President – Operations & Marketing
Thank you. Welcome everybody. Let me now share the key operational and financial highlights for Q1FY26. Our consolidated revenue for the quarter stood at rupees 457 crores marking a 17% year on year growth compared to rupees 391 crores in QI. FY25 exports accounted for 31% of the total revenue during the quarter. EBITDA came at rupees 75 crores reflecting a strong 30% year on year increase with EBITDA margins improving to 16.5 up 170 basis point from 14.8 in Q1 FY25. Profit after tax also grew by 17%. Year on year 20 rupees. 23 crores. Sheet bottle volumes for the quarter were about 16,000 metric tons.
It is worth noting that Q1 and Q2 have historically been softer quarters for the industry. And in line with our past trend, we typically see about 45% of our annual revenue generated in H1 and the remaining 55% in H2, a pattern we expect to continue this year as well. We continue to closely monitor the evolving geopolitical development and tariff situations. However, we remain optimistic of achieving a top line growth of about 15% for FY26. This is supported by strong pipeline of inquiries and robust order visibilities. With the anticipated increase in revenues and combined with improved operational efficiencies and benefits of operating leverages, we are confident in our ability to drive further margin expansions in the coming quarter.
With this, I hand over to Mr. Akshay for the Q and A session. Thank you.
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 and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. The first question comes from the line of Sunny from Access securities. Please go ahead.
Sunny Kumar
Yeah, thanks for taking my question. And while I understand there is, as you mentioned, there is some error on slide 17, but I would like to appreciate the effort that I think there has been. The presentation has been improved a lot, so it seems a lot more sorted. But having said that, I think the numbers for Dakshin and Pipl were excluded. So could you just elaborate? I mean, give the larger numbers because you have just mentioned the sheet metal volumes were 16,000 megametric ton, but otherwise it would be good if you could give the other numbers as well.
Akshay Pitti
What we have done here, we are trying to consolidate the sheet metal and casting, give the consolidated numbers. So the Dakshin and Bagharia numbers are rolled up into slide number 19 itself.
Sunny Kumar
Okay. Okay, understood. Okay. So. And the correction, would you be ruling it out just after the call or would you prefer correcting whatever is there. On the call itself
Akshay Pitti
just after the call? SGA team will be correcting it and sending it out.
Sunny Kumar
Okay. Okay, fine. Thank you. And in terms of the numbers, I think in the last call we had mentioned that the depreciation number going ahead will be similar to the Q4 number and the Finance cost will actually start declining. But both the numbers seem to increase. So can you throw some light on that and expectations going ahead?
Akshay Pitti
Yeah. So on the working capital side, if you see we have moved from about 57 days to about 75 days in the working capital cycle. This is mainly on account of two issues. One, we have stopped factoring export receivables like in the past. Therefore the cost of finance of that particular business is not reduced from the sales. It’s now coming into the EBITDA line, interest line. So if you see the EBIT margin has increased and so has the interest rate, number one. Number two, we have also stocked up a little extra raw material considering the current situation related to BIS and import of material and the quality control orders on the steel mills. So we have seen huge shortages in raw materials in Q1 and the situation is expected to continue up till Q2 end as a result of this disruption. Which is why our net debt has actually gone up to about 525 crores.
Sunny Kumar
Okay, okay. So but can we expect it to reduce a bit or because we have announced capex it would remain elevated or. May increase further going
Akshay Pitti
the the RM we are stocking up will be reduced by December and only depending on the situation, the market and the availability of raw material.
Sunny Kumar
I’m asking about the net debt.
Akshay Pitti
Net debt will be related to that because right now the net the driver for the increase in net debt is mainly the inventory.
Sunny Kumar
Okay, so financing the inventory.
Akshay Pitti
Yes.
Sunny Kumar
Okay. And depreciation would the current quarter’s rate fair assumption or do you think it may change?
Akshay Pitti
Like we have announced this CapEx which we’ll start implementing probably from second half of the year and as that CAPEX will move from CWIP to cross block, the depreciation will rise. Till then this should be the steady rate. Approximately we have only about 25 odd crores of CVIP currently left to be capitalized. So it’s not going to be significant.
Sunny Kumar
Okay. Okay. And given new CapEx, I think it will be in phased manner and there will be some breakeven period. So what are. Is there any expectation in terms of our target for FY27 or shall we assume that the meaningful contribution to earnings side will only come in FY28?
Akshay Pitti
This is the CAPEX that we are currently incurring is all aimed towards FY27 sales numbers. As we mentioned, we are expecting a 15% top line growth for the current year and in terms of quarter four we expect to be at full optimum capacity utilization right so the quarters four will be at full utilization. So for quarter one of FY27’s growth, we will be doing this capex in a phased manner.
Sunny Kumar
Okay. Okay. So but we had earlier stated that you would be doing around 2100-2200 crores of sales in FY27. So that does it change and if yes, how much?
Akshay Pitti
I think that should get a revised upward. I think this year itself we should be ending around 2000 crores. If you go by our guidance of 15 IOI growth and for FY27 that will change. But like we said, it’s a evolving geopolitical situation and we are still optimistic. The visibility and order pipeline is quite strong.
Sunny Kumar
Understood. Okay, thanks a lot for answering my question.
operator
Thank you. Before we move to the next participant, a reminder to all participants, you may press Star and one to ask a question. The next question comes from the line of Dipesh Agarwal from UTI amc. Please go ahead.
Deepesh Agarwal
Yeah. Hi, good afternoon. Congrats for the good set of number. Akshay, my question is is how you plan to mitigate the U.S. tariff situation. Are you looking for alternate manufacturing or you would be looking for newer markets or do you think the customers can absorb the kind of a price increase?
Akshay Pitti
So see, there are two parts to this answer. The first part, if you see our consolidated exposure to the US market. Firstly, our exports, about 31% of revenue. Of that revenue, about 30% goes to US. So on the total revenue basis, the exposure to US about 9 to 10% which is going to be impacted by this tariff. So it is, while it is a decent amount of revenue, it’s not critical to the company, if you may put it in one sense. Second, if you see the kind of tariff announced, I don’t think any company, US or the customer can absorb it.
Eventually it has to be the end user. And secondly, if you see the supplier base like I mentioned in the previous call as well, it’s either India or China. So currently China has a 30% duty from what I’m given to understand. And we are at a 25% duty. There’s a discussion on the Russia penalty which is still an evolving situation. So from whatever discussions we’ve had with our clients, they are also little confused as to how to navigate the situation.
Deepesh Agarwal
Right.
Akshay Pitti
We are not seeing any decline in order inputs. I think quarter three, our projections are really robust for our export business.
Deepesh Agarwal
Right?
Akshay Pitti
Including the US market.
Deepesh Agarwal
Do you think the capacity so 10% of the revenue comes from us? Do you think if the you are not able to supply to us because of tariff, you can chip into the other markets and actually compensate for this kind of a decline.
Akshay Pitti
For sure. If you look at the other North American markets, what our customers have, they have facilities all over the globe. So if it is prohibitive for them to probably import this material to us and manufacture it there, they probably will move it to some other facility in the global supply chain and get it manufactured there. See, what is interesting about our US business is this business is primarily linked to mining related parts and not the locomotive related part of our customer. And that is not in US consumption. Those mining trucks are exported all over the world. So, you know, like it’d be very easy for them to move their production somewhere else if the tariff situation continues.
Deepesh Agarwal
Sure, sure.
Akshay Pitti
What we can’t assess is the indirect impact of the tariff. So if we have customers in India who are exporting their products to us, that is still an unknown question for us.
Deepesh Agarwal
Right. The other thing I want to understand from you is on the capacity expansion. Right now, if I see you would be operating roughly at 70% utilization across the various verticals and there is a geopolitical uncertainty still you are going for expansion. So how confident are you on actually having the exit run rate on capacity utilization healthy enough for us to see next year new capacity being absorbed?
Akshay Pitti
If I talk of the total tonnage of laminations that we export to the US, I think that’s in a year somewhere around 3,000 tons. Not significant like I mentioned in tonnage terms, in revenue terms it’s slightly higher because there’s significant value add in those parts. If you ask me, on volume projections for the three current year, our annual business plan of 68,000 tonnes still looks very, very achievable and it will be split something like 16,000 tonnes. What we have done in the current quarter 17, the next quarter and somewhere close to 18 and a half and 19,000 in the quarter 3 quarter 4. So if you look at our quarter 4 run rate, that will be actually well above the optimum 80% utilization levels, which is why we have decided to go ahead and invest.
Deepesh Agarwal
Sure, sure. And this new capacity will be up and running by when? 1q of next year, Right?
Akshay Pitti
It will be progressively implemented starting 1Q of next year. Yes, sure.
Deepesh Agarwal
And lastly, the current margin levels of 16.5% would we think that these margin would be sustainable? And as you increase the utilization to 80% by Q4, there could be some upside risk to this?
Akshay Pitti
Definitely. So if you see the employee cost, other expenses, those are all factored in for the higher operating level. So as we move from 16,000 to 19,000 quarterly output levels in the lamination business, the incremental margin should technically flow to the EBITDA line.
Deepesh Agarwal
Sure. Thank you and all the best.
operator
Thank you. The next question comes from the line of Mohit Jain from Dr. Choksee Finserf Pvt. Ltd. Please go ahead.
Mohit Jain
Hi sir, good afternoon. Thanks for taking my question. So my first question would be on the EBITDA quarter rise. So we have seen a good jump in EBITDA margin from last year. YoY 16.5% from 14.5. What is the EBITDA per ton realization this quarter and could you please compare it sequentially and y.
Akshay Pitti
So if you look at EBITDA button we can just google that out at 75.4 crores is the EBITDA for the quarter and the tonnage is about 16,000. But like we had mentioned in the past, that would not be the right metric to measure the company given the complex product mix that we have now because we have casting, machining, fabrication and even in lamination different levels of assembly.
Mohit Jain
All right sir, answer on the sector sector side I’ve seen renewable energy share mix in the overall sector declining from like 5, 6% to 3% this quarter. So what are the reasons behind this drop and what sort of demand do you see in renewable space in the next like 1 and 2 years?
Akshay Pitti
Renewable space is typically a seasonal business as well. The windmills which need to be installed or the power generation projects that are getting implemented so seasonally this will keep varying. Overall renewable energy in this year will be much higher than last year in actual rupee terms. We are seeing huge demand coming in from domestic as well as international wind layers as well as the requirement of electrolyzers for the hydrogen part of the business continues to grow. And with this revolution line that has been implemented, the hydropower related business also should start growing starting Q3.
Mohit Jain
Okay sir, and sir, earlier you mentioned out the.
Akshay Pitti
Sorry, just coming back to your EBITDA per ton at a very simplistic level. It’s about 68, 6, 46,008, 75 tons in a consolidated basis.
Mohit Jain
And this sequentially. Sequentially, I mean last quarter that I.
Akshay Pitti
Think, that I think can work it out. We have given the quantitative numbers, you can just divide the EBITDA by the tonnage. I don’t have that on hand with me.
Mohit Jain
Got it. And so you earlier mentioned about 15 growth this year which you’re targeting which comes from 1952 to 2000 crore or revenue. And you Also maintain a positive outlook for FY27. I guess before like 2, 3/4 you mentioned about around 2300 crore guidance for FY27 at a constant raw material prices and EBITDA margin guidance was around 15 to 16. Now do you think we’ll achieve this revenue guidance or given the new capex you are going to have incremental guidance on this number on FY20?
Akshay Pitti
I think we’ll maintain that guidance for now. What we are doing is also a lot to do with the margin accretive products. So I think you should see margin growth in FY27 post CAPEX progressively through the year. The capacity in lamination, the headline number is increasing significantly. While that’s the case, if you look in the casting side of the capacity it’s increasing even more than the lamination. So you will be seeing those benefits in FY28 because the machining and casting will be a higher profit margin business.
Mohit Jain
All right, so thank you very much. That answers all my questions. Have a good luck.
operator
Thank you. Before we move to the next participant a reminder to all participants you may press Star and one to ask a question. The next question comes from the line of Rahul Kumar from Vaikaria. Please go ahead.
Rahul Kumar
Yeah hi sir, just on the US exports what is the outlook for growth in the next few quarters you’re seeing especially in the context of the merger of their end customers is that.
Akshay Pitti
Sorry, if you can just clarify what do you mean the merger of the end customers?
Rahul Kumar
I think there’s a expectation of merger of the railroads in usa.
Akshay Pitti
Yeah, so see those are the end customers of my customers. So as the consolidation capacity takes place I think it will help, you know drive more capex and more modernization in railways. In any case that’s for the overall market the growth anyways is there. When we talk to our clients we see robust order visibility and order flows coming to us ex off tariff. I think quarter three is slated to be our best export performance ever. And if you see quarter four of last year and current quarter they were also some of the best quarters in our export history. Okay, the major question that needs to be answered is the tariff bit.
Rahul Kumar
Okay. And second question is I think you mentioned briefly but what is the update on this import of electrical steel situation? I mean when do you expect it to be resolved for let’s say industry in general?
Akshay Pitti
What we are expecting was the imports from China would be stopped starting April. What we did not expect or nobody in the country expected was that there would be quality control orders for even integrated Steel mills which have BIS approvals, such as Korean Cosco or Nippon from Japan or the Russian. So that has actually resulted in a constrained supply to India of electrical steel. While we wanted a stop to the Chinese material, we didn’t want stop to all materials coming to India. So it kind of backfired dramatically. And I think the quality control orders are already lifted for the Japanese and Korean mills this month itself. So we should start seeing the situation easing out from September onwards. We should see the shipments coming in.
Rahul Kumar
Okay. Okay, perfect.
Akshay Pitti
So till then we are on, you know, holding mode for our raw material. We rather hold the material and keep it so that we don’t, you know, incur any shocks in supply chain.
Rahul Kumar
Okay. And the third question which I have was I think if I look at your product mix which you have disclosed, I think this is for the standalone business which you have disclosed in that if I see the value added mix has improved sharply this quarter versus let’s say Q4 of last year, do we expect this kind of value added product mix to continue or this is more of a one off phenomenon this quarter.
Akshay Pitti
the percentage is very sharp, but in absolute terms it’s not so big a number. So we will see percentage wise sharp increases. This business is stated to grow. Like I said, the wind power business is going to do well. The railway business is doing well. The mining business is doing well. Data centers is doing well. So these are all the segments that take the higher value added products, higher level assemblies and sub assemblies.
Rahul Kumar
Okay. And the last question which I had was I think there’s a goodwill basis. Your last year acquisition. Yes. If I remember correctly, I think there was some discussion for, you know, how do you want to amortize it going forward or do you want to impair it? I mean, have you reached some sort of conclusion regarding that?
Akshay Pitti
Currently we are not impairing it as we have been advised. We are still taking some more advice from our tax auditors on how to amortize this correctly. So I think we’ll come up with a policy of that shortly.
Rahul Kumar
Okay. Okay. And on your U.S. exports, I think one of the key customers which you export, given the status drama, is it possible for the customer to move that business out of that location and therefore circumvent the tariffs like that.
Akshay Pitti
see part of the business? Yes. Not all of it. Certain things I don’t think they would be able to move out immediately. It will take significant time. But certain parts where they have dual capacities in the other global facilities, I believe they would start moving it down especially for Those businesses where the end market is not within the United States.
Rahul Kumar
Okay, so broadly speaking let’s say for the products which goes out of us, for those, those particular products what would that be? Percentage? Let’s say if your sales to us was 10% what percentage is that related to the product exported from us?
Akshay Pitti
See it’s very difficult to correlate our quarterly sales or our annual sales to their sales because they also have an inventory, there’s a transit time and where they ship it is like. It’s very difficult for us to you know, kind of correlate that. But if I have to make a guesstimate based on our discussions it would be something like 30 odd percent.
Rahul Kumar
Okay. Okay. And. I think last question is on your business. I mean is it possible that given the tariff on India is at a high level and let’s say if it sustains do you believe that I mean you can move the business to some other location maybe reshoring it to let’s say Mexico or some. Some facility like that.
Akshay Pitti
So we have explored Mexico as an option. What we understand if you take the steel prices that are prevalent in Mexico and the cost of labor arbitrage I don’t think it makes much sense to reshore it to Mexico. Anyways Mexico is one of our largest export markets. Out of our total exports about 55 odd percent goes to Mexico. So we have looked at that as an opportunity. Not even due to tariff, even pre tariff trying to be close to customer.
Rahul Kumar
Right. Okay. Okay. Okay. Okay. That’s all. Thank you.
operator
Yeah, thank you. The next question comes from the line of Bala Subramanian from Arihant Capital market limited Please go ahead.
Balasubramanian A
Good afternoon sir. Congratulations for good set of Numbers sir, this 155 crore capex how much capex to be incurred in effect probably we are starting at the H2 only and FY26 number and FY27 number on the capex side and we are doing is a brownfield capex or we are setting up a new facilities. Whether we are doing it or we are setting up some other plan we are getting any incentives or subsidies for this capex.
Akshay Pitti
Yeah, so just hold on one second. So if you ask whether it’s a brown field. Yes, it’s a brown field. It’s known to lot of disturbance.
operator
Yeah, a lot of disturbance. Please move to a quieter place please.
Akshay Pitti
Thank you. So like I was saying. Yeah so yeah these are all brownfield expansions. There’s no new facility been created. As you recall the infrastructure is in place in both Bangalore and Aurangabad for increasing the capacity and we’ll be only doing incremental capexes quarter on quarter in a brownfield expansion manner in terms of capex spend of 150crores which is a fresh capex. Apart from this we already have about 40 crores of unspent under unutilized Capex which was approved from the last financial year carry forward if I take the total 190 crores including the carry forward we will be spending somewhere around 80 odd crores in the current year and the remaining 110 crores in FY27.
Balasubramanian A
How is the funding mixer?
Akshay Pitti
Internal accruals and debt okay sir so.
Balasubramanian A
Actually earlier we plan to repay some 100 crore kind of debt Whether like where we are going to repay or will we continue the same in this year.
Akshay Pitti
Loans for this, loan for this project at a better cost.
operator
So may I request you to mute yourself while you are not speaking please There is a lot of disturbance. Yes, thank you.
Akshay Pitti
Well like I was saying we intend to repay those debts and take fresh loans for this with better cost of funds.
Balasubramanian A
Okay sir actually because of this tariff arbitrage I think last quarter mentioned about 200% increase in RFQs from US and EU clients are diversifying Basically clients are diversifying from China and how this order conversion how the traction is there so.
Akshay Pitti
The traction is still good. See this tariff has just come in a few days ago. Despite that the discussions are still encouraging. Nobody believes that this is a final tariff that we will have to pay 25% plus 25% total 50% and even in that case they want an alternate supply chain to China. So RFQs are continuing to be. Well like I said the recent platform on the data center has been finalized with the customer with a 20% annual revenue potential so we are continuing to see the same kind of order flow and inquiry flows.
Balasubramanian A
Okay sir. So lastly on the automotive side right now maybe 1 or 2% kind of revenue share only but they are targeting 10 to 12% kind of share and what specific OEM partnerships or any other fragments are underlying in coming quarters.
Akshay Pitti
If you see the overall EV market globally also is under a lot of pressure. We are still focused on both EV and non EV related automotive and we have a few customer additions going on. This will be a very slow and steady process as the supply chains move to India. As I had mentioned in the past it is not a near term prospect, it’s a longer term prospect.
Balasubramanian A
Okay sir. And lastly our clients are really doing good. I think they have seen in that Q1 itself I just want to understand, is there any reiteration of our revenue guidance and margin and volume guidance in this year how this pipeline, whatever, how.
Akshay Pitti
This mentioned previously in the call, I hold that guideline. I don’t think I’ll be revising that within the call.
Balasubramanian A
Okay, sir. Okay, thank you.
operator
Thank you. Before we move to the next participant, a reminder to all participants, you may press start and one to ask a question. The next question comes from the line of Nysar Parikh from Native Investment Managers. Please go ahead.
Naysar Parikh
Hi Akshay, thanks for taking the question. My question is on volumes. The volumes this quarter are obviously soft. So what is driving that and how should we look at it for the rest of the year?
Akshay Pitti
Typically, Q1 is always slightly slower due to the upheaval in April related to raw material. April as a month was quite bad. So we’ve made up a lot of ground in June and May and June. So for quarter two, if you look, we are projecting somewhere around 17, 17 and a half thousand tonnes. And for the whole year we still maintain our guidance.
Naysar Parikh
Okay. And specifically within that, you know, we are seeing high value assembly parts, machine components, etc. The decline is higher. I’m assuming these would be better margin products generally. And earlier you mentioned that, you know, we’ll try to increase component of high value parts and all that, but that’s not happening. So is there any product shift which will eventually flow down to margins?
Akshay Pitti
So if you’re referring to slide number 19, like I mentioned in my opening remarks, there is an error wherein Q1FY25 is wrongfully labeled. Those numbers are actually for Q4FY25. SGA team and our team will be restating these numbers and sending out. However, if you see even on a quarter, on quarter basis, the move is from high value added SMD’s to stator frame and rotor sharp integrated SMD’s which is the next level of value add. So what is happening is if you see the high value added parts are moving into an even higher value added bracket.
Naysar Parikh
Okay, got it. And just on the U.S. bit that you mentioned, right, that 10% of your revenues are the U.S. but for the balance that you’re kind of obviously, you know, selling, do you know if your end consumer, they are using it mainly domestically or are they exporting to us? So do you have any indirect risk that you are bearing?
Akshay Pitti
So indirect risk would be there. It is very difficult to quantify that. Like if you see the data center product that we do, those go all over the world. So in a given quarter, it might be US heavy, in a given quarter, it might be Europe heavy or Australia. We don’t get that granular detail from our domestic customers as to what their export mix is.
Naysar Parikh
Okay. But at least from the either of them, even from the domestic customers, right now you’re not getting signals of, you know, slower ramp up or delay in ordering or anything like that. You’re not seeing that right now.
Akshay Pitti
Nothing such as that. In fact, like I said, quarter two is expected to be the best quarter in the company’s history in terms of volumes.
Naysar Parikh
Right. Got it. Okay. Got it. Thank you so much. And all the very best. Yeah.
Akshay Pitti
Thank you.
operator
Thank you. Before we move to the next participant, a reminder to all participants, you may press Star and one to ask a question. The next question comes from the line of hate Choksi from Diven Choksi, please go ahead. Sorry to interrupt. There is a lot of background noise. Please go ahead with your question. Sir, hello?
Het Choksey
Yeah. Can you hear me? Hello?
operator
Yes, sir. Please go ahead.
Het Choksey
Yeah, yeah. Good afternoon, Akshay, and thank you for a very detailed presentation and very, very detailed approach towards tackling these uncertain times. So keep up the good work. I have two questions out here. First thing is I’m seeing a substantial jump this quarter, although I don’t like to see the number on a quarterly basis. But in the railway component business, there is a substantial jump as a percentage of your overall revenue breakup. Can you just elaborate on the traction motor and the LV component business? Exactly what is happening?
Akshay Pitti
So as you recall, we were in the final series of approvals for a lot of our domestic parts that will be going to the CLW DLW factories for machined castings. So those have come through and now our commercial supplies have started and are ramping up for those businesses. Apart from that, if you see on a this is on a consolidated basis post the acquisition of Dakshin Foundries, a lot of their business also is towards railway and traction motor related parts. So those are the two things which have changed there. And the remaining is attributable to the increase for our supplies to a project called Shimandu Project for Vaptech where they have this new locomotive being built for South Africa. Somewhere in Africa. I keep forgetting the country. So that is a kind of a one time.
Het Choksey
Is it the Mozambique order?
Akshay Pitti
Could be. I don’t have that offhand with me. I just asked my team to check on that. It’s called the winning Shibandu Consortium or something. So that is one thing which is again bumping it up and apart from that, I mean quarter one was very good for our traditional U.S. and Mexico Railway related business.
Het Choksey
Okay, so does this trend continue as a percentage of the revenue breakup? Like it just wanted to get a pecking order of the profile of the margin. As I understand the mining business, the renewable business and the wind power business and the data center business is a really high margin business.
But as a percentage of your revenue, the brake, the compost, it’s still small, it’s like a sunrise space. Whereas the power generation of business, or let’s say the industrial and commercial might be the low margin business but a significant volume driver business. So where does the traction motor and the railway components stand here?
Akshay Pitti
Traction motor and railway components are also very high margin business. So if you have to take a margin profile wise, traction motor, railway components is one. Mining, oil and gas, renewables and data centers. These would be your higher value add higher gross margins business.
Het Choksey
Okay. And do you have a break of the data center part as a percentage of this revenue?
Akshay Pitti
It’s combined on the power gen but I think that should be about 4%.
Het Choksey
Can you see it going up to close to 7% this year?
Akshay Pitti
See the overall power gen space is increasing. As I mentioned we are going to see increase from hydropower related projects and thermal power related projects as a consequence of the new varnish line that we have commissioned. Apart from that, the traditional DDSAT business volumes also are going up and are projected to go up further. So while there will be a significant absolute increase in the data center related business in percentage terms, it’s little difficult for me to say whether it will go to 7% because the other segments also are growing. See what we are seeing is that it’s a broad based growth. Okay. Some sectors such as say wind power is going to grow faster than the rest. But every other sector also is growing significantly. Maybe they are not going 50% up but they are still doing 10 12%.
Het Choksey
Okay, okay. And it’s okay just to get a feel of this part to continue on this. We have seen this government’s plan of next five years that about 6 lakh crore rupees will be invested in the entire power distribution and transmission space to strengthen the HVDC and UHVDC space. How do we fit into this story? Can you elaborate?
Akshay Pitti
So that is mostly on the transmission lines and transformers. That’s what they require. We are not into the transformer business, that is a static electrical equipment. We are only in the rotating electrical equipment. We may look at it as an opportunity going forward. But the steel sourcing of transformer grade steel is very, very difficult, complicated and very, very high cost. So your gross margins there are much lower. Capital employed is higher. So while we have explored those opportunities, we feel that our capital can be better deployed with better returns. Currently in this segment, if an opportunity in inorganic way presents itself to us in that space, we would be interested to look at that rather than doing it Greenfield.
Het Choksey
Fair enough, sir. Great. Just one Clarity on this traction, motor and railway component business. What’s your share of. As far as. As far as the Dakshin is concerned to let’s say the Metro projects and the high speed rail projects coming up.
Akshay Pitti
So Metro and high speed rail. I believe you’re talking of one day Bharat in this case.
Het Choksey
in some form. Yeah, the upcoming. Yeah. Future project.
Akshay Pitti
Not the, not the Mumbai Ahmedabad, right.
Het Choksey
No, no, no. I mean you can elaborate on that. But I was definitely concerned talking on the one day Bharat.
Akshay Pitti
So yeah, so there I think you would have very, very high. I would not want to put out the percentage, but yeah, I would say very, very high percentage market share.
Het Choksey
Okay. We’re like sort of we are like the de facto player in this place who can supply to Meil and anybody
Akshay Pitti
for the motor bodies. Yes. For me, I mean and all of these people, we are the preferred vendor of see Dakshin does the casting. Now we are starting to do the machining in house for those castings and we make the laminations in PITI engineering. So now with all of this coming under one roof, it’s unbeatable combination.
Het Choksey
Perfect. Perfect. I think it sounds good. And just one last question, Clarity. You mentioned on the call earlier to one of the participants that the US business is like 10% of your revenue. But as I understand it is not easy to shift the supply chain overnight. Despite China having, let’s say today, 30% tariff and we are moving from 25 to 50. So just want to get your understanding on the mining part which is the main component in the US what is your interaction with your customers? Will they easily move to China if this continues? For the minor business,
Akshay Pitti
whatever parts are due source and they are already vendors approved, it is not that big a deal to move it. It will take six to nine months. If they are already approved suppliers, they have to ramp up. That’s about it. But where there are no approved suppliers, it’s a multi year project. So if I have to give a estimate of the 10% revenue, I would say about 7% is where there’s no dual source or there’s no dual source in a competitive, economically competitive region X of tariff.
Het Choksey
Okay, okay. Hello.
operator
Yes sir.
Akshay Pitti
Yeah, yeah,
Het Choksey
please go ahead. Yeah,
Akshay Pitti
yeah, yeah. So that’s what I’m saying. If you take the 10%, about 3% is where there’s dual source in an economically competitive region for the 7%, there may be some due source, some no due source in some cases and wherever there is, it’s not in an economically competitive region.
Het Choksey
Okay, so, so it means that the three person business is where there, there will be a lot of negotiations and discussions on part of the customers.
Akshay Pitti
Potentially there’ll be a discussion or they might, you know, just start shifting six to nine months later. Because see, with the 50% tariff there’s nothing much that we can discuss. Our gross margins also not 50%.
Het Choksey
Correct, correct. Okay, great. I think all the best. Keep up the good work. Looking forward to the progress and just keep up the good work.
Akshay Pitti
Yeah, yeah, thank you.
operator
Thank you. The next question comes from the line of Shah Maheshwari from Aditya Birla Mutual fund. Please go ahead.
Shyam Maheshwari
Yeah, hi Akshay. Congrats on a good set of numbers. Just a question from my side on the strategic initiatives. So when we last spoke on the concord, I think the focus was more towards, you know, debt repayment. But obviously now, now we have announced this CAPEX as well. Just wanted to understand, you know, has there been some positive development on ground. Because of which now we are kind. Of focusing more on capacity augmentation. Has anything changed on the ground in that respect over the last few months?
Akshay Pitti
Yeah, so over the last few months, you know, we’ve been seeing quite a few positive developments. But more concretely in the last 30, 40 days the domestic side of the business is really picking up and there’s consolidation taking place. So what CapEx we thought, you know, we’ll probably kick off post September of current year. We are trying to, you know, pull in because we see that quarter one itself will be requiring new capacities to meet the increased demand. Our projected volumes based on our internal calculations and visibility is about 19,000 tonnes for quarter four. So that takes us beyond the current installed optimum utilization of our capacities.
Shyam Maheshwari
Understood. And this should be lasting in the sense that even for 27 and maybe beyond, we see this sustaining, maybe improving.
Akshay Pitti
Yes, absolutely. All of these. See, we are only looking at those projects which will continue to sustain which are not going to be tariff related movements to India. Like I said in the last call that we are very focused not to, you know, go into this hyperbole of putting investment Based on tariffs. Which is why, you know, we have waited for the situation to crystallize, let the dust settle and then decide to go ahead with this. And as far as the debt reduction goes, we are still committed to the reduction in debt. Like I mentioned, the net debt is up to 525 vis a vis 470 odd in the previous quarter. That’s mainly on account of the inventory rise as well as moving from export bill factoring to on our books for a better cost.
Shyam Maheshwari
Right.
Akshay Pitti
And if you look at the capex announced about 150 crores, that is over 18 months. So over 18 months our cash accruals will be significantly higher than the CAPEX projected on a net basis. You will see a net debt reduction.
Shyam Maheshwari
Makes sense. Makes sense. So even with inventory rationalizing, you know, post, as you mentioned.
Akshay Pitti
Yeah, around December.
Shyam Maheshwari
Yeah, around December. So at least maybe some sort of debt reduction should happen this year. I mean that, that, that, that is still possible.
Akshay Pitti
Yes, absolutely.
Shyam Maheshwari
Understood. Understood. Perfect. Yeah, all the best.
operator
Thank you. The next question comes from the line of Kulin Panna from Ionius Alpha Investment Management. Please go ahead.
Abhijit Mitra
Yeah, hi. Yeah, hi. Am I audible? Yeah, this is Abhijit here. So just a couple of questions on, on the export business. For the clarity of understanding, whatever is going to Mexico is essentially for the locomotive and the passenger freight, you know, and the rest which is going to us directly is majorly, you know, mining. I mean, is that the broad categorization which is.
Akshay Pitti
Yes, absolutely correct. So what goes to Mexico is mainly for freight and what goes to the US is predominantly for mining.
Abhijit Mitra
Understood, understood. And, and, and on Mexico there are no duties as such, at least for the next 90 days, there are no duties sort of contend about and then, you know, probably they’re going to follow the FTA which they have sort of got into in the first term.
Akshay Pitti
Yes, that’s exactly what we read. So the, the revised FTA that they had signed is what I think will prevail. And the duty structure with India and Mexico remains constant. There’s no change there.
Abhijit Mitra
Understood, got it, got it. And you know, on the business as such, you know, if I take out the traction motors and the railway components, you know, if I look at the rest of the revenues that has grown by around 5% on a YUI basis, that growth is constrained by the availability of raw material largely. Right. Because since, you know, traction motor and railway components is high margin business, you would have prioritized it. And correspondingly the rest of the pack has been deprioritized to A certain extent, which leads to a 5% revenue growth per se. And probably as the supply sort of moves up, this growth sort of comes back, I think. Is that the way of looking at it?
Akshay Pitti
I think at the macro level you can frame it like that. But see what’s happened. If you see the industrial and commercial motor space or the power generation, especially the DG sets, they are extremely price sensitive. So when the raw material constraints took place and the prices went up in India in quarter one, if you would have seen the results of all the steel mills, they have given fantastic results in quarter one on account of those increases.
Those increases were not appreciated and accepted by the end consumers of these products. Which is why April, as I mentioned was slow and May and June have picked up pretty well. So we continue to see the growth in those higher profit segments such as traction, motor, renewables, data centers. And now with the rationalization and availability of material coming in from Korea and Japan, the prices are going to lower in India and the same is going to result in volume growth in the price sensitive segments of the business as well.
Abhijit Mitra
Understood, Got it. And, and the last question is, when you say 16,000 tons and you target 19,000 tons, these are purely lamination volumes, Right. This does not include casting volumes,
Akshay Pitti
not casting.
Abhijit Mitra
Understood. So can you help me with casting volumes also for the quarter, I mean laminations plus castings would be how much for the quarter.
Akshay Pitti
castings? In terms of machine castings, we did about 420 ton. And we did about 1236 tons of plain vanilla machine castings and 676 tons of raw castings. So roughly about 3000 tons in total.
Abhijit Mitra
Okay, got it, got it. So whatever numbers that you have reported in your presentation on Slide 19, if I include the other components, that is essentially laminations plus castings, I mean. Yeah, so, so Slide 19, if you, if you add loose laminations plus other components, essentially that’s lamination plus castings put together, right?
Akshay Pitti
Absolutely correct.
Abhijit Mitra
So that it. Shouldn’t one be looking at that number as then purely laminations? I mean for consolidated sort of.
Akshay Pitti
I think that is the right way to do it, which is the intent. And that’s, that’s the reason that we decided to put it in this way. So that we can move from a bit upper to non lamination to a product mix based percentage margin on revenue. Understood. And when you say you’re exiting, look at the company.
Abhijit Mitra
Okay, got it. But when you say you’re exiting Q4 at 19,000 tons of laminations, what is the targeted castings volumes by Q4.
Akshay Pitti
About 4,000 tons per quarter. 30% growth rate there.
Abhijit Mitra
Got it, Got it. Great. Thanks for taking my question and wish you all the best. Thanks. Yeah.
operator
Thank you. The next question comes from the line of Bhavik Shah from invec. The line for the participant has been disconnected due to time constraint. I would now like to hand the conference over to the management for closing comments. Am I audible sir?
Akshay Pitti
Yeah. Thank you all for joining us today. I hope we have addressed all your questions. We remain committed to keeping the investment community informed with regular updates on any development in the company. If you have any further information request regarding our company please feel to reach out to us or sga our investor relations advisor. Thank you again everyone for attending the call and have a good day.
operator
Thank you on behalf of Pitti Engineering Ltd. That concludes this conference. Thank you all for joining us and you may now disconnect your lines.