Quality Power Electrical Equipments Ltd (NSE: QPOWER) Q3 2026 Earnings Call dated Feb. 05, 2026
Corporate Participants:
Unidentified Speaker
Bharanidharan Pandyan — Joint Managing Director
Sanjog Mhatre — Chief Business Officer
Rajesh Jayaraman — Chief Financial Officer
Sarika Jadhav — Senior Vice President, Finance
Analysts:
Unidentified Participant
Shaleen Kumar — Analyst
Praveen Motwani — Analyst
Aditya Trivedi — Analyst
Kartik Kohli — Analyst
Nemish Sundar — Analyst
Eshit Sheth — Analyst
Naman Parmar — Analyst
Shashank Jha — Analyst
Presentation:
operator
Sat sam sat. Sa. Sa. Sa. Foreign. Ladies and gentlemen, good day and welcome to the Quality Power Electrical Equipments Limited Q3 FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Bamre, head of Research, Asits Ji Mehta. Thank you. And over to you, sir.
Unidentified Speaker
Thank you. Good morning everyone. On behalf of ASIT Cmeta Pantomat Group Company I welcome you all to this con call where Quality Power Management will apprise us on fantastic set of numbers Q3FY26. And for this today on call we have Mr. Banigaran Pandyan, joint Managing Director who’s joining this call from Chicago. US. What a time to be in US, I would say. Also Mr. Rajesh Jayaraman, Chief Financial Officer. Mr. Sanjok Matre, Chief Business Officer who’s now been elevated to Chief Executive Officer. Our greetings for that to you, Sanjo and Mrs. Sarika Jadav, Senior VP Finance.
Over to you.
Bharanidharan Pandyan — Joint Managing Director
Morning ladies and gentlemen. Thank you for joining us this morning for our Q3 and nine month and financial year 2026 earnings call. The quarter gone by has been an important one for the company. We delivered a healthy operating performance broadly in line with the direction we had communicated to the market earlier. Execution improved meaningfully across organizations driven by better advanced planning of critical materials, tighter project governance and disciplined cost management. On the ground, our teams remain sharply focused on delivery timelines and margin protection. And I am pleased to note that this focus has helped us sustain profitability despite a dynamic and often unpredictable operating environment.
During the quarter, we successfully executed multiple large value orders through our Turkish operation. As this also coincided with the financial year end, the timing led to a noticeable uplift in quarterly revenues. As a promoter and long term steward of the company, it is critical for me that we walk the top. I am therefore particularly satisfied that the guidance provided both on the top line and the bottom line has been largely met. For the year. The standout achievement has been Mehru’s performance with an EBITDA margin of 16.4% fully aligned with the commitments we had made to our stakeholders earlier this year.
On the strategic front, we took an important step by completing the acquisition of a 50% stake in Sukrut Electric Co. Private Ltd. Converting into a joint venture of the company. Along with Yash High Voltage Ltd. Sukrut operates in electrical component manufacturing and brings in highly complementary capabilities to our ecosystem. When combined with our instrument transformer and our upcoming magnet wire capacities, Sukrut enhances our access to the transform manufacturing value chain across geographies. Equally important to note that we have welcomed a dynamic leadership team at Sukrut and we are encouraged by the early signs following the financial handover.
The company turned operationally positive in its very first month under the new management, some something that has not been achieved over the past five years. This gives us confidence in both the business model and the leadership driving it forward. On the capacity expansion side, we are making steady and tangible progress. The SANI Global Coil factory construction timeline has been advanced in line with our earlier communication and we are now targeting completion by June 2026 ahead of our earlier schedule. Operational commissioning of course remains subject to regulatory approvals including the Critical Environmental Clearance certification which we continue to actively engage upon.
In parallel, the Board also has approved an additional investment for setting up a Global Engineering and Technology center at Sangli. This facility will serve as a group wide hub for design, engineering and product development, an investment that reflects our belief that sustainable growth in our industry must be anchored in deep engineering capability. Expansion at Nehru is also progressing well with equipment being commissioned in a phased manner. The Cochin expansion is fully complete and we are evaluating the establishment of an instrument transformer manufacturing facility in Turkey through our group entities aimed at serving the European markets with greater proximity and responsiveness.
With the induction of new leadership across the group, it also afforded me something rare and valuable time to step back and learn. Earlier last month I spent time at the Flame University as a part of the Next Orbit program. Going back to the classroom was both humbling and energizing. The program helped me look at the organization from a wider lens beyond numbers and quarterly outcomes to reflect on what it truly means to run a scale a public, global and institution driven enterprise. Interactions with diverse cohort and a strong faculty sharpened my thought process around capital allocation, governance framework, sustainability, leadership depth and investor communication.
These learnings have directly influenced how we are shaping the next budget not merely as a financial exercise but as a strategic roadmap for long term value creation. I would like to sincerely thank our employees for their commitment, our customers for their trust and most importantly our long term investors for their continued confidence in us. I now invite our new Chief Executive Officer Mr. Sanjog Matre to share the business updates. Thank you. Jai hind.
Sanjog Mhatre — Chief Business Officer
Thank you Mr. Pandyan. Good morning to all and thank you for joining us today. The strong results this quarter are a direct outcome of the commitment and execution strength of our teams. Despite more than 25 holidays during this quarter, our operations performed exceptionally well which reflects the resilience and focus of our workforce. We have continued to strengthen our manpower, particularly in areas aligned with expansion and new growth initiatives. Headcount additions are ongoing with new employees joining regularly. This increased capacity enhances operational stability, reliability and supports a strong one time culture anchored in well defined processes.
I am also happy to share that our coaching expansion is now fully operational, strengthening the ability to serve coil based products for the domestic markets more efficiently. Looking ahead, we have set higher targets for order intake for the coming years. Budgeting activities are underway both internally and in close coordination with our group companies. Demand has been particularly robust from the Middle East, Europe, United States and Australia reflecting both the strength of our product portfolio and our growing global footprint. Despite delivering record high execution levels during this period, our order book has expanded meaningfully. We are currently in advanced discussions for potential orders exceeding rupees 300 crores, which we expect to close before the end of the financial year.
From a market perspective, we continue to navigate global challenges including volatility in metal prices and supply chain constraints. While copper prices have been soaring up, our exposure remains limited and does not materially impact quality power. At this stage, aluminium prices are expected to be a little impactful. However, we are progressively adjusting our prices to to manage this anticipated increase as part of the upcoming promising journey. Our first GIS trial product is targeted for market readiness by June or July of 2026, making an important milestone in our portfolio expansion. Positive indicator is that the increase in customer audits at our facilities, particularly for HBDC and SATCOM projects.
The growing frequency of this audit reflects increasing confidence from global customers and ensures that our operations remain system driven, compliant and process oriented. To summarize, therefore, we are entering the next phase with stronger teams, clearer processes, higher targets and a disciplined one team approach. Positioning quality power group quite well to manage current challenges and support sustainable growth going forward. Thank you for your time and continued trust. I now hand over the call to our CFO, Mr. Rajesh Jayaraman who will walk you through the financial highlights for this period. Thank you.
Rajesh Jayaraman — Chief Financial Officer
Thank you. Thank you Sanjay. Good morning everyone. I will briefly summarize the financial performance for the quarter ended 31st December 2025 covering both our standalone and consolidated results based on total income. Overall, the quarter reflects healthy growth in income and profitability driven by better execution, operating leverage and disciplined Cost management starting with the standalone business. Total income for the quarters two deck rupees 592 million registering a quarter on quarter growth of about 9% and year on year growth of around 63%. The growth was primarily driven by higher execution and billing during the quarter while other income remains stable indicating that growth was largely operational.
EBITDA increased to around Rupees 204 million reflecting a substantial growth over the previous quarter and a strong improvement almost doubled over last year. EBITDA margin improved to about 35% supported by better absorption of fixed cost and controlled operating expenses. Profit before tax stood at rupees 194 million, growing by about 12% sequentially and almost doubling on a year on year basis. Profit after tax was rupees 146 million reflecting a similar improvement supported by strong operating performance and a stable tax structure. Moving on to consolidated results. Total income for the quarter two debt rupees 2,843 million representing a quarter on quarter growth of about 30% and more than 250% increase compared to the same quarter last year.
Aided by scale up in consolidated operations, robust order execution, improved capacity utilization and higher operating scale. Consolidated EBITDA increased to around rupees 793 million showing a strong sequential improvement with EBITDA margin improving to about 28%. This was supported by operating leverage and disciplined control of fixed cost. Profit before tax to rupees 743 million, growing by over 65% sequentially and profit after tax increased to rupees 628 million reflecting a strong improvement driven by higher operating profitability. Consolidation of Financial Sukrut Electric Co. Private Limited will happen from this quarter Q4 Financial 26 onwards. Looking ahead, we remain confident in the business outlook supported by healthy order pipeline and improved execution capabilities.
As revenues continue to scale, we expect operating leverage to support margin stability with potential for gradual improvement. Our focus will remain on disciplined growth, cost efficiency and capital prudence to drive consistent value creation for the stakeholders. Thank you. We will now be happy to take your questions.
Questions and Answers:
operator
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their Touchstone telephone. If you wish to withdraw yourself from the question queue, please press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shalin Kumar with ubs. Please go ahead.
Shaleen Kumar
Am I audible?
operator
Yes. Please go ahead.
Shaleen Kumar
Yeah, Hi. Congratulations to the management. Very, very strong performance and pretty good set of numbers. So you know some of the basic. Question which I want to understand like. We see margin is improving in Mehru but just to understand one thing like is the category in that category can we see the margin coming back, coming to the level of the company or is that category is something where we should see something like a mid teen kind of a margin or there is a scope for margin further improvement.
Bharanidharan Pandyan
Good morning Charlin. We have margin for improvement in Nehru. I believe we should be in hope for a higher or higher teen margin if the commodity prices remain stable. However, Nehru is also the place where we have new capacity coming in and we have some new geographies that we need to explore. So it’s between margin and growth. I believe we will take a chance. As long as the Overall guidance of 20, 22% is being met, we may sacrifice some margin for larger growth. Because right now the focus is to make Meru a global brand. That is what the board is also putting across our new facility, exploring a new facility in Turkey.
So. So overall I think if it’s just margin we can push more margin but we are also pushing growth. That’s where it is.
Shaleen Kumar
Got it, Got it. Thank you. So Bharani then my next question is on your Tangli capacity. So you know we have a capacity coming I believe by starting from June 2026. So just want to understand like what will be our next process? Like will the new facility require qualification from the customers or because we already have existing facility doesn’t need that. When will we start booking orders on that? So if you can just walk us through what would be your next step? Probably post from now till maybe next six to nine months, et cetera.
Bharanidharan Pandyan
So once we have an operational facility the customer audits would start on the HVDC. There would be at least about 40, 50 different audits, global customers depending on the projects we would schedule those guys coming in. Initially it would be power grid Adani satellites of the world in India along with EPC providers of HVDC like Hitachi, Siemens and ge. So we believe that could be the first quarter focusing including ISO and the NABL laboratories. With that I think on the order book front, I think at quality power right now we are at about 280 plus crores or 290 plus crores in order book.
And we are expecting another 200 to 250 crores in the next three to four weeks. So we are at about 500 crores which is about three times what we closed last year in revenue. Going forward, we would focus a lot more on execution. And from here till June of we think we have another four, five months more to pick up more orders. I think orders at this moment is not the worry. It is how we are able to execute, get the audits and the approvals faster from the authorities. The, the bureaucracy matters, basically.
Shaleen Kumar
Got it, got it. Sure. This question is bound to come. So rather I ask. So Bernie, your, your guidance I was listening to last time, you know, you were sticking to 20% but given your performance has been so good, how should we think about for this, this year margin now?
Bharanidharan Pandyan
I think as we committed last time, we would improve upon the guidance. I think you can take about 22% as a flaw and with an upward bias that we would try to achieve. We have some small changes in numbers that may happen because of MERU at Copper and Aluminium at Quality Power, but I think we’re comfortable with an upward bias of over 22%. Basically.
Shaleen Kumar
22 plus plus you say?
Bharanidharan Pandyan
Correct. So assuming there’s no more surprises on the copper and aluminium front from today.
Shaleen Kumar
Yeah, fair enough. Yeah, fair enough. Like even where the commodity prices are right now. Right. So. Yeah, got it. No, that’s, that’s very, very, very, very healthy.
Bharanidharan Pandyan
And so from, from a company perspective, from a company perspective, to give you individual numbers, EBITDA margins at Quality Power, the call product factory is 34%. At NDOS level it’s about 30% and at Mehru level it’s about 16.4%. So that’s how that number comes to 22. So the larger margins are being delivered from the coil products factory at this moment.
Shaleen Kumar
Got it, Got it, chief, Got it. Thank you. Thank you so much. Thank you. Best of luck. I’ll turn back the queue.
operator
Thank you. The next question comes from the line of Praveen Motwani with Bank of India mutual funds. Please go ahead.
Praveen Motwani
Yeah. Hi team. Thanks for this opportunity. So firstly, congrats on the great set of numbers across the parameters. So just wanted to understand from you the with increasing adoption of, you know, grid scale battery energy storage system for renewable integration, does that any challenges the requirement of HVDC or FACTSET projects going forward. What’s your view on this?
Bharanidharan Pandyan
Sir? I would like to replay this question again. Praveen. So when we put batteries, do we put it at the generation end or at the receiving end, if I may ask, according to you. So we put the batteries closer to where we generate the solar power or the place where we distribute the solar power generation end. So then how are we going to transmit that power from generation to distribution?
Praveen Motwani
Okay, okay. So according to you. Yeah, understood.
Bharanidharan Pandyan
So. So if I’m going to put all the batteries in Canada, how does Bombay get power? And if I put all the batteries in Bombay, how the, how do the solar panels from Kaura reach Bombay? So having said it, we’ve already done best projects. We are making our own EMS and converters in Turkey. We have about two or three projects old. We have our converters already on the field. Best is a complementary technology to hvdcfax and battery energy storage is at this moment a couple of hours maximum. What we say as a peak load, sharing in the peak load times when you have to really store energy for more than eight or 10 hours.
We still don’t have those kind of batteries. And assuming bad weather for a couple of days, there is no other option but to get, you know, conventional power sources. So interconnecting of transmission grids is a no brainer technologically. And if you look at some of the new projects that are coming up, these are typically 1 GW plus. So even the reliance new projects, what they are talking is again excess of 30, I think it’s close to 40 or 50 gigawatt. So AC transmission line typically is about a gigawatt in transmission whereas the HVDC in India we are talking 6 gigawatts.
So the customer does not intend to put in 50 transmission lines at transmission voltages. They would rather do about five lines of hvdc. So I believe HVDC is there to stay. I was reading about the power grid earnings call last week. I believe they have announced two more HUDCs coming up in the next year. But apart from the Indian HVDCs, we have executed HVDCs in Korea. In Abu Dhabi, we are also executing something in Australia. So we see global opportunity as much larger than India. Even though in India we are the dominant and the only player at this moment.
Praveen Motwani
Got it, Got it. That was very helpful, sir. And so just to understand what portion of our order book is, you know, executable in the next 12 to 18 months.
Bharanidharan Pandyan
About 95%.
Praveen Motwani
95%. Okay, got it.
Bharanidharan Pandyan
90, 95% if everything goes okay. Because we would normally not like an order book of more than 12 to 15 months. I normally pick up orders only once the capacity comes online or we have a visible hold on the capacity. Otherwise we lose money on LDs or the metal prices give us a very rude shock. So 12, 15 months I think has always been Our traditionally a safe period for us.
Praveen Motwani
Got it. Thank you so much sir. That’s it for my.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants please limit your questions to two per participant. The next question comes from the line of Aditya Trivedi with Nipian Capital. Please go ahead.
Aditya Trivedi
So is the new HVDC CTC magnet wire facility able to service demand for both VSC and LCC technologies? Given that different specifications of CTC are required for both.
Bharanidharan Pandyan
So for the coil products that is used for both VSE and LCC technology is the same with the same raw material. So I do not think that is a problem. This special HVDC wire is the first time that we’ll be making in the country and I believe over a period of time we would also cascade or you know, vertically move into the CTC cable facility for HVDC in the transform manufacturing space. With Sukrut already giving us in excess of 200 to 300 global customers on transformer business globally, we believe we will at some point also be able to sell it to competition.
Aditya Trivedi
Okay, got it. And given the volatility in commodity prices, how much of an existing order book of 895 crores is fixed price versus having price variation clauses?
Bharanidharan Pandyan
I don’t have the numbers but I can, I think I can be reasonably sure that 98% is fixed prices. So it’s very very rarely. But because we do not have any government direct dealings unless it’s power grid so our numbers are already fixed at times when the gold prices or silver prices start shooting up. We also understand that copper and silver, copper and aluminum also start shooting up. So we start increasing prices 2 or 3% every week or sometimes every month. But when it suddenly increases by 30% in a night, it’s unexpected. That is when we get some shock.
But then when we adjust the prices to higher prices then the next quarter and the price goes down, we make the money. So overall we are not worried about the margin expectation. As I said, some of the coil products where we are exposed on aluminium we are doing 34% EBITDA margin. We have scoped the aluminum price to the sale price is about 20 to 25% at this moment. So if anything it would be about 2, 3% here and there. On Meheru the impact would be about 1 or 2% based on what the copper looks like at the current moment.
So this is all at end of. They’re not worried. It’s all power electronics, corporate doesn’t hurt them.
Aditya Trivedi
All right. And one last question from my end is on the OCF to EBITDA conversion that seems to have got impacted this year. How do you see the cash conversion cycle going forward as you’ll ramp up on this new capacity?
Bharanidharan Pandyan
My apologies, Aditya. I don’t understand the question. I’ll have to route IT to my CFO or VP Finance Sarika or Mr. Rajesh. Can you please answer the question? Can you please repeat the question? We did not get it clearly.
Aditya Trivedi
Yeah, I’m saying the OCF to EBITDA ratio which was at 0.5 in FY25 has come down to 0.1 for H1FY26. Which means your working capital has got stretched. So you know, how do you see your networking capital days going forward? You see that improving and.
Bharanidharan Pandyan
Our working capital limits. We have optimum utilization during this quarter for the procurement of raw materials like conductors and insulators to support the business operations and requirements. That’s why it’s stretch during this quarter. And. Yes, sir. Aditya, what we have done is we have had a stockpile of all critical raw materials including insulators. Whichever was. Whichever we felt was very critical to the operational requirements. So these are all in stock, building on inventory. I think that is why you would see a slight enhancement. This is one of the reasons why we didn’t disappoint on the numbers. Because we stocked up.
Aditya Trivedi
Sure. Okay. Makes sense. Once the demand supply and the inventory side or in the supply chain side improves I think we would reduce our inventory levels. And what are your receivable days right now?
Bharanidharan Pandyan
Sarika, you will have to answer that.
Sarika Jadhav
Our receivable days are normally 45 to 60 days.
Aditya Trivedi
Thank you. That’s it from my end. Thank you, sir.
operator
Thank you. The next question comes from the line of Karthik Kohli with Kotak Institutional Equities. Please go ahead.
Kartik Kohli
Thanks for taking my question. While obviously you’ve had a very good quarter, I wanted to understand how these expansions that you’re doing. Where, what sort of top line do you see these contributing and what is the overall opportunity size in the market that you intend to capture with these? And the more important part of all of this is more linked to your magnetic wire capacity. Because that’s when it’s entirely for your own value chain. I wanted to understand from what all other areas of, you know, backward integration that you may be looking to, you know, to secure your supply chains.
That’s my first question.
Bharanidharan Pandyan
So the backward integration is something that we Are not very excited about. We are only doing it to ensure that such a large facility is able to, you know, run on it in critical times on for especially HVDC projects. So I do not foresee any further backward integration unless there is a huge shortage going forward. With regards to the revenue potential, I believe I do not have any published numbers, but my nearest competitor is a company called Trench Electric. This was earlier owned by Siemens, currently owned by a clutch of private equity investors. On their last post in December, their order backlog was about $1.5 billion or euros.
So I think there is a lot of scope for growth. What we see in that sphere between the coil and instrument transfer products. So instead of focusing on what is the kind of opportunities or the market that would be in, I think we are more focused in getting the factory to about 70, 75% capacity utilization over the next two or three years. I think that would generate enough cash and beat the estimates. The market is there. Got hvdc, FAX and other product side got it.
Kartik Kohli
That’s very helpful. My second question is more linked to your GIS product line. Your partnership with the Coreum company. I wanted to understand firstly what sort of core development benefit that you get here. Does it help you with qualifications with customers? Does it get your market access far more quickly than any other? And more specifically, is there a limitation to such an arrangement? Does it limit you to certain geographies or certain set of customers? Is there any sort of limitation on that? Yeah, that will be my second question.
Bharanidharan Pandyan
So when you develop high end technology, especially at the transmission voltage, say at about 400kV, 765kV there is always a market resistance. The resistance comes from end customers, say in this case power grid or likes of power grid. Then would come the system integrators themselves. So in India there are four major system integrators. Hiosung, ge, these are the largest in Hitachi and Siemens. These guys get about 95 to 97% of the current market share. And he also being the market leader in high voltage. So when we started developing this product line, we were the first people in India.
But we had to also there was also support from the central government. The CEA has been very positive on this approach because this was very critical to the national security because all this stuff is coming from China or Europe at this moment. And this was critical to most of the substation going forward. So the government had a positive view on it. Power grid had a positive view on it. But we still had to have some partner who would put it at the 765kV or 400kV to begin with. Hyorsung is a very large company. I think this year the revenue is in excess of $17 billion I think in the size of Hitachi.
And they also have a globally large facilities for GIs across the world. So working with Hyosung also not only allows us the Indian market going forward, but also the Korean and American markets where we see a lot of traction and including Middle east. So it has a natural buy in. So whatever we sell to Hyosung we do not have to pay any royalty. But whatever we sell to the other customers, we have a very small royalty which goes away in about five years time. So that is where it is. I think there’s a cost of development and when we are working with the green gas technology, green gas testing protocols, there is a lot of knowledge share that is happening with Hyoseong handholding and I believe it will be a successful partnership for some more products.
We are also starting work on transient surge capacitors for gis. We are also working with them to see if Sucrot can develop more components into the GIS ecosystem. As GIS goes in, I believe we have the first mover advantage on the products into it. And we have also been approached by the other players in the market to be able to see whether we can also start delivering to them. So we are working with all the large players now in the ecosystem just.
Kartik Kohli
To quickly follow up. So you said there is a positive view of government agencies, BGC IL system integrated. So are you seeing a positive push in terms of they’re actually come like asking for more such partnerships in place, you know for other products and specifically from non with non Chinese players which more specifically would end up being more Korean players. At this point.
Bharanidharan Pandyan
There is a lot more opportunities in the power system but we are limiting ourselves to critical high technology items. So we do not intend to participate there. But as we speak I am in the US and I believe we will have some more partnerships coming from this part of the world. So the non Chinese critical technology items is a requirement across the world right now, Including Middle east, us, even parts of Europe. Now with all governments being protectionist to their own national security, they require access to technology locally. So that is something that we are working upon.
And because given the access of technologies, if you see we have put across our technologies that we own, we become a credible player in technology transfer along with local partners or co joint manufacturing. So we are exploring opportunities in that side.
Kartik Kohli
Got it sir. Thank you. I’ll fall back in the queue.
operator
Thank you. The next question comes from the line of Nimish Sundar with Elara Capital. Please go ahead.
Nemish Sundar
Hi. Thank you for the opportunity, sir. Congratulations on a very strong set of. Numbers during the quarter. So my first question is I just wanted to understand on the recent EU and US trade deals that we have signed particularly for meru. So could we see any additional new opportunities that we could gain from this and also the Chinese relaxation that was provided the news of that recently. So for Meru, could we see any impact? Because what we heard is that would also be covering transformers. So could we see any new Chinese entrants coming and affecting the pricing?
Bharanidharan Pandyan
I will answer the first question. With regards to the tariffs, I think we never had a problem with the tariffs because there was no competition in us so everything had to be imported and most of us were sitting at similar tariff levels. What I have seen in the last two days, I am in the US talking to customers. It’s not about the tariffs, it’s about the sentiment. Like you know, they prefer somebody with a lower tariff or lower cost than, you know, somebody with a higher tariff. So I think the sentiments are positive towards India at this moment.
So with regards to the next question on China, I think it’s a mere speculation with regards to instrument transformers to Indian utilities. I think the discussion you are referring to is part transformers, not instrument transformers. Instrument transformers. Every customer, every utility has a different certification test, different specifications. Even when the Chinese were there in full force before 2020, there was not a single tender which they participated. So I don’t think the worry is at the Meruan for the Chinese. On the HVDC side, including pre2020, the Chinese are not allowed primarily because the spare part requirement is about 40 years.
If and when Chinese would be allowed, they would be allowed in small categories in the AC transmission segment where we do not have much to contribute anyways at the transmission voltage level. With regards to again the component business like Sukhrut, again we are not worried. NDOCS already faces Chinese competition in that part of the world and most of the global markets that we operate in, we already face Chinese. So it is not something new to us. It is not something that worries us. However, the recent news I would, I would only classify as speculation and nothing more.
Nemish Sundar
Okay, fine, very clear, sir. And secondly on the imagine in the speech that some supply chain constraints were being faced. So would you highlight if there is anything significant as of now in any particular area that we’re facing or it’s largely something that we. It’s a normal course of business and we can go through it.
Bharanidharan Pandyan
The insulators are still a cause of concern. If you look at something like modern insulators, you see their stock touching upper circuit every day. It just indicates that how big is a shortage in this part of the world? The Chinese insulators are not available for some of the critical projects in India. So again for the Indian projects and some projects in the US and Europe, you are stuck to Indian vendors. We do import some insulators now from China paying a larger price than what our Indian counterparts do. That is something that is very visible. Apart from it, there is ongoing shortage of different commodities.
So you work on one. The second one would go in for a shortage. This is because of the kind of peak cycle in manufacturing we are seeing across the sector. This is something that I cannot predict right now that tomorrow we will have it. We stockpile it for a couple of months, but not more than a couple of months.
Nemish Sundar
Okay, fine. And just one last bookkeeping question. So could you provide the revenue split between Quality Power Endocs and MERU for the quarter?
Bharanidharan Pandyan
Quality Power electrical equipments and projects the Indian companies put together is about 63 or 60 plus about 4.5 crores. Meru is about 83 crores and Ndocs is 149 crores. Give and take.
Nemish Sundar
Okay, thank you so much sir and all the very best. Thank you.
operator
The next question comes from the line of Ishit Seth with Anvil. Please go ahead.
Eshit Sheth
Hi. Hi. Thank you for taking my question and congrats on very good set of numbers. Sir, my question was with regards to, you know, the demand outlook with what we’ve heard in the budget, especially for data centers, the tax incentives that government is providing, does this give a meaningful push for HVDC in the medium term for us? And the second question I had was when we look at what we’ve highlighted in the presentation with regards to capacity expansion, possibly a greenfield facility for, you know, Meru at Turkey, what is the rationale of doing it outside of India and not in India, especially with the key management of Mehru based out of New Delhi.
So if you could explain both these points.
Bharanidharan Pandyan
With regards to your first question on data center, I think anything if you are doing on data centers, the only cost of running a data center apart from people is energy. Some of the data centers in India that we are talking about Hyperscale is already 1 gigawatt. That is what Google said. We are also looking at Some projects like Fermi in US where they’re talking about 11 gigawatt in Texas and with the tax breaks in India with cheaper renewable power, I believe we should also be in that scale in the next four, five years in India.
So when you talk about 10 or 11 gigawatt this is like a city of Pune that needs to be fed to a data center 24,7 there’s going to be a lot of high power equipment that’s being built. Not just hvdc. It can be instrument transformers, wave traps, transformers. It’s just a power ecosystem. So whether or not HVDC I don’t know. But whether there will be a lot of AC transmission equipment. Hundred percent. Yes. But do I see anything happening in the next two years? I don’t think so, because there has to be still some commitments.
Like even the money is not seen on the ground yet. But in the US we see a lot of hyperscale data centers coming up. We are working on some few opportunities. We just executed a Microsoft hyperscale data center in Finland. So in Europe we are working in US we are hunting for opportunities in India. As and when it comes in we will get into it. That is the first point. The second point is on Nehru. So for Meru expansion they had about 45% coming in offered. Something is already reflected. We had to start expanding for land.
And near the factory in Delhi the land is not coming less than 25, 30 crores an acre. And at about 10 acres that we require. We require at least 300 crores only for the land plus the building and the people. I don’t think it’s economically viable for that kind of a business. The only other option was to shift it 150km away from where they are. Which means the management anyways would not be there 24, 7. We had about 40 acres of land in Turkey and we had a lot of cash sitting in our subsidiaries there highly profitable subsidiary.
And Turkey is also overnight to Germany, France on the road. We also have support and service team there and which also enables easier fat that what we call as factory acceptance test for European customers. So we are exploring. The board has requested a market survey along with the details. We will be in Turkey with a delegation going around talking to the customers. Even the Turkish local market seems significant. The prices are almost 30, 35% higher than the Indian market. So we are consolidating operations there. And it would be cheaper for us to put a new capacity there because the cost of land and lot of money is already available.
That’s all instead of money in India.
Eshit Sheth
Yeah. And what kind of greenfield facility? When we talk about, you know, setting up, you know, a greenfield facility, what kind of capacity we’re looking at for Meru.
Bharanidharan Pandyan
The initial outlay for the test lab and other allied equipments including manufacturing is about three, three and a half million dollars plus the building. So we are working, I think the building would cost us about 2, $3 million, about $6 million is what we are. We have an outlay since Mehru does not have all the cash on its book. So we also have cash on NDOCS book that and the land is there. We are using those opportunities and I think about $6 million, I think in about two to three years time I believe it should be a 25 to 35 million dollar facilities with similar margins of between 15 and 20%.
Eshit Sheth
Understood. Okay, thank you so much.
operator
Thank you. The next question comes from the line of Naman Parmar with Nivesha Investments. Please go ahead.
Naman Parmar
Good morning sir. Thank you so much for the opportunity. Firstly, continuing with the other participant question that increasing the capacity in the Turkey. So with the trade deal with the Europe and various US and other countries, don’t you think the manufacturing facility increasing in the India will be very viable for us because manufacturing India is always very less costly as compared to the other part. Even though you have rightly pointed out about the cost of the land is very high in the mid. So any outlook on that?
Bharanidharan Pandyan
So I will answer the question. So if you look at high voltage electrical equipment manufacturing, say a part transformer which you are very well aware, Hitachi operates in excess of 11 factories across the world and the biggest factory for them for H1EC facts is Brazil, not India or China. Same way GE operates multiple facilities. So the customer here is not really worried about prices. It’s not the lowest cost of manufacturing which decides the buy decision. It is also access to the factory the fat. So most European customers need a visa to enter India. Whereas it’s a domestic flight for them to fly inside EU it’s on road.
The service teams can enter facilities within 3, 4 hours from direct flight from Istanbul and most parts of western Europe. And the deliveries are about six weeks, eight weeks inside the factory and another two, three days on road to most parts of Europe. India still is a mother facility. India would still have a lot of market for say something like the us, Australia and more larger markets. But I think European is also far more inward looking market toward Indian companies. European base would not hurt a B And we also don’t have the land in me.
So if I have to invest in a land 150km away and then ship it to Europe, I think this is much cheaper, easier and the capital allocation is better because I have money sitting in one book, I have technology sitting in the other book and the customer is very close to where I am.
Naman Parmar
Understood, Understood. Secondly, on the capacity and revenue potential side, so existing capacity could handle around 1500 crore of revenue. Right. With the all new capacity that you are expected to come in the quality Meru Ando Sukhar growth and all, how much revenue potential could be for you?
Bharanidharan Pandyan
I would take a step wise, my dear friends. Instead of going and throwing some large numbers, you know, I would go sequentially. A healthy growth every year is what I would. I would want the company, I believe we will be taking an S shaped curve grow exponentially one year, stabilize the next again grow. That would also help us build the teams internally build the structures. Because not every year you can recruit 4, 500 people and then you know, take another 500, 800 people next year. So we also need to internally stabilize for the next step of growth.
So that’s, that’s, that’s going to be the ecosystem. While all this is happening, we are also generating a lot of cash. I think our net current assets is in close to 390plus crores. And what we say we would, we would also attempt some acquisition in the near future if we find something attractive in our space. I think largely it’s both organic and inorganic. That’s where our growth potential is.
Naman Parmar
Okay. And lastly on the other income side, so if we see on the current quarter your other income has fell significantly. So how much cash you currently hold in the Turkey plant? Like there was a very big translation gain used to happen in the earlier quarter. Right. Due to hyperinflation in the Turkey. So currently what is the scenario for the end of other incomes?
Bharanidharan Pandyan
So the Turkish lira has been more or less stable for the last three to four months which is translating to zero forex gain or loss in your hedge call. So it is going into operating income. So the other income is slowly translating into operating income, more or less. EBITDA remains the same in percentages if you compare in the last three quarters.
Naman Parmar
Okay, yeah, understood. Yeah. And lastly, if you can give a order book breakup for the all the. Three quality endocs, Mehru and Sukhrut, the.
Bharanidharan Pandyan
Quality I think is about between 290 to 300 crores. Sukhrut is about 4 or 5 crores. With Meru, I think is excess of 400 crores and docks because they build a very high quarters. About 150, 160 crores of the new order intake. That is likely to come in about 200 plus crores for quality power, about 70, 80, 90 crores for me and sorry for Ndocs and another about 100 plus crores of Meru. That’s what we are seeing immediately in the next 45 days that we should be able to sign.
Naman Parmar
Okay, understood. And for Meru, the margin that you have expanded in the current quarter of around 16%. So you expect that the margin could increase more from here also or it could be sustainable for the Mehru.
Bharanidharan Pandyan
I think we would like to chase growth right now because MERU is a growth engine for us globally. So we are comfortable with the guidance what we gave. We are comfortable with the margins what we have. So even with Meru being lower, our overall margins are still under control. We would focus growth from Meru at this moment rather than margin expansion.
Naman Parmar
Okay, yeah. Understood. Yeah. Thank you so much for answering. Thank you.
operator
Thank you. The next question comes from the line of Srinik Mehta with Indo Alps. Well, please go ahead.
Unidentified Participant
Hi, good morning. Just wanted to check a little bit of an idea about all the expansions that you’re doing. So if you just take the current expansion and if you just take say 75% capacity utilization, what could be the revenue that we could generate just based on current expansions? I believe it would be safer to say about close to 1500 Cross. Okay. And my second question was more about these trade deals that have been signed. So there is also an inclusion of supply to Turkey that comes with the European deal. How do you see this impacting maybe from 2027 onwards.
So the customers for our products have an elastic budget. So it’s basically bought on brand and technology rather than what the prices are. So as long as your factory is compliant, the technology is good, you have capacities. I think the tariffs really didn’t matter. I don’t. Tariffs either impact us positively or negatively. So I don’t have any good news on that front. However, what I’ve seen in the last couple of days that it has a feel good effect on the customer. He feels he saves something small, that small is big for them. So I believe that’s only a feel good sentiment rather than really impacting the business sentiment.
These are not commodities, these are high end technical stuff. So where the customer knows what he’s buying, the price is not something that is going to hinder. What if he decides what to Buy. Just to give you an idea say an F35 Sukhoi or a Rafael. I don’t think it is on what is the price of F35 or Sukhoi. The customer has made his decision what he wanted to buy. And then based on what he buy he negotiates with the vendor. That’s how it goes in the sector. Okay, thank you.
operator
The next question comes from the line of Shashank Ja with SB Capital. Please go ahead.
Shashank Jha
My question is regarding a top line like with the current capacity and the capacity coming you can add max to 2,500crore of revenue as per your guidance here in last quarter. So. And you plan on having new capex. And what is the timeline you can give to achieve that revenue?
Bharanidharan Pandyan
So Sushant, we did not guide anything to 2500 crores. We just said that this factory can go up to 1500 crores. Our focus is to first deliver on this factory. Focus on Nehru expansion and focus on getting more throughput out of NDOCs. Increasing at least three times from Socraticut. I think we have a lot in our table for the next 12 to 24 months. I believe that is going to keep us busy. We have land bank, we have cash. I think as and when there is a requirement of a capex. I don’t think there is a problem.
If the board approves and we feel it required as promoters we would put in I think next 24 months. I don’t think we are we are even looking at that, sir.
Shashank Jha
But this 100% growth it is sustainable using the capacity we are. I think currently I’m going to having some goals because I don’t feel like I see it sustainable for at least 2, 3/4.
Bharanidharan Pandyan
So I guided earlier that we would having a S shaped curve. So the next year, once this year, once we get the new factory coming in we will have audits going in. And once the audits and the teams are fixed, I think you will see some hyper growth again after about 12 months time Nehru again they are incremental capacity once if the board approves a Turkish facility again it will be about 7, 8, 10 months of CapEx. And then they would again start spiking. So I think these would be coming as bullet quarters. And again as I said it’s both inorganic and organic.
So where we target organic we may also supply markets with inorganic stock.
Shashank Jha
Okay. Okay. Great. Sir, two more numbers I need from. One is the sustainable EBITDA margin. What can be. And second is tax rate. Like your tax rate is varying a lot quarter on Charter. So can you give me some number what will be the tax around FY28? I assume it will be something of 25 but I just want to get some confirmation from you. And secondly some numbers on EBITDA margin which can be sustainable.
Bharanidharan Pandyan
We have already guided that 20. 20% is your flow rate for the EBITDA margin. For all your calculation analysis I think we would, we would have a positive bias on 20% that is 0.1. And the second one, the second question was you asked me was on tax rate. Tax rate. So in India the tax rate for both MERU and Quality power is about 25%. At Sucrude they have about 25 crores of losses that we will be able to recoup going forward from the old management. With regards to NDOCs, we have a lot of R and D benefits in that country.
So it’s effectively zero tax rate as and when we do the project. So we have paid close to zero tax rates over the past 15, 16 years that we have owned them. I believe that will continue till they change the policies in that country. That’s one of the reasons why the effective tax rate looks lower. But it is because NDOCS pays anywhere between 0 and 4% taxes.
Shashank Jha
So sir, for my calculations what can I assume so 20%, 22%. What should this you give.
Bharanidharan Pandyan
About tax rate? Should you. You can take it about 20%. Assuming that even if you don’t do any R D in Turkey and there’s only small rd, you still would get it. But if you, if you look at our DRHP as of last year I think the numbers was between 5 and 6% of our revenues. What we were doing as an R and D budget. Again these are, they are doing the battery energy storage, statcoms, svcs, high end of the stuff. So that that kind of money needs to be continuously deployed to to get a advantage on the technology side.
Shashank Jha
Okay, great sir. Got it. Thank you. All the best. Thank you. Thank you.
operator
Thank you. The next question comes from the line of Yash Tantevarya with Dante Equity Capital. Please go ahead. Mr. Yash, your line has been unmuted. Please go ahead with your question.
Unidentified Participant
Yeah. Am I audible?
operator
Yes.
Unidentified Participant
Yeah. Actually you just missed one number. I had a choppy line. Could you just reiterate the order flow for the next six to nine months?
Bharanidharan Pandyan
I don’t know about six to nine months. Right now we have about 890 plus crore of an order book and about 300 plus crore that we would likely to sign in the Next few weeks. That is stuff that we know. Otherwise the pipeline is very healthy. As and when we get it, we will declare to the markets. So right now we are covering more than one year of order book. Perfect.
Unidentified Participant
Just wanted to understand. This quarter I think is the first time you achieved a 300 crore run rate. Almost the top line from what I was able to understand and your guide when I went through your guidances before, you’ve been pretty conservative in giving guidances and you’ve overachieved generally. So going forward, do you think the current run rate is manageable? Assuming you have let’s say a three to four quarter of order book already in? That’s my first question. Second, your order execution and deliveries obviously sometimes are a little choppy, right? And lumpy in nature because you might build in, you know, have one quarter of very high deliveries.
So was this quarter one of those quarters or is this quarter lumpy or not lumpy or sustainable or not sustainable? I hope you got the question.
Bharanidharan Pandyan
So on the first question I had already replied to Shashank that we plan to get an assured curve, grow one year, then have a healthy growth the next year and then again start spiking in the next two, three years when the super cycle of the business is going around. That is point one with regards to lumpy quarters. Yes, we will have lumpy quarters. Because if we are doing a lot of American business or Turkish business, December happens to be lumpy. If you’re doing a European business, September happens to be a lumpy. But more or less the guidance was between 700 and 800 crores.
I think when you look at the guidance and what the numbers we delivered, I think more or less these were factored in. So that is where it is. So there is nothing new apart from the guidance that we are already given.
Unidentified Participant
Right. But just trying to get this right.
Bharanidharan Pandyan
We are a very newly listed company. We cannot overcome it under deliver. So I think going forward we would like the way Voltam, our peer, the transformer guys communicated. We listen to the calls. We, you know, we do our own peer review. We would like to excite the market every time rather than disappoint.
Unidentified Participant
No, that’s perfect. Also when we take orders in let’s say the 900 crore order book, do we use anything to hedge the commodity sort of input or do we place our orders immediately? How does that work?
Bharanidharan Pandyan
Unfortunately both of us is not possible for us because we really don’t know when the customer is going to lift or when the project is online. But then we Know what the deliveries are. The prices of the copper or aluminum is normally factored in as a part of that process. Sometimes you miss it, like in a super cycle like last week where the copper prices went haywire. That quarter we may have an impact, but the same quarter we are also booking orders at that price. And the next quarter the price is not sustainable, it goes down.
So you book the profit the next quarter. So unfortunately we cannot, if we get a clearance, we need to go ahead with the copper because we have to buy every day metals. You cannot have your factory running empty because the copper prices are higher. So that’s a part and parcel of the deal. But our margins allow us to take care of it. And we’ve been there in the business for more than two and a half decades. I think we know how to manage these cycles. But yeah, the super cycle of 30% in one week or something, it sometimes hurts immediately, but over a period of a year it flats out.
Unidentified Participant
But how many months of inventory do we generally maintain? You said we buy every day. Could you just help me understand at any given point of time how many covered and factored in?
Bharanidharan Pandyan
So we normally don’t buy every what we say the long lead. Sorry, we don’t buy the what we say material and stock. It is mostly just in time based on order based performance. But something like insulator, some long lead cables where we see suddenly a huge spike in deliveries. We are right now storing it like stocking it from global sources, Indian sources, whatever capacity we have because that determines our sales in the next two quarters. So that’s one of the reasons why we are stocking. And the stock is related to only the most problematic items and not the ones which are not required.
So these are temporary measures that is taken based on market situation. Otherwise in a normal market I don’t think we have an inventory of more than 2 to 3% of our revenue.
operator
Thank you sir. Mr. Yash, I would request you to please come back in the queue for further questions. The next question comes from the line of Praful Agarwal with IIFL Cap Finance. Please go ahead.
Unidentified Participant
Hello.
operator
Oh yes sir, please go ahead.
Unidentified Participant
Good morning all. My question is. Hello?
operator
Yes. Are you audible? Please go ahead with your question.
Unidentified Participant
My question is what is the current capacity utilization and by when do you expect the recent capex to start meaningful contributing to our revenue and roce?
Bharanidharan Pandyan
So our capacities are already stretched more than 100% at the current moment or all the businesses Mehru quality power at the manufacturing stage. Sukrut has a lot to offer NDOCs, we can take more with regards to the capacity of Mehru, I think you would see some incremental numbers coming in from second quarter next year. For us to start seeing some significance of the CapEx, we need to complete a lot of audits. We need to also have the HVDC plant, the cable factory online. You would see some numbers tickling in from the third and fourth quarter of the next year.
You will see the uptick coming in. You would obviously see the order book shooting up every quarter which would eventually be translated into numbers in the next few quarters. As I said, with the current order book we are already at about close to 300 booked. Another 200, 250 coming in in the next few weeks. This is about against 167 crores of last March. So we’re already 3x and we could take more provided we have capacity to deliver.
operator
Thank you ladies and gentlemen. This will be our last question. It’s from the line of Dev Galwani with Care pms. Please go ahead.
Unidentified Participant
Hi. Thank you for the opportunity. So if I look at AMDOC’s quarter and quarter growth it is approximately 100%. And in last one call you mentioned that new capacity expansion will commission in December 2025. So new capacity won’t have contributed much. Plus existing facility was also at 100% utilization. So what is the reason behind such high growth in ndocs?
Bharanidharan Pandyan
Ndocs? You are confusing with what we are doing. And these are all different product lines. We are not one product, one location company. Each factory, each location has a different product line and a different vertical. The capacity shortage has been in our manufacturing verticals in India, in Turkey where we are doing the power electronics portion, we never had a problem with capacity. We had other issues on semiconductors earlier. Now it’s again high voltage components. December is a year end for them. And this is where a lot of large projects execute like March for most of us.
I think that is a story and this is not something new. We had already factored in the growth and that’s where the guidance came in. So when we did about 363 and 70 crores last year and we had guided to 800 plus plus crores based on the numbers that we had 12 months before. This is not unplanned.
Unidentified Participant
Okay, and last question, what will be the peak revenue from MERU and NDOCS after capacity expansion?
Bharanidharan Pandyan
Depends on copper prices. My dear friend. If the copper keeps going, I don’t need to do anything. The prices increase 30%. So it’s very difficult to answer such questions. But I would say that 45% of thing about 450, 500 crores may can go in at this current moment, at the current capex going forward with what we do in Turkey and other parts of the world. I think we will come over the next call.
Unidentified Participant
Thank you so much.
operator
Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. With that, we conclude today’s conference call on behalf of assetsi meta that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.