Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Raymond Ltd (NSE: RAYMOND) Q4 2026 Earnings Call dated May. 05, 2026
Corporate Participants:
Gautam Maini — Managing Director, Engineering Business
Navin Sharma — Chief Financial Officer of Engineering Business
Analysts:
Manish Valecha — Analyst
Unidentified Participant
Rokaesh Roy — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Raymond Limited Q4, FY26 and FY26 earnings conference call hosted by Anand Bhati. 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 your touchdown phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Manish Valeja from Anand Rati. Thank you. And over to you sir.
Manish Valecha — Analyst
Thank you. On behalf of Anand Rathi, I would like to welcome all the participants in the Q4, FY26 and FY26 conference call of Raymond Limited. We have with us from the senior management of Raymond Limited Mr. Rakesh Tiwai Group, CFO Mr. Gautam Memi, MD, Engineering Business Mr. Sanjeev Sharma, Joint MD and CEO JKMPTL Mr. Naveen Sharma, CFO, Engineering Business and Mr. Sunny Desa, Head Investor Relations. Without taking further time, I would like to hand over the call to Mr. Gautam Meni. Over to you mister.
Gautam Maini — Managing Director, Engineering Business
Thank you. Good evening everyone. Thank you for joining us today for our Q4, FY26 and FY Q4 results as well as the FY26 results conference call. I hope everyone has had an opportunity to go through our financial results and investor presentation which have been uploaded on the stock exchanges as well as on the company’s website. Moving ahead, let me start by talking about the broader macroeconomic landscape that has influenced our performance and strategic decisions. India concluded FY26 with a robust real GDP expansion of 7.6% underpinned by a significant base year revision and resilient industrial activity.
While the manufacturing sector remained in expansionary territory throughout the year. The manufacturing PMI moderated to 53.9 in March which was a 45 month low reflecting the impact of energy shocks and the rising input costs from Middle Eastern conflicts. Despite this late quarter cooling, the fiscal year benefited from structural GST2 reforms and the RBI’s managed policy rate of 5.25% which helped contain March CPI inflation at 3.4% and supported overall domestic demand. If you look at the automotive industry, it hit a historic milestone in FY26 with domestic passenger vehicles which is the PV sales reaching a record 4.64 million units, a 7.9% year on year increase.
Q4 momentum was particularly strong with volumes climbing to 13.2% to 1.32 million units driven by a structural shift towards utility vehicles which now dominate the market. Total industry dispatches including two wheelers, which was 21.71 million and commercial vehicles 1.08 million reached a combined seven year peak. Complementing domestic strength exports touched a record of 0.91 million units which was 17.5% plus reinforcing India’s role as a critical global manufacturing node. Looking at the aviation sector, it has maintained significant momentum in FY26 with global OEMs.
Like global OEMs tripling India sourcing compared to 2019 levels to reach 1.5 billion annually. This expansion is fueled by the deepening of Tier 1 manufacturing roles for Indian firms and a global airline transition towards fuel efficient next generation fleets offering 25% gains in fuel burn efficiency Despite a record backlog of 17,000 commercial aircraft representing over a decade of the renew visibility, actual conversion remains hampered by engine shortages and supply chain friction. Q4 was specifically impacted by a contraction in aerospace grade titanium and aluminum alloys following logistic blockades in the Gulf.
These persistent inflationary pressures have accelerated a strategic pivot towards domestic input localization to insulate margins from geopolitical activity. The aerospace component ecosystem remains highly resilient due to extreme barriers to entry. Suppliers who have cleared rigorous certification hurdles are protected by a compliance mode that insulates them from low cost competition for the component and hardware ecosystem. This record high order book provides unparalleled long term revenue stability provided that domestic localization can successfully mitigate ongoing material cost premiums.
Raymond limited on its consolidated performance continued its growth momentum delivered a resilient quarterly performance reporting a total income of 613 crores reflecting a 2% increase compared to the same quarter of the previous financial year. EBITDA stood at 85 crores with an EBITDA margin of 13.9% in Q4FY26 versus total income of 601 crores in Q4 of FY25 delivering an EBITDA of 99 crores with an EBITDA Margin of 16 in Q4 of FY25 Q4FY26 performance was anchored by the Aerospace, Defense and Precision Technology divisions reflecting the structural integration of Indian suppliers into global high tech value chains.
We are observing a significant migration of domestic vendors from basic component manufacturing towards high complexity subsystems and precision engineered assemblies. This transition has secured a robust multi year order pipeline for Tier 1 and Tier 2 export partners enhancing both revenue visibility and contract stickiness amid broader global supply chain realignments. During FY26 total income stood at 2,312 crores, a 10% year on year growth from 2,105 crores in FY25. EBITDA was flat at 335 crores in FY26 compared to the same number 335 crores in FY25.
The EBITDA margin stood at 14.5% in FY26 versus 15.9% in FY25. While operational performance remains strong, EBITDA margins faced pressure due to a reduction in non operating income. 600 crores of cash was transferred to Raymond Reality post the demerger, hence the difference going forward. We continue to remain optimistic about the future growth trajectory given our expansion strategy in new product categories and new geographic. I’d like to move on to the segmental performance to give more clarity on the operations.
So we look at the aerospace business first which is through the company JK Mini Global Aerospace limited At the segment level the aerospace and defense business reported robust performance with revenue of 119 crores which is 11% year on year growth and an EBITDA of 3 crores which is again 11% year on year growth and An EBITDA margin of 25.5% in Q4 of FY26 versus A revenue of 107 crores and an EBITDA margin of 27 crores and an EBITDA percentage of 25.5% in Q 4 of FY25 in FY26 full year this segment generated 392 crores in revenue which is a 26% year on year growth from 311 crores in FY25.
EBITDA also grew by 25% year on year reaching 88 crores compared to 70 crores in FY25. The EBITDA margin stood at 22.3% in FY26 versus 22.4% in FY25 Q4. FY26 performance was driven by a dual strategy of portfolio expansion and increased volume allocations from core OEM and Tier one partners. Forward looking indicators remain robust characterized by a steady rise in the RFQ activity which is request for quotation and the pursuit of new global strategic ventures. This healthy demand supports continued capacity scaling and deeper integration into the high tech supply chain while internal growth indicators remain strong.
The near term outlook is currently influenced by external macroeconomic factors. Precision Technology and Auto Components which is the JK Mining precision technology company is at this segment level. This precision technology and auto components company reported a revenue of 442 crores which is a 5% growth and an EBITDA margin of 67 crores which is a 26% year on year growth and an EBITDA margin Of 15.2% in Q4 of FY26 versus a revenue of 421 crores, an EBITDA of 53 crores and an EBITDA margin of 12.7% in Q4 of FY25.
In the full year of FY26 this segment generated 1667 crores in revenue which is a 10% year on year growth from 1513 crores in FY25. EBITDA also grew by 34% year on year reaching 200 and 23 crores compared to 100 and 67 crores in FY25. The EBITDA margin stood at 13.4% in FY26 versus 11% in FY25. The eBITDA margin improvement was also on account of higher sales volumes, favorable product mix but also included a one time gain of 13 crore from the sale of land in Q2 of FY26. We continue with our strategy to expand into new international geographies and industrial sectors.
We are observing business momentum across domestic and international markets supported by the China plus one strategy, integration synergies and focused operational efficiencies across all segments. However, global trade pressures stemming from US Tariffs have introduced logistical complexity resulting in some temporary rescheduling and delays across the industry. Let us come and look at the debt and cash position at Raymond Ltd. We continue to remain a debt free business with net cash surplus of 68 crores in March 2026.
Raymond is embarking on a transformative 930 crore capital expenditure program over the next five years to meet surging international demand. This includes 500 crores dedicated to aerospace projected to scale current capacity significantly and 430 crores for precision technology and auto components. The integration of advanced multiaxis machining systems is already enhancing turnaround times and enabling the execution of complex high value projects in aero engine, landing gear and structural segments.
Our operational reputation is reinforced by consistent fair what is typically called new product development approvals and successful audit outcomes accelerating the conversion of RFQs into multi year contracts. We are strategically pivoting beyond build to print services towards co design and value engineering collaborations with global OEMs. This shift into sophisticated subsystem manufacturing deepens our integration into the global supply chain and enhances long term contract stickiness. As global OEMs increasingly, look to India for supply chain diversification.
Raymond Engineering’s business is uniquely positioned to capitalize on this structural tailwind. With a record RFQ pipeline, robust operational readiness, a clear focus on high precision innovation, we remain committed to scaling exports and reinforcing our status as a trusted global manufacturing hub. I’d like to thank you all once again for your continued interest in Raymond. We are now happy to take your questions.
Questions and Answers:
Operator
Thank you very much. We now begin with the question and answer session. Anyone who wishes to ask a question may press star N1 to ask a question. Anyone? You may press star N1 to ask A question. Foreign. The first question is from line of Bala Subramanian from Arian Capital. Please go ahead. Sorry to interrupt, but your audio is not clear
Manish Valecha
Right now. It’s clear, sir.
Operator
Yes, go ahead.
Manish Valecha
Yes. Good evening, sir. Thank you so much for the opportunity. In that aerospace side, we have added 100 plus new SKUs in this year. And what is the R and D expense in this financial year and are these development costs are contractually reimbursable by the customers?
Gautam Maini
So basically it’s a mixed question, but let me try and answer that. Most of the R and D costs are written off as operational costs. It’s between 3 to 5% your cost. But we write it off in the same year because we are considering it as part of our business model to grow aggressively. In some cases where the projects are very complex, you can get some development cost, but in a lot of cases it is included in the prices that you quote and therefore you build them into your price. But the clear answer is that we do not separately record these costs and we write them off in the same year, like operational costs.
So in a way, the more products you develop, the more you write off that particular year.
Manish Valecha
Out of our current order book, we could share the breakup between lead programs, GTF and other platforms.
Gautam Maini
Well, I don’t think we go to the extent of sharing exactly on all platforms, but I just want to tell you that we are basically present on several platforms across all the possible engine OEMs globally, both in Europe and US, and we are significantly looking to continuously increase our market share with them. And therefore our goal is to be de risk that whichever, whether it’s a narrow body aircraft or a wide body aircraft, or whether it’s in Europe or whether it’s in us, we are part of those markets and we have de risked ourselves to make sure that we are part of most of these programs.
Manish Valecha
Sir, on the target side, I think it’s been reduced from six months onwards, how do you look at from Q1 onwards?
Gautam Maini
Sorry, can you repeat that question?
Manish Valecha
So tariff impact has been reduced from fifth month onwards. So it’s the mid of the quarter. So how do you look at from Q1 onwards?
Gautam Maini
So are you asking this question for aerospace or automotive? So just to clarify, in aerospace there were no tariffs and in automotive the tariffs are definitely down to 18% now. So it’s definitely better than what it was. And I think slowly customers are getting used to the new normal and therefore slowly business will start coming back and is coming back. It’s taken some time, but I think it will only get better. However, in the meantime because of the war, you had disruptions on supply chains, et cetera.
So it will just be a little bit more time, but it will slowly come back.
Manish Valecha
Yes. So my last question, I think we are in the auto side, are we majorly doing for IC engines, EV hybrid on the TV side, which are the components we are doing right now and what is the target in the coming years?
Gautam Maini
So we make some complex assemblies as well completed fully transmission gearboxes as well. We also do some very critical components that fit into the hybrid transmissions globally in Europe and those also get exported to all over the world. So I would say we are in a good space in terms of both hybrid and EV and we are trying to horizontally deploy this across our customer base over the next couple of years. So we would definitely focus on that. We did see that the hybrid market grew in the last two years compared to the EV global market.
And therefore we focused a lot on the hybrid market and captured a major market share.
Manish Valecha
Thank you, sir. All the best.
Operator
Thank you. Next question is from the line of Neeraj from Whitepan Investments. Please go ahead.
Manish Valecha
Thank you for the opportunity. You have this order book of 2350 crores on the aerospace side. Wanted to know how much can you, you know, facilitate from the existing facility, not including the greenfield one that’s putting up.
Gautam Maini
So we have planned it in such a way that we will, you know, we will not run out of space till we grow. So we will continue to keep our trend of 25% growth till we reach the new greenfield facility. So nothing will stop us in the meantime to continue to keep the growth that we have. And in fact we will also continue to develop new products here itself, which will then be transferred to the new facility when it gets ready to shorten the lead time of customer approvals in the new facility. So a detailed, seamless plan is being made to ensure that there is a continuous growth in the new facility when it comes out without running short of Karpenhosi in our current facility.
Manish Valecha
Okay, so sorry, I’m extending the same question. So your current yearly revenues for aerospace and events is almost 400 crores and you’re talking about 25% CAGR. You are talking of almost additional run rate going to 506, around 898 crores run rate in FY28. And that’s when you’re expecting the new facility to start. So is it the right way to look at
Gautam Maini
When we’re starting the new facility? By the end of calendar year FY27. Right. So we’re talking about the 18 month period first of all. And therefore we would be closer to a number much lower than what you said. And we will definitely have capacity to reach that number before we move to the new facility in Andhra Pradesh.
Manish Valecha
Right. So the last question and I’ll come back on the queue. There is lot of shortage of machinery for machines like the likes of Grob and other machines in the global market. So are you fully ordered for the machines for your facility or is it just a step up on the gradual side?
Gautam Maini
So first of all, we don’t depend on one manufacturer. I think we must be having within our group at least 15 different manufacturers. We look at what machines are required for, what operations, what complexity. And based on that we buy our machines, we plan our machines lead times well in advance to make sure that we don’t lose out on any of our projects. And that will be the trend going forward as well. We also buy from all over the world. So it’s not restricted at all.
Manish Valecha
My question is more specific to you. Have you completely ordered all the machines or you are yet in the process of doing it?
Gautam Maini
So we continuously have a capacity plan that we order in times of lead time. If our lead time we believe is let’s say six to eight months, just to give you an example, then we plan six to eight months in advance. So you have to understand we’ll be growing almost on a weekly monthly basis. So it’s not like a project like a cement plant or some other plant where you know, you put a big project and then you expect it to grow. Ours is a modular growth which happens every month. So let’s say you develop 15 new components this month, you know, six to eight months from now you have a ramp up plan for them.
So you already plan those machines and based on the lead times you have committed to the customer, customer, you then plan to buy those machines. So you practically have Machines coming in every quarter for continuous expansion on growth. So right now also we have several machines that are on order which we will receive over the next three to six months and then we will keep ordering based on what new products are being developed and the ramp up plan of those products. So continuous process.
Manish Valecha
I’ll come back to the queue. Thank you.
Gautam Maini
Sure. Thank you.
Operator
Thank you. Next question is from the line of Sanjeev Romantic Stockbroking. Please go ahead.
Manish Valecha
Yeah. Sir, my question is regarding the commissioning. So in the presentation we are saying that the commercial production will start by late of 2027. So probably towards the end of. Can you just, can
Gautam Maini
You just. I can’t hear you very clearly. Can you just either come closer to the mic or just speak a little louder please?
Manish Valecha
Yeah, yeah. Audible now.
Gautam Maini
Yes, yes,
Manish Valecha
Yeah. Sir, regarding the commercial start of the new units and the presentation is mentioning 2021 late late of 2027. So it means that probably it was the, you know, end of FY28, the commercial production. Correct. Is that because I think in your initial remarks
Gautam Maini
It’ll be like second half or towards, towards the last quarter. FY28. You’re right. Yes.
Manish Valecha
Yeah. And how would be the capex plan for 27 and prepare towards these units as well as for the existing unit?
Gautam Maini
Yes. So basically in each of the businesses we will approximately be spending about 100 crores each to build capacities which will be consistent. Yes.
Manish Valecha
So 200 crore per year for both the units for S27 and 28.
Gautam Maini
Yeah.
Manish Valecha
Okay. And in the aerospace side, what further industry developments you are seeing which could be kind of a tailwind for our growth?
Gautam Maini
Well, we have quite a few strategic plans which I can’t disclose fully at this stage till they conclude it. But I can tell you that we are involved at a strategic level with both OEMs and tier ones with some long term large businesses which only once they conclude I can bring to the notice that there’s a lot in the pipeline. There’s a lot of effort being put to move up the value chain which we’ve been talking about and also add more value added work. Also in terms of sub assemblies and then final assemblies.
We’ve also, like I mentioned before, we’re doing some design to build work. So on all the fronts we’re trying to, to expand the value creation.
Manish Valecha
Okay, great sir, and just one last question. On the other income side, on the consolidated basis, the other income has fallen in. So is there probably some dividend that you would have received in the fourth quarter of last system which was not there in this quarter.
Navin Sharma
So there are two parts to the other income. There is, there is other income which we get because there’s a surplus fund or surplus corporates available in let’s say Raymond Ltd. Which is the parent company. And then there’s also other operating income which is you know, essentially generated from let’s just say scrap and all because more particularly in the aerospace business there’s a lot of scrap which get generated, you know, because a new machine. So it
Manish Valecha
Has both elements. Okay, right sir, I think I’ll stop here and with further questions again I’ll come back. Thank you.
Operator
Thank you. Next question is from Inquiry Capital. Please go ahead.
Unidentified Participant
Hi sir, thank you for the opportunity. I hope I’m audible. So my first question was in the line of our precision auto business. So the EBITDA margins expanded around 250, 260 basis points but the top line growth was only like 10% on a yearly level. So what really drove the EBITDA margin expansion and is it fair to assume that these kind of margins are sustainable?
Gautam Maini
So first of all there was an exception of 13 crores which I hope you’re aware of, which you have to take out from the equation which was a one time cost from the land sale that we had. So once you remove that, basically, you know we implemented SAP in August. We did a lot of work on integrating all of the companies. We then did a lot of synergies across the companies and all of this I would say came together before the start of the last quarter. And therefore synergies from the companies, cost reduction activities, improvement in efficiencies, consolidated buying, all of those had a role to play in margin expansion and the margin will continue going forward as well.
Because these are permanent synergies and cost reduction programs that we put in place. Yes, this year there’s going to be some amount of pressure because certain raw materials have gone up but normally these are pass through so there will be a lag. But in effect the margins should remain where they are.
Navin Sharma
There is a big strong cost consciousness mindset which is why we are running a formal cost reduction program. This is so clearly the focus on improving margins not just from the growth but also from cost efficiency remains a priority.
Unidentified Participant
All right sir. And in our segmental performance also we have some other operating income or losses there. So we incurred around 13 crore of you know, loss in the other segment. So could you give a breakup of that?
Gautam Maini
Right, Yeah, I just,
Navin Sharma
You know, see the Raymond, the Raymond corporate essentially which is the, which is the holding Company has other income which comes in for in the form of interest income that is generated from the corpus it has. But obviously it has some expenses as well. So more or less, you know, of course, you know, you can’t measure that on a quarterly basis. But I guess the best thing is to look at it on a full year basis. And on a full year basis, the income more than offsets the expenses. And therefore to that extent, you know, it could be one quarter year there.
But broadly the way you have to look at this business is that Raymond corporate will be more or less even Steven. Okay, There could be some margin loss, some quarter or some year. There could be positive somewhere, some, et cetera, but broadly neutral. The way to kind of look at this business is you have to look at the aerospace and the auto segment and then really focus on those two segments and not on the corporate that you can assume will be always even Steven with some marginal loss of profit.
Unidentified Participant
All right, sir, got it. And lastly on our aerospace business, we have highlighted our order book. So this order book is largely from Safran or are we taking in any other customers? What is the concentration?
Gautam Maini
So you have to appreciate that we have over 25 customers and one of our strategies has been to de risk our customers. Even when you talk about the oem, you mentioned they have more than seven different legal entities. So we are working with many of them. So, so the point is to derisk our business across several customers with whom we already have approvals. And that puts us in a very good position to scale business.
Unidentified Participant
All right, so I mean, so my direct question was, can you give a breakup of how much would be leap engines from the total order book? Only leap engines?
Gautam Maini
Well, I can’t. I don’t think it’s okay for me to give you a direct breakup, but let me tell you that over 75% of the products that we make are for the engine segment across the OEMs globally, which should be a good direction for you to know.
Unidentified Participant
All right, lastly, I mean, I’ll join by this. So we have guided that we’ll be adding around 300 to 350 new components every year. So how has that been playing out till now? Are we in line to ramping up those things?
Gautam Maini
Yeah, so I talked about one component a day that we will start to do and this year we should manage that. But I don’t count your all the days in the year. So I would say 250 is possible to be made this year and we should be on track for.
Unidentified Participant
All right, all right. Thank you so much. I’ll join back.
Operator
Thank you very much. Next question is from the line of Singh from Amicus Capital Partners. Please go ahead.
Manish Valecha
Hello. So firstly, congratulations on a good set of numbers. I have a couple of questions. So first on the net cash number that you have presented which is 68 crore. If I look at the balance sheet, right, so I see borrowings of around thousand crore and some cash of 200 crore. So can you please provide the reconciliation for the same.
Navin Sharma
Sorry, which page are you referring to? I mean.
Manish Valecha
So borrowings is if I look at the console balance sheet, borrowings comes to about thousand crore. And the net, if I look at the cash and bank balance, it’s around 200 crore. So I’m just trying to understand what else is included in the cash line item.
Navin Sharma
Yeah, so there are investment in other marketable securities, right? I mean you have lots of, let’s say instruments in which you invest to optimize your heat when you are sitting on a large copper. So there will be a variety of instruments there.
Manish Valecha
Okay. These would be liquid instruments, right?
Navin Sharma
I mean some may have two, three years kind of time frame but largely liquid.
Manish Valecha
Okay, okay, okay, that helps. That helps. And so second question is more along the lines of, you know, on the aerospace business. So right now we are primarily into engines. But as we scale, right. Is there any plans to get into let’s say aerostructure or landing gear? So if you can help me understand if there’s any strategy around it.
Gautam Maini
Yeah, like I said before, it’s 75% in engines. So obviously that other 25%, we are in landing gears, we are in hydraulics, we are in fuel, we are in other accumulators, we are in auxiliary engines. So we have not restricted ourselves to any. The idea was to create enough relationship with the aerospace industry as a whole and then depending on where the operations opportunities were, we will take them. So we will definitely be taking opportunities in all areas. Obviously keeping in mind our growth rates, our roces, our returns and wherever we find them to be the best, we will pursue those on priority.
Because like we said, the market is so large that it’s more limited by what you can execute rather than market. So it’s very important to execute. Right. And that is the focus of the company now is to make sure that we can grow our execution base.
Navin Sharma
See, the critical thing is that the biggest opportunity for us is when we start setting up Andhra. It’s a clean slate for us. So on a clean slate and Gautam alluded to it, but Maybe I’ll make it more specific that you know the kind of conversation we are doing with most of our partners are basically to say Bob, you tell us what you want us to, you know, kind of story so that we can become more strategic with them. So obviously we want to a, you know, make it kind of one stop shop for the customer.
So that will help the business trajectory as well as I think one of the other participants had asked a point on 250 parts and those kind of things. But I think it’s not the 250 which is more important. What is important is that how do you, you go up the value chain on those 250 parts. So that’s also part of that Android strategy because a, you know, there’s no baggage. It’s a total new parcel of land. I mean you have about 45 acres for aerospace. So we can do what we like to do there and therefore we would rather take the try to reshape the trajectory of the business, you know, versus doing more of the same.
So those are the kind of things we are trying to work on now. Of course they’ll happen when they happen but that’s the thought process.
Manish Valecha
Understood. Thank you so much and all the best for FY27.
Gautam Maini
Thank you.
Operator
Thank you. I request to all the participants kindly limit yourself to two questions per participant so the management can address all the questions. Next question is from the line of Rakesh Roy from Boring amc. Please go ahead.
Manish Valecha
Hi sir, my first question regarding for your aerospace business. As you mentioned this will grow 25% year on year for FY29. How much revenue we expect from your Andra plant? From aerospace?
Gautam Maini
Yes. So obviously the Andhra plant in the first few months where you can’t expect any revenue because you will have customer approvals and stuff like that. So we will grow in a very small way in FY28 which is your calendar year ending FY27 and last quarter of FY28. In FY29 you will see the real growth.
Navin Sharma
Let me address, try and address this question separately without getting into specific numbers. See we have, we have the capacity to grow this business by 25% for next year within our existing system. So to that extent whatever growth will happen will happen in the existing unit to a large extent. And then Amra really starts kicking in towards the end of FY28. Now that’s why 29 you. I mean the next 25 has to come from under.
Manish Valecha
Okay.
Rokaesh Roy
Yeah
Navin Sharma
But the next 25 has to come from other. It can’t come from anywhere else.
Manish Valecha
Okay, okay. For assumption for for existing business your business would f28 here by 650cr from this one again we take 25 from existing plan and for Andhra is the 25% of 800 or just again you have to add 200.
Navin Sharma
I mean you can do your math as much as we can do. Now all we can say at this point is that you know we are targeting a 25% growth year on year and the first year growth can be taken care by the existing fund. The second year have to be taken care by it will be some number between 150 to 200 crores but whatever that number is. Right.
Manish Valecha
Okay. Okay. So my next question regarding auto business especially EV side. So the demand for EV is increasing in Europe. So any, any outlook from your side how the demand or how is the product for Europe any export to Europe also?
Gautam Maini
So I would say that the demand for hybrids has been much higher than just the demand for EVs where we have been spending a lot of time as well. And that demand looks very strong for us. In fact the volumes are increasing and it’s helping offset some of the other issues that are there with markets. So I would say the hybrid market will continue to be very strong. The EV market we have to still watch because the governments in Europe have moved the dates out out by four, five years. So to that extent the EV market is not as strong as the hybrid market but as a percentage they continue to grow.
Operator
Thank you Rakesh, I’ll request you to come back for a follow up question. Participants, can you limit yourself to one question per participant and rejoin the queue for a follow up question. Next question is from the line of BR Jain from Sapphire Capital Partners. Please go ahead.
Unidentified Participant
Thank you for taking my question. So for FY27 what kind of growth do we expect with and what kind of EBITDA margins are we expecting?
Gautam Maini
So you’ve seen us historically grow at a certain pace and we’re going to keep that growth rate constant, you know. So I feel that there’s a positive signal and we will move in that on that basis.
Operator
Thank you. Also
Unidentified Participant
With the margins.
Gautam Maini
Yes, also with the margins.
Unidentified Participant
And sir, can you also provide the breakup of the Capex that we are planning to do over the next five years?
Gautam Maini
Each year almost you can take approximately hundred crores from each company. So over five years you’ll probably spend thousand crores.
Unidentified Participant
Okay sir, thank you so much.
Gautam Maini
Thank you.
Operator
Thank you. Next question is from 9 of Naman from Sanghi family office. Please go Ahead.
Manish Valecha
Hi. Hi team. I hope I’m audible.
Gautam Maini
Yes,
Manish Valecha
Yes you are. Great. So first of all, congratulations on a very strong set. Actually it’s getting disguised because of the other income. Other income bit of it. But there are a couple of questions. First is one, you know you said that we have a very interesting pipeline of product development and products that are under development. So could you tell me or would it be able, would it be possible for you to share status on say total number of products developed and total number of products commercialized?
What would be the proportion of it and how do you see that ramping up? Could you throw some light on that? That’s the first question.
Gautam Maini
Yeah,
Manish Valecha
Okay. Okay, go ahead,
Gautam Maini
Answer the first and then maybe it will be easier. So basically see whatever you develop, depending on the timeline that you have from the customer, certain products can ramp up between three months, some will take six months, some will take nine months depending on the complexity, depending on the customer’s order, depending on the contract the customer wants with you. So you have to work everything backwards from what the customer wants as a, a portion of ramp up. So basically you have to appreciate if you take an average period of about six months, you will maybe have 100, 125 parts that are not yet in ramp up but are in a process where you develop the samples and that’s a cycle because those parts will then come into your ramp up, they will then go into production and then you have new parts that come into your new product development.
So, so it’s a continuous cycle that runs and that could be the gap. As you increase your new product development, you’ll have more and more parts in the pipeline before they ramp up. But that’s what the number looks like today.
Operator
Thank you Naman. I’ll request to come back for a follow up question. The next question is from the line of Panka from Affluent Assets. Please go ahead.
Unidentified Participant
I’m audible.
Operator
Yes sir, go ahead.
Unidentified Participant
Sir. You mentioned about the capex that you have for your company for both the companies just wanted to understand what are the plans for funding the same and secondly the growth rate of auto components segment which you. Which is part of our company.
Gautam Maini
So basically you know at the Raymond limited we are sitting with thousand crores of cash, right? So there’s. So there’s enough sitting there plus the internal generations. So based on that we don’t see any problem in funding the capex
Unidentified Participant
Due to that. Will the parent company increase the state.
Operator
Sorry, you’re not audible
Unidentified Participant
Due to that.
Navin Sharma
So I guess I think the critical thing Is that the balance sheet of the engineering business itself with the kind of earning growth trajectory that we are estimating itself has strength to take care of the growth plan. So it doesn’t need to actually draw upon the parent company for any capital for its organic needs. So to that extent we can continue to grow the business while strengthening our balance sheet also now on top of it the safety net is that the parent company has liquidity. So therefore, which is why if you see on an overall basis we have pretty much almost zero net debt.
So that’s something which will continue
Unidentified Participant
The beauty that will the parent company increase the stake in the Women’s Limited because
Navin Sharma
If the businesses can self fund itself from its cash flow and the cash flow generation and the earning growth trajectory then you don’t have to really draw on capital from parent company for the organic needs. Of course if something inorganic happens, depending on the size, scale etc. Then at that stage maybe parent company will have to ch. That is how we anticipated at this point in time having done the long term projection, you know,
Manish Valecha
Before doing 200 crore of capex, I really don’t need 200 crore rupees. Right. It’s always a mix of accrual and debt. So our cash flows are supporting us.
Operator
Thank you very much Pankaj. I’ll request to come back for a follow up. Next question is from Tanya Singh, individual investor. Please go ahead.
Unidentified Participant
Hi. So my question is regarding the recent order win in the build to spend domain. Could you throw some more light on this please?
Gautam Maini
Actually we not able to disclose that right now due to confidentiality. But this is a product that we’ve developed for a customer which is also designed completely by us. And it’s the first time we did a build to spec. So our goal is to look at how we can take it. It’s a slower process, it’s not immediate results. But I’m glad that we got our first order and therefore we will be spending more time on this as the years go by.
Unidentified Participant
No congratulations on that. And could you throw light on how this would position us to move up the value chain?
Gautam Maini
Obviously today we make components based on assemblies and sub assemblies based on customer drawings. This would be our own product. So obviously it makes a big difference. But you have to start small so it takes time. You know in the aerospace industry is not an industry where you can just get in and do something. You will take a few years to establish yourself into the build to spec area. And we’ve just made a beginning there as one part of our value Addition that we intend to bring in different parts of our business in aerospace.
Unidentified Participant
Got it. Thank you. And all the best for the new X Files.
Gautam Maini
Thank you.
Operator
Thank you. Next question is from the line of Madhun Jain from Mode pms. Please go ahead.
Unidentified Participant
Hi, am I audible?
Operator
Yes sir, go ahead.
Unidentified Participant
Hello. Yeah, sorry. So I’m particularly new to this company. I had a doubt on the shareholding pattern. So when as an investor I am invested in Raymond Limited, what do I get as an I am, I actually get a share of the parent company, right. The Raymond Limited company which has got two subsidiaries and the parent company has got about 66% shareholding in the two subsidiaries if I’m not wrong. So can somebody please clarify as in the minority interest gets subtracted from my, I mean how does it work out?
Navin Sharma
See I think the very simple way to look at it is that it’s a 300 crore broadly EBITDA company and you want as a shareholder 2/3 of that EBITDA. So it’s a 200 crore EBITDA that you own. Then there is a debt at the, at the businesses but there’s more than sufficient liquidity at the parent company which offsets that debt. So to that extent if you have to just simply look at the company then you have to say it’s a 200 crore EBITDA that you own in a very, very
Unidentified Participant
About 65% of whatever EBITDA that the company generates. Right. At the annual level
Navin Sharma
66.3%. Now 66.3 is 2 3rd. So if company just 300 crore, if it does anyone 200 crore of that EBITDA because 66.3% is roughly 2/3. So I’m just making it simple for you. Of course you know you have to multiply by 66.3% if you want to be precise.
Unidentified Participant
Got it. And my another question would be since we are in our aerospace business, since we are into turbine vanes and all that, do we have a play in the gas turbine segment as well other than the aerospace business? Are we looking into that as a possible segment?
Gautam Maini
So we have looked at it and we don’t rule it out in the future because there are similarities and we have some RFQs in that direction. So we are definitely looking at it and it will be very natural for our own production as well.
Operator
Thank you. I’ll request to come back for a follow up question. Next question is from the land of Sawanthakkar from Chris pms. Please go ahead.
Rokaesh Roy
Hi sir. So across our raw material mix, so across Inconel across stainless steel, titanium, aluminum, how much do we import and what do we import and how much is sourced from India.
Gautam Maini
So typically as of today you import 100%. Right. We have just started development of few of the materials which are hopefully over the next six to eight months we’ll see some progress. In auto, we don’t. But I’m talking specifically on Aero. Right, on aero We import 100% today because you need approvals etc. So slowly over the years as we localize these materials and as the OEMs give approvals, this will actually be in the favor of not only us, but all Indian companies to get more competitive in the future as these raw materials get localized in India.
Rokaesh Roy
Okay. And in terms of your STUs and components, you said that you’d add about 200 to 250 components this year. Now what, what is the mix between assembly and components like? Is there, is there a mix that can be defined on that side?
Gautam Maini
Yeah, so I would say probably 20, 25% of them would be sub assemblies, some would be main assemblies and the rest would be components that you would use for those sub assemblies or some components you would use, which are complex components you would use on your own. Typically in the engine side you will have a lot of sub assemblies or on their own, unlike structures and systems where you could have more number of assemblies.
Operator
Thank you. Someone I’ll request to come back for a follow up question. Next question is from line of Ruben from Equal Intelligence. Please go ahead.
Manish Valecha
I just want to know in aerospace what is your current utilization and is the growth more constrained because of the capacity or is it because of the orders?
Gautam Maini
So the growth will always. I don’t think it is either. It is a question of execution. So when you say execution, you want to have the right engineering, you got to have the right process, you got to have the right tools, you have to have the right fixtures, you got to have the right systems. So it’s the entire supply chain process, end to end that you deliver a product and the pace at which you can do it and the speed and accuracy with which you can do it. So it’s a question about having the entire delivery process smoothened out rather than just saying is it capacity or is it order?
It’s definitely not order, it’s the ability to execute. And capacity is only one issue of the entire supply chain. So you need to get the whole story right and then it works.
Manish Valecha
Okay. Because we’ve been hearing about this huge order backlog by various bigger OEMs and all but right now when we’re looking at this order book of 2,300 over five years, it’s just 460 a year. So I’m just trying to understand what help me understand what is holding back this revenue expansion. Why isn’t growth going as much as the order backlog conversion? I’m just trying to understand that.
Gautam Maini
Yeah, you need to understand that these orders are for products that you’ve already made, not for products that you’re making because they are not in the contract yet. When you make, let’s say the 200 products we would make this year, those are not in the contract. So almost on a monthly basis or a quarterly basis, your order position keeps increasing based on all the new products you keep adding. So it’s not like a fixed. This is the current situation. The situation is changing every day, every week, every month.
These are the orders that you’ve had in the past.
Unidentified Participant
See, this is like if we stop taking new orders then how big the order book is. But we’ll not stop taking orders. Right?
Operator
Thank you to come back for a follow up question. Next question is from Sahil from Whitefind Investments. Please go ahead.
Manish Valecha
Hi. Thank you for the opportunity utilization of the current 8,000 units for you. And what would be the incremental capacity for this gains in the Andhra plant?
Gautam Maini
So the veins we have enough capacity in the current plant and we’ve just doubled our orders. So we’ll be adding it in this plant itself before we go to the Andhra plant. And what was the second question?
Manish Valecha
The incremental capacity in the Andhra plant for these whales.
Gautam Maini
Yeah. So there are different kinds of veins. The ones we do today are cast iron. They are out of titanium, they are out of steel. Some of them are machined, some of them are. You can’t even machine because they are made out of hard metal. So there are many varieties of vanes and depending on which variety we will get how much order then we will based on that we will do our Andhra plan. So we will also fill up first our current capacities here and then based on whatever new orders come, we will move them to Andhra.
Operator
Thank you. I’ll request to come back for a follow up question. Next question is from Nain of Harsh from Toroval. Please go ahead. Harsh, may I requested unmute your line and proceed with your question. Due to no response, we move to the next participant. Next question is from Nanushashi Kant from brightermind. Please go ahead.
Manish Valecha
First of all, congrats for the good set of numbers. I have one question that one of our peer group has recently won order from Roll SaaS. Were we participating similar program? Hello. Hello. Yeah.
Gautam Maini
What was the last part of your question?
Manish Valecha
So one of our peer group company has recently won order from rollsoyce. So were we participating in that program? Also
Navin Sharma
It’s not an order win per se. There was an acquisition opportunity of an asset which came a lot of its own set of complexities, which is what they have acquired. And what they acquired had a contractual term as part of the acquisition. So they have just aggregated the entire contractual term of the current size of the business. So it’s not a new win that they have. Having said that, there are lots of RFQs that we are participating with. I mean not just host but many other customers. So as we keep winning them, we will keep reporting them.
Manish Valecha
Okay, so just an extension of that question. So what is the timeline gap between the RFQ and the real order placement from the OEMs?
Gautam Maini
So again it depends. Like I said, you know, if you take the OEMs, they have different complexities. So if the parts are very simple, then the turnaround time is very quick. In some cases we have self approval process so they don’t even check our parts. They trust us to do the right job. In some cases the medium complexity could take three to six months. In very complex it could go 12 months. So if they need validation it can go even further. So I think each part is on its own and that’s the reason why you have to make a lot of parts.
Because each one will follow its own path. It will have its own ramp up plan, will have its own growth strategy. So the ability of a company to continuously make new product continuously scale up and ramp up, that’s what we are looking at.
Operator
Thank you Shashikanth. I’ll request you to come back for the next question. The next question is from Mr. Parikh from LS Finance. Please go ahead.
Manish Valecha
Hello.
Operator
Yes.
Manish Valecha
Yes. So my question is for Mr. Gautameni and I was in a. I read the call you had, I think last year where you mentioned that there are four levels of critical components, N1 to N4 and we work at N2 and I think that tech was at least partially was transferred to us by Safran. So are we planning to get into N1 level of components, the rotating components? Do we have the capability? And if we are not planning to do so, why is that
Gautam Maini
So? Definitely, I think the wish list is definitely N1. It takes time. It took us five years to go from N4 to N3. It took us another five to go from N3 to N2. So these are long term programs where the customers really test you out and make sure that you are a really reliable supplier. You know, you have to carry heavy insurances, you have to do a lot of things and which we’ve done. Right. And therefore there’s no reason why you would not want to do an N1. We definitely are pitching and we hope that the customers, you know, one day will buy our.
And we can do N1 pass. So that’s definitely part of our wish list.
Manish Valecha
That’s, that’s great to hear. Can I squeeze in one more question? Please,
Gautam Maini
Go ahead.
Manish Valecha
So this might be for the cfo. The depreciation is very high for our ebitda. Right. So like how does, how does the company generate cash flow like the capex? I think you mentioned in the past that the capex will come from internal accruals and debt. So if the depreciation is so high, how do we generate internal accruals? And maybe I’m not very bright here, so maybe. Please enlighten me.
Unidentified Participant
See, we also have significant intangibles in our books to the tune of around 800cr on that. We have a significant part of depreciation coming which though in terms of calculation appearing into depreciation but that’s more of, you know, it’s not really, really impacting our cash basically it’s rather helping us in a way. So the depreciation number which seems very high to you, that’s largely coming because of, you know, the intangibles that we have in our books, our actual gross block is not that big and a of lot.
Again, stick to the same statement that we have enough cash flow which is getting generated into our business for funding our further expansion.
Navin Sharma
See you have to understand this depreciation is a non cash charge. So to that extent, because there are intangible which you know, got created out of the merger. So those intangibles and depreciation of that in some sense is actually helping the cash flow because of the, you know, the, the tax advantage that you get on that depreciation. So it’s actually helping other than hurting.
Operator
Thank you very much. Next question is from man of ASU and division investor. Please go ahead.
Manish Valecha
Hi. Hello. Am I audible?
Operator
Yes, also go ahead.
Manish Valecha
Okay. Yeah, thank you. I just want to know, as of today we are not interested in moving towards service treatment. I mean scaling up vertically rather we are more interested in scaling up horizontally. Right. To maintain a trade off between ROCE or Margins which you explained in previous calls. It’s still that standard. We are looking for getting into surface treatment or the margin accretive processes.
Gautam Maini
So obviously we were constrained also with a lot of other things where we wanted to grow top line, we wanted to grow with customers and we had limited space in our current location. Now that we have Andhra, definitely our plans have changed. We are discussing with all of our customers in a strategic manner to understand what will be their service requirements over the next five years. Heat treatment requirements. We’re willing to be vertically integrated where it’s needed. So we are moving to a much more strategic level with the customers where they can depend fully on us as a one stop shop and we don’t have to depend for all cases outside.
Obviously this will be done with a lot of prudence not to carry on with surface treatments where there is a lot of capacity in the country but rather to go after those surface treatments that would build a business case for us in the next three to five years. So this is definitely on the cards and we are exclusively pursuing information from all our customers as to where we should look to invest.
Manish Valecha
Okay, perfect. And the last one, a short one is can you please let me know like what all steps we are taking to reduce the audit or clearances process for the new greenfield? Because I think when I was reading it it takes two to three years to get it approved from the, I mean various kind of certifications. So if you’re targeting by end of FY27 calendar year or Q1, FY28 kind of, I mean we can kick off the production. So is it feasible considering the audit and clearances will be done or it’s
Unidentified Participant
More on the line that we will produce the self certified
Manish Valecha
Things which doesn’t need external approval?
Gautam Maini
No. So it will be a combination of things. But mostly since it’s a new plant and our customers would want us to make at the new plant because it will have a lot of things that they will like including sustainability, mechanization, automation. There will be a lot of stuff that they would love in that new factory. So in fact they will actually push for us to move our products there. So it would not be something painful because it’s, you know, the company is already approved. It’s only a question of second location.
That is is not a very difficult thing. If you are not approved by a company and you want to go and get approval for the first time then it takes two years. But in our kind of situation that will not be the case. So that will be managed very well and very much in advance. In fact, all of our customers already know about our plan, you know, 16 months in advance. So we are going to plan with every customer how to do that. Yeah.
Manish Valecha
Okay. Thank you, sir. And sir, any plans to get into single fiscal materials as of now?
Gautam Maini
Right now, no plans, you know, because that’s not our core business, you know, that would become a supplier for us when we need to get in there. We’d like to start with the heat treatment, surface treatment, finishing assembly, etc. And give a complete sort of a value added product to our customers at this point in time.
Manish Valecha
Thank you. Thank you very much, sir. Good luck.
Gautam Maini
Thank you.
Operator
Thank you very much, ladies and gentlemen.
Manish Valecha
We will take that as a last question.
Operator
I’ll now hand the conference over to the Bottom Line for closing comments.
Gautam Maini
So thank you very much for the, you know, for the many interesting questions and thank you for all your support for recognizing that the sectoral performances have been great. We look forward to seeing you all in the next quarter. Thank you once again.
Operator
Thank you very much on behalf of Anandwati. That concludes this conference. Thank you for joining us. And you may now disconnect your thank you.