Sansera Engineering Ltd (NSE: SANSERA) Q2 2025 Earnings Call dated Nov. 12, 2024
Corporate Participants:
B.R. Preetham — Executive Director and GCEO
Vikas Goel — CFO
Praveen Chouhan — Head of Corporate Strategy
Analysts:
Mukesh Saraf
Arjun Khanna
Siddhartha Bera
Mumuksh Mandlesha
Abhishek Jain
Gaurav Gandhi
Deep Shah
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Sansera Engineering Limited Q2 FY 2025 earnings conference call. [Operator Instructions]
I now hand the conference over to Mr B.R. Preetham, Executive Director and Group CEO. Thank you, and over to you, Sir.
B.R. Preetham — Executive Director and GCEO
Thank you. Good morning and welcome to all. And thanks for joining this call. On this call, I’m joined by our CFO, Mr. Vikas Goel; Mr. Praveen Chouhan, our Head of Corporate Strategy; Mr. Rahul Kale, our COO; and also our investor relation advisors SGA. The results and the presentations are uploaded on the stock exchange and the company website. And I hope everybody has had a chance to look at them.
To start with, we are pleased to report that our financial and operational performance in Q2 FY 2025 has been quite strong compared to the existing market conditions. On the year-on-year basis, our revenue has increased by 10% to INR7,634 million, along with an improvement in EBITDA margin, which stood at 17.4%. Having completed QIP of INR12,000 million in the month of October, our balance sheet position has strengthened significantly. The — this capital will be instrumental in supporting our future growth plans, giving us financial flexibility we need to pursue the growth opportunities.
Now, let’s take a look at the broader industry landscape. In the domestic market, two-wheelers maintained a healthy momentum in Q2 FY 2025 with volumes increasing at double-digit rates on a year-on-year basis, while the passenger vehicles saw a slight dip. On the export front, two-wheeler volume showed similar growth trajectory. And as we look-forward, festive sales have come in strongly in the month of October. Having said that, we are seeing some softness in the demand on the export side.
Let’s take a closer look at our performance across sectors in Q2 FY ’25. While our Auto ICE business had a healthy growth, there was a mixed bag performance in our emerging business, namely Tech Agnostic, xEV and Non-Auto. The Tech Agnostic and xEV business continues to be the fastest-growing sector with a growth of 55% year-on-year basis. This was primarily driven by the ramped-up order execution of our large North American-based EV customer and interestingly, we are yet to achieve the peak execution levels. However, our Non-Auto sector saw a degrowth of 20% year-on-year. This was mainly due to weak performance in our off-road and agriculture business. Off-road segment revenue stood at INR166 million during the quarter. Agriculture sales during the quarter stood at INR101 million. With a stronger monsoon, we expect this segment to be better in the coming quarters.
I would like to inform you that we have already started order execution for a large stationary engine and HCV customer with one order started giving revenues and another one will start in the next few months. These orders will reach their optimum value by FY 2026. Speaking of aerospace business, it was also under pressure due to some headwinds faced by our large customer — faced headwinds faced by a large customer, which resulted in delay of order execution. Having said that, we look-forward for a gradual production recovery at their end. Broadly, the demand for the aerospace remains robust, driven by the healthy air traffic growth. The underproduction of the aircrafts in the recent years has resulted in a very large order backlog. And with the ending of strike at Boeing, we expect the business to be back on the expected growth trajectory. We have entered into a strategic MOU with Dynamatic Technologies, allowing us to leverage our manufacturing and engineering expertise in producing high precision parts going into the Airbus A220 aircraft door assemblies.
Coming to our Auto ICE business, it witnessed a growth of 9% year-on-year and stood at INR5,367 million, which is the highest-ever quarterly revenue. This performance was mainly driven by the two-wheeler business, which showed a growth of around 21% year-on-year. We are positive on this business as we continue to get new orders for the two-wheeler components in the Tech Agnostic and high-end of the market and expect it to demonstrate a similar kind of growth in the coming future as well. Our PV business, fueled by the slowness in the export market, de-grew by 8% year-on-year, which is in-line with the overall industry scenario of slower demand.
Now let’s turn our turn to our order book. As of September 2024, our order book stood at over INR20 billion with 60% of these orders coming from international markets. I would like to mention that this quarter was a very good quarter in terms of order booking, as well. We booked around INR3.2 billion worth of orders during the quarter and major order inflows are from auto as well as non-auto sectors. In order to meet the increasing demand for our products as well as necessity for launching of new products to meet our customer specification, we have also set-out our plans to expand our capabilities, including establishment of a new manufacturing facility in order to accommodate new forging lines and machining lines. Towards this, we have signed a letter of allotment of 55 acres of land in Harohalli, Karnataka. We are also expanding our factory building at Plant 9 to accommodate a new special process setup. Further, we will be upgrading and adding some more machines to in these facilities, as well. We have also set-up a — we have also expanded our manufacturing facility at our Pantanagar plant, having acquired a new manufacturing in place with a 1,20,000 square-foot area and we hope to continue our low-cost manufacturing base at our Pantanagar facility. Broadly speaking, beyond the land and building, we would — we intend to spend more than 60% of our future capex towards the new-age components in Tech Agnostic and xEV and Non-Auto side.
We are also focused on expanding our professional team and have recently roped in multiple members at a senior level. To name a few, Mr. Rahul Kale, who has recently joined us as COO of the company, brings in significant amount of experience and leadership expertise with a demonstrated history of more than 20 years in automotive and MNC. Mr. Madhukar Bhat, CHRO has over two decades of experience in HR leadership experience. Mr. Sreedhar, who has joined as Head of — COO of our forging division, also comes with more than two decades of experience in forging related industry.
If you recollect, we have already added experienced professional to take their leadership role such as Mr. Anil Patil, our CQO, who has over two decades of experience in quality management and operational excellence across automotive OEMs; and Mr. Pattabhiraman Raghuraman, our CSSO over two decades of experience in managing sourcing and supply-chain management and Mr. Satyanarayanan Patel, Head of our Business Finance, who is also over two decades of experience. Along with — along with our strong existing team, collectively, all of them bring a wealth of industry experience that will be instrumental in driving our growth journey forward. At Sansera, we are driven by a passion of engineering to effectively seize market opportunities and drive continued growth in the years ahead. Now, I hand over this to our CFO, Mr Vikas Goel.
Vikas Goel — CFO
Thank you, Preetham. Good morning everyone. let me talk about the consolidated financial performance during the second-quarter of this financial year. Our revenue from operations rose by 10% to INR7,634 million. We have delivered our highest-ever quarterly revenue despite the challenging macro-environment in the auto industry in domestic as well as international markets. Our gross margin expanded by approximately 1.3% points due to evolved product mix and certain efficiency projects which we’ve been working on, which have now started delivering benefits. During the quarter, our gross margin stood at 41.3%.
Other expenses, we had a marginal improvement in — on a sequential basis on a few items. And this is basically a result of our cost-control measures. So that also helped us improve our — to maintain a good performance. The EBITDA for the quarter stood at about at INR1,331 million versus INR1,178 million in the same-period last year. Our EBITDA margin for the quarter stood at 17.4%, which is marked improvement on an ongoing basis. Interest cost was higher on a sequential basis, partially due to higher debt and largely due to the discontinuation of interest subvention on export credit. Going-forward, we expect this to get nullified as we are deploying the proceeds of our QIP for repayment of most of these loans. And so, we should have some positive reflection on the results going-forward on this account. Our depreciation and amortization expenses stood at about INR425 million, in line with our ongoing asset capitalization. We were able to maintain our PAT margin level and close the quarter at INR516 million of PAT.
Talking about the performance during first-half, the revenue from operations rose by 11% to INR15,073 million with a healthy margin profile. EBITDA for the half year stood at INR2,607 million with a year-on-year growth of 12% and a margin percentage of 17.3%. PAT stood at INR1,018 million with a margin of 6.8%. On the debt front, our net-debt stood at INR8,797 million as of September 2024, owing to higher capex during the first-half and slightly elevated inventory, which is basically to build up for the ongoing festive season. Capex investment were largely — sorry, capex investment to the tune of INR2,937 million in this period of first half. And the details of which were already explained by Preetham in his address. Cashflow from operations stood at INR1,959 million. And I would like to highlight that with the help of QIP proceeds, we are currently net cash positive.
With this, we would like to conclude our presentation and open the floor for Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Mukesh Saraf from Avendus Spark Institutional Equities. Please go ahead.
Mukesh Saraf
Yes, sir, good morning and thank you for the opportunity. My first question is on the order book. We have seen the order book kind of expand now this quarter. And moreover, it seems like the non-auto segment has — has seen a good order increase now past INR500 crores. Could you give some more sense on this number? Is this largely aerospace or is there some of the other orders that we are getting in the non-aerospace, non-auto segment, as well?
B.R. Preetham
Thank you, Mukesh. Yeah, see, while the overall order book is quite healthy, I think the orders have flown from all the — orders have flown from all the segments. Overall, if you really look at our order book, which is about INR2,055 crores, more than 50% of this has come from Non-Auto, Tech Agnostic and xEV or approximately about from INR500 crores from non-automotive. Our Tech Agnostic is about INR205 crores, xEV is about INR315 crores. And Auto ICE also is quite healthy with INR979 crores. So — and if you really look at the domestic versus this thing, again, about 40% of this is from domestic and about 60% is coming from exports. So, there is in a healthy order inflow from each of the sectors and also from the geography, as well.
Mukesh Saraf
Right. So, my question was specifically on that INR500 crore non-auto order book. Just trying to understand this incremental quarterly improvement that we have seen. Is this largely only aerospace or is there other segments within the non-auto?
B.R. Preetham
Also a portion of — we have been able to add some new segment, as well. So in this about 36% — about 37% of the — orders have come from aerospace and about 4% from agri, but then we have also added a customer in semiconductor business. So, we have been able to get a good entry into this. This is for a semiconductor equipment manufacturer and that constitutes about 55% of the Non-Auto order book.
Mukesh Saraf
Got that. Got that. Thank you. And secondly, on the money that we have raised, the INR1,200 odd crore number, could you kind of spell out the plan step? Obviously, you have mentioned about some debt repayment, etc. but any strategic plans there in terms of M&A? And even if you’re not able to kind of specifically talk about M&A, could you tell us what kind of areas we are looking at? Is it more a geographic expansion that we’re looking at? Is it capability building, say warm forgings, we do have fitwell, but is that you know, anything that we’re looking there on the warm forging side or is it like a customer acquisition so could you kind of spell out a little more in detail on the usage of these funds? Obviously, there is a US plant as well that you’re looking at. So if you could give those details.
B.R. Preetham
Yes. See, broadly, what we have strategized is that to begin with, with immediately, we would actually net off our debt. So we have become mostly debt-free. That will also give us a leverage for any further expansion as and when the opportunity comes up. We’ve also, as I specified that, we are expanding in two places on our land and building because we have almost run-out of — we had almost run-out of our land-bank. So we are acquiring about 55 acres, which is in an EV park coming up very close to Bidadi Industrial area, where government has identified a parcel of 55 acres and allotted, where we expect that all our future order book execution would happen.
We have also added a manufacturing base, which we intend to keep it as a low-cost manufacturing base in our Pantanagar. Now post this, you know, we are also setting up a special process plant in our aerospace facility. This will also accelerate our growth in aerospace and also in other non-automotive sectors because special process being a extremely critical to the — you know these sectors. Now, apart from this, as you said that we are on the very actively pursuing our plans into starting up of a small assembly plant to begin with in the US and with a change in government that is due to happen in US, we are closely watching what kind of policy shift will happen, which would also you know, help us to take further decisions on this.
Now just coming — and you know that we have — we have already invested in a deep technology startup where — in MMRFIC and we would definitely look at a much faster growth in that. Of course, aluminum would play a key part in our expansion strategy. We are definitely open to looking at more-and-more warm forged as well as hot forced components critical to our component strategy. Some of our key members who have joined us also come with that expertise. So we expect that will also leverage our — propel our growth.
Mukesh Saraf
Right. Any number you can tell us on the US capex? Will it be a small — I mean, are you starting off with a very small number now because you’ve raised the money just wanted to check it?
B.R. Preetham
Yeah, it is not a significant number at all. To begin with, we would — it would be only a lease premises with some final inspection and assembly and operation. So it would not have any material impact at all.
Mukesh Saraf
Got that. Got that. And just lastly, margins, while we have maintained the ballpark around the 17.5% number. What are the kind of levers from here you’re seeing because of — and how are you seeing some of these initiatives you’re taking in terms of product diversification, etc., might take some more time? What is the trajectory you’re seeing on these margins?
B.R. Preetham
So, as I explained earlier, the margin is definitely, you rightly said, there are project diversification or higher product mix is one lever. The second lever is the cost improvement initiatives. On the indirect cost, we are taking control measures. And also we are looking at efficiency improvement projects. There are a few projects running already in the company. So, these are two levers that we have. The third lever is the volume expansion on an overall basis and a higher capacity utilization, which will probably also materialize over a period of time.
Mukesh Saraf
Right, right, right. So immediately — I mean, so basically, it would take some time as we see these results play out, basically.
B.R. Preetham
Yes, absolutely.
Mukesh Saraf
Right. All right. Thank you so much. I’ll get back-in the queue.
B.R. Preetham
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address the questions from all the participants, please limit your questions to two per participant. Thank you. The next question is from the line of Arjun from Kotak Mahindra Asset Management. Please go ahead.
Arjun Khanna
Thank you for taking my question and congratulations on a great set of numbers. Sir, the first question is just on the capex. While you did cover it, we had indicated roughly INR450 crores of capex for this year. Has there been any change in thought process post raising money in the QIP?
B.R. Preetham
No, Arjun, we continue to work as per the guidelines, except that this — between 425 and 450 what we had indicated was not inclusive of this land parcel that we have mentioned. So that would be additional. And apart from that, absolutely. Yeah, those two land portions. And apart from that, it should be more in-line with whatever we had indicated. Of course, we will also take the overall macroeconomic condition, the market momentum into consideration while slightly adjusting in case that we need to curtail or accelerate any of this thing.
So, because as I said that we have added some more sectors, there could be some capability that needs to be added into those, which may also require some additional equipment. But that again, having said that, that should be well within the projections that we have made.
Arjun Khanna
Sure. Sir, just on the margin side of it, while you did also articulate, going-forward, if I look at your order book entering into semiconductors, equipment, etc., would it be fair to say that the margins of the order book potentially could be higher than the existing margins?
B.R. Preetham
Yes, while the new sectors, especially non-automotive and also Tech Agnostic, xEV, these are primarily driven by the export geographically, it is meant for exports. So this all these comes with higher margins, of course. But then you know, we also have some learning, as I had already said that we are optimizing our learning in our tech agnostic components, especially in aluminum forged and machine components. I expect that we would take another couple of quarters before we reach those optimum levels, which also currently is a drag. And so — and definitely the order book, as it represents, should give us a positive momentum in margin expansion, and also some of the initiatives that we are taking in our Swedish facility, along with new order additions there and some automation projects that we have taken up. Beginning of the next quarter, we should see a better — going back to our normal margin this thing and you’ll see the full-year, next year going back to normalcy in our Swedish facility, as well. So with all these things, definitely we expect that there would be some expansion in the margins.
Arjun Khanna
Sure. Sir, just a final question, a quick one. Obviously, things are fluid globally. But just if we look at the aerospace and defense piece, we had earlier indicated that we could look at maybe INR350 crores of peak revenues over the next couple of years. Obviously, there have been global related occurrences, but how do we see the ramp up now going-forward? Is our order book yet intact or has there been some change in the orders or anything has been canceled?
B.R. Preetham
No, in fact, our order book has expanded in aerospace and defense and with the recent — one of the largest OEMs, you are aware that there was a labor issue and then it has been resolved. And we expect that they would really put their efforts to catch-up the last ground. So since we have also expanded our customer base, we have been able to work-through with the newer orders. We really very firmly, we are working towards achieving whatever is our targets. Of course external factors do play a big role, but we have tried to — we have also added, as I said, the new sector would also get added into this facility. So, this achieving and setting up of a special process line or facility into this is also towards achieving those numbers much faster than what we had thought. So we continue to hold a positive outlook on aerospace and defense. And definitely, again, as I reiterate that the company intends to grow by 40% to 50% CAGR in this sector for the next two to three years with a strong outlook on the order book.
Arjun Khanna
So what would be our peak revenues currently in terms of order booked and current business?
B.R. Preetham
I think, see, if I add the new sector also into it, we are already very close to about INR325 crores to INR350 crores worth of order book, both aerospace, defense and semicon put together.
Arjun Khanna
Sure. Thank you and wishing you all the best, sir.
B.R. Preetham
Thank you, Arjun.
Operator
Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead.
Siddhartha Bera
Yeah. Hi, sir. Thanks for the opportunity. And Sir, my first question is on this non-auto side, again, now given these improvements with your key customer ramping up now and newer orders also we are starting to get, should we expect that this segment start growing in that 30%, 40% or maybe in high-teens from current quarter onwards or do you think some of that recovery may take longer?
B.R. Preetham
See the as the — now we see that there is already a momentum started seeing, we are also looking at the entire supply-chain to definitely support this growth story. And I expect that while the third quarter should maintain the momentum and see an improvement, but in the fourth quarter, you would see a significantly improved performance because already we are towards the middle of November and these things would start taking some time into — coming into the production line. So I expect the full recovery and full back to normalcy from the fourth quarter. So where you will see the kind of growth that we have been speaking about.
Siddhartha Bera
Got it, sir. Sir, second question is on this PV side. We have seen quite soft growth in the last — first half of this year. What are the issues here? And given the lot of potential even in Indian market, as well as, in the export customers, when can we expect some of these trends to sort of pick-up for us going ahead?
B.R. Preetham
See, PV, both headwinds, there is headwinds in both the domestic, as well as, export market. But for our — having said that, while one, the macro conditions are not yet very favorable, but some of the programs, initiatives that we have taken, which will start kick-in the next couple of quarters would cover-up for the — if we expect that even the industry would not continue to demonstrate the same slowness and in a quarter or two, it should be back to the normalcy. But added to that, we also have programs which are now going to start in the first quarter of next financial year. So, we definitely are quite positive on the passenger vehicle industry.
Siddhartha Bera
Got it, sir. Sir, lastly, on the Sweden, would it be possible to share the EBITDA for this Q2 for the Sweden entity?
B.R. Preetham
You mean our Swedish entity, what kind of numbers did it return?
Siddhartha Bera
Yeah, the EBITDA level.
Vikas Goel
EBITDA is about 5.5% for the Swedish facility. And as Preetham explained earlier, with the closer to 6% and with the improvement in the outlook for that business, especially due to price revision with the customer and the new orders. We expect to reach double-digit by end of next year.
B.R. Preetham
So Siddhartha, for the overall H1, it was about 6.7%. And I mean H1, it was 6%, but Q2 it is 6.7%. But then what we see is, you know, already from Q3 to Q4, you would see a performance improvement. And towards the end of the Q4, we should be — we should be back to our normalcy. We expect that between 10% to 12% EBITDA to sustain for ongoing quarter.
Siddhartha Bera
Got it, sir. Thanks a lot. I’ll come back in the queue.
B.R. Preetham
Thank you, Siddhartha.
Operator
Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir for the opportunity. Sir, firstly, how do view an overall growth has been around 10% to 12% and we expect to do like 10% better than industry? Also the key segment two-wheeler particular has been doing well. I just want to understand, I mean, in terms of the new orders execution, how that has performed because it seems broadly our growth has been broadly closer to the industry growth, not much of outperformance we have seen, sir. Just want to understand, I mean, why is there low-growth than what we expected, Sir?
B.R. Preetham
Sorry, Mumuksh. Now, if you really look at — while our overall business is both distributed across about 32% coming from international business, 68% coming from a domestic business. And if you really see about 28% of our business, 27% 28% of our business coming from passenger vehicle, while the two-wheeler itself has done reasonably well and we have also done this thing, in-line with or slightly better than the two-wheeler growth. But then what you need to consider is, apart from that, there is a lot of headwinds across PV, across aerospace because of one of the customers that being then. If you really average out all those things, we still have significantly outperformed the industry numbers. And this is because we have been able to ramp up our newer programs, especially on Tech Agnostic and non-auto, which is an — Tech Agnostic and xEV, which has actually given us almost 50% growth. And these are all newer components coming into production in this program and we expect that this would add to the momentum going forward.
While we keep — keep maintaining that overall industry, if you average out all the sectors, both the both domestic and passenger vehicle, we still have outperformed the industry growth.
Mumuksh Mandlesha
But do you see that going ahead with the new programs coming up, can this pace of growth further improve assuming the industry more or less stays around this level, sir?
B.R. Preetham
Yes, we will, because, like I had said that some of the sectors which had faced headwinds, like one of the sectors that we have seen almost 25% reduction in the industry level is on the off-road. And the customer expectation and the market expectation is next financial year, it should be back to normal. We have already spoken about aerospace where we see a momentum — significant momentum to improve in the quarter four itself, we will demonstrate that. And with addition of new sector, we should be able to outperform as we have committed in our previous and we have been saying that we would outperform the industry by 8% to 10%. So, we are working towards that and I’m quite hopeful that we will be able to achieve that.
Mumuksh Mandlesha
Got it, sir. And also will there be any steel pass-through impact any — because steel prices have come down, so any pass-through impact of that, sir?
B.R. Preetham
Steel is not a big impact. Whatever is the — whatever is the nominal reduction that has happened is already been executed.
Mumuksh Mandlesha
Got it.
B.R. Preetham
But it’s a very small impact.
Vikas Goel
We have a similar offset of this in these scrap rates because that also has been falling. And so largely we see a nullification of that benefit as of now.
Mumuksh Mandlesha
Got it, sir. Sir, coming to this aerospace MOU with Dynamite, can you just share us how this business potential is there and just more on this particular order win from A220 parts, Sir?
B.R. Preetham
Yeah, I think as we had communicated in our — in our press release also, they have secured the supply of orders for supply of complete door assemblies for this A220 programs and we would be machining a lot of critical components to one of the door assemblies. And this is approximately about INR40 crores INR45 crores of — INR50 crores of annual revenue, about INR53 crores of annual revenue to start with. And we expect that once the program is launched, we would have higher opportunities in this. And this also gives us a good entry into the ecosystem of Airbus where we are working with multiple tier-ones and also with OEMs to on numerous new upcoming projects, as well.
Mumuksh Mandlesha
Okay, and this order will start by when, SIr?
B.R. Preetham
We’ve already started submitting the FAIs and we expect that Q1 of next year, it should start getting into commercial production.
Mumuksh Mandlesha
Got it, sir Just — and then lastly on the aluminum forging, sir, how that is gaining traction, sir? And can you indicate what could be the order book for this segment, sir?
B.R. Preetham
Now totally, aluminum forging, as we had also said that we have actually — overall, we would be having about eight presses operational by end of this year. And with a total order book of what we are currently executing, as well as, overall — overall order book is close to about INR350 crores. And I think by towards the end of next financial year, because these are also going into some newer programs starting in Europe for the high-end motorcycle business. There are some couple of components which are getting into passenger EV exports, as well. And by towards the end of the next financial year, a quarterly hit rate, I think we should be very close to executing the full at least about 80% to 85% of this order book.
Mumuksh Mandlesha
Got it. And sir, currently, it will be in the double-digit crores, sir, full-year basis this year?
B.R. Preetham
Yes, yes, yes.
Mumuksh Mandlesha
Got it, sir. Thank you so much for this opportunity. All the best, sir.
B.R. Preetham
Thank you Mumuksh.
Operator
Thank you. Ladies and gentlemen, you may press and one to ask a question. The next question is from the line of Abhishek Jain from AlfAccurate Advisors. Please go ahead.
Abhishek Jain
Thanks for opportunity and congrats for a strong set of numbers despite a challenging environment. Sir, in ICE segment, our growth was around 9%. So if you can explain the new products and the client additions in the ICE segments?
B.R. Preetham
No, see, ICE segment, of course, we — two-wheeler itself has grown well. Of course, there has been a de-growth in our passenger vehicle segment, both domestic as well as the export — domestic — export being slightly more than domestic. But we have been able to expand our business with as we had said that Tata Motors has been — we have been expanding our this thing — our business with Tata Motors. We have also been able to, in-line with the growth in two-wheeler business, we have been able to grow with our existing customers, namely Bajaj and HMSI and as well as TVS. We’ve also added Ford Motor Company where the development is on for a connecting rod, which would be — which would be largely exported but that’s it. I mean we see that the momentum continues in this quarter, as well.
Abhishek Jain
So how do you see the revenue growth for the medium terms in the ICE segment? If the industry will grow by the 6% to 7%, how much outperformance can be possible because of the new client addition and the product expansion?
B.R. Preetham
No, we expect that — see very significant portion of our Auto ICE will also come from passenger vehicle exports. While the domestic industry has grown well, but we still await our recovery in the export segment. So, all put together, I think we should — we should be between 8% to 10% better than the overall industry, including exports and domestic.
Abhishek Jain
Okay. And are we looking some big orders from the export segment in the passenger vehicle side, in EVs or ICE, sir?
B.R. Preetham
Yeah, that’s an ongoing process. We can’t stop working with our existing and new customers to acquire new businesses. Of course, at any point of time, there’ll be a lot of projects which we will be working on, including some of the big ones going into both North-America, Latin-America as well. So we expect that that’s an ongoing process. We are quite hopeful with the favorable manufacturing conditions in India and also China plus other thing. We would expect that our inflows will start getting better and better in this segment.
Abhishek Jain
Okay, sir. In non-auto segment, our revenue on a quarterly basis is INR65 crores to INR80 crores. So, how do you see the medium-term revenue on the basis of the new order wins now? So new orders in the non-auto segment is quite healthy, so the — what kind of the revenue you are targeting for the medium-term and in next two to three years in non-auto segment side?
B.R. Preetham
See, non-auto, see, if you really have to dissect the non-auto — non-auto primarily consists of aerospace, defense, as well as, off-road. So off-road still, we think that another one or two quarters it will take for it to come back to its normalcy because the sector itself — sector itself is struggling. In US, one of our major customers is having a — this year, they had already projected that they are looking at between 15%, 20% de-growth. So, that is in-line with whatever the market had expected on that. But other than that, we are quite bullish and you will see us growing much faster in aerospace, as well as, defense. And you would also see a kind of recovery in agriculture sector, which also is part of the non-auto for us. And so see, overall, if you really look at the off-road coming to its normalcy over next couple of quarters, I don’t expect that to happen in this quarter or the next quarter, but at least from the Q1 of the next financial year. We should really look at about 35% to 40% growth in our non-auto business.
Abhishek Jain
Okay. Sir, my last question on the raising the fund — you have raised around INR1,200 crores and you are also looking for the repayment of the debt. So how much debt would be repaid and how much interest cost will go down in FY 2026?
Vikas Goel
So, we have stated that we will be repaying INR700 crores of debt and the process is already started. By March, we should be able to complete this entire process. Approximately, this should reduce our interest cost by about INR55 crores per annum on an annualized basis.
Abhishek Jain
Okay. Thank you, sir. That’s all from me.
Operator
Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Gaurav Gandhi from Glorytail Capital Management. Please go ahead.
Gaurav Gandhi
Yeah. Thanks for the opportunity. Just one question, sir. This order regarding semiconductor equipment you are talking about, will this order be recurring in nature or onetime? And is there any more better opportunities in this space for the company?
B.R. Preetham
Yeah, this is definitely a recurring order and we expect that once we you start establishing yourself in any sector, you would have definitely higher opportunity, both with the same customer as well as with a few more of these players who are dominant in this industry. So, we are creating certain kind of facilities which are very, very typical for this sector, including a class 1,000 clean room, also with some of the very high-end capability of machining. All these things should definitely aid us to improve our standing in this sector.
Gaurav Gandhi
Okay. All right, sir. Thank you very much.
B.R. Preetham
Okay. Thank you.
Operator
Thank you. The next question is from the line of Deep Shah from YES Securities. Please go ahead.
Deep Shah
Yeah, hi, sir. Thanks a lot for the opportunity. A question on aerospace and defense. If you can share what’s the revenue share for the quarter — for the segment, aerospace and put together.
Vikas Goel
In this quarter, what was the revenue is what was your question?
Deep Shah
Yes, from Aerospace and defense put together.
Vikas Goel
It’s approximately — it’s close to 4%. That’s the average share from this segment that we’ve been having for some time now.
Deep Shah
Right. And the related question to that is with you know this supply ramp up from Dynamatic Technologies once starts, with annualized rate of about INR50 crores to INR60 crores. Where do you see the revenue share from this segment to go? I mean, and the other question to that is how the — how are the margins in terms of begin from this particular segment? Is it like — since it’s a critical equipment, how is the margin profile different versus the other components? So that’s the second question.
B.R. Preetham
Okay. So see, overall, I don’t see too much of a change between 6% to 7% is what we see aerospace, defense and semicon put together, to happen in the short-term in next two to three years, while we see that this growth would have about 35%, 40% CAGR over year-on-year. But since our other sectors are also growing and this being a smaller base would not really improve a lot from current 4%, 4.5%, it would probably go up to about 5.5%, 6%. As far as the margin is concerned, it is, like we have said earlier, this is definitely margin accretive compared to any of the domestic businesses that we have. It is in-line with all our other export components that we do, probably slightly better. But this also — one needs to understand that this would also come with a higher working capital cycle and a longer inventory period. So, this would definitely be margin accretive or definitely be much better than our domestic margins.
Deep Shah
Sure, thanks for that. And the last question is about this other wins of INR60 crores that you have just mentioned, about INR55 crores for A220 program. So do we see a chance of that getting extended to, let’s say, furthermore families of the flights like, for example, A320, etc. in the near-future?
B.R. Preetham
Yeah, so it’s like see, as we have capability expansion in this. We have already working with similar components with one more one more tier-1 this thing. So, we also see that once you get into a range of family of components, the opportunities to work with various other models would come up. So we are already, you know, pursuing such opportunities.
Deep Shah
Okay, sir. Thank you.
Operator
Thank you. [Operator Instructions] As there are no further questions from the participant, I now hand the conference over to the management for closing comments.
B.R. Preetham
So, thank you very much for all your patient hearing and participation in this. I conclude this call. If you have any further queries, you can contact SGA, our investor relations advisors or directly, you can be in touch with us and we would give you further clarifications, if you have. Thank you very much.
Vikas Goel
Thank you.
Praveen Chouhan
Thank you.
Operator
[Operator Closing Remarks]