Sharda Motor Industries Ltd (NSE: SHARDAMOTR) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Puru Aggarwal — President
Analysts:
Mihir Vora — Analyst
Unidentified Participant
Amit Hiranandani — Analyst
Rushabh Shah — Analyst
Krish Agarwal — Analyst
Ankur Poddar — Analyst
Sanket Kalaskar — Analyst
Agastya Dave — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Sharda Motor Industries Limited Conference Call hosted by Equirus Securities. This conference may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] I now hand the conference over to Mr Mihir from Equirus Securities. Thank you, and over to you, sir you, sir.
Mihir Vora — Analyst
Thank you,. Hi, good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to the Q3 FY ’25 post-results conference call of Sharda Motors. From the management side, we have Mr, CEO; and Mr Puru Agarwal, President and Group CFO. So without further ado, I now hand over the floor to Mr Puru Agarwal for his opening remarks. Over to you, sir.
Puru Aggarwal — President
Thank you, Mihir. Good afternoon, everyone, everyone. A warm welcome to all the participants on this call. I’m here with Mr Ashim Danan, our CEO, CEO; and. I hope you have had a chance to go through our results and the investor presentation. You can find the presentation on the stock exchange and on the company’s website. Before going into the company’s financials, I would like to give a brief overview of some highlights of the industry for the quarter gone by. In Q3 FY ’25, passenger vehicle production volumes registered modest growth of approximately 3% year-on-year, reaching around 11.7 lakhs units.
Within PV segment, passenger car were down 10%, though utility vehicle saw 11% growth in-production. The Q3 sales growth of 7% indicates the expectation of recovery in PV segment with gradual clearance of inventories, driven by strong demand, a surge in SUV launches and effective marketing strategy by OEMs. In Q3 FY ’25, the commercial vehicle sector recorded a recorded production degrowth of approximately 2%, reaching around 2.46 lakh units. The subdued production activity was primarily due to a slowdown in industrial activity, declared government fund and slow financing approvals leading to many customers postponing purchases to the final quarter of the physical.
However, rising, particularly in the regions benefiting from infrastructure products projects. Additionally, this sector may witness a gradual recovery driven by an accelerated pace of infrastructure development and government incentives, which could support fleet renewals and expansions. In Q3 FY ’25, the segment recorded a production growth of approximately 12%, reaching around 2.2 lakh units, up from 1.95 lakh units in Q3 FY ’24. This expansion was driven by strong growth in the agricultural sector and a favorable monsoon during the year., given the positive outlook for agriculture, this momentum is expected to continue in the final quarter of the fiscal year.
While the industry remains closely linked to agricultural trades, increasing mechanization, rising farmer income and improved access to financing are expected to drive steadily the volume growth over the next three years. The two-wheeler segment registered a decent year-on-year production growth of 8%, reaching around 59.2 lakh units, driven by a 12% increase in scooter production and a 6% rise in motorcycle production. In contrast, the three-wheeler segment experienced production degrowth of 3%, indicating a market slowdown. The segment continues to remain positive, supported by improved supply, new launches and stronger — stronger rural demand, though financing constraints may continue to oach hurdles.
Additionally, a revival in export markets further strengthens growth prospects. Overall, the Indian automobile industry registered a year-on production growth of approximately 6% in Q3 FY ’25, reaching around 75.9 lakh units, primarily driven by the two-wheeler segments with 8% Y-o-Y growth, fueled by new model launches, a revival in rural demand, festive season sales and OEM discounts that boosted sales. In the PV and CV segment’s performance was subdued, however, given the sales growth and clearance of inventories in Q3 FY ’25, it is hoped that numbers in these segments will improve going-forward. I will now shift the focus to operational and financial performance of the company. On the consolidated basis, we registered revenue of INR690 crore in Q3 FY ’25 and for nine months FY ’25, our revenue stood at INR2,087 crores.
Our gross profit was INR181 crore in Q3 FY ’25, which is a growth of 5% compared to Q3 FY ’24. And for nine months FY ’25, our gross profit stood at INR549 crores, which is a growth of 14% to nine months FY ’24. Our EBITDA for Q3 FY ’25 was INR95 crores as compared to INR94 crores in Q3 FY ’24. The EBITDA margin for the quarter was 13.7% and for nine months 25 FY ’25, our EBITDA margin was INR296 crores as compared to INR262 crores in nine months FY ’24, which is a growth of 13% on a Y-o-Y basis. The EBITDA margin for nine months FY ’25 was 14.2%.
Our PBT for the quarter was INR101 crores after accounting for our shares in profits of JVs and associates. And for the nine months, the PBT stood at INR309 crores after accounting for our shares in the profits of JV and its associates. The PAT for Q3 ’25 was INR75 crores and nine months FY ’25, PAT stood at INR231 crores. Our balance sheet front, we continue to maintain a healthy liquidity position of more than INR863 crores in cash, cash equivalents and investments as on 31st December 2024. We are excited to announce a new order win for our lightweighting vehicle vertical, the order — the order is for suspension control arms product with annual business of USD4 million and lifetime business of UST $22 million.
The SOP is expected from Q3 FY ’26 from our new plant in Puneh. With this, now we can open the floor for Q&A.
Questions and Answers:
Operator
Thank you so much, sir. [Operator Instructions] The first question comes from the line of Chetan Ginodia from PGIM Mutual Fund. Please go-ahead.
Unidentified Participant
Hello, sir. Sir, congratulations on a great set of numbers in a challenging environment. Sir, wanted to understand that our revenue growth for nine months or for this quarter is more or less mirroring the industry growth as of now. So given the tough macro, but for coming year, do we have any significant orders or any new products that can help us grow ahead of the industry? I know we were working on a bunch of new products because it looks like TREM 5 is consistently getting delayed, especially on the tractor side. So are there any growth verticals available for us where we can our revenue growth at least two double-digits.
Operator
Hello, Mr Agarwal, please go-ahead. hello, hello. Yes, sir, please go-ahead. Go-ahead.
Puru Aggarwal
Am I audible?
Operator
Yes, you are now.
Puru Aggarwal
Okay, good afternoon. I think I was on-mute. Good afternoon and thanks for the question. So I’ll just take it in few parts. First, regarding the sales being flat. I think better to look at our numbers with the gross profit growth de-growth. So for this quarter, we’ve had a 5% growth versus the PV industry, which is growing at 3% and LCV is actually de-growing by approximately 1%. And for the nine-month basis as well, our gross profit has grown by roughly 14% versus the PV industry growing at under 7% and LCVs at 2.8%. Now coming to the question of the immediate year ahead of us, which is FY ’26. So there we have a couple of things coming up.
First, we have the CV5 norms coming in where we have successfully won the business on the adjacency, which is the temperature control pipes and that’s something that will additionally come probably mid of Q2 of next year. Then, of course, our new plant, which is our lightweighting plant for suspension control arms that is just about starting up and that will have its full-year next year. In addition, we have just won a very good order, which San announced, which is also for existing running program. So we have in fact managed to take business and that is also going to start within financial year ’26, so that should be coming in the revenues from Q3. Then the export business that we had announced last call, which is a very significant win that we made, that also is scheduled to start in Jan ’26, so we will have revenues for that in Q4.
And of course, there are some small LCVP launches as well that will be coming in next year. So we should be able to outperform the industry with these additions. Now when we move forward on a five-year basis, that of course, the strategy which we had noted is well under. One, the export business is going to be growing fast. We’ve already won our first business in CV emission components. In addition to that, we will be looking at the temperature control tubes, which we’re going to start production next year for the domestic market to export that.
Third on the emission side; and fourth on the under 100 horsepower tractors. Then the light beating vertical, which has started with the control arms already showing very good growth. We are also working to add technology organically plus inorganically to increase our content on that side and that will be a very good growth area. Then of course, the upcoming emission norms, whether it will be BS7, TM5 will be great drivers for content as well as revenue. And then M&A is of course something that we are actively working on.
Operator
Does that answer your question,?
Unidentified Participant
Yes, sir, it does. Sir, just lastly, sir, these new programs that we have won and also the new products from our temperature control pipe and the new lightweighting plants. So all this, would the margin profile be any different from what we are doing right now if you can give any light on that?
Puru Aggarwal
Sure. So these are newer products. We are hoping for similar margin profile and though it’s too early to yet, you know take a call on that, as we move forward and we really start producing them at-scale, I think we’ll know more. Definitely, anything that is an adjacency is very similar in margin profile, lightweighting as we start production, we will learn more, but we are hopeful to have similar margin.
Unidentified Participant
Got it. Thank you so much, sir. And all the best.
Puru Aggarwal
Thank you.
Operator
Thank you. Thank you. The next question comes from the line of Amit Hiranandani from PhillipCapital. Please go-ahead.
Amit Hiranandani
Yeah, hi. Thanks for the opportunity team. Sir, just wanted to confirm as the TRIMPA implementation date is confirmed from April 2026.
Puru Aggarwal
So the government has notified the date for 1st April ’26. There’s always possibility of time adjustment from the government side. However, the government has not seen the date. So as of now, we are looking at the date 1st April ’26. However, as we learned from the government, we’ll keep you updating.
Amit Hiranandani
So similarly, if it is confirmed, so you must be having an orders in-hand for the date, right?
Puru Aggarwal
Yeah. So we have — most businesses already awarded for TREM 5. So we have all the LOIs. However, the norm is something that the government leads, right? So the current notified date is April 26, right, and that will be based on the government. That’s why it’s difficult to guide so-far there are no changes, but what is most of the orders for this segment have been now.
Amit Hiranandani
Right. Sir, any order wins in the export side? And if you can also let us know what is the contribution coming from the international markets now?
Puru Aggarwal
But right now, the contribution from the international markets is very less. In terms of exports, it would be like 1%, 2% only. However, we won a very good order, which we announced a last-time. In fact, it was our main target order for commercial vehicle components. That’s something that will start production on January ’26 and that is going to be for the US market, their annual business is roughly INR7 million and Lifetime business is about $40 million and this is also only few components for that particular customer. It is the leading engine and emission vertical company in the world. And the balance, we have a very, very good RFQ pipeline. We’ve added a strong team, which is focused on exports, which are working on various segments. And as and when we have significant additions like the one we had, we’ll keep updating. We are quite positive on the export side.
Amit Hiranandani
Right. And sir, like I wanted to understand what is the capacity utilization for the exhaust system at present. And in case demand surges for the exhaust, then do we have the sufficient capacity in-hand?
Puru Aggarwal
Yeah. So for exhaust systems, we can augment capacity very easy, right? It’s kind of a very-high ROS, low capex kind of business. So we can augment very easily. And that’s why we are well-prepared on the exhaust system capacity side.
Amit Hiranandani
Anything on the utilization currently for this one?
Puru Aggarwal
We are at about 80% plus, but we don’t share utilization numbers just because we can augment it very quickly. So it’s not as relevant in this exhaust system product as it is to other components, but we are of course always at a high utilization. But if we need to augment capacity, it can happen very easily in emission vertical.
Amit Hiranandani
So my concern is basically in case the implementation date is April ’26, so are we like very much having the capacity in-place to serve this demand?
Puru Aggarwal
Have the capacity in-place? However, we will trigger capex, etc once our customers commit to triggering capex as well. So it is going to be linked to customer, but we have ample capacity available and we can augment at a very short period of time as well.
Amit Hiranandani
Right. Just last two questions, if you can help us with the capex outlook for FY ’25 and annually for the next two fiscal, please?
Puru Aggarwal
So we will consistently have a similar run-rate as we’ve had last year and this year. So from the capex perspective, we anticipate on a gross level to be around INR60 crores, INR50 crores to INR60 crores and might be going a little bit higher this year and early next year because of our new plant. But generally, we’ll maintain a very similar run-rate. And of course, if there is any inorganic opportunity that comes, that is additional or any substantial order win that comes in the lightweighting vertical, which is not to do with control apps.
Amit Hiranandani
And sir, in your opening remarks, you have mentioned something on the M&A. So like in which areas are we looking for M&A?
Puru Aggarwal
Powertrain agnostic products, anything that is powertrain agnostic? And first focus is things that can strengthen our lightweating vertical, otherwise any product that is powertrain or diagnostic and which is recommended by the customer, of course, to us.
Amit Hiranandani
Right, sir, broadly, if you can give us some outlook on the PV and the small commercial vehicle industry for FY ’26. Any color on the same thing?
Puru Aggarwal
I think the PV industry, the budget was very good. The budget was very good and hopefully that now really drives consumption and higher demand for PVs. However, given the global environment right now, it is hard to really forecast the next year, but we are quite optimistic about the industry reviving. And I think the festive sales that happened were really good and hopefully next year will be even better.
Amit Hiranandani
And my question next is on the bookkeeping side of Peru, sir. Basically, sir, wanted to understand there is a jump of 18% in the other expenses line on a Y-o-Y basis. If you can help us understand the same, please?
Puru Aggarwal
Sure. I’ll take that. So our other expenses, they include various headers. There are various semi-fixed things like high labor charges, which are in-line with minimum wage and wage inflation, plus there is power fuel, etc. And then we’ve also had some development expenses. That’s one of the additions that have happened. So just a mix of all these things I think nothing major on the other expense. And it’s not all first fixed. There are a lot of semi-fixed headers also that come into other expense.
Amit Hiranandani
So there is no one-off and this will be a sustainable number, right?
Puru Aggarwal
No, difficult to guide. There are some small one-offs. It’s difficult to guide because this particular header includes fixed, semi-fixed as well as one-time expenses. So there are some one-offs on R&D, new plant and so on, but difficult to guide because of the combination of the expenses that come into the side.
Amit Hiranandani
Right. Sir, anything to read on the Q-on-Q basis, there is a small drop-in the EBITDA margin side. So anything you want to highlight here?
Puru Aggarwal
In what — in what two?
Amit Hiranandani
On a quarter-on-quarter basis from Q2 FY ’25 to Q3 FY ’25, EBITDA margin looks little bit lower. Are you — are you seeing sequentially or sequentially Q2 versus Q3.
Puru Aggarwal
So generally very difficult to look at sequential in the autocomp industry. There’s a lot of seasonality, the long value chains and so on. But definitely on this little bit product mix, addition of employee cost that has happened, we’re adding teams for our global business, lightweighting, new, margins and so on and plus this other expenses to some degree. But it’s very difficult generally to look at sequential, but these factors are definitely fact.
Amit Hiranandani
Great, sir. All the very best. Thank you so much.
Puru Aggarwal
Thank you. Thank you so much.
Operator
Thank you. [Operator Instructions] The next question comes from the line of Rushab Shah from Bugal Rock PMS. Please go-ahead.
Rushabh Shah
Yeah. Hi, thanks for the opportunity. My first one was.
Operator
Sorry to interrupt, we are not audible at all.
Rushabh Shah
Yeah, hi. Sir, my question was, so in the suspension business, in the PPD, you have written that you have a market-share of 10%. So what definitely have we done in this business and that we command this type of market-share of 10% and how big is this market?
Puru Aggarwal
Can you please repeat the question? I think your voice is coming very muffled.
Rushabh Shah
So in the suspension business, so in the PPT, you have written that we command a 10% market-share. So how big is this market? And what differently has we done so that we command this 10% market-share?
Puru Aggarwal
Sure. Thanks for your question. One that we update the market-share on an annual basis. So definitely in the next year’s presentation, you will be seeing even a better market-share than 10%. But for the time-being, one, we have a really good R&D for emissions. We have worked to augment it for control lumps. And when we utilize the word suspension, right, I think in the industry, it is used in various ways, right? Various other products also called suspension because it’s more like a category. Most of our revenues are coming from control lumps, which is suspension control lumps as well as the overall suspension and axcel assembly. And in these products, the range really differs on — and the content differs from car to car and LCV to LCV. So currently, the products that we offer, the range is quite big, it’s between INR2,000 to INR8,000 rupees per car per LCV that we have and there are various factors on the design of the suspension and so on that lead to that. However, we are also working on increasing the content on how we can offer more content in this for the time-being, we are doing 2,000 to 8,000 and that’s roughly what the market has been.
Rushabh Shah
Sir, just a follow-up. What led to gain in-market share next time?
Puru Aggarwal
Sorry, your voice — just as we just won a good order right now also, so it’s work-in progress and that’s why we update annually. So once we update annually, we’ll have of course, an uptick because this order also is quite good and this is the second or third order now that we won.
Rushabh Shah
In the second no, no, sir, I’m asking the reasons what led to gaining market-share in so less time?
Puru Aggarwal
Okay, okay. The reasons we set-up a new facility, we augmented our R&D and started offering control arms only. Then we do have a very good knowledge as well as prior experience in stamping because we are backward integrated and especially stamping and welding parts which are sensitive and sensitive because emissions is of course sensitive to emissions. Suspensions are sensitive to safety. It’s a safety item. So it involves a lot of. Lot of these plants, the industry in India as well as globally try to shift it to casting, aluminium and so on. However, there are lot of failures that happened previously and there were lot of imports from China and other countries.
So I think OEMs took a strategy to go back into sheet metals, but to go into higher tensile steels and also to really work with larger players so that they can take care of the safety angle of it as well. And I think us being prepared from before and doing some R&D investments from before as well as having very good experience in this product, of course, directly we were doing some of it, plus indirectly also through our backward integrations and exhaust system. So we were well fit for this. So we benefited a little bit from that.
Rushabh Shah
And sir, my next question is in.
Operator
But if you have any further questions, please rejoin this.
Rushabh Shah
This is my second. This is my second question.
Operator
I guess you’ve done with two already.
Puru Aggarwal
Go ahead.
Rushabh Shah
Sir, in the PPD, you had mentioned that the total export market size is $48 billion within with an addressable export market size of INR2.2 billion for Motors. So for its current product range, so which products are we talking about and why the addressable market is so less? And which product can gain the highest share out of our range, sir.
Puru Aggarwal
If you can just repeat the numbers, your voice is coming very muffled in number.
Rushabh Shah
USD48 billion is the total export market. And the addressable export market is INR2.2 billion for Motors for its current product range. So which products are we talking about? And why is the addressable market grow less for us and which product can gain the highest share of this sure.
Puru Aggarwal
Sure. So I’ll just focus first on not going into exact numbers, but the larger picture that we want to start with a focused area into exports, of course, because we are new to exports. The four sub-segments where we are focusing on is commercial vehicle emission components. That’s something where we’ve now already had a major success where we have got the order for these components for the largest engine maker in the world for commercial vehicles plus their emission verticals.
And that’s the first focus area that we’ve had. We’ll, of course try to increase our wallet share with the same customer as well as add more customers in this line. And here, there is also a trend happening that the CV emission norms are shifting in US and Europe. So it’s a great time to enter and add content and business for us over here. Second is on the adjacency or the emission adjacencies of the off-highway market. This is the temperature control tubes, which we’ve just developed and we’ll be starting production first domestically. So this is focus for us to of course cater to the domestic market.
However, for this product, there is a large, large, much larger market outside of India, especially US and Europe, and that’s a focus area. Third is on GenSet emission systems. So we already have exports where we do emissions and mufflers for generators as power generators and there is a big boot going on in the power gen market. The reason for that is varied from data centers to all these fires we just saw to various outages that have been happening in the US so we are just trying to utilize our prior experience and cater to customers who have much higher market-share in some of the growing markets. And last is emission systems were under 100 horsepower tractors. So these are our four focus areas for exports.
Rushabh Shah
Thank you. Thank you, thank you.
Puru Aggarwal
Thank you so much.
Operator
The next question comes from the line of Kresh Agarwal from Torus Asset Management. Please go-ahead.
Krish Agarwal
Yeah. Sir, as you had mentioned, the company holds over INR800 crore in cash-and-cash equivalents. So what is the capital deployment strategy you have in your mind for this amount? Like are you looking for an M&A or some upcoming CapEx plans or some special dividends going-forward?
Puru Aggarwal
Sure. So our first preference is to utilize this for augmenting our lightweighting vertical through M&A and through, of course, organic investments as well. Second, to do M&A in the powertrain agnostic products where we can have a GVTA or acquire a company to add content to cars, trucks, tractors and so on. So that’s the first preference. However, for this, there is no fixed timeline because, of course, when it comes to acquisitions, we want to be very careful with deals valuations and we won’t do anything that is not of the correct value for the shareholders plus JVs, TAs, there is always talks ongoing with multiple companies.
So it really depends when they materialize. In the meantime, we last year, of course, really accelerated the returns back to the shareholders. We had initiated a buyback and that was a very large-size buyback. It was about INR230 crores gross and we will continue to return back-in other forms. We have established a dividend policy. The dividend policy right now is roughly 10% to 30% of that and top cap. So that is really plan going-forward?
Krish Agarwal
Yeah, sure, sir. Another question. How does the company plan to mitigate the high customer and product risk? Like are there any strategic initiatives to diversify the product portfolio or expand the customer-base in the medium-term?
Puru Aggarwal
Yeah. So I’ll first take maybe customer. We have added multiple new customers. I mean, it would be a very large number of customers in various segments in the last two years. And of course, when you add a customer, the beginning is always small, right. However, once the relationship strengthens and mutual Trust is developed, the growth is exponential. So I think we’re very, very good with the number of customers that we have now as a company and that will grow over-time. And of course, the good part is that the current customers also grow. So that’s a good problem to have.
And I’m sure with all so many new customer additions that we’ve had over-time, that will grow and that will take care of itself. Now coming to product concentration, so of course, right now, most revenues comes from remissions. So our focus is to first get into the adjacencies, the adjacencies, which I just mentioned within emissions and to cater more to the power generation, commercial vehicle, tractor and off-highway industry. And outside of emissions and outside of adjacencies, we are investing into the lightweating vertical, which is right now the control arm business where there is lot of work going on and I think that work is now also showing results and that lightweating vertical, of course, adds control arms and assemblies business, but over-time, there are a few more products that can be introduced into the similar theme and that will have a much higher percentage of revenues in the future than we see it now.
And third, we will, of course, as I mentioned, we’ll use the M&A route, GBT as acquisitions to add more content other than this and more products, which over-time could also reduce the product concentration.
Krish Agarwal
Okay, all right, sir.
Puru Aggarwal
Thank you.
Operator
Thank you. The next question comes from the line of Ankur Poddar from Swan Investments. Please go-ahead.
Ankur Poddar
Hello. Am I audible, sir?
Operator
Yes, please go-ahead, Ankur.
Ankur Poddar
Thank you for taking my question, sir. Sir, I have two questions. I’ll start with the margin. Gross margins, we have seen it has stabilized to around 26-odd percent last three, four quarters. So from here, do we expect this is the stable run-rate of gross margin and it will — it is going to remain at these levels or is with the introduction of new initial norms in the construction Equipment segment post 2025, will there be some increase in the gross margin as what we have seen in the CD emission norms, which helped to improve our gross margin levels of six, seven quarters back, will we see us some kind of improvement in gross margin with the construction equipment emission norms as well? Can you throw some light on that? Thanks.
Puru Aggarwal
Thanks for the question. So I’ll just first go back that the improvement that we saw is also from our strategy change from buying the catalyst or buying the catalyst on behalf of the customer to a more directed by fee of cost model. So it got reduced from our top-line and bottom-line accordingly and that of course, mathematically as a percentage also improve the gross margin. So gross margins as such would not be the best way to look at and it’s very difficult to guide because some still non-catalyst and catalyst business mix is there, so product mix can always change that.
Now coming to your question on the CEV norms that are coming in. So as step one, we are getting into the adjacency product, which is the high-temperature controlled pipes. And those pipes anyways don’t have that. So they are going to be as per normal only and there is no base effect there as well, right, because they would — as on, they don’t serve to this or very little we serve to construction equipment. So whatever little revenues will come from this adjacency will come fresh. So there won’t be any pace like that.
Ankur Poddar
Okay, because you always guided that gross margin is an important parameter to look the improvement in the efficiency level for us because as we migrated into new norms, the component will be lower. So hence — and since you — you know we don’t share the percentage of.
Puru Aggarwal
I’ll just clarify here that it is gross profit growth, right, that is that is what we have been sharing, gross profit growth. So it does go in tandem with margins also. So it’s kind of the same. But what we had guided is on gross profit growth, that would be the best way to look at it rather than that percentage margin. So if you see all the commentary also, it’s on gross profit growth and since we’ve been sharing that and you look-back also, it matches a very wealthy gross profit growth.
Ankur Poddar
Okay, okay. Right. So any — any inputs on the follow-up orders of the last quarter we got in emission products from US, it was 7 million USD order and you shared that we are pitching for call on orders in this market. So any input on that and you know what strategies we are developing to scale-up this export business because we have been trying to scale this business for some time now. So can you throw some light on that as well?
Puru Aggarwal
Sure. So definitely that export business takes time. However, the, let’s say, the trying what we’ve been doing for a while that has shown good results, right? So I think this order win which we’ve had is very significant, I would Call-IT, because it has given us CV emission components for new emission norms for the largest customer in the world, right? So I would say that’s quite significant. And of course, we do have a very good RFQ pipeline also. Now what are we doing about it?
Number-one, we maybe now it’s been more than one year that we added a completely new vertical for exports with a separate team, who has now built a team under him, including you know people who are working on the US and the European market. Plus we want to, of course, utilize this order to build trust with the customer as well as to build trust with the other potential customers. This is regarding the CV emission segments. Rest the work on the other fronts are also on. And as we have significant business wins, then we’ll keep updating on that.
Ankur Poddar
Okay. Just one suggestion from my side. Since now the lightweighting vertical is scaling up, it is — so in your reporting structure, it will be really great if you can provide you know, segmental information of lightweighting and emission products that will be, you know, really helpful for us to analyze. Thank you. And that’s all.
Puru Aggarwal
We’ll look into that and we’ll see the possibility of separating.
Ankur Poddar
Thank you. Thank you and all the best.
Puru Aggarwal
Thank you. Thank you so much.
Operator
Thank you. Thank you. The next question comes from the line of Arian from Torus Mutual Funds. Please go-ahead.
Unidentified Participant
Hi, sir. Am I audible?
Operator
Yes, please go-ahead. Arian.
Unidentified Participant
Yeah. So sir, my first question is, what is our current capacity in — for powertrain agnostic products, if you can give a percentage of that in our revenue? And who are our main customers for powertrain agnostics, mainly as in the ICE vehicles or EV vehicles?
Puru Aggarwal
Sure. So we don’t give capacity numbers as such and I would say that they’re different also, right? And powertrain agnostic might be very let’s say, a large bucket, right, to be talking about just in terms of capacity, so we can focus on the control arm side or the suspension assembly side, right? And there our new plant is coming up — or it’s now come up, which is going to start with roughly 300,000 capacity. And we do have additional capacity in other plants also.
We are even catering to this segment a little bit from the south as well. Now coming to the customer profile, so we have three customers, one is newly developed in this segment. And as you see from the market that mostly all customers have all kinds of vehicle and powertrain offerings. So this product is cross-use between ICV, CNG, hybrid and so on. So this is — that’s what it’s agnostic to it. So it’s cross-use. So even our products, they’re going into all different power grids because they agnostic these products to-market.
Unidentified Participant
Got it, sir. Sir, one last question. So given our company’s limited bargain power in the OEM supply-chain because we are dealing with players like Mahindra and Hyundai. So I mean, how do we expect to enhance our cost efficiencies because the raw-material prices are fluctuating a lot considering steel prices and other metal prices, how can we improve our price pass-through mechanism to maintain our EBITDA margins or maybe improve them?
Puru Aggarwal
Sure. We want to name any customers as part of these calls. But in general, I will take a general question on how — if you can just reframe the question, how can we improve our — I didn’t understand it. If you can just reframe the question a little bit.
Unidentified Participant
So sir, my question is because the raw-material prices is fluctuating a lot, how can we enhance our cost efficiencies and how can we be safe and resistant from that cost — I mean, price fluctuations to keep our EBITDA margin stable?
Puru Aggarwal
So with all our customers, we have a mechanism called indexing, right? So it is index-based on fluctuations. So sometimes raw-material goes down, sometimes it goes up, right, and it’s volatile. It’s always been. So for some time now, we have with all customers, this agreement. So sometimes when raw-material prices even go down, we have to pass-through to the customers and we are back-to-back with the entire supply-chain largely. So that is the mechanism we use, which is called indexing.
Unidentified Participant
Right. So do we also.
Puru Aggarwal
There is an improvement that happens, it just pass-through, right? So it just neutralizes. It’s a pass-through agreement.
Unidentified Participant
We don’t use any hedging instruments, right?
Puru Aggarwal
No, we don’t use any hedging per se, there may be some small here and there that use, but nothing.
Unidentified Participant
Sure. Thank you, sir. Thank you for your time.
Puru Aggarwal
Thank you so much.
Operator
The next question comes from the line of Sanketh Kilaskar from Ashika Stock Broking Limited. Please go-ahead.
Sanket Kalaskar
Thank you for the opportunity, sir. So what is the revenue potential from the existing CEV5 norms as in what is the market size and what is the revenue potential from the largest customer for the — for this segment, particularly.
Puru Aggarwal
Sure. Thank you for your question. So I’ll segment this answer into three. One is the revenue potential from high-temperature sensitive pipes, which we’re just starting with domestically, right? So with this customer, we have now a good amount developed, plus we are hopeful that with the balance industry also over-time that we’ll be able to develop this business domestically quite good. However, the volumes domestically for construction equipment are not that much vis-a-vis other segments like PVCV and so on. So overall, the size is modest.
But the next part to it that most of these customers are going to localize even there after treatment or emission systems once these norms come in, they are waiting maybe for a year to pass by before they actually localize it given that they already have similar systems available somewhere in the world and they are importing mostly. In most cases, they are importing them. So that localization theme that will happen here, that will expand quite a lot in this segment or the addressable part of it domestically. So that’s the second part that when they localize their emissions, we want to participate on that and developing these customer relationships help us in that. And that’s something which would probably happen with a lag from the emission norms as they first want to stabilize by importing mostly.
Then third, all these customers, hence the ones we have developed, the ones we are working with, have a very, very, very large wallet for similar products globally because globally the construction equipment market is very large and as well as it has a good amount of content for our products also. So we want to harness these relationships that we are developing and really go for that export opportunity. So this is in three areas where there’s opportunity.
Sanket Kalaskar
Thank you, sir. Sir, my second question is, what is the value of business win which we have received from the control arm segment.
Puru Aggarwal
For the one which we just announced right now, the new one?
Sanket Kalaskar
Yes, sir.
Puru Aggarwal
Sure. The value, the lifetime value is INR22 $22 million and the annual is $4 million.
Sanket Kalaskar
Okay. And this is with just with respect to export or domestic as well?
Puru Aggarwal
The control arms is domestic. We have won — the control arm business is a domestic business which we won, which we announced as part of this call today and export is commercial vehicles, emission components, that’s a separate business.
Sanket Kalaskar
Okay, sir. Thank you, sir. That’s all from side. Thank you.
Operator
Thank you. The next question comes from the line of Mihir Vora from Equirus Securities. Please go-ahead. Go-ahead.
Mihir Vora
Yeah, thank you for taking my question. So sir, my question was on the suspension and lightweighting segment, which right now would be roughly around 7% to 8% of our revenues. So going ahead, what is the aim here like are you — do you have any internal target here to reach? Because the way we are seeing the order book building up and new winning new orders. So what’s there in the store for next two to three years in the suspension and lightweighting segment?
Puru Aggarwal
Sure. So thanks for the question. Firstly. Yeah. So we have a new plant coming up, of course, there is — there’s a slight echo if from the moderator side? Yeah, actually there was an echo, sir. I’ve taken care of it. Okay. Okay. Thank you. So thanks for the question. So, yeah. So there is a good amount of traction in this segment. The control arm business, we are gaining market-share and now we’ve won another good quarter here.
So first focus is, of course to strengthen the control arm and assembly business, this we have done organically. At the same time, we are also looking for partnerships, partnerships in the form of JVs or TAs where we can further strengthen the control arm and accel assembly business, but more importantly that we can add content and offer more content because right now, the content range is only 2,000 to 8,000 and this entire segment has lot of opportunity to add content and there are lot of changes going on globally as well as domestically, which makes this a more technology-enabled segment rather than the traditional stamping segment that it was.
So we are focused on that and we are quite hopeful for this to be a significant contributor for us moving forward. However, giving a firm percentage number, I think is too early and there are a lot of other moving parts as well, but this is a focus area, which we’ll be working on organically and inorganically as well. Just a follow-up on that part. So we have a 1.8 lakh units capacity annually for the suspension part, but with the Pune plant coming in, so would that be a substantial addition to our capacities or how can we look at it? Yeah, that’s going to be substantial. That plant alone will have about slightly less than 300,000 capacity.
Mihir Vora
Okay, that’s all from my side. Thank you.
Operator
Thank you. The next question comes from the line of Agastia Dave from CAO Capital. Please go-ahead.
Agastya Dave
Am I audible?
Operator
Yes, please go-ahead.
Agastya Dave
Thank you very much for the opportunity. Sir, a lot of the questions that I wanted to ask you have been asked by my fellow participants. Thank you very much for answering those. Sir, again, there was a question on the gross margins and how the previous changes in emission norms contributed to higher gross margins. So can you can you provide some understanding of the scale of the opportunity again in terms of, let’s say, EBITDA, absolute EBITDA or absolute gross profit. Once PREM 4 is like fully — sorry, TREM 5 is fully operational and all the opportunities related to CEV5 are also are also something that we are — we are actually like addressing that entire market. So the timelines I understand are uncertain. But again, the magnitude of the opportunity, sir, can we double the size of the company based on these opportunities plus the light plus the export opportunities. Is that possible, sir? Are these opportunities big enough?
Puru Aggarwal
Yeah. Yeah. So without going into specifics because there are long — laundry list of various markets that we are addressing. But if you look at it from the perspective that currently the company revenues are of course as on-date coming largely from emissions. There is barely from exports, tractors, construction equipment. I think all of that put together we had shared is less than 5% of our revenues as on-date. And so there is a huge opportunity.
Now different segments, different numbers. But if we were just to list out our focus areas to begin with, the largest opportunity is exports and within exports also the four sub-segments of CV emission components, then emission adjacencies, then the genset emission system market as well as the under 100 horsepower tractor market. So put all of this together, it is a very large addressable market and of course, much larger than the Indian market per se because it is the US and Europe. Then our lightweighted vertical where we have just started-off and we are already seeing very good kind of traction. So there just contributes to 8% of our sales, right?
And with additions, it will definitely contribute a higher percentage. In addition to that, the CV norms, the norms as well as the export tractor market, all of that will significantly increase it. And all of that is on-top of our possibility of us adding content to our existing customers and new customers via M&A group. So overall, yes, we are quite hopeful to be growing significantly and to be outperformed the overall market.
Agastya Dave
Sir, have you discussed publicly the timelines associated with the M&A opportunity because we have been discussing it for about a year now. But when do you see realistically the M&A opportunity?
Puru Aggarwal
Yeah. So yeah, we, number-one, when we look at M&A, there are three parts to it, of course, GBTU and then acquisitions. So on the acquisition front, we are going to be very, very careful and that really depends on the deal. There’s no fixed timeline for that. We won’t just do an acquisition for the sake of doing it, right? And we at any given time are exploring various opportunities. We have a separate team in fact now that we’ve created only to look at M&A. So there are a couple of people who just look at M&A opportunities. When it comes to JVs/Ts, there are various talks that are always ongoing. And as you know something material comes up, we’ll keep updating. However, there is no fixed timeline per se to any of this because this is also fairly dependent on various other factors including.
Agastya Dave
Understood, sir. Sir, final question, again, going back to the exports and including all the core segments that you mentioned, is the traction — I mean, I want to understand the nature of the traction that you’re seeing with your clients. Are we — are we going to see a slow and steady by steady, I mean, let’s say the exports growing at, let’s say, 25% 30% CAGR or will there be a very a quantum jump-in your exports once an inflection point is hit? How do you expect the growth to pan-out? I’m not talking about the numbers here, sir, just the characteristic of the growth. Suddenly, will we see a huge jump or will there be a — like a slow and steady increase or fast and steady increase?
Puru Aggarwal
Sure. So one, it’s of course, difficult to forecast and CAGR per se can be very-high because the base is so low, right? Export base is so low right now. So CAGR is very-high in some ways, if you look at just the order we won the CAGR number that you shared would already be met by that, right? However, it’s very difficult to time what we’ve learned in the export market so-far that getting the first order and really getting that trust going takes longer. But once it’s done, then it opens up a wallet that is 10x or 20 times bigger, right? And that’s what we’ve seen so-far. I think we have made one significant move already and one significant win. So that should open up a lot of more opportunities.
And we are in similar stages in the other segments also that we spoke. And some customers which are very large export customers are heavily focused on also producing out of India because of the geopolitical situation that’s happening. So we are actively also working to develop those customers, even if they’re small in India so that we can access the wallet shares that they have globally. So difficult to guide per se as the timeline. However, are seeing progression generally to pick in this point.
Agastya Dave
Understood sir. Sir, thank you very much. And again, a excellent performance. Operationally, you guys always deliver irrespective of the macro-environment. Thank you very much. All the best, sir.
Puru Aggarwal
Thank you so much. Thank you.
Operator
Thank you. Ladies and gentlemen, due to time constraints, we would take that as the last question. I would now like to hand the conference over to Mr Puru Agarwal for the closing comments.
Puru Aggarwal
We appreciate your participation in our earnings call today. We trust that you have addressed — we have addressed all your queries. Should you have any further questions, please feel free-to reach-out to our Investor Relations Advisors, Strategic Growth Advisors. Thank you and have a pleasant evening and Happy new year.
Operator
[Operator Closing Remarks]