Sharda Motor Industries Ltd (NSE: SHARDAMOTR) Q3 2026 Earnings Call dated Feb. 09, 2026
Corporate Participants:
GD Takkar — Chief Financial Officer
Ashwani Maheshwari — Deputy Managing Director
Aashim Relan — Chief Operating Officer
Analysts:
Unidentified Participant
Mihir Vora — Analyst
Preet — Analyst
Saurabh Jain — Analyst
Manpreet Arora — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q3FY26 Shada Motors Limited post earning conference call hosted by Aquarius Securities. As a reminder, all participant lines will be the listen only mode and there will be an opportunity for you to ask questions after the presentation. Presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on attached on phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Meher Vora from Aquarius Securities. Thank you. And over to you, sir.
Mihir Vora — Analyst
Yeah. Thank you. Muskan. Welcome everyone to the Q3FY26 post results conference call of Sharda Motor Industries Limited from the management team we have Mr. Ashim Rehlan Group CEO Mr. Ashwani Maheshwari. Deputy Managing Director, Mr. G.G. thakur Group CFO. So without further ado, I now hand over the call to the management for the opening remarks. Over to you sir.
GD Takkar — Chief Financial Officer
Thank you. Thank you very much, Mihir. My name is Gigi Thakkar and thank everyone for joining today. I extend a warm welcome to all the participants. On today’s call I am joined by our Group CEO Mr. Ashim Relan and Deputy Managing Director Mr. Ashwini Maheshwari. As Mihir just mentioned, I trust you have had the opportunity to Review our Quarter 3 and 9 monthly results and investor presentation which are available on the stock exchanges as well as on our website. Before I move to the financials, let me briefly touch upon the Indian automobile industry’s performance during quarter three.
FY26. During this quarter, Indian automobile industry continued to witness broad based growth across all major vehicle categories supported by strong festive demand, improving affordability and a favorable macroeconomic environment. Demand momentum remained healthy across all major vehicle categories reflecting a balanced mix of urban and rural consumption. Passenger vehicle production rose by over 19% year on year to 13.97 lakh units while light commercial vehicle production grew by over 16% reaching 1.75 lakh units. This quarter. Three wheeler segment witnessed strong momentum with production increasing by close to 35% year on year to 3.41 lakh units. Two wheeler production expanded by 15% to 68.06 lakh units.
And tractor production registered a robust 31.5% growth to 2.88 lakh units across segments. Industry performance during the quarter was supported by a combination of strong festive demand, improved affordability and favorable policy support. GST rationalization, personal income tax relief and successive repo rate cuts helped ease financing costs and lifted consumer sentiment. While easing supply side constraints supported by smoother production and deliveries. Demand strength was visible across both domestic and export markets reflecting improving economic activity, rising mobility needs and a gradual recovery in key overseas markets. Urban demand remained a key driver during the quarter with improving discretionary spending, Increased freight movement, higher last mile connectivity requirements and continued infrastructure led activity further supported overall industry momentum.
Looking ahead, the industry enters final quarter of FY26 with a firm momentum. Healthy order pipeline year end sales push and the full transmission of earlier interest rate cuts into lending rates are expected to support demand supported by macroeconomic stability, continued policy focus on manufacturing and improving financial conditions. The industry outlook remains positive while remaining mindful of evolving global and geopolitical risk. Union Budget February 2026 is also supportive for Sharda Motor Industries. The continued push on domestic manufacturing strengthens localization theme. Rationalization of customs duties on capital goods and inputs supports cost competitiveness while sustained infrastructure spending should drive demand for commercial vehicles and tractors benefiting component suppliers.
Besides this stable tax regime, export friendly measures and focus on technology upgrades including AI create a positive medium to long term operating environment for the company. Let me now walk you through the. Operational and financial performance for the quarter and nine months ended 31st December 2025. For third quarter FY 2026 on a consolidated basis, the company reported revenues of Rupees 881.6 crores representing a YOY growth of 28%. Gross profit for the quarter stood at Rs 202.3 crores, a growth of 12%. YOY gross profit remains the better indicator of underlying operating performance and growth was broadly in line with industry Trends. EBITDA for quarter three came in at Rupees 106.4 crores reflecting YoY growth of 13% with EBITDA margins at 12.1%. Profit before tax and before. Exceptional items for the quarter stood at 111.6 crores.
After factoring in our share of profit from joint ventures and associates in the corresponding quarter last year, PBT was rupees 100.8 crores. During the quarter the company recorded rupees 4.5 crores towards the impact of new labor codes as per guidelines issued by the Institute of Chartered Accountants of India. Profit after tax for quarter three FY26 was rupees 81.4 crores for the nine months ended 31st December 2025. Total revenue stood at rupees 2,425 crores, marking a growth of 16% over the same period last year. Gross profit for the period was rupees 586.7 crores up 7% yoy again largely in line with industry growth.
EBITDA for the nine month period stood at rupees 305.9 crore up 3%. Y O wide. Profit before tax for the nine months was rupees 339.1 crores which included exceptional gain of rupees 22.4 crore on sale of one of the idle industrial parcels in first quarter of this financial year and exceptional loss of rupees 4.5 crore towards impact of new labor codes in quarter three FY26. Compared to this, profit before tax was rupees 309.3 crores in the nine months last year. Profit after tax for the nine month period stood at Rupees 256 crores as against rupees 231 crore in the corresponding period last year.
Now I hand over to Mr. Ashwini Maheshwari, Deputy Managing Director of the company for key business updates.
Ashwani Maheshwari — Deputy Managing Director
Thanks a lot JD for the updates. This is Ashwini Maheshwari. I extend a very warm welcome to everyone on the call. It’s a pleasure to connect with you and provide the business updates. Let me begin with the news on Trade deal which brings in encouragement for all of us in the industry. The India US Trade deal is a positive structural development for Indian auto component manufacturers. For Sharda it’s a reinforcement of our strategy and positions us as a manufacturing base for emission system components, lightweighting components, temperature control tubes and heat shields. It improves long term sourcing confidence among global OEMs and tier one suppliers.
While our business development in the region has been yielding positive results, this increases the customers confidence in in sourcing from India and would provide good tailwinds to our efforts. European OEMs are also actively diversifying supply chains to reduce single region dependence. India is increasingly being viewed as a reliable manufacturing partner including for emission and thermal management systems. The India EU Trade deal supports this by improving predictability and increasing market access for India based suppliers. This aligns well with Sharda’s product portfolio and capabilities. We have lot of business development activities going on for the European market and have multiple RFQs in hand and with the trade deal we are hopeful that this is going to be a tailwind.
Moving on to a lightweighting vertical in line with our strategy. We have made good progress. Happy to announce that during the quarter we have bagged significant wins as well. There is an order win of control arms of USD 3 million annual and $15 million lifetime value from a leading PVOEM. The SOP for this order is in Q3FY27. We have also bagged orders for increase in volumes on existing programs for control arms and links from two leading PV OEMs. This with a combined value of USD 5 million dollar and a lifetime value of 25 million dollars.
The SOP of one of this has already happened in Q3 and the another one is in Q4FY26. To recap on the previous announced wins in Q2 we had announced two significant orders for control arms and links from existing customer with a combined revenue of USD approximately $14 million and lifetime value of approximately USD 70 million. With the SOP scheduled in Q1 FY28 so the momentum in lightweighting vertical is strong. With the multiple auto WINS in last two years, we’ll be gaining further market share in FY27 and FY28. Coming to our previously announced association with Dongi, the association is offered technology licensing agreement that enables us to expand our suspension and lightweighting portfolio and participate in powertrain agnostic products.
In addition, the partnership at DONGI will strengthen our R and D capabilities in control palms and links and add subframes and torsion beams to our product offering. There has been a good appreciation and response to dongi’s global experience in New age technology. We have started the business development and engagement process with the customers. We’ll keep you posted on the developments as they happen. Moving on to exports, we are again happy to announce that we have bagged a couple of export orders and with an aggregate value of USD $3.7 million and an aggregate lifetime value of USD $18.5 million.
This is from a North American largest engine engine set manufacturer. The SOPs for the new orders are scheduled to gradually commence from Q3 of FY27 and Q4 of FY27. As regards the previously announced export order with annual value of USD $7 million and lifetime value of USD $40 million from North American largest engine and genset manufacturers. We have already shipped the samples in Q3FY26 SOP is expected to start from QT Q2FY27. We continue to see a healthy RFQ pipeline supported by a dedicated export focused team and expect new customer additions over the coming quarters. Our emission business continues to be on a steady growth trajectory.
We continue to be strong in our quality and delivery. Our emission adjacency business is also showing traction. SOP for CEV Temperature control Pipe solder from the largest off highway manufacturer in India commenced in Q3FY26 and is expected to ramp up from Q4FY26. These programs continue to strengthen our presence in emission systems and thermal management. At the same time we continue to strengthen our IND in R&D. We have filed total 20 patents to date and have been awarded one patent this quarter taking the tally of awarded patents to four. We are also augmenting our manufacturing footprint by putting up a new facility Uttarakhand with a capex of approximately 20 crores, the capacity would be modular and scalable.
We would reach a high capacity utilization within FY27. This facility has been planned to meet incremental volumes and improve proximity to customer. In the first phase we are shifting current business and co marketing as the customer is shifting some production to that region. The new facility also opens up opportunities to gain more market share from that plant of our customer as well as other customers in North India for emission and lightweighting segment. Now moving on to regulations, there has been no official notification on trend 5 so far. However, based on customer interactions it is evident that there would be a delay or a change in the implementation.
At this stage it is difficult to speculate on the revised timeline or the exact contours of the regulation as discussions are going on and no formal communication has been issued. However, important to note that we have not initiated any CapEx for Trim 5. That said, the preparatory work undertaken so far is already helping us secure indirect export opportunities particularly in tractor exports from India. BS 6.3 which is essentially BS 6 with WLTP. WLTP stands for Worldwide Harmonized Light Vehicle Test Procedure for vehicles less than 3.5 ton gross vehicle weight as per notification will be effective from 1st of April 2027 and for BS7 we are closely monitoring including benchmarking the products and developments globally.
The exact date of change may get notified soon. We are also engaged with customers to co develop the system. Coming on to TA and jd we are focusing on lightweighting and increasing content per vehicle. There’s a key focus on China and Korea market as the technology used there is arguably one of the best in the world. Now coming to acquisitions. For acquisitions we continue to evaluate opportunities. However we want to be very disciplined on the valuation and ticket size. It is hard to time this as this will be based on what comes back. Thank you so much for being with us.
And now with this we can open the floor for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask Question may press star and one on the touchdown television. If you wish to remove yourself from question queue, you may press star in two. Participants are requested to use the handsets while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. The first question is from the line of preet from incurred amc. Please go ahead.
Preet
Thank you for the opportunity. My first question would be line on the gross profit growth. As you have mentioned the industry growth was above 15% for PV and LCV it was in the range of 16 to 20% and still we have grown with only 12% despite some SOP for the export has started and suspension business also we were growing at a higher pace. What would be the probable reason for the same? Are we losing market share or.
Ashwani Maheshwari
No? Thank you very much, that’s a good question. You are absolutely right. Our growth for this quarter has been lower than the industry growth. So industry as you know has a very long chain. It is very difficult to match quarter on quarter the exact production numbers. And the reason for that is there is a lot of WIP within the value chain of the automobile industry. Our part goes into engine and then there is an engine inventory which goes into final assembly and then some mix within the industry. It always has an impact of positive and the other way around also.
So every quarter matching the growth definitely is not possible. But you will see it on longer term basis. Even for nine months of this year you will see our growth in gross profit is 7% which is very close to the industry growth for first nine months. So broadly the this is the reason there is nothing as such in terms of losing market share etc. And the other thing on the suspension and exports of course those will also as they get into SOP that will also start getting added in due course of time.
Preet
Thank you sir. Just follow up question on the same line. So our growth is more or less like you mentioning same with the industry volume growth. Just wanted to know the know about the realization. Do we get any benefit of the realization growth? And also you have mentioned in the previous con, you have not explicitly guided but you have mentioned that we will be growing higher than industry by 400500 basis points. So what, what derives that growth? Exactly.
Ashwani Maheshwari
Yeah, thank you. Thank you very much for this question. So you know as you would have noticed, we have announced very good significant orders in our new verticals which are basically lightweighting vertical and global business vertical where we have backed significant orders from our customers. Now as these orders go into SOP later this year, next year and Year after next you will see these verticals will grow to a significant level. And obviously once these get aided, our growth is expected to be better than the industry. So in due course of time we will be endeavoring to beat the industry growth with the realizations coming in from these announced orders.
Hope that gives you the response to your question.
Preet
Yeah, thank you. My second question would be. My second question would be on the line of jv. This time we see a good profit from JV and Associates. So was it something one off or JV has started contributing to our profitability.
Ashwani Maheshwari
So jv, you know, as such in. Terms of our size, you know of our revenues and balance sheet, you know it’s very small. Having said that, its contribution continues to remain positive. It was little over 1 crore for this quarter and roughly similar number for this financial year. So it’s contributing positively. But the contribution is not very significant for us. They have recently been awarded one new program also for which SOP has started. So we expect the performance to improve going forward but its overall contribution won’t be very significant.
Preet
When can we expect material contribution from jv? Anytime sooner or it will take a time.
Ashwani Maheshwari
No, I think the industry, the segment. They are into, obviously it’s not very big segment. So gradually of course it will improve. But to what extent and in what manner it will be meaningful. Maybe in due course of time we would know. We don’t share anything on forward looking but as of now this continues to remain positive and we are hopeful that it will grow further from here.
Preet
Thank you sir. On the similar line of that top line, just wanted to understand how was the suspension growth for US in quarter three? And we have, we are around 15% of market share and we aim for around 20% of market share by end of this year. Are we on the track for the same or is there any delay in gaining that market share?
Ashwani Maheshwari
Yeah, the suspension business, it has actually been growing very well. We announced if you have seen a couple of good orders in FY25 for which SOP is now taking place in 26 and we’ll also see gradual ramp up in 27. Now as such we don’t share forward looking numbers but we expect this business to grow significantly in 27 and 28 and that would be in view of the orders already announced. I guess your second question was on the market share. Now we calculate the market share on an annual basis. In FY25 our market share for suspension had gone up to 12.5% from 10%.
In FY24 we expect this to go up further in 26 as well as in the next couple of years in view of very strong order pipeline.
Preet
Thank you so much sir. I’ll join back in the queue.
Ashwani Maheshwari
Thank you.
operator
Thank you. The next question is from the line of Anubhav from Precincts Capital. Please go ahead.
Unidentified Participant
Hello, Am I audible?
Ashwani Maheshwari
Yes, you are. Please go ahead.
Unidentified Participant
So my first question is that you mentioned the WLTP emission change. What sort of increase in content per vehicle or business can this lead to?
Ashwani Maheshwari
Okay, see, let me explain you WLTP first. WLTP essentially is a change in the test procedure which is more representative of real world driving. It changes the operating conditions under which the vehicles are certified. This typically may lead OEMs to recalibrate and optimize their after treatment and thermal systems. Obviously this would lead to a greater focus on the catalyst efficiency, thermal management and durability. Now this might not lead a trigger to a complete redesign immediately. However, what it does is it increases the emphasis on the efficiency of the emission systems. And once it does that there will be requirement which may increase the content.
Now as I’ve said, it is up to 3.5 tonnes gross vehicle weight. The content increase might gradually go as the gross vehicle weight goes up. And that’s the area which we are focusing on. Exact content increase is what we are working in which segment and how much with the OEMs.
Unidentified Participant
Okay. And sir, my second question is that since you mentioned that there might be a dimension of the 10, 5 knots. So a hypothetical question is that like if like they come up with that like less than 50 horsepower will now transition to something like Prem 4, even that can. Can that be meaningful for us or will that be a very minor change then for us?
Ashwani Maheshwari
Sorry, your voice got a little muffled. Can you repeat? I could understand it’s on trend five and not on a greater horsepower you’re talking about. Can you repeat the question please?
Unidentified Participant
Sure, sir. Is it better now? Hello.
Ashwani Maheshwari
Yes
Unidentified Participant
sir. I was asking like if they dilute the norms and like for less than 50 horsepower tractors, if they come up with the change that they will now only transition to like 10, 4 norms which is already in place for greater than 50 horsepower tractor. So will that kind of a change be also something meaningful for us or will that be a very incremental or minor change from a revenue standpoint.
Ashwani Maheshwari
Got it, got it. Okay, so one is as you said, it is hypothetical. So one hypothesis is dilution of norms. So I don’t think officially we are saying that any norm is either a diluted or an upgraded norm. A norm is a norm. Now assuming that it is not trend 5 it is trem something else which is of a different parameter which is being monitored. Now what we need to see is what kind of parameters are being specified there. Now does it require a redesign of catalyst? Does it require redesign of mufflers? And that is what it will be dependent upon.
If this does not need a significant redesign then the existing emission system will continue. However the soxnox what is specified has got a decent amount of change from the existing one. Obviously the emission system components will change and that’s where value added partners like us will step in. So short pointed laws depend upon what the norms come out to be. It is very hypothetical for me to say anything on a diluted inverted commas normal.
Unidentified Participant
Thanks for that perspective and last question before I get back in the queue is that this JV with a birth pattern so like compared to couple of like when the JV was announced and what at least I understood was that the addressable market for the JV is also very decent. Maybe not as large as cars for India but like the TAM still was very decent. But if I look at like last two years there has been no meaning it seems at least there has been no meaningful ramp up in the JV performance. The profit has remained range bound at around 1 crore.
So like in hindsight like what can be like the reason for that? Did we not break into more models or was the competition more difficult? If you can share some light on that.
Ashwani Maheshwari
Yeah sure. Thank you very much for the question. So as you rightly said, the overall progress on the joint venture has not been very significant. But at the same time you know the kind of business they are into, they are primarily into you know above 4 liter segment in commercial vehicle segment which is MNHCV and the overall market share which they command for that industry is also not very significant. The team has been working on to grow that business so gradually that will show up in results. Also having said that for us contribution from JV has always been insignificant. So that is the story. Overall they are into a particular segment where opportunities are limited and whatever share they are maintaining and then working on to increase that share. Very recently they have also backed one new program for which SOP has just started in this quarter. So it will show up in the results and otherwise also if you see overall journey of creating new opportunities very long because lot of testing time is involved and approval process is also very long. So I think once probably when new norms come in they will have an opportunity to increase their market share. So fingers crossed.
We will also look up to how it pans out as and when there is a change in norms.
Aashim Relan
Sure. And I’ll just add here as well. This is Ashim. So in addition to that it’s worth noting how the accounting happens. So in this joint venture we do not have management control and hence it is only consolidated at the profit level and that is after deducting, you know, all royalty expenses etc. And hence it also is a smaller contributor for us. At the same time if you look at the independent joint venture performance, it’s been quite good and there is a good opportunity there as well. And definitely the commercial vehicle emission segment is a very attractive segment and we are looking at other options as well and how we can grow further in this segment.
Unidentified Participant
Thanks. I will get back in the queue.
operator
Thank you. Participants are requested to limit the questions to two questions per participant. Do you have follow up question? We request you to rejoin the queue. The next question is from the line of Viraj from Simple. Please go ahead.
Unidentified Participant
Yeah, a couple of questions. First is on the GD is there now rethink on the export as an opportunity especially post EU deal.
Ashwani Maheshwari
Sorry I would interrupt. Your voice is not clear at all. You need to microphone little away.
Unidentified Participant
Sure. Just. Yeah. Am I audible now?
Ashwani Maheshwari
Yes, much better. Thank you so much noise.
Unidentified Participant
So is there a revisit on exports as an opportunity post EU deal on the JV for the jv.
Aashim Relan
Sure. I’ll take this one. I’ll take this one. Ashwin, decide. So after the EU deal. Definitely it opens up an opportunity for the European market JV as well as other customers. We are looking at good traction and we will update as we make progress. There is a very good opening in the European market and the EU trade deal definitely strengthens that.
Unidentified Participant
Okay. Second question is on the lightweighting suspension business. If you can give a more detailed color on competitive landscape. You know what are the major players and their market share and what is driving a better win rate for us in last 12 years? I mean there have been a segment with us for quite some time but we’ve just seen attraction building up for us in last few quarters a year. So any more color on these two aspects for the two segments.
Ashwani Maheshwari
Right? Yes, I think it’s a great question in what is helping us build the momentum. I think that’s your prime question. Two parts. One is on the competition. We don’t name competition and we don’t specify so there is competition. But having said that our own intrinsic Capabilities is what is making us win the business. I would just enumerate a few why this business is giving us good traction. One is the R and D. So what we have done is we have augmented our R and D to cater to light fitting. We are one of the few Indian players now with local capabilities on control arms and links.
We are likely to further enhance these capabilities. The other thing is that we have a very successful track record with our customers to manage critical components and emission is one such critical component which we have been in. So with control arms and links market evolving, it’s evolving to high tensile strength steel market and hence the customer they feel comfortable in partnering with an established player who can handle these critical components. With the evolving market our facilities because of the business which we are in are co located. So we are able to also get into JIT deliveries.
This is for the existing business why we are getting and at the same time OEMs and the our customers see us making very meaningful relationship like with Dongi partnership we now access to global design, manufacturing, engineering benchmarks. Now this helps us build more customer confidence in getting support for lightweighting and standardizing part of the powertrains. So this is what our intrinsic capability which is driving increasing in the suspension business regarding the market share and regarding what the growth would be. I think just a few minutes back on some of the questions we have specified as to how our growth would pan out to be.
Unidentified Participant
Okay, just two more questions.
operator
I just request you to reach.
Unidentified Participant
Yeah, yeah, just I just have a request for Asim and you sir as well. I think we’ve been trying to meet, you know, make a request for meeting and it’s been going on for last, you know, many quarters. So just a humble request if you can give us an opportunity to meet you in person, you know and help us understand our business better.
Ashwani Maheshwari
Absolutely, absolutely. Let me, let me on Shada’s behalf say that we are always open and we are absolutely delighted in meeting all the investor community people because it’s a very educating thing for us also when we meet. So we are absolutely open at any point of time. If you leave your contact details with EY gd.
GD Takkar
Yeah. So you can share your details with. The Aquarius or EY as you like and then we will get back for you.
Unidentified Participant
Sure. I’ll again follow up with ey.
Unidentified Participant
Sure. Thank you.
Ashwani Maheshwari
Thank you so much.
operator
Thank you. The next question is from the line of Sourav Jain from Sunidi Securities. Please go ahead.
Saurabh Jain
Hello. Yeah, thanks for taking my question. So my first question is on Revenue split if you can give me the revenue split for Q3 and 9, 9 months. In terms of. Sorry, in terms of passenger vehicles and commercial vehicles we do it for FY20 on fiscal basis but it would be, you know, good if you can give us for nine months as well. Also emission segment and lightweighting segment. And what was the contribution from the new projects in the quarter? Yeah, that’s my first question.
GD Takkar
Thank you very much Sourabh, thanks a lot. So as you said, you already have FY25 data and we calculate these details on segment basis, on annual basis only. So as of now, as you would already know, emission vertical currently contributes 88% of our top line and suspension, or if I call it lightweighting, contributes 9% of the overall revenues and 2% comes from supply chain and 1% from miscellaneous. Now if you look at category wise, CV contributes roughly 40% PV 46% of highway genset exports put together. These are smaller categories as of now, 2% suspension lightweighting 9% and then 2% from supply chain and other 1%.
So maybe in after Q4, you know, once we have calculated the revised updated data based on the current situation we will share with you. So as of now this is the number we have. So then coming to the second question on the suspension. Now you know, suspension is really, it is a very promising business for us and it has very good margins. It is part of our new vertical as you know and it is growing very well. We have bagged, you know, many orders in this category last year also we announced few orders. Again a few more have been announced this year.
This all will take it to, you know, a higher level. However it will take time to start SOP and then translating all of that into revenues. So we would know the margins of a fully grown business and the associated economies of scale in due course of time. So please bear with us for some more time. But this definitely is a very good margin business and on standalone basis also it will have very good contribution once it reaches a decent size and scale.
Saurabh Jain
Okay sir, that’s a request from most of us that if you can start giving the product wise, you know, revenue split on a quarterly basis because we, you know, we expanded substantially in the light weighting or in the previous four to six quarters from you know, to 148000 pieces and again expanding. So the mix would have changed dramatically in nine months or especially in this quarter. And also we are seeing regular SOPs happening in the quarters. Recent quarters we saw some new SOPs and also some substantial sops lined up in the coming quarters as well.
So if you can start sharing this data on a quarterly basis that would really be helpful. Okay sir, coming to my second question. How much of the gross margin contraction would be due to impact of raw material prices and how much it would be due to change in product mix. Just a broader, you know, split if you can give us. Because you have in the past stated that you are working on some methodology to report this variation because we have substantial bought out component as well. So through some indexing or something. So if you can share the same.
GD Takkar
Yeah, thank you Sourabh again. So as far as you know this commodity prices is concerned. So there are two parts to it. One is the catalyst which is either directed by the customer and we buy it or it is on FOC basis. So there is no impact on us for increase or decrease in prices of the catalyst. So this is completely passed through. Secondly, the other raw material, the other raw material is also on back to back basis similar to, you know, other players in the industry. So it is based on indexation which happens, you know, regularly on the on the periodicity which is agreed with the customers.
So as such the movement in commodity prices does not impact the margins. So that is the response to the first question. What was your second question Sourabh?
Saurabh Jain
Sir, in the past you have stated that you are working on some methodology to report this, you know, variation in terms of bought out component through some indexing. So. So by when can we expect that to materialize?
Ashwani Maheshwari
That is not precisely. I think we said one thing definitely we most likely from next financial year. We are working on something which will give you some more idea about, you know, segment wise details in terms of how much from which category and also we are working on to see if we can share something on the other pass through element. Also as you know we have confidentiality agreements with our customers. So as such there is limitation. But definitely we are working on something on those lines which you mentioned. Maybe from next year we will share some more details to help you understand more about the breakup of the, you know, revenues and other parameters of our financials that would be really helpful.
Saurabh Jain
So my last question is on the lightweighting vertical. So we expanded from 180,000 pieces to 480,000 pieces. So what would have been our capacity utilization in Q3 on 480 existing capacity of 480,000 pieces and with Dongi’s involvement we expect.
operator
Sorry to interrupt sir, I just requested you to rejoin the queue for the follow up question.
Unidentified Participant
I’ve almost done with my question. So just. It was just a follow up to the first one. So we also. We also expect our, you know, content per vehicle to go from 2, 2 to 8,000 to 6 to 18,000 as per the presentation. So over what period can we expect that to happen? Yeah, that’s it from my side. Thank you sir.
Ashwani Maheshwari
So there were in the trail last question. There are two parts to your question. One is the capacity utilization. So as we had stated earlier that we build capacities close to demand. So and whenever we have announced the orders we have also stated about SOPs. So our capacity utilization normally runs very high. So. So we would be on 80% utilization on the existing capacity which are already created. The second question of yours was on dongi. So as I said that dongi, the association gives US law of R and D capabilities in Lynx sub frames and torsion beams. There is a very good customer appreciation for the same. We have started the business development and engagement process. It’s a longer B2B business development process so it’s very difficult to indicate a timeline. We’ll keep you posted on the developments as they happen. Now lightweighting has DONGI plus the suspension which we just spoke about.
So there is a very good business momentum in all these areas.
Unidentified Participant
And that’s it from AS I thank you and wish you all the best.
Unidentified Participant
Thank you so much.
operator
Thank you. The next question is from the line of Dishon Jain from Kosar Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Sir, just one question. Most of the questions have been answered. Could you help me with the export. Growth either on a quarterly basis or. On nine month basis.
GD Takkar
So as of now, export as such is not a very big contributor to our top line. So if you see last year our overall revenues from Exports were roughly 1% of our overall company revenues. However, you would have noticed that we have announced some very good orders from this segment which I will request Ashwini Tan to elaborate more.
Ashwani Maheshwari
So the exports we had stated about orders last time in which we spoke about US 7 million dollar lifetime value of 40 million dollars from North American largest engine and genset manufacturers. Those orders we already shipped the samples and SOP is expected Q2FY27. Now in this call itself we announced more export orders with aggregate annual value of USD 3.7 million. Now we continue to see a very healthy RFQ pipeline now which is supported by a dedicated export focused team and we expect new customer additions over the coming quarter. So as of now, as GD said, the percentage contribution to the overall sales might not be so High but we do see lot of traction building up in this area, the LE RFU pipeline and the healthy order wins which we already declared.
Unidentified Participant
Sure. Thank you. Thanks for the opportunity.
Ashwani Maheshwari
Thank you.
operator
Thank you. The next question is from the line of Manpreet Arora from Arorad Wealth Advisors. Please go ahead.
Manpreet Arora
Yeah, thank you. Thank you for the opportunity. Am I audible?
Ashwani Maheshwari
Yeah. Yes you are. Thanks.
Manpreet Arora
Yeah. So you know, first of all, very nice to you know, see Mr. Maheshwari on the call as well. So yeah, you know, that’s good.
Ashwani Maheshwari
Thank you so much. Appreciate it.
Manpreet Arora
Yeah. So you know, I would just like your help in expanding a little bit more or give us a little bit more color on the donkey collaboration. You know, what I would like to understand is what are those gaps in our capabilities or market access that we had which DONGI helps us to fill. I know you mentioned about R and D capabilities and lightweighting and also you know about subframes and torsion beams. But you know, if you can give more color, let’s say, you know, you know, what we did not have as a technical capability and how it was, how this collaboration will help similarly let’s say market access.
You know, maybe we were present only on sedans and smaller version compact cars and maybe this collaboration helps us into get into SUVs and more premium. So does it, you know, help us in to get, get into more segments or increase our content per vehicle in the car and you know, what is changing in the suspension system landscape that you know, this collaboration will help us meet those gaps if we can give a little bit more.
Ashwani Maheshwari
All right, so I think lot of answers are there in your question itself. And so I will now just rewind back to our call last quarter and I’ll very briefly answer so that, and then we can take. Happy to take you through a lot of technical areas including getting our R and D colleagues on the call. I’ll just give you a very brief perspective on what DONGI is first and then why this collaboration is so critical. DONGI is a global tech focused player. It’s almost with over $2 billion revenue. It has a worldwide presence, strong R and D capability in powertrains, catering to many leading OEMs.
It has been successful in China also with the new age OEMs. The experience which they have in light rating commonization and standard products overall the now what it provides us, it provides us R and D, global R and D capability. In the items which I mentioned, I mentioned about subframes, I mentioned about torrent beam. This is what it strengthens our capability. What they will do is the association with them is transfer of design drawings, process, know how to and the validation protocols. We would target market for Indian OEMs including SUVs and EVs and other premium vehicles.
Exactly what you mentioned. The potential kit value as we stated last time can be anywhere from 4,000 to 10,000. The other thing which is happening in this segment is that the PE market is now moving to multi power trade. And that’s something which is rhetoric which you would know. You’re talking about ice, hybrid, EVs. Everything will coexist. So what requires what would happen in the future is that there will be a lot of standardization commonization across the platforms which will happen now in the standardization commonization lightweighting scheme will also play a very very critical part.
Now the question comes what is that commonization? So the power trains will have subframes, control arms, links. This will have a different or architecture from the OEM design perspective. It would depend upon the space available. What is the lightweighting requirement, what are the right comfort. So there will be a configuration with the OEM will design and on the premiumness on the vehicle also. And that’s where Dongi with their global capability, with their R and D power is, is what they are going to help us in. There’s an organic capability which we already have which is going to be supplemented by this.
It’s a slightly longer sort of an answer but happy to take it along with the R and D folks with you if you want further details in the technical aspect.
Manpreet Arora
Yeah, thank you. I think that’s really helpful. Just a follow up on that. You know what we are also hearing about is the suspension systems are moving to more dynamic suspension systems now with sensors and using sensors to automatically adapt etc. Etc. And I think these are pretty advanced systems as well. So is the Indian car industry also moving towards that? And does Donghi have capability there? And is that an area that we are also looking into getting into?
Ashwani Maheshwari
So there are. Sorry, there are three parts to your question. I’ll just break it very quickly. One is you are asking about the evolution of suspension system. That’s a great topic, great subject. Whether we are talking about the Macrosys truck base, we are talking about evolved systems on sensors. It’s a great subject. We can certainly debate on that. The second point you said which is more related to our current DNA metronome, our current TLA with DONGI is on torsion beams and subframes. DONGI has far more capabilities and greater capability Than this we will gradually, I’m not saying only with Donghi, but we will gradually keep on adding more and more capabilities towards lightweighting to our portfolio.
Now whether that is with existing partner or with a new partner is something which will evolve. I stated that Shanghai is very actively looking at two specific countries for technology scouting. So we will intend, we intend to bring in that kind of technology.
Manpreet Arora
All right, thank you. My second question. Sorry.
operator
Thank you.
Manpreet Arora
Yeah, My second question is on the.
operator
Sir, I just request you to rejoin the queue for the follow up question.
Manpreet Arora
You allowing two questions and I’ve only finished my first.
operator
So you can rejoin the queue for the follow up please.
Manpreet Arora
All right, thank you.
operator
The next question is from the line of Mehr Vora from EKV Securities. Please go ahead.
Unidentified Participant
Yeah, thank you. So sir, my first question is basically on the commodity cost and you mentioned that you know we have a catalytics part which is basically a pass through. So here the pricing is decided by the OEM itself or we are the one to decide the price. How does it work out?
Aashim Relan
Sure, I’ll take this one. This is ashen. I’ll take this one. So in the case of Catalase, it’s completely driven by the OEM and it is completely passed through. Right. So as we’ve seen, all of us in the news also that Nobel commodity prices are up like anything in the world and that increases the price of catalyst and it’s completely pass through. So it does show up in the numerator and the denominator but it’s completely directed by the oem. Right. The only difference is in some models we buy it with some customers, we buy it at the price, whichever they tell us.
And in some models we get it free of cost. Otherwise it’s something that’s completely back to back with the OEM and nothing to do with us in the business.
Unidentified Participant
All right, so just one thing here that why would an OEM not prefer buying it on its own book and you know, we have to buy for them because this, you know, deteriorates our numbers as such. So how are we feeling that this portion going down so on a.
Aashim Relan
On a percentage basis it deteriorates our numbers. If you look at it from an absolute, right. It’s just optical this first of all, there’s no deterioration, it’s all optical. Right. If you just adjust the numerator and denominator it will even out. Right. At the same time some OEMs prefer it for different reasons, ease of doing business and some other reasons, inventory and so on and some OEMs do give it free of cost. So it depends from OEM to oem and we follow, of course, the customer. Our preference is also to take it free of cost.
However, some OEMs do have a strong preference to work in this model. We take that business as well as it has no impact within the business, apart from definitely this optical, you know, numerator denominator effect that happens as Nobel metal prices fluctuate.
Unidentified Participant
All right. Okay. So secondly, sir, there’s some mention of AI in your opening remarks as well as into your presentation. So just some color on how you’re. Using this AI for manufacturing part. Something which I’d like to.
Aashim Relan
Yeah. So I think AI is a huge technology leap and a very exciting opportunity for all of us. And we are focused on two sides. First is harnessing the innovation and effectiveness by starting to implement AI across all business functions and processes internally. And this is something that we are going to double, triple down on as we go forward. There is an opportunity internally to apply AI into almost every business function and process. And the second, we are also seeking growth opportunities in the AI infrastructure components plus robotic components. This is still a very early initiative as it’s very quickly evolving and we’ll keep you updated on progress as and when it happens.
Unidentified Participant
So this would be under the lightweighting part.
Aashim Relan
We are applying AI right now internally. And of course, if something good opens up on the AI infrastructure as well as robotics, the theme would be lightweight because there are a lot of cross use processes between lightweighting technology and these two places. Again, it’s very early and that’s why we’ll progress as we move forward.
Unidentified Participant
Okay. All right, thanks.
operator
Thank you. As it was the last question for the day, I would now hand the conference over to the manager. Over to you, sir.
GD Takkar
Thank you. Thank you very much. We appreciate your participation in our earnings call today. We trust that we have addressed all your queries. Should you have any further questions, please feel free to reach out to our investor relations advisors, Ernst and Young. Thank you and have a pleasant evening. Thanks a lot.
Ashwani Maheshwari
Thank you so much, everybody.
operator
Thank you. On behalf of Equeria securities, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.