Stallion India Fluorochemicals Limited (NSE: STALLION) Q4 2025 Earnings Call dated May. 20, 2025
Corporate Participants:
Unidentified Speaker
Shazad Sheriar RustomJi — Managing Director and Chief Executive Officer
Geetu Yadav — Director
Analysts:
Unidentified Participant
Parth Raorane — Analyst
Sanket Sadh — Analyst
Prabal Jain — Analyst
Jayaraj Jain — Analyst
Ajit Sethi — Analyst
Manish Bhadane — Analyst
Bhavika Singhvi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Australian India Fluorochemicals Limited Q4F5.25 results conference call hosted by Ventra Securities Limited. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing STAR and then zero on your touchstone phone. Please note that this conference is being recorded. Before we begin, I would like to point out that this conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations expectations of the company as on date of this call.
These statements do not guarantee the future performance of the company and it may involve risks and uncertainties that are difficult to predict. I would now like to hand over the floor to Mr. Parts from confidently Partners. Thank you. And over to you sir.
Parth Raorane — Analyst
Yeah. Thank you and good day to you. Ladies and gentlemen. This is Parth here from Confidely Partners. So we represent the investor relations for Stalin India Fluorochemicals Limited. On behalf of Ventura securities and Confidely Partners, I warmly welcome you all to the stallion India Fluorochemicals Limited earnings call for the Q4 and FY25 earnings conference call. The company is represented by Mr. Shahzad Sherya Rustamji, he’s the managing director and CEO. And Mrs. Geetu Yadav who’s the director at Stallion India Fluorochemicals Limited. I would now like to hand over the call to Mr. Shahzad Serya Rustam Ji for his opening remarks.
Thank you. And over to you, Shahzad ji.
Shazad Sheriar RustomJi — Managing Director and Chief Executive Officer
Hello.
Parth Raorane — Analyst
Your voice is cracking. Says I’m.
operator
Please go ahead sir. You’re audible. Dear participants, kindly stay connected.
Shazad Sheriar RustomJi — Managing Director and Chief Executive Officer
Hello.
operator
Yes sir, you’re audible now. Please go ahead.
Shazad Sheriar RustomJi — Managing Director and Chief Executive Officer
Yeah, sorry for the bad signal. I would like to extend a very warm welcome to all of you joining us on our Q4 and FY25 earnings conference call. We are pleased to close financial year 25 FY25 on a strong note underscoring a successful execution of our strategic initiatives and increasing importance of our integrated solutions within the fluorochemical industry. For Q4FY25 we recorded total revenues of 153.16 crore registering a robust 79.87% quarter on quarter growth supported by sustained demands across our end user industries. EBITDA rose 41.75% quarter on quarter to 20.31 crores. And PAT came in at 13.27 crore which is up 35.56% quarter on quarter on a full year basis.
We crossed a significant Milestone by delivering 379.47 crores in total revenues, EBITDA at 49.74 crores and PAT at 32.33 crores. This is excluding a one time provision of 10.71 crores which we had made in H1. Other than this, our underlying PAT would have been 43.04 crore Reflecting the true strength of our operating performance strategically, FY25 marked the beginning of a new chapter for Stallion as we accelerated our forward integration efforts. The successful execution of projects at the Kalapur and Gilotte facilities as well as the groundwork for the upcoming Mumbai and specialty gas units sets the stage for the next phase of growth in the high margin segments such as semiconductor gases, HFOs and liquid helium.
At Khalifur we are developing capabilities for semiconductor and specialty gas debulking and blending while the Mamba 2 facility is poised to become a key production center for HFO based reference aligning with global environmental mandates and India’s strategic push for indigenous electronics and semiconductor manufacturing. These expansions will enable us to participate more deeply in the electronic, solar and fiber optic ecosystems which are expected to grow at high double digit CAGRs. Furthermore, we continue to maintain a strong focus on safety, sustainability and customer centric innovation. Our ability to customize gas blends tailored to the needs of over 200 customers across 15 plus sectors including automotive, pharma, fire, defense and power differentiates us in a commoditized industry.
We believe that our strategic investments in infrastructure and product development backed by 30 plus years of technical know how position us to capture an expected CAGR of 30 35% over the next three years while enhancing profitability by 3 to 4% through margin accretive offerings. Looking ahead to FY26 and beyond, we are confident in our roadmap to become fully integrated fluorochemicals company with a strong emphasis on backward integration, innovation and operational scalability. With a well established Pan India network, deep industry linkages and a growing presence in next generation industrial gases, we are committed to creating sustainable long term value for all stakeholders.
Before we open the door for questions, I would like to thank the entire Stallion team for the hard work and commitment and our investors and partners for the unwavering support. With that I conclude my opening remarks and invite your questions. Thank you.
Questions and Answers:
operator
Thank you sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your name to be announced. If you would like to withdraw your request, you may do so by pressing Star and one again. Ladies and gentlemen, if you have any question, please press Star and one on your telephone keypad. The first question comes from Sankeet Saad from Artais. Please go ahead.
Sanket Sadh
Hi team. Firstly, congratulations on a good set of numbers. I have a few questions. So. So how many competitors are there in India doing similar activities as you?
Shazad Sheriar RustomJi
Basically, Stallion is across multi, multi fields. It’s not single like in the reference side of the business. You have companies like SRF, Naveen, etc. Who are competitors. These are the big names, smaller names there would be at least meaning much smaller than us. And in the trade segment more than in the manufacturing segment, there would be at least another 10. Then in the industrial setup, that is in the specialty gas side, not exactly special one is in the specialty gases side, there would be about 7. In the industrial segment there would be another about 7 to 10.
In the fire side there would be at least 10 to 12. So we are not in one particular segment. We are ranging across a huge number of segments. As such, that gives us a different strength which others do not have.
Sanket Sadh
All right, but.
Shazad Sheriar RustomJi
Difficult to find another company that fits in with Stallion across all the segments.
Sanket Sadh
Right, right, thank you. And what will be the key reasons for the guidance of 30 to 35% CAGRADE in the next three years?
Shazad Sheriar RustomJi
Basically, if you have seen it’s, you know, for the investors it has been a very good studying option. Stallion, basically we entered into the IPO mode in 23. We had expected that when we first filed our DRS in 24, we had expected that we would have been through by March. However, due to SEBI requiring us to have land purchased earlier, we had to withdraw and again file back. So we got set off by one year. Now the good thing for the investors, all the investors is you were able to study us over two years, which is normally not the case in most IPOs.
In most IPOs, you know, you look at the company, three months, they’ve come in, you’ve done all your showcasing, etc. And the IPO is true. And that’s it. Here we have been over 23, 24, 24, 25. So you’ve got two financial years results where you have seen year on year growth happening. So basically, firstly it starts with the basic thing, forget the expansion. Even as a normal company, we had geared up post Covid when everything had come crashing down, meaning we had geared up that we would be on a growth mode and we would expand at least by 20, 25% minimum.
Now post IPO we’ve got the funding, we’ve got the plans forward for setting up the specialty gas unit, we’ve got the plans forward for the HFO unit and the southern facility which gives us a different reach. Together with these we believe that 30 to 35% year on year should be a very reasonable growth target that we have kept for ourselves. And seeing our past performance I think you can believe that we would be able to more or less meet whatever targets we are setting.
Sanket Sadh
Right. And can you please comment on the CAPEX for our semiconductor gases and specialty gas facility? I can see that there’s not much of the IPO proceeds which are utilized as of yet. And can you also comment on the capacity utilization which your facilities have currently? Because as per the RHP I saw that the Manasar and the Panvel facility utilizations were decreasing every year.
Shazad Sheriar RustomJi
Okay, basically your questions. Let me break up your question into three parts. One, first is the question on CAPEX utilization for the current IPO proceeds. Number one number two question is what why is the capacities not utilized? Meaning what are the capacities and why are they not utilized. And third why are the capacities declining utilization declining in certain facilities? So I’ll that should give clarity to your question so I’ll answer it in sequence. The CAPEX basically we received the funds somewhere in February end meaning Jan end we got listed. By the time we started finishing formalities and finishing everything we almost reached February end.
We were in middle of best quarter and very honestly we did not want to waste time or the quarter because you know up to March is our strongest quarter. So we did not want to waste time in number one in the CAPEX spending and neglecting an opportunity that is there because the sales are not going to wait for us. So basically March we were concentrating more on closing the year with good growth number one. Number two the redesigning of the both the facilities have taken some more time than what was expected in the sense the Mumbai facility was designed for five tanks as a five tank facility.
We have scaled it up to a 10 tank facility. The helium plant also the specialty gas plant also initial designs were different then. Now basically as you come into the current year and as you see the opportunities coming in front so you will re engineer and change the design to suit what would now appear to be a better sort of, you know, plant utilization than what was earlier planned for. So in both cases we are scaling up slightly. In Mumbai we are scaling up 100%. Reason for scaling up is in These plants, especially in the Mumbai plant, which would also be a flammable gas plant technically.
So all the gases are flammable. So what happens is if you set up five tanks and now we want to go in for expansion of say one more tank or two more tanks. So additional sub facility, you have to take a complete shutdown. So once we are started on a growth project projections and you know, and towards the growth drive, we don’t want to come come to a stage where now we want to expand and we need to take a shutdown for three months for expanding the capacities. So it was decided that it might not be entirely a bad call to complete the maximum utilization of whatever we have there and in one stage complete all the capacity that we want to enhance.
So we’ve gone in 400 utilization of total land, 100% utilization of whatever is possible, doubling the capacity, etc. And finishing it once and for all. So that in the designing site took a month more number one, because you have to change the entire RFIDs, you have to change the piping diagrams. Then you have to fit in with the space restrictions, the safety distances, etc. So it’s quite a task. So all that was completed by April end and now we have started giving out all the orders for all the raw materials, all the plant and machinery, all the work overall.
We will not lose time because the end what we have, the 30th of October is what we are looking at completion. We would be on track to meet our completion date internally. The little timeline has moved up and down, but ultimate timeline will remain the same. There won’t be any changes. And coming to your third part about capacity utilizations and why reductions are there now capacities you have to understand the capacities that have been mentioned is basically during the IPO, the merchant bankers, etc. They asked, they needed, they wanted a third party chartered engineer to come, you know, evaluate and arrive at the capacities.
So their way of evaluating is slightly different than realistic in the sense. It’s more a paperworking of capacities where like suppose you have a tag, you have, you know, the downloading equipment, etc. Your capacity to unload and repack is so much, your capacity to blend is so much. So what they do is they note all that down and then they multiply by the number of tanks or setup you have, which is little unrealistic because what it does is it does not take into effect that you cannot run all simultaneously. So you cannot actually multiply in the manner that it was done.
So the capacity is a Little shown out. So it is shown as, you know, poor capacity utilization which is not the case. Second, you have to understand the Indian market is now divided into North, West, south, east is pretty much dead zone meaning in percentage terms it’s like 1/4 of any of these other zones. Like it realistically it would be 30, 30, 30 and 10 for east so or 40, 25, 35 and 10 for east like that. So you have the manufacturing hub that used to be the NCR belt. Now if you’re predominantly dealing in OEM business then you will stick to this belt.
You will have more capacity utilizations here. If you shift your focus to HFOs and other products and aftermarket then you will move more towards the west and south. So basically it’s been our move towards operating ideology that currently HFCs, especially what the OEMs are currently using in the NCR belt, it is oversaturated number one. Number two, better returns come from the aftermarket and from the new products that are more coming up. Now you’ve got another region where we have a Mombattu facility, sri cd. So all the major industries like LG like Bluestar, Voltas, Daikin, Amber, most of the large manufacturing have set up one big unit in that facility area.
So basically all the new products etc. Anything that they have a lot of the export business happens from there. So you would find that a lot of the new products more, the growth is more in the south and the old products growth is in the north number one. So it’s a move towards the shift of products and market that we’re looking at. Also aftermarket you have to understand is 80% of the total market share and 20% remains with OEM. So he who controls the aftermarket controls the market. It’s a larger share percentage, it’s basically moving the volumes.
Sanket Sadh
And there’s a significant dependence on China for.
operator
Hello. So can you join the CQ please?
Sanket Sadh
Okay,
operator
thank you. Sir, the next question comes from Prabhal Jain from SM Holding. Please go ahead.
Prabal Jain
Hello.
Shazad Sheriar RustomJi
Hello. Good evening.
Prabal Jain
Good evening. Sir, my first question was regarding that, that contingent liability which you had. You mentioned that the part payment has been done and the deadline was the 30th of April and there was a one month extension clause which would extend it to the 30th of May. So I mean you will be doing the next part payment by 30 May, right?
Shazad Sheriar RustomJi
No, firstly can I just brief so that everyone else also understands this contingent liability. Basically in our RSP we had mentioned that we had a dispute with a Chinese company called Sunbai. The dispute was based on, number one, them arbitrarily changing the terms of the contract resulting in a loss of $500,000, half a million dollars and not meeting the full contract. Where they did not supply. We had booked, we had booked for 200 containers and they supplied only hundred containers because the price jumped from two dollars to seven do. So we had a result in seven million dollar notional loss.
So our dispute was based on that. And we could not go into arbitration because arbitration place was China. This was during COVID period. China was shut down. You could not go there, they could not come here. Nothing could happen thereafter. The time frame moved out and basically it just went into limbo. These. So finally after the IPO has happened now technically we do not need to settle also because now it’s four years past this year, next year, what we could simply do is now after four years just write off the operating this after giving notice, etc.
But what we decided is now that we are a listed company now, we have got stakeholders, etc, it would make lots more sense rather than have any such disputes, anything lingering on to settle all, all such disputes amicably, such that you have a better reputation and better market access even in China or wherever. So what we did was we negotiated with them. They were claiming much higher, they wanted about $800,000 of damages. We were claiming something else. Finally we settled it. Whatever is the net pending amount shown, we close it at that. No interest, no damages, no legal fees, nothing, everything.
We closed that and amicably everything gets settled. So on that basis we settled it. We took that in the provisions now in H1 we had taken it into provisions already and there’s no impact on the balance sheet to that. And we paid out about $250,000 before 31 March. And the timeline given is not so much delay or monetary thing. You have to understand that there’s an operational problem in making payments. Because my purchase order says $50,000, his invoice has come for $60,000 or $100,000. So the bank says there’s a mismatch in documents that you have what the contract states and what you are asking us to pay don’t match up.
So we are having operational issues with the bank in closing all the payment spending. And this is what our dispute was originally about, that we place order at 50 at the contract says 50 and you’ve charged me 100. So that was the basic issue of the district. So as of Right now we posted on BSE NSC because yesterday as of right now we have paid off everything except $32,000. And the $32,000 is spending only because the documents are so mismatched. The bank says you need RBI here which we cannot issue this payment. So now we we’ll apply and get it for that last 32,000.
But we wrote to Sunma, they understand and they accept that in principle everything is closed and settled and this also will be done. So as of today, as of today when we’re talking we have paid off everything except 33 800. Sorry not 32. $33,800 is all that remains spending out of one point. 1.4.
Prabal Jain
Yeah, yeah. No issues here sir, in Q4 you did 150 crores odd at this 150. Like what is the capacity utilization that you are at with existing infrastructure?
Shazad Sheriar RustomJi
It’s more than 50% everywhere.
Prabal Jain
More than 50%. And sir the new two facilities, one of the this semiconductor and specialty and one expansion, the existing product lines. What is the peak revenue can we target from these two new facilities once it you know commences after like I think you mentioned 30-10-2025.
Shazad Sheriar RustomJi
Yes. See basically what is that facility coming up for? Currently we have four facilities already. Now the four facilities are in north and west. We don’t have anything in the south. So if you have a facility in the south, firstly that market becomes very much more accessible and cheaper for you to operate. We become fully forward integrated meaning we are just in time with all our customers. Meaning my plant would be like about 10 minutes away from the Blue Star plant or the Daikin plant or the Voltas plant. So first thing is in mode of supply.
Second the lucrative south market which is the Chennai, Bangalore and Kochi belt we have, we are very much like three, four hours away from each of them. So what happens is the proximity to market gives you additional business which currently is not being enjoyed by us number one. Number two, more important is this facility is not like the other four facilities because it’s going to be designed only for HFO and HFO blending all the next generation. As the quota starts kicking in and as all Companies after say 2027 all the companies will start switching over to new products.
26:27 they will start moving to HFOS. You already have the facility in place. You already have the blending in place. You already have everything available ready. You don’t have to set up anything. So first mover advantage comes about. Secondly even for when you Apply for licenses, import permits, etc. DGFT and MoEF want to see do you have a facility, do you have a peso approved facility? You have the factory, do you have the blending capability? So without that they don’t give you any import permits also. So this facility would provide you a new reach into a new products that are going to be coming.
HFO currently don’t have that much reach or scale of volume. But now from next year it is expected to grow phenomenally. So this gives us opening to the new businesses that are going to start now.
operator
Thank you sir. The next question comes from Jaira Jain from HNI Group. Please go ahead.
Jayaraj Jain
Am I audible?
Shazad Sheriar RustomJi
Yes.
Jayaraj Jain
Thank you. Congratulations for a good set of numbers.
Shazad Sheriar RustomJi
Thank you.
Jayaraj Jain
So my first question is like, given the company has made recent improvement in, you know, gross margin, how sustainable are this level considering, you know, potential fluctuation, raw material.
Shazad Sheriar RustomJi
See it. We’re taking a couple of investor calls in around January I think. Okay. In that January, February, that period, a lot of the investors had asked like you know, the spike that came about in all the shares of the fluorochemical companies like that the prices have gone up, everything has gone up. So everyone was asking us how, how does it look for us? And I just, I just told everyone one simple thing. It’s a very good time for us also. We are same as them, what benefits they will reap, we will reap. So to answer you in in a correct manner, this is a cyclical upturn and we have been, how to say, very agile to be able to get the benefits of the cyclical upturn.
Similarly you will have in all industry cycles, you have up cycle and you have a down cycle. So currently when it’s on the up, everyone will have excellent results. In our past record, even in the down cycles we don’t usually have anything. We managed to come out very well even in the down cycles because being across so many industrial groups allows us one industry group has a down cycle, another has an upcycle. Secondly getting into the specialty gases, semiconductor gases, etc. NHFO’s HFOs don’t have a down cycle because they are new industry that is starting.
So it’s like a sunrise industry which will only keep rising till it reaches, you know, 12 noon, then it’ll start setting. So for the next 10 years, seven years, it’s only going to rise. Then products like helium, argon, all the semiconductor products, NFC, etc. Though those only not only have a very stable setting in normal times, they have a very strong cyclical movement also like other products wherein you, you get excellent buffering. Suppose if our products, us fluorochemical products have a down cycle, these products will have an upcycle usually. So basically being a company that is expanding into various industry mode groupings, it allows us to deflect the usual down cycle syndrome.
So we hope to have it pretty much sustainable. Maybe the high margins currently seen, it may not in this particular industry segment may not hold but the other industry segment will offset it. So we can, we think that it should be pretty much sustainable. Hello.
Jayaraj Jain
Okay. Okay, thank you. My another question is can you elaborate your performance between you know, online sale and offline sales channels? And which channel is you know, currently giving you much growth as compared to others?
Shazad Sheriar RustomJi
Sorry, can you repeat online scale and offline meaning?
Jayaraj Jain
Hello, can you hear me?
Shazad Sheriar RustomJi
Yeah, I didn’t understand the question.
Jayaraj Jain
I’m asking about your performance different between your online and offline sales.
Shazad Sheriar RustomJi
Online and offline sales.
Jayaraj Jain
Yes.
Shazad Sheriar RustomJi
I still didn’t understand what is online, what is offline.
Jayaraj Jain
Sorry. Oh sorry. My bad. So my next question is like are there any plans to, you know, prioritize your investment and for your further growth as I have seen that you are going for two more new manufacturing facilities, one in Maharashtra and one in Andhra Pradesh.
Shazad Sheriar RustomJi
Yeah. Now our complete focus is going to be the CapEx proper CapEx spend and also setting up both these facilities in time. Because if we meet the timeline then our growth plans as we have kept and as we are announcing it should be sustainable more than the current CapEx also we are enhancing whatever CapEx we had raised money for and we are increasing where we feel that the capacities we should enhance currently or have better facilities than what we had originally planned. For one is that second, the company also has a very ambitious road to go into backward integration.
So side by side along with this two facilities, these two facilities would give us a different reach, would give us a different industry segment. But in a core segment also we would like to go in for backward integration where we go into manufacture of at least one or two of the molecules. So focus is there also. And we are working on that also.
Jayaraj Jain
Okay sir. And so my last question is like if after the starting of these facilities like your new facility, one in Andhra Pradesh and another in Maharashtra, how much, you know, manufacturing demand will be increased and it will reflect on your revenue.
Shazad Sheriar RustomJi
We have given the expectation the growth should be 30 year on year.
Jayaraj Jain
Okay. 30% year on year. Okay. And is there any scope of growth for your semiconductor? As you can see, government is giving you much more Initiative and incentives for the same. So does your company get any benefit for from it?
Shazad Sheriar RustomJi
No. See the government is giving incentive for the direct manufacture of semiconductor products or products that go directly into it like say chips or something and that also in specified areas they’re not giving for every product that goes into it. Now the gases that will go as part of the manufacturing process etc. Currently it does not have. Secondly, we are not in the areas where they, you know, where they notify and say that okay, you’ll get if you set up here. Second, you have to understand why we have kept 30%. First thing is we don’t want to over project or try to do a big show shine and say this industry is growing at 100% year on year we will also grow 100%.
We want to give you. We expect to be having this discussion next year also with you and we hope you will be our investor even next year. So next year when you turn and ask me that you had quoted 30% and you’ve done 35% we have credibility. But if I say 100% and it comes out 30% we lose credibility. So we are giving figures what we hope to achieve and what we hope to discuss on that we did better than what we had mentioned to you. We don’t want to give wrong figures or very optimistic figures where we are not confident of achieving.
We’re giving figures that we are confident we will achieve and we may surpass also.
Jayaraj Jain
Okay sir, thank you. So just one last question. Like I have seen your group is.
operator
Can you join that you sir.
Jayaraj Jain
Okay, sure. Thank you.
operator
Thank you sir. I request the participants to restrict with three questions in the initial round and join back the queue for more questions. The next question comes from Ait Chi from Eco Quantum Solutions. Please go ahead. So sorry, your voice is not clear.
Ajit Sethi
Am I audible?
operator
Yes, please go ahead.
Ajit Sethi
Yeah. What is the CAPEX amount we have spent for the upcoming two manufacturing facility. As of and what is the asset?
Shazad Sheriar RustomJi
Sorry, as of right now we have not spent any capex. As of 31st March we had shown a spend of approximately I think 69 crore or 69 lakhs only versus 51 crores of capex spend. Approximate 51 crores of capex spend. I explained why we did not concentrate concentrate on the CAPEX spend because we received the money sometime by February. March was a very, you know, very high growth, high sale period. So everyone was concentrating there plus we went in for enhancing the scale of operations. So both the plants needed redesigning.
So redesigning which started in the 15th of March as per the scheduled date and should have got over by 30 March did not get over it. It took till April end to complete the redesign. And in May now we have started the procurement.
Ajit Sethi
So with the optimum capacity utilization of both the plants. So what kind of revenue we can achieve from that plant?
Shazad Sheriar RustomJi
Again, like I said, we have already given the growth figures. And at 30, 35% year on year for the next three years, the HFO. You have to understand one thing. The semiconductor business. Many big companies also looked and wanted to get into it till they realized the high gestation period. There’s an approval process. Each product will take two to three years to get approved. Once it’s approved, it’s like an entry barrier. Nobody else can enter. Meaning if I am supplying, I’m just giving example. I’m approved and I’m supplying Tata Semiconductor. Now it’s approved by the foreign partner, it’s approved by the local unit, it’s approved.
The consistency, equality, etc is approved. If my price, I’m just giving a ballpark sort of to understand, I am charging thousand rupees. A newcomer comes and says I’ll. I’ll supply this at 500. Nobody will even accept the code. You have to go through the qualification process which itself becomes an entry barrier. So once you are entrenched in it, you’re very secure and the business is very strong, stable and higher, very much higher margins and returns than what you have currently. But it is not something that will come overnight. The HFO business also as the industry, as the companies all start moving over from HFCS to hfo.
It’s a gradual shift, fast but gradual shift. And hence you will see that 30, 35% growth year on year.
Ajit Sethi
My last question is what is the current domestic demand for refrigerant gases and what is the industry capacity?
Shazad Sheriar RustomJi
Let me put it this way. The approximate demand. Now I will speak in terms of one product only. Because the local manufacturers don’t manufacture. See, they’re about a total of 40 products. 40 products. That stallion is in the peer group, that is Naveen SRF. They’re into five products. They manufacture two. So I will speak on the two. Because you can speak only on that when you’re asking manufacturing capacity. So manufacturing like 32, the Indian demand should be approximately about 15,000 tons. We understand Naveen’s capacity should be 10,000 tons. SRF should be about 16,000 tons. Naveen’s 10 should be about 8,008 and 16,000.
So that should be about 24,000 tons. There is two new capacities that are coming up. There’s a company called ChemClast who would be coming up with a 3,000 ton facility. Tanfac Group, they should be coming up with a 10,000 ton capacity. But initially they’ll start production with a 3,000 ton capacity. So the capacities in the country should be about 30,000 tons for sales of 15,000 tons. But you have to understand that majority of this will get exported out. Because the export market pays at least 25% higher than the local market currently. And the global capacity for the same product is over 250,000 tonnes.
So India is still like 10% of whatever global capacity is.
Ajit Sethi
Thank you.
operator
Thank you. The next question comes from Manish Badani from PNK Securities. Please go ahead. I repeat question comes from Manish Badani. Please go ahead.
Manish Bhadane
Sir, have you mentioned in your opening commentary that you accepted the CAGR of 35% for the next three years and you also like explain it one to two times. But can a bit more clear like how you will achieve this 35% CAGR over the next three years. Like what is your strategy? Like are you going to launch any new project or anything like that? Thank you.
Shazad Sheriar RustomJi
Yes. See the new facility that will come like the helium, all the new products that will come out like ARG and hello Helium, your NFC etc. All the semiconductor products that would be there very easily would add on at least 100 crores of revenue. Your Mumbai facility for the HFOs would add on another 100 crores towards revenues. So basically these will keep on scaling up and growing up.
Manish Bhadane
Okay sir. Thank you.
operator
Thank you. The next question comes from Bhavika Sanghi from Nivishai. Please go ahead.
Bhavika Singhvi
Hello. Thank you for the opportunity. My question is that as in rhp it’s mentioned that most of your raw material is imported mainly from China. How does salient handle price fluctuation? Like do the cost is transferred to customers or it’s get absorbed. So could you.
Shazad Sheriar RustomJi
The reason your question has like sub questions in it. Meaning why are we getting most of the material from China? Number one in a sort of asking and second is how do we manage the fluctuation. Now basically you heard about, you know how the Chinese and manufacturing took over a lot of the global industry. Like in rare materials, rare earths, they’ve almost got 100% of the business share. Now in fluorochemicals China has 85% of global share. It is not out of choice. There’s nobody in America who Makes this. There’s nobody in Europe who makes this.
There’s nobody in any other part of the world who’s making in Japan etc who’s making this? So if you want to deal in this you have to go to China. Now it’s changing. The government in India has realized, they’ve woken up. They’re giving incentives, they’re asking people set up. Now you have to understand why is it that everything moved to China. Cost of electricity, like industrial electricity in India would cost something like about 9 rupees to 11 rupees. In China it’s 4 and a half to 5 rupees the cost of raw material. Nobody goes about mining, opening up mines and opening up like you know or having strategic partnerships like how China goes to Africa and then takes over the mining of a complete area.
The government in most countries don’t do that. So as a result most of the raw material for manufacturing the fluorochemicals also is controlled by China. So today if like SRF is there, Naveen is there. Okay, we feel that we have manufacturing in India. They still have to go back to China to buy the fluorospa or whatever the raw material is. They’re going to have to go back to the same guy. So what China does is they increase the cost of raw material. When they find that there is a safeguard duty like suppose if on R32 the anti dumping duty is there they’ll raise all the raw material cost that goes into manufacturing it.
So for the short run it is inevitable that most companies in certain fields will have to depend and work with China. Number one. Number two, how do you manage the fluctuation in our product fluctuations are over 100% meaning it’s. It’s about 300% increase is not unheard of. We have seen three cycles where the 300% increases. So basically the fluctuation in forex, the fluctuation in material cost and now the biggest problem will be the quota. What you saw on the 1st of January why the shares pricing went up for SRF Naveen was that suddenly the prices jumped up by 25%.
So when there’s a 15% quota cut, the price of material will go up because ultimately you can sell less. So you have to divide the cost over the remaining product. So how do we manage it? A lot of times the questions have been raised why do we have such high inventory level. So the inventory level is what allows us to offset the fluctuations. Being 30 years into the field, Stallion has never faced a time where we have failed in supply or in commitments, everyone else, every single company, multinational or Indian, including peer group, not one company can give this statement that they have not failed in supply multiple times.
And Stallion is the only company you can. Meaning if you have reach in the market you can ask not a single time in 30 years we fail the commitment and the reason is understanding the market, understanding the dynamics, knowing what is going to move pricing, what is going to move availability, knowing what is the seasonal challenges, etc. Meaning see when I say seasonal challenges I don’t mean hot and cold. Meaning you’ve got the storm season in the South China Sea, you’ve got regional tension somewhere. So already planning in advance that okay if something goes wrong, what’s plan B? So usually it all boils down to having higher inventory levels at the correct pricing.
So you have your raw materials stocked up so that allows you to offset any short term fluctuations.
Bhavika Singhvi
So my the next question is that as your revenue comes mostly from domestic so is there any plan to go like in export side you are planning something or it’s just like domestically there are like you have a lot of supply to cater.
Shazad Sheriar RustomJi
No, it’s we definitely have plans for export and also enhancing our footprint across other countries. Meaning we have plans for Middle East. We have plans. Middle east is more for accessing African sales. Africa is a major sail point but money is very insecure. Dealing is very unsecure in Africa. So usually you look at stepping points like Middle east from where you control the sales to Africa and other Middle Eastern countries, not necessarily Dubai or sales in Dubai. You’re looking, you’re setting up in Dubai but you’re looking at sales elsewhere also Sri Lanka. Now reason is also shipping is one of the biggest customers for from everything from firefighting, insulation, refrigerant, etc.
So when you have like India, Sri Lanka, Dubai, you basically you can manage almost like one third of shipping moving from this area which is a very huge market unit or the multi billion dollar company just built on catering to shipping. So we have plans but currently in this year, possibly in the half of next year we will not make any move towards it because having just gone through the IPO first we have our CapEx responsibilities to complete. Then we are looking at stabilization here also a backward integration opportunity that is currently there. So we are looking at that also.
So we would conclude all our plans here before we move out.
Bhavika Singhvi
Thank you very much.
operator
Thank you. The next question comes from Gurgaksh from Hni and Group. Please go ahead. A repeat question comes from Gurbaksh please Go ahead. There is no response. Ladies and gentlemen, if you have any question please press star and one on your telephone keypad. We have a follow up question from Sanket Saad, from Art aif. Please go ahead.
Sanket Sadh
Hi. So my first question is how much can the EBITDA margins expand next year and what do you think could be a sustainable margin in the future?
Shazad Sheriar RustomJi
Currently EBITDA margin and the PAT margins are much higher than for a company like us not physically currently manufacturing the molecule. These are excellent EBITDA and PAT margins that we have right now. No one in the similar grouping would enjoy these kind of margins, number one. Number two, we are definitely looking at enhancing the EBITDA and the fat margins by moving into like the semiconductor facility that would come up that would enhance the margins significantly. Even the HFO facility that, that would allow better margins. But currently I can’t give you any numbers because we would be starting the sales in this year, current year we would only enjoy 1/4 of the new facilities.
So the real difference you would see next year.
Sanket Sadh
Okay, fair enough. And can you please tell me a little bit more about the semiconductor facility. Do we already have some sort of arrangement with the private manufacturer who you would be supplying to?
Shazad Sheriar RustomJi
No, currently we were not in the semiconductor gas field. Number two, the electronics and semiconductor gas field. What we were, we were very marginally into it. What we are looking at is to become one of the big players like Linde or Global Gas etc in evm. Then in all the other products also like those that go into fiber optics, electronics and solar. So we are looking at gaining quite a good share in that segment. Currently we are not a player. So the good thing for us is all these will add revenue streams, give us a sort of a stabilization versus our current business cyclical nature and more important enhance EBITDA and PAT also because those places have a much higher EBITDA impact than our current business.
Sanket Sadh
Got it. So as for my understanding, at least for the next maybe one, one and a half years we won’t be seeing any sales to semiconductor like any sales from the semiconductor gases.
Shazad Sheriar RustomJi
No, you will. The last quarter of this year you’ll see and the next whole year you’ll see it.
Sanket Sadh
Okay, but I thought that there would be some sort of gestation period like you had mentioned in order to actually qualify to be a PS supplier.
Shazad Sheriar RustomJi
Okay, I’ll explain. Sorry. I mean you have to forgive me because many times in the flow of talking we forget that you are not from the field. So you know, we have to give more clarity when we are speaking. So I apologize. Let me explain it a little better to you. Now helium, helium is something that would be required by semiconductor units etc. High purity helium 6N helium is required there. But helium is also required for medical purposes. It’s used for like space, it’s used for research, it’s used for testing, it’s used for million other purposes other than semiconductor itself.
Now helium is a very big requirement in fiber optic cable manufacturing, etc. In fiber optics it’s a very huge requirement. Semiconductor issues. Now all your MRIs. Now simple, one of the big user groups would be like all your hospital MRI units. So someone like say Siemens or someone like GE or any of these manufacturers where they have the service requirements Pan India. So liquid helium is what runs your MRIs. So basically you don’t concentrate. Now even for the navy. Like the navy is one of the biggest users of. For ultra deep sea diving they need helium oxygen mixtures otherwise your lung will collapse at those depths.
So what happens is like you will have a tender of like 400,000 cylinders of the navy for deep sea diving, helium oxygen mixtures in various levels. Then you’ll have for like the MRI business, you’ll have for the fiber optics. Then any testing, any laboratory anywhere needs helium for testing in the gas chromatograph as a carrier gas, there’s like hundreds of thousands of cylinders going in that application. It’s not just your, how to say semiconductor unit that will require. You also have the ancillary businesses that require the product which don’t have a gestation period. That is why I have not said we will have 100% growth and we will grow at this scorching rate, etc.
I’ve given a very, very conservative estimate of 30, 35% because as soon as the unit starts, the first tanker of helium that comes in will be 26,000 kgs. You cannot hold helium. It has to get sold instantly. So basically as soon as it comes, you’re using liquid nitrogen to dampen any evaporation. The whole thing is in either vacuum insulated or flooded with liquid nitrogen to keep the temperatures at below -265 degrees. It’s entirely a cryogenic setup. And then you put it in containers, either insulated again vacuum insulated or insulated with liquid nitrogen. And these have to be rushed out immediately.
So your sales will start off instantly. You won’t have a meaning. The gestation period. The real. Now let me explain the real, the real business that will get set is where does a linde earn money? You’ll all have heard of Linde. Now where do they earn over the years? They are approved so say for semiconductor with the foreign company etc. So any new unit comes automatically. They have a qualification pre qualification. Now they still have to go through the qualification round but they will, it will be less than 1/3 the time that it would take us.
But once you get qualified like that the margins there it’s phenomenal. And not only the margins, the business is set. You don’t have any disruptions once it’s set. So ultimately you will work towards semiconductor businesses. But it does not mean that you will not have sales or there is not volume that will go into all the other requirements.
Sanket Sadh
Okay? Okay. Understood. Thank you.
operator
Thank you. We have a follow up question from Prabhal Jain from Smolding. Please go ahead.
Prabal Jain
Hi sir. So you mentioned that you are a forward integrated player in this industry and you are the only company. And you also mentioned that you plan to be backward integrated. So can you explain like what what exactly this mean in simple terms?
Shazad Sheriar RustomJi
Yes, basically forward integration and backward integration. Now SRF Naveen, they are backward integrated. They manufacture the molecule that they are selling. But they are not forward integrated. They do not have a pan India supply network. They are out of wherever the manufacturing facility is. They will send from there till Chennai also. They will send from there till Kashmir also. They will send it to NCR region everywhere from that one location. As a result the cost of transportation is four times, at least three times what it would be similar for us. Second, when you are doing everything from one facility, your manpower at that one unionized manpower at that one facility is very high.
300, 400 people. Now when you break it up and each of your facility is next to your customer just in time and below union strength it gives you a very different advantage than what it would to your competitors. So currently we are now we would be in six locations, number one geographically, in five locations. And the strength that it would give us is we’re just in time to every single customer that is there. Meaning we aim to be one hour away from any customer number one. Second, our movement of cargo anywhere would be in 20,000 litre bulk tanks.
Not in like cylinders or smaller packings or whatever. So what happens is the cost of transport, the cost of logistics, the cost of manpower becomes like almost one third. So when you get into the real competitive move that time if you’re not forward integrated you’re going to lack the. See today we don’t have the strength because we are not backward integrated. It is easy for us to go backward, but for already people who are backward integrated, to go forward it is almost impossible.
Prabal Jain
But backward integrated, you mentioned the molecules are derived from some critical metal or minerals which China only has control. So how would you be backward integrated? Because you would be using those molecules, I’ll tell you.
Shazad Sheriar RustomJi
See, it’s like this though. When you buy Fluoro Spa. Now suppose you want to make R32 gas. I’m taking the product that is manufactured in India. So like I said, out of 40 products we are working in, my peer group that I mentioned is dealing in five of those products only. And they manufacture two of those products. So we’ll speak, since we are speaking on manufacturing, we’ll speak like say R32. So R32, how is it manufactured? You have to take the basic raw material, fluorospar. Fluorospar is blended with hydrofluoric acid in a reactor with a catalyst.
And you get R32 as one component, you get dilute hydrofluoric acid as another, you get a waste stream that comes out. So now basically in the reactor, with heat, with, with the addition of catalysts, etc. You’re going to have the reaction. Now basic raw material is fluorospar. The biggest supplier is China today. So it does not mean that there are not other suppliers. Mexico is a major source. Then you have Vietnam, you have, you have other countries also. But other countries are very much smaller. The largest is Mexico and China. Now Mexico, Mexico. The problem is the mines are operated by a company that’s already in the gas field.
So the discomfort in buying from your competitor is there. That is why everyone relies on China.
Prabal Jain
One more thing about this, this business you mentioned that the focus is on aftermarket clients who make up 80% of the market share and deliver substantially higher profit margins than OEM. And OEM control 20% of this. So when we are talking about this, first of all, who are the aftermarket clients and how does the aftermarket service work?
Shazad Sheriar RustomJi
Like, I’ll explain. See whenever any new business. Now the HFO business that we’re talking of, so for next 10 years, for the first two years, hundred percent business would will be with OEMs. Then thereafter it will slow slowly. For the next five years, 80% of the business will be with OEMs. 20% will come for service requirement. Then after seven years, every year, then that percentage will start dropping. After 12th year it starts inversing where the aftermarket grows to 80% and the OEM business comes to 20%. Now in an OEM business you have to understand how the business is done, you sign a contract for the whole year, the dollar went up, you don’t get anything.
If the price jumped up 100%, you don’t get anything. Yes. If the whole market moves and it’s a major mess, then fine, after two months of dragging the supply, they will enhance the contract, but still nowhere near what the real cost is. So first thing is, you’re in a very tight, how to say position number one. Number two, as it is out of 100% of the pie, you can choose wherever you want. So why would you want to take a portion of the pie where the liability is the highest, earning is the lowest and mobility is the least.
So you will keep an OEM presence, but you will take a higher share from the aftermarket. It’s more lucrative, it’s got less liability and the price mobility is instant.
Prabal Jain
Got it, sir. Got it, sir. One more thing on your margins because so I’m sure we’ll be backward integrated going ahead, but till the time we are not like, obviously there will be some volatility in terms of the margin especially and I understand you have 40 gases. So like there’s a good bouquet of product and upcoming also like good product addition is happening. But can we expect like the margins are going to be volatile to certain extent because you won’t be able to pass it on immediately to OEM customers.
Shazad Sheriar RustomJi
We have no. See, you have to understand, we have never passed out the margins in that manner. That is what differentiates us from the others. There is a difference from a new company or a newcomer coming into a market and trying to understand and feel the way around. I am first generation in this. This company was started by me when I was 22 years old, number one, number two, 30 years. The core team from the company, the core team has been around over 25 years in the same field. We have never diversified or bought into oil or this or that.
We have concentrated on what was a core product. And we are today where we had, where our plan was that we will grow to this size, reach here, go ahead and go backward, etc. So we are, as per our plan, we have been moving perfectly in sync with that. Now, when you have so much of experience and knowledge, you know exactly what is going to happen. Meaning I can tell you exactly what’s going to happen two months from now, one month from now. Okay. There are certain irrationalities which are beyond anyone’s ability to foresee. But more than that, how the price movements would be, how the market movements would be There for us it’s first thing is experience.
Second thing is it’s more than experience or gambling. It is having a plan A, a plan B and a plan C. What happens if this happens? What happens if this happens? So you have seen all the eventualities that can happen now what are the eventualities that will happen? Okay, you might have like during the war, war scene, etc. So one of the things that we had to plan out was if war happens, the shipping definitely will shut in Mumbai or it will be prohibitively expensive. So immediately what we did was plan B was all shipping will get diverted to Chennai port.
Make sure that the tie up, the clearing agents, etc, the logistics team, everyone have the tie up there. Now when a Mumbatu facility starts, that would be a real asset. Because then without seamlessly we would be able to move into any port that we want. But what I’m saying is the planning starts from the level that if something goes wrong. What is plan A? What is plan B? What is plan B? A lot of your volatility gets removed in this.
Prabal Jain
Okay. Okay, sir. Great. So just one more thing. This Honeywell. Honeywell you have a distributorship agreement for refrigerant, right?
Shazad Sheriar RustomJi
Yes.
Prabal Jain
What sort of offline? Yeah, please go ahead. I mean I just wanted to understand what kind of revenue concentration we have for this client. Because you have a renewal coming up in December 2025 for this, right?
Shazad Sheriar RustomJi
I guess it’s sort of perpetual. Only there’s no renewal. Meaning it’s. That’s more paperwork. See, we’ve been with Honeywell 20 years. 2006 till date, we have with Honeywell. Now earlier it used to be it’s a non exclusive agreement. No, no American company signs exclusive agreement. So everything is non exclusive. But it pretty much worked as an exclusive agreement. Now you have to understand Honeywell had its strengths. In the early part of the 2000s, like from 2000 to 2015, they had a lot of strength. Now what happened is HFC business, India falls under the third world grouping.
So we are the last to change over. America, the first world changed over instantly. So what happens is now there’s no HFCS or very restricted, highly restricted HFCS used in like you in the west, in US, Europe, Japan, etc. The move out of HFCS will be much faster there complete move out of HFCs that will be in India. India will have a lag of 30 years. So what happens is now they have moved out of HFC and they do not have the earliest trends that they had in hfc. As a result the sales major part of the sales booming in India still HFCs.
So predominantly right now their share of business comes down number one. Number two hfos. Whether it’s invented by them, patents are with them. Very strong positioning globally is with them. So hfos as it starts growing, it’s a first mover advantage. With us it’s restricted to all. Meaning I can sell HFOs in India. My peer group cannot sell. They can’t sell one kilo.
Prabal Jain
Madam. I mean you as in you or Honeywell?
Shazad Sheriar RustomJi
Honeywell as in true stallion. No sale is done. It can only be done by us.
Prabal Jain
Okay. So you will be the exclusive supplier for that hfo.
Shazad Sheriar RustomJi
Again like I said, no American company signs anything exclusive. But over last 20 years it. It appears to be pretty much that way. Okay, great.
Prabal Jain
Great. Okay sir. And the last is on your cash flow. I mean what kind of cash flow cycle do we understand for our business?
Shazad Sheriar RustomJi
Meaning.
Prabal Jain
Meaning like crazy supply like hundred crore worth of gases in a month. Like when do we expect the payments to come in?
Shazad Sheriar RustomJi
Normal. See normal. Most of the when we moved segments like when we moved to Dao, when we moved to Hosang, when we moved to JCI train etc. We moved the industry segment. Earlier we were strongly with like set people like LG Voltas, Bluestar, etc. So there it was like a 30 day within the terms were 30 days but the cycle was usually about 60 days and that flow was there. Though as we move to newer products and newer business cycle alignments, the new customers are all on 120 to 160 day cycles. Now we moved all of them into vendor finance and discounting.
So the. The payment cycle should improve significantly. But currently they’re at 90 days average. Okay, okay. Okay. Great. But we are, we are looking at moving it faster out because all of them we have access the vendor financing. So like Dow has Citibank discounting the bills at no recourse to us. So the discount and they make the payment immediately. So we moved. Think we have moved things like that to get better realization faster cash flow turnarounds.
operator
Thank you. So last question for the day comes from Bhavika Singhvi from Nivishai. Please go ahead.
Bhavika Singhvi
Thank you. So my question is could you please share the current revenue split between after sales service and OEM sales.
Shazad Sheriar RustomJi
For us it is majority majorly we are concentrating currently. See you have to understand how we, how we look at it is where is the major funding, major revenue, major profitability going to be there. So we are going to move majorly in between OEM and aftermarket for the next one year. Currently aftermarket reliance is 70%. OEM is 30%. Now when we start with the specialty gas segment and the HFO segment again we will move 100% back to OEM. Because HFO there’s no aftermarket, it’s all OEM and specialty gas again it’ll all be oem, there’s no aftermarket.
So we would keep moving in between the two segments. Currently ours is 70% driven as aftermarket.
Bhavika Singhvi
And for FY26 how much sales are you expecting? Like any like order book or something? Like how many contacts stadium have currently in hand.
Shazad Sheriar RustomJi
Let me put it this way. After the the year started off April, the year started off very beautifully I think for all industry. Everyone this current little border issue that after Pahelgam that happened, unfortunately it has had its ripple effect on business. It’s not that it’s not without totally without consequence. So from what was a sterling quarter that was starting off it got subdued very badly. Number one. Number two, the year continues with the same forecast that we have 30 to 35% growth.
Bhavika Singhvi
Okay, and is there any like can you share the numbers regarding metric tons stadium can produce through its capacity? Like what is the capacity of stadium currently without the expansion we put it in the rsp.
Shazad Sheriar RustomJi
Each plant has capacities. I mentioned those capacities. We would. You know we’ve explained many times that the capacity you have to understand for a blending or a unit like us. So in India the requirement in summer per month it would be like 4,000 tons. The same requirement for six months of the year is 400 tons. So now which capacity will you build to meet peak demand or to meet the low demand so many times like companies like SRF Etc. Also when the demand was 3000 tons in India they still set up a 10,000 ton plant.
Because 10,000 tons plant divided by 12 means 800 tons a month. And in summer even during the 3000 tons the summer months would be like 1000 tons. 2000 tons would be in the summer months. So they would never be able to meet the summer demand. So the capacities were enhanced and remaining they started exporting out. So if you need to meet the local demand this business that. That is why this business is very difficult and not easy to handle or understand because the difference between season and off season or peak demand and non demand is like 10 times.
Bhavika Singhvi
That’s all. Thank you so much.
operator
Thank you. I would now like to hand over the floor to management for closing comments.
Shazad Sheriar RustomJi
I would like to thank everyone for the call today. It has been a real good journey post the IPO till today. We are happy that after the IPO our growth story continues number one. Number two all the plans etc that we have got onwards for growing the company for the vision for how we want to make it absolutely independent of cyclical fluctuations etc. By being across so many business segments and then anchoring ourselves so firmly so such that it is how to say most the company gets more structured, the company gets more integrated and the company’s operating margins Pat EBITDA etc.
Improve in line with expectations of all investors also and the returns also show what work we have put in. We look forward to making sure that we have a lot more success stories like we had in this last quarter and we would be in touch with you all.
operator
Thank you sir. On behalf of Venstra securities. That concludes this conference. Thank you all for joining us. You may now disconnect your lines.