Subros Limited (NSE: SUBROS) Q4 2025 Earnings Call dated May. 23, 2025
Corporate Participants:
Pramod Kumar Duggal — Chief Executive Officer
Hemant Agarwal — Chief Financial Officer and Senior Vice President, Finance
Analysts:
Annamalai Jayaraj — Analyst
Arjun Khanna — Analyst
Abhishek Jain — Analyst
Aashin Modi — Analyst
Mihir Vora — Analyst
Punit Jhaveri — Analyst
Presentation:
Operator
Please wait while you are joined to the conference the conference is now being ladies and gentlemen, good day and welcome to the Q4 FY ’25 Post-Results Earnings Con Call of Subarros Limited hosted by Batlivala and Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Jaraj from Batlivala and Karani Securities India Private Limited. Thank you, and over to you, sir.
Annamalai Jayaraj — Analyst
Thank you, Aldri. Good morning. Welcome to Limited 4Q FY ’25 and FY ’23 post-results conference Call. From Subros Limited management. We have with us today Mr Amar Dugal, Chief Executive Officer; Mr Kumar Agarwal, Chief Financial Officer and Senior Vice-President, Finance; and Mr Singh Gil, Vice-President of Finance. I’ll now hand over the call to Mr for the opening remarks to be followed by the question-and-answer session. Over to you, sir.
Pramod Kumar Duggal — Chief Executive Officer
Thank you thank you,. Good morning, ladies and gentlemen. Welcome to investor call for quarter-four FY ’25. The Indian automobile industry showed a resilient and broadly positive performance in FY ’25. The Singra Vehicle achieved an all-time high sales-driven by the growing performance of and preference of utility vehicles. However, the commercial vehicle segment faced headwinds and recorded a slight decline due to the financial constraint and uneven fleet demand. Overall, automotive sector grew by 5.14% during the quarter-four and 9.21% in 12 months period. Our passenger vehicle segment has grown by 4.11% in-quarter four and 3.71% in 12-month period. It is the first time that PV sector has crossed a 5 million vehicle production as well as sales in one fiscal year with a robust growth of 14.66% in SUV segment. Electric vehicle continued their upward trajectory of gaining greater market penetration, especially in two-wheeler and passenger vehicle categories, electric vehicle EV sales in FY ’25 reached 1.97 million units, marking a 17% year-on-year growth. Our CV segment industry, including truck and buses have also registered a growth of 4.42% in-quarter four and 0.3% growth in 12-month period. However, CV segment has registered 1.5% growth in domestic market and 56% growth in export market during quarter-four. So has stayed committed to driving innovation and growth, which are crucial for us driving the future. Subross has registered a sales growth of 9.3% in-quarter four and 9.7% in 12 months basis. In this growth journey, CV segment truck has again played a key role, which is 35% sales growth in-quarter four and 38% in 12-month basis due to new emerging sector of Aircon in last mile connectivity trust. There is 36.49% improvement in-quarter four profitability and 44.61% profitability improvement in 12-month basis as against the performance of corresponding period of last year. The results are mainly because of aggressive push in our improved internal efficiencies and localizations, which are consistently reflecting in our results. The results of quarter-four FY ’25 shared yesterday with the stock exchange and posted on our website also. Let me elaborate the summary of results one-by-one. Subros has performed better than the industry in-quarter four FY ’25, a revenue growth of 9.25% with a significant improvement in margin is a result of aggressive push of our operational efficiencies and cost-on efforts. The company has achieved a revenue of INR908 crores during quarter-four and INR3,368 crores during 12 months of this year. Our share of business in passenger vehicle air-conditioning market is 42% in the quarter and share of business intra KC and Blow segment is also 43%, which is recasted based on the new definition of N1, N2, N3 categories based on the new regulation. And in the bus AC segment, it is 16% in this quarter. Now I’ll talk about the operational performance specifically. The company has realized EBITDA of INR99.22 crores in-quarter four of FY ’25, which is 10.96% of the net sale as against EBITDA of INR80.86 crores, which is 9.76% of the net sale-in corresponding quarter of the last year. The EBITDA realized in the year is INR343 crores, which is 10.22% of the revenue. This is a — there is an improvement in EBITDA by 22.72% as corresponding quarter and 22.61% as compared to the annual results. Profit before-tax in-quarter four is INR61.83 crores, which is 6.83% of the net sales and annual profit before-tax is INR203.45 crores, which is 6.06%. Profitability before-tax with the corresponding quarter for the last year is improved by 36.49% and annual growth is 44.60%. Profit-after-tax in-quarter four FY ’25 is INR46.19 crores, which is 5.10% of the net sales and profit-after-tax for the year is INR150.39 crores, which is 4.48%. PAT margin with the corresponding quarter of the last year is improved by 50.57% and 53.98% for the year. Now I’ll talk about the business update. Over the past few quarters, we have been delivered a consistent improvement in the financial performance, including the robust growth in EBITDA, PBT as well as PAT. All is backed-up by the steady rise in sale as well as our internal efficiencies and our aggressive push on the localization. Our focus is now to further improve this by managing internal efficiency better and optimizing on the capacity utilization. We are also expanding our product portfolio and investing into advanced technologies to meet the rapidly evolving the need of automotive sector, especially in electric and hybrid vehicle space. Our alternative-fuel initiative, including CNG, hybrid and EV components are gaining traction and we are expecting that this will grow further. Right now, almost 20% of the turnover is contributed through these kind of products. In alignment with the Ministry of Road Transport and Heavy Industries regulation mandate for AC cabin in all new trucks from October ’25 in end-oc category, we are actively working on capturing the large share of this segment. We have almost secured businesses which are now in the ramp-up stage for start of production. The railway segment has also appeared as a robust growth driver for Subros. We have almost 35% growth in this segment. Our large tender, which we have secured last year, 50% of that is delivered during this year. Looking ahead, we are excited about the projects on the horizon, particularly in upcoming plant of Karkoda, which marks a key milestone for our journey towards sustainable manufacturing. We already updated you about the investment proposal, which we have already-approved from the Board in last two quarters. The land acquisition is already completed and we have started construction activity on the site. This would be a key strategic project for us in terms of expanding our capacities and also in terms of automation. Before I conclude, let me summarize the overall financial results once again. Revenue from operations INR908 crores with a growth of 9.25, annual revenue of INR3,368 crores, growth of 9.67%, EBITDA of INR99.22 crores in-quarter with a growth of 22.72%, INR343 crores for the year with a growth of 28%, PBT of INR61.83 crores in-quarter with a growth of 36.49% and INR203.45 crores with an annual growth of 45%, PAT of INR446.20 crores in-quarter with a growth of 50.57% and INR150.39 crores with a growth of 54%. Based on the above results, the Board has recommended dividend of 130% to the shareholder subject to the shareholder approval.
Questions and Answers:
Operator
Thank you, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Arjun from Kotak Mahindra Asset Management. Please go-ahead
Arjun Khanna
Hi, thanks for taking my question and congratulations, sir, a very good set of numbers. Sir, the first question is on the AC cabin mandate. So by now, we would have won orders which we would have started put into production. So could you just help us understand what would our market-share be at this point in time and how do you look at profitability from this segment?
Pramod Kumar Duggal
Thank you,. So this segment, we have been pursuing for last almost 1.5 year to pursue for order booking in this segment. We have already booked almost orders worth INR150 crores and we will be crossing share of business in this particular segment, more than 50% in coming year. So from the margin perspective, they are more comparable as compared to the passenger vehicle overall business domain. So there is no differential as such. But of course, the overall revenue will substantially increase even though industry is muted, but since AC penetration would be now end-to-end three category would be 100%, so that would be a growth driver for us.
Arjun Khanna
Right. So this product ramping-up will not dilute margins per se. And we had earlier stated our goal over a period of time, three, four years to reach 12%, this should help us in that journey.
Pramod Kumar Duggal
Of course, that will help us because that will also contribute to operational efficiencies as well.
Arjun Khanna
Sure. Sir, the second question is regarding our margins, I think we have now crossed 10% very well. In terms of — is there any forex impact or one-time element because in employee costs seemingly are lower. So are there any one-offs for this quarter, the 4th-quarter?.
Hemant Agarwal
So there is no hedging impact. So there is no impact due to the restatement of the ForEx liabilities or foreign currency exposure.
Arjun Khanna
Sure. And on the other line items of employee and other expenses.
Hemant Agarwal
So implying other expenses, what is your question? Is it higher or it is lower?
Arjun Khanna
No, it’s seemingly lower as a percentage of sales. So is that operating leverage playing out for the company? Is that the right way of reading it? There is no one-time impact?
Hemant Agarwal
So it is not a one-time impact with the increase in the revenue in terms of the percentage implied cost seems to be lower. And also due to the operational efficiencies and relay of the manpower cost also has come down.
Arjun Khanna
Sure. Sir, my last question after this, I’ll come back to the queue. Please go-ahead, sir.
Hemant Agarwal
Go-ahead.
Pramod Kumar Duggal
Go-ahead.
Arjun Khanna
Sir, in our Karkoda project, so we had mentioned that we are probably going to be spending INR150 crores for this year. Are we on-track with the project at this point in time?
Pramod Kumar Duggal
Yes. Yes, we are on-track on this project. So construction activities are in-progress now. So we have a plan to start our production next year, first-quarter. So at this moment, everything is in-place.
Arjun Khanna
So this year, our capex would be roughly INR270 crores, INR150 plus the INR100 crore INR120 which we spent per year. Is that the right way of looking at it?
Hemant Agarwal
Yes.
Pramod Kumar Duggal
Yes, that’s right.
Arjun Khanna
Perfect. Thank you and wishing you all the best, sir.
Pramod Kumar Duggal
Thank you.
Operator
Thank you. A reminder to all participants, please press star and want to ask a question. The next question comes from the line of Abhishek Jain from Alpha Accurate Advisors. Please go-ahead.
Abhishek Jain
Hi, thanks for opportunity and congrats for the strong set of numbers. Sir, as the EV penetration is gaining momentum right now, so how much you are ready to leverage the benefit of it. If you can throw some more light over there.
Pramod Kumar Duggal
Thank you, Abhishek. So EV penetration for us, it is commonly for strong hybrid as well as EV with respect to our product application is concerned. So we are focusing on green mobility or green fuel per se, that is an important parameter for us. Almost 20% of the total revenue is now contributed from these kind of green mobility segment per se. And we are now gearing for — gearing up for more product range to be introduced in this segment so that in next two to three years when this EV penetration is much more aggressive at that time we will have long-term benefit.
Abhishek Jain
So as the content per vehicle will increase significantly in the EVs and Maouti is also going to launch also launched with EV. So just wanted to understand how much you are ready for supplying the product for them and how much increase in the content per vehicle is expected over there?
Pramod Kumar Duggal
So we are ready for the EV project also. I think the small SOP element have already been seen now in this quarter and it will ramp-up now further. So content per vehicle for sure will increase now because in EV vehicle, content per vehicle is higher than the ice-based vehicle. So I’ll not be able to quantify exactly, but yes, around 1% to 2% of overall vehicle contribution will increase.
Abhishek Jain
1% or 2%, or 1x or 2x
Pramod Kumar Duggal
No, no, that is without the electric compressor. That’s why I’m referring to without electric compressor, because if it is electric compressor then it would be more than two times. So right now I’m excluding the electric compression
Abhishek Jain
Okay, sir, and sir, in-home AC business basically you have slowed down your business, but it can provide a good scale to you. So do you have any plan for the medium-term turn-in the home AC business?
Pramod Kumar Duggal
I think, yes, we are focusing on that, but right now we have muted because right now the whole action is to improve the margins because if we mix that segment, of course, there would be impact on overall margin. It will be slightly lower. But if we have to — as an organization, if we have to drive top-line, then that segment growth would be a key contributor. But right now, we are trying to stabilize our margins first.
Abhishek Jain
Okay. And in the CV business, basically you had done, I think that 35% growth. So last year it was around INR130 crores. This year is expected to be around INR175 crores in FY ’25. So in FY ’26 and the order book is around INR150 crores. So can we surpass the INR300 crores kind of the revenue from the CV and the buses segment?
Pramod Kumar Duggal
So Abhishek, since SOP is happening in the mid-year, so in FY ’26, we’ll have only half year impact only. But FY ’27, when we see the full-year and if industry grow because this year we expect this industry would be muted and the growth driver for us will be only the AC penetration becoming 100%. But if growth also and AC penetration 100%, we see a I think substantial growth in this segment. So I’m not confirming 300 as a number, but of course, from the current level, it may be maybe around 50% to 60% growth coming in.
Abhishek Jain
Okay. And my last question on the passenger vehicle AC segment. So how — what is the revenue in this year in passenger vehicle AC segment and how do you see growth where the industry participants are saying that 3%, 4% growth on the overall volumes in the domestic side or although that’s going to be better. So just wanted to understand how you would be able to outperform what are the new business wins, which can give you substantial outperformance versus the industry.
Pramod Kumar Duggal
So the PV segment AC product we have done last year roughly INR2,700 crores and ECM is almost INR480 crores or so. So our growth in this segment is 8% as against the industry performance of around 4%. So we have done double of the industry. There are two reasons to that. One is that, of course, the content per vehicle is increasing now because a lot of auto ACs are getting introduced as against the manual AC. So there the content per vehicle is increasing. That is one. Second is our EV penetration. And a third important point is the share of business in few OEMs where we are substantially progressing. So that is also a contributor. But as you said that in FY ’26, the industry growth is not expected as the earlier trend are. So we are expecting 1% to 3% growth subject to the market condition and geopolitical condition. But still we will be doing better than the industry performance. That’s how we have been striving for last four, five years.
Abhishek Jain
Thank you, sir. That’s all from my side.
Operator
Thank you. The next question comes from the line of Ashin Modi from Canara Robecco. Please go-ahead.
Aashin Modi
Yeah. Hi, thanks for the opportunity and congrats on good set of numbers. Sir, my first question was, so you said you are supplying for the new EVs of. Could you tell us which are the components which you are supplying and going-forward, which are the products which you’re developing? So there are three, four key elements which are there as a part of the AC. Currently what we are supplying and what we plan to develop going-forward.
Pramod Kumar Duggal
So in electric vehicle, we will be supplying, pipe and shout module.
Aashin Modi
Okay. And any plans on the compressor side of things?
Pramod Kumar Duggal
That is still in pipeline. As I mentioned before also, compressors require a minimum breakeven point of 0.5 million of capacity. Still that volume in India EV passenger vehicle is not available and we need to be watchful of that because large investment is required. Once this industry will be projected to almost 1 million of EV vehicle, in that case, 50% share of business with 0.5 million, we will definitely kick-off this project for localization in India.
Aashin Modi
Got it. And sir, my second question is regarding the margin trajectory. So we’ve 9.5% margin for the full-year. Now going-forward, how do you see — I mean, so we are doing this CapEx which in almost INR150 crores of capex next year. And also in the last cycle, we saw that when there were some issues in the global supply-chain, there was — there was some cost — some elements which are not price pass-through, their cost increased. So any impact which we expect going-forward of these two things which should be there?
Pramod Kumar Duggal
So two questions you have asked. One is on the margin. I think I need to correct you, margin is 10.22% in the financial year. So we are now continually improving on that and our efforts are now to reach to the next milestone. As against your second question of global supply-chain impact, yes, it was very-high in FY ’24, slightly muted down or slightly on a declining trend in FY ’25. Right now, whatever we could negotiate with customers as one-time settlement for all this impact has already been done now. And since the trends are now softening, it will not be a major impact as of now in case irrespective of the fact that right now, whatever costs have already been factored is part of our normal cost now. So we are watchful on that situation.
Aashin Modi
Okay, got it. Thanks, sir. I’ll join back the queue.
Operator
Thank you. A reminder to all participants, please press time one to ask a question. The next question comes from the line of Mihir Vora from Equirus Capital. Please go-ahead.
Mihir Vora
Yeah. Thank you sir for taking my question. So basically, sir, if I see the working capital cycle, it seems to be a bit stretched over last two years. And if you compare it to over the last four, five years, the working capital cycle has been a bit stretched. Even in this year, we see datas have slightly increased higher. So any reason to this is some kind of you know, is it because of the new segments we are entering into or some changes with the company agreement? Can you throw some light on that? The working capital cycle?
Hemant Agarwal
Working capital case is higher because of the realignment of the credit terms with the customer. So earlier we were taking payment with the shorter period. Now it has been restated for a normal credit period. That has resulted in increase in the receivable of more than INR100 crores. Then the working capital cycle is higher. If you see the other elements of the working capital, that is more or less same,
Mihir Vora
Right. And this will continue going ahead as well at the similar levels.
Hemant Agarwal
From this financial year, if you come — if you benchmark ’24 ’25 for future years, it will continue in the same direction.
Mihir Vora
All right. Okay. And my — another question is on, so basically during the approval, you had mentioned in that you would be taking around 75% of the debt for investment into the project. So does the stance currently also remain same, we would be taking around, INR100 crore INR120 crore debt going ahead or we will using our internal cash or investments have also increased in the year. So how do we look at the capex allocation?
Hemant Agarwal
So investment is INR150 crores, which company intends to avail 75% through the term-loan borrowings, which is crore. As of now, we have not taken any loan, but during the financial year, we company we intend to go up to INR112 crores term-loan or it may be lower also based on our internal cash accruals.
Mihir Vora
All right. But up to
Hemant Agarwal
INR112 crores as a term-loan for this project. And all the rest of the capex will met out-of-the internal accruals.
Mihir Vora
All right. All right. And okay. And just a follow-up to previous participants’ question on the — like sir, mentioned that the auto AC penetration is slightly increasing now. So just some light on that whether what would be a broader penetration number now and what would be the — how much would be the content per vehicle increase here in terms of from manual AC2 and auto AC
Pramod Kumar Duggal
So normally manual is AC, especially the impact is only in the HUX side. So HUX pricing differential between auto to manual is around 5%, 5% to 7%. So if auto AC penetration is increasing, that much incremental revenue per vehicle will come to us. So that’s how we are expecting now much more auto aircon will be in the market. And especially when you are exporting a more vehicle — export is almost 90% with auto economy.
Mihir Vora
Okay. And in domestic, sir, any idea in terms of any number here?
Pramod Kumar Duggal
I don’t know the percentage, but I think earlier it was around 25% to 30%, it has already crossed 40% now.
Mihir Vora
Okay. Okay. So auto AP will be. Okay. And sir, my last question would be on what would be the import content as a percentage of RM cost in this year in FY ’25?
Pramod Kumar Duggal
So import content would be, I think, 60% to 18% of the total revenue as of now. We are consistent in that. And as I mentioned before also that our effort now for more localization because of many supply-chain disruptions are happening across the globe now. So right now, we are at this level, but going-forward, I think we will push much more aggressive on localization.
Mihir Vora
All right, sir. Thanks. That’s all from my side. I’ll get back-in the queue. Thank you.
Operator
Thank you. A reminder to all participants, please press time one to ask a question. The next question comes from the line of Puneet Javeri, an Individual Investor. Please go-ahead.
Punit Jhaveri
Yes, sir. Hi, thanks so much for the opportunity. I just wanted to understand in terms of comparison with EV specifically, you mentioned 20% share of alternate fuels. So is there — you mentioned about like certain parts of which has the difference essentially between realizations of an ICE versus an EV. Could you just elaborate a little bit on that and how should we see this percentage of 20% going-forward because the CNG share has been increasing for all players, so that would be, I think the fastest growth. But could you just elaborate a little bit on your products specifically for ICE versus the alternate fuels? Thank you.
Pramod Kumar Duggal
Okay. Thank you, Puneet. So I’ll little bit elaborating this subject for a better understanding. So in green fuel, there are three elements. One is CNG, second is strong hybrid or mild hybrid and third is on EV side. So our product between ICE and CNG is not differentiating because finally, CNG is driving the engine. And finally from engine, all the thermal products will get driven from. So main difference is coming from strong hybrid and EV. So a key differentiator in strong hybrid and EV is engine cooling module, which will have a battery cooling element also. HVAC, which will be more for battery cooling as well as for the cabin side also. And third major element is compressor, which is in ICE is the engine drive and in EV, it is battery drive. So these are the key differentiator. So when we say we are penetrating more on EV or strong hybrid sides, so major contributor for us, what product we already have is ECM and HVAC. And accordingly, pipe also is differentiating because the scope is almost double 4 pipe for cabin AC and 4 pipe for battery cooling also. So these are the three key differentiator and of course, compressor is also a big one, but compressor we are not supplying for these two category of vehicle. So these are key differentiator what I said before on the value differential.
Punit Jhaveri
Got that. And compressor, I think you didn’t mention that you need the market to expand a little bits of other points. One other question I had was in terms of both for commercial vehicles and railways. So for commercial vehicles, now that the new regulation has come for ACs, I think you are expecting orders you already started to incur as well. Based on these orders currently, as of FY ’25, what would be the company’s market-share and who do we compete with your because it’s still a very new segment for ECs within trucks. So who would be the actual competition here for us.
Pramod Kumar Duggal
So I already replied partially this question before that we are intending to have more than 50% market-share in truck aircon market as such. And as you also mentioned about that this segment is going to grow as the IC penetration is increasing. We secured most of the business now and we are in the phase of preparing for startup production. And the official date for this rollout is October ’25, but OEMs may start production slightly before that. With respect to the competition, there are many other players also. There are — Mahalay is there, Air International is there. Is there, so there are competition available in this market, but we are insulating ourselves with the — with respect to the technology and the product and the availability closer to the customer facility. That’s the key advantage what we have.
Punit Jhaveri
Understood. And one last question, specifically on railways and please pardon me for not knowing this, what is the current product that we give for railways specifically? Is it air-conditioning product itself? And is that specifically for modes like one day or something like that? Because we also see a lot of EMS players who work-in that space as well. So if you can just elaborate a little bit on your opportunity for railways because still a — and how much is it currently in percentage of revenue, if there’s anything that you can quantify?
Pramod Kumar Duggal
So railways. When we started this segment, it was mainly for driver cabin air con. And that was the drive at the time. Government wanted all the driver cabins to be air con as the first preference. And after that, we developed product for coach air con. We started this segment of coach air con last year. Now we are progressing for product application by Vande Bharat and for metro coaches as well, so that is in pipeline now.
So last year, we have done a railway business of around INR17 crores, which is not significant in terms of overall contribution to the revenue, but with respect to the orders in pipeline, we have almost around INR40 crores of tender business what we got. Out of that, INR17 crores is delivered. And balance INR23 crores will be delivered in maybe first 3 quarters or so.
Punit Jhaveri
And any aspiration that you have for this business? Is this also because when you go into coach ACs, that of course gets a little bit more competitive with other players from the cool impact. So will that business be in is more of a medium-term opportunity. Anything that you can tell us about that?
Pramod Kumar Duggal
So we are going very aggressive on this railways segment expansion, not only limited to AC but beyond also, but since it is a tender-based business, you will not have consistency of business month-on-month. It would be one tender to be delivered in a period of 2 quarters and then subsequently waiting for next quarter, but major part is on the product development side. So that’s where our aspiration now are basically to expand the product range beyond coach AC, for high application for high value addition.
[Abruptly Ended]