Metrics raised 1
- FY27 volume growth (ex-material) guidance raised to 12-15% (from earlier ~10%)
Alicon Castalloy Limited - Q1 FY27 Earnings Call Summary Friday, 14 Aug 2026, 11:00 AM IST
Event Participants
Executives - 3
Sumit Bhatnagar (Group CEO), Vimal Gupta (Group CFO), Mayank Vaswani (Consultant, CDR India)
Analysts - 6
Atharva Deshmukh (MM Capital), Avinash Nahata (Parami Financial Services), Bhavya Doshi (Sushil Finance), Raghunandhan NL (Nuvama Institutional Equities), Riddhesh Gandhi (Discovery Capital), Unidentified Analyst (SJ Investments)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹579 crores | +37% YoY, +17% QoQ; first-ever quarter crossing ₹500 crore sales |
| Revenue Growth (Consolidated) | +37.7% YoY | Adjusted for material inflation, underlying volume growth ~17.5% |
| Revenue Growth (Standalone) | +43.6% YoY | Adjusted volume growth ~22% |
| EBITDA | ₹55 crores; margin 9.5% | Margin vs FY26 full-year 11.4%; adjusted EBITDA margin 11.4% excluding aluminium impact |
| Profit Before Tax | ₹18 crores | +45% YoY |
| Profit After Tax | ₹12 crores | +23% YoY |
| Capex (Q1 FY27) | ~₹40 crores | FY27 planned ~₹150 crores, incl. ~₹70 crores for new Shikrapur facility |
| Order Book | ₹8,450 crores | Executable over 6 years (FY26-FY30/31); EV ~16%, hybrid ~12%, structural ~10%, balance ICE/2W; non-auto ~2% |
| Tonnage (Q1 FY27) | 9,124 tonnes | +124 tonnes YoY (standalone); FY26 standalone ~34,000 tonnes |
| Value Addition Growth | +17.6% YoY | Driven by shift to higher-value machined products |
| Capacity Utilization | >90% | Approaching full utilization, driving new investment |
| Commercial Vehicle Growth | ~26% YoY | Supported by conversion of recently acquired businesses to mass production |
| Machining Share | 65-70% of tonnage | Machined vs. non-machined; expected to increase in-house machining |
Geographic & Segment Commentary
India (Domestic): Strong growth driven by program ramp-ups, new business conversions, and new customer additions across passenger vehicles and commercial vehicles. The company intentionally reduced two-wheeler market share by 1-2% to reallocate capacity toward higher-value products in PV, CV, and industrial segments.
Europe (Slovakia): Softer quarter as certain mature programs reached end-of-lifecycle, with new programs yet to ramp up. Management expects the decline to persist for one or more quarters, with reversal beginning in Q4 FY27 as new programs (including the EXL acquisition from a global OEM) enter mass production. Slovakia remains strategically positioned as one of the best European locations for foundry investment, with room for capacity addition via automation.
Non-Automotive: 2% of executable order book (₹1,200 crores per management). A dedicated standalone sales/marketing vertical has been created. Won HVAC compressor housing business for global data centers (starting India, expanding to Europe and Mexico), plus first-ever aluminum tractor cylinder head (world-first solution replacing cast iron) for the world's largest tractor manufacturer. Management targets meaningful order-book composition change by end of FY27.
Company-Specific & Strategic Commentary
Reset-Refocus-Rebuild Philosophy: New CEO's operating framework. Reset focuses on "islands of excellence" and strengthening people policies; Refocus targets value addition and operational efficiency (conversion costs, energy, tooling, rejection, logistics); Rebuild covers capacity, order book, and customer base expansion.
Capacity Investment - Shikrapur Facility: ~₹125 crores investment over 2-3 years in leased 1.36 lakh sq ft facility; GDC, LPDC, and machining capabilities; SOP targeted March 2027; expected ~₹500 crores annual revenue within 4-5 years. Facility to start at 3,000 tonnes capacity, scalable to 7,000 tonnes. The company hinted at additional capacity investments in a different part of the country to be announced soon, plus potential inorganic growth announcements by Q4 FY27.
Order Wins & Customer Additions: Acquired businesses worth >₹450 crores potential revenue over 5 years (auto + non-auto) in the quarter. Entered two large Indian PV and CV OEMs with ~₹850 crores of booked business over next 5 years. Growing pipeline of new global OEMs. New business order book is ~40% exports (30% deemed exports).
JLR EV Ramp-Up: Dispatches have commenced at 600 sets/week, with indication of increase from January 2027 (figure undisclosed due to confidentiality). Volumes expected to peak by Q3 CY2026; marginally reflected in Q1 results.
European Technology Investment: Investments in latest technologies at the Slovakian plant positioned as a high-technology facility for European OEMs, with new programs under development from multiple European automotive giants.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 Revenue Growth (volume, ex-material) | 12-15% | Upgraded from earlier ~10%; Q1 achieved 17.5% (consolidated); management expects similar growth rates for next several years |
| EBITDA Margin | +1% improvement in FY27 | From customer price recoveries (Q2/Q3 closures) and internal cost initiatives; adjusted Q1 margin at 11.4% excluding aluminium impact |
| Capex (FY27) | ~₹150 crores | Includes ~₹70 crores of ₹125 crore Shikrapur project; pace aligned with customer program progress |
| Underlying Top-line Growth (CFO) | 8-10% FY27 | Stated in financial priorities; differentiated from management's 12-15% volume-led guidance |
| New Facility SOP | March 2027 | Shikrapur leased facility; all orders for the facility already committed |
| ROCE | ~15% (near-term trajectory) | Up from 10.7% in FY26; driven by mix improvement, operational efficiency |
| JLR EV Volumes | Increase from Jan 2027 | 600 sets/week currently; undisclosed higher rate telegraphed |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Geopolitical Middle East developments caused sharp movements in aluminium, gas, cooling, energy, and logistics costs in Q1. Aluminium is contractually pass-through with timing lag; ~1% EBITDA margin improvement depends on closing price recovery discussions with customers in Q2/Q3. |
| Margin Recovery Timing | Freight costs face two models (OEM pickup vs. supplier-borne); not all increases yet recovered. Management expects partial closures in Q2 and Q3 FY27, creating potential near-term margin volatility. |
| European Transition Phase | Legacy programs at end-of-life not yet fully offset by new program launches; softness may persist 1-2 more quarters. New programs (EXL, additional OEMs) expected to reverse from Q4 FY27, but execution risk remains. |
| EV Program Delays | Historical order book execution suffered from slower-than-expected EV adoption and extended SOP timelines (e.g., JLR). Management has shifted focus to faster-realization ICE/hybrid products while maintaining EV optionality. |
| Capacity Constraints | >90% utilization limits near-term growth; new capacity (Shikrapur) only SOP by March 2027 while >₹450 crores of new orders were booked in Q1 alone. |
| Customer Price Pressure | Competitive intensity remains high in automotive supply chain; management asserts technology differentiation (e.g., complex cylinder heads) allows pricing power but acknowledges industry-wide annual cost-down pressure. |
Q&A Highlights
Europe Operations Outlook & FY27 Revenue Guidance
- Question: How will Europe perform near-term, and what is the FY27 consolidated revenue growth outlook? (Raghunandhan NL, Nuvama)
- Answer: European decline may persist for 1-2 more quarters before reversal from Q4 FY27; EXL business and new European OEM programs will drive recovery. FY27 volume growth (ex-material inflation) guided at 12-15%, with similar growth expected for the next few years. Organic capacity investments will be concentrated over the next two years; inorganic growth announcements expected by Q4 FY27. (Sumit Bhatnagar)
Margin Trajectory & Cost Recovery
- Question: What is the margin outlook, and how much of cost inflation will be recovered from customers? (Raghunandhan NL, Nuvama)
- Answer: Adjusted EBITDA margin for Q1 was 11.4% (ex-aluminium impact), matching FY26 full-year level. Management expects at least 1% EBITDA margin improvement in FY27, driven by customer price closures (partial in Q2 and Q3) and internal structural cost initiatives. Longer-term progression to higher margins depends on mix shift to high-value machining and productivity gains. (Vimal Gupta, Sumit Bhatnagar)
Order Book Composition & Tonnage Details
- Question: What is the non-auto share of the ₹8,450 crore order book, and can you share tonnage details? (Avinash Nahata, Parami)
- Answer: Non-auto visibility is ~2% of the order book. FY26 standalone tonnage was ~34,000 tonnes; Q1 FY27 was 9,124 tonnes (+124 tonnes YoY, with Europe contributing only 150-200 tonnes). The company has shifted to higher-value parts, so revenue grows faster than tonnage. (Vimal Gupta, Sumit Bhatnagar)
Growth Pace Consistency & New Facility Revenue Potential
- Question: Will volume growth slow from Q1's 17% to the guided 12-15%? And can the ₹125 crore capex facility really generate ₹500 crore revenue? (Bhavya Doshi, Sushil Finance)
- Answer: 12-15% is a "clearly visible" guidance; management would be happy to exceed while remaining cautious on quarterly volatility. The Shikrapur facility has fully committed orders and can generate ₹500 crore annual revenue over 4-5 years; capacity can scale up from 3,000 tonnes to 7,000 tonnes. (Sumit Bhatnagar)
JLR EV Ramp-Up & Aluminium Pass-Through Mechanics
- Question: When will JLR EV orders hit revenues, and is there any lag in aluminium pass-through? (Riddhesh Gandhi, Discovery Capital)
- Answer: JLR EV production has started with 600 sets/week, marginally reflected in Q1; expected to peak by Q3 CY2026 with a higher rate (undisclosed) from January 2027. OEMs in India made aluminium pass-through effectively real-time (from April 1, no quarter lag). Freight cost recovery varies by model - some OEMs pick up material themselves; others are under discussion for closure this quarter. (Sumit Bhatnagar)
Capacity Utilization, ROCE, and Strategic Capacity Reallocation
- Question: At >90% utilization, why are ROCEs unimpressive, and how will returns improve? (Riddhesh Gandhi, Discovery Capital)
- Answer: History of low-cost two-wheeler mix suppressed returns, but the company is deliberately reallocating capacity from low-value to high-value products (two-wheeler share cut by 1-2%). Capex payback is typically 3-4 years. ROCE was 10.7% in FY26; ~15% is achievable with minor business process tweaks. JLR-related investments have incurred costs without returns due to SOP delays, but these will turn around this year. (Sumit Bhatnagar, Vimal Gupta)
Shikrapur Facility Details & One-Time Expenses
- Question: What are the timelines and capacity for the new Pune plant? Any further one-time expenses? (Atharva Deshmukh, MM Capital)
- Answer: Facility possession from September 1, 2026; SOP by March 2027. Starting capacity 3,000 tonnes, scalable to 7,000. No further one-time expenses currently visible. (Sumit Bhatnagar, Vimal Gupta)
Order Book Execution Credibility & EV vs. ICE Mix
- Question: The order book history hasn't materialized - what's different now? What is the EV/hybrid/ICE split? (Unidentified Analyst, SJ Investments)
- Answer: Past order book misses were caused by delayed EV adoption and extended SOP timelines (e.g., two-to-three-year development cycles for complex EV products). Current order book is weighted toward traditional ICE/hybrid products with much faster realization. Split: EV ~16%, hybrid ~12%, structural ~10%, remainder ICE and two-wheeler. (Sumit Bhatnagar)
Development Costs & Competitive Positioning
- Question: Where did the past years' development capital go, and can margins reach 14-15%? (Unidentified Analyst, SJ Investments)
- Answer: Investments went into larger product sizes (12-15 kg up to 28-30 kg), end-to-end machining capabilities, and critical product-specific tooling/machines. Intangible development costs run ₹3-5 crores quarterly. Margin aspiration of 14-15% is achievable, though timing unspecified. Competition is increasing but the company is "not fighting on prices" due to technology differentiation (e.g., aluminum cylinder head capability). Machined products constitute 65-70% of tonnage and will rise as in-house machining expands. (Sumit Bhatnagar, Vimal Gupta)
Non-Auto Diversification & Europe Strategy
- Question: Has the non-auto aspiration of ~25% of revenue been abandoned? Is Europe worth keeping? (Unidentified Analyst, SJ Investments)
- Answer: Non-auto is still an aspiration; the dedicated vertical team was formed 7-8 months ago with results expected by end of FY27 and meaningful contribution from next year. Europe (Slovakia) is strategically one of the best foundry locations in Europe; capacity can be expanded via automation in the existing plant, with no plans for a second location. Current revenue target of doubling by 2030 will require further investments, which will be announced soon. (Sumit Bhatnagar)
Key Takeaway
Alicon Castalloy delivered a landmark quarter with total income of ₹579 crores (+37% YoY), crossing ₹500 crore quarterly sales for the first time, driven by 17.5% underlying volume growth (22% standalone) and program ramp-ups including a 26% CV segment expansion. However, input cost inflation from Middle East geopolitical developments compressed EBITDA margin to 9.5% (11.4% adjusted for aluminium), offset by strong PBT growth of 45% to ₹18 crores. Strategically, the new CEO's reset-refocus-rebuild agenda is translating into action: a ₹125 crore Shikrapur facility targeting ₹500 crore annual revenue by FY31, entry into two large Indian PV/CV OEMs (₹850 crore book), >₹450 crore of new orders, and a dedicated non-auto vertical winning data center HVAC and tractor segments. Guidance is 12-15% volume growth for FY27 with at least 1% EBITDA margin improvement, supported by customer price recoveries and internal productivity gains, with Europe expected to recover from Q4 FY27. Key watch items: margin recovery timing, new facility execution by March 2027, JLR EV volume acceleration from January 2027, and capacity additions to support a doubling of revenue by FY30.