Event Participants
Executives
2 B. Dhanalakshmi (Associate Vice President), V. Senthil (Chief Financial Officer)
Analysts
7 Divyam Doshi, Krish Mehta, Lakshmi Narayanan, Manish Goyal, Prabhat, Rahul Kumar Mishra, Ritwik Sheth
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹902 crores | Down 7.2% QoQ from ₹972 crores; segment mix shift with MTD and TMD sequentially lower |
| Consolidated Profit | ₹75 crores | Down 3.8% QoQ from ₹78 crores; margins held despite revenue decline |
| Standalone Revenue | ₹891 crores | Flat QoQ (₹889 crores), up 24% YoY (₹722 crores); driven by MTD and TMD growth YoY |
| Standalone PBT | ₹85 crores | Up 18% QoQ (₹72 crores), up 151% YoY (₹34 crores); strong operating leverage |
| TMD Revenue | ₹482 crores | Down 0.6% QoQ (₹485 crores), up 16% YoY (₹415 crores); domestic recovery offsetting export weakness |
| TMD Order Book (Secured) | ₹3,200 crores | Active orders ₹2,400 crores; 70% projects, 30% unitary; requires 10% deposit for booking |
| TMD Capacity Utilization | ~60% | Significant headroom; utilization tied to domestic capex cycle recovery |
| TMD Revenue Mix | 64% Domestic, 10% Export, 26% Spares | Domestic dominant; spares provide recurring revenue base |
| LMW Global (Dubai) Revenue | ₹51 crores | Down 5.6% QoQ (₹54 crores); loss ₹5.6 crores vs ₹5 crores prior quarter |
| LMW Global Order Book | ₹22 crores | Short-cycle, LC-based orders |
| LMW China Revenue | ₹11 crores | Down 85.5% YoY (₹76 crores); loss narrowed to ₹7 crores from ₹11.5 crores QoQ |
| LMW China Order Book | ₹128 crores | Export-focused, LC-based |
| MTD & Foundry Revenue | ₹343 crores | Down 2.6% QoQ (₹352 crores), up 36.7% YoY (₹251 crores); foundry ~8% of division |
| MTD Capacity Utilization | 75-80% | Can push 15-20% more with current capacity; further capex planned for VMC expansion |
| MTD Revenue Mix | ~56% Automotive, balance EMS/General Engineering | J-series (6 models) gaining traction in EMS; J2 specifically well-accepted |
| ATC Revenue | ₹60 crores | Up 5.3% QoQ (₹57 crores), up 30.4% YoY (₹46 crores); margin expansion from mix shift |
| ATC Revenue Mix | 90% Export, 10% Domestic; 80% Metallics, 20% Composites | Composite share rising in order book (25% vs 20% revenue) |
| ATC Order Book | ~₹1,000 crores | Execution over 3-3.5 years; 90% export, 25% composite, 75% metallics; fully tied up |
| ATC Capex Plan | ₹150 crores over 18-24 months | New facility (land owned, building construction); supports scaling to meet order book |
| Other Expenses Growth | +4% YoY | Vs 25% revenue growth; driven by cost optimization and VRS in prior quarter |
Geographic & Segment Commentary
Textile Machinery Division (TMD): Revenue flat QoQ at ₹482 crores but up 16% YoY. Secured order book of ₹3,200 crores (₹2,400 crores active) with 70% projects providing multi-year visibility. Domestic demand driven by state policies (Gujarat, Odisha, Madhya Pradesh) and FTAs; synthetic spinning margins under pressure but cotton margins healthy. Capacity utilization ~60% with significant headroom. Export order book minimal (₹150 crores combined Global + China), mostly LC-based short-cycle.
Machine Tool Division (MTD): Revenue ₹343 crores, up 36.7% YoY but down 2.6% QoQ. Capacity utilization 75-80% with room for 15-20% growth without capex. Automotive remains 56% of mix; J-series (6 models) gaining traction in EMS segment. Margin compression QoQ attributed to operating leverage on lower turnover; management targets double-digit EBIT margins (historically 12-14%) through capacity utilization and price increases to offset forex-driven cost inflation (3-3.5%).
Advanced Technology Center (ATC): Revenue ₹60 crores, up 30% YoY. Order book ~₹1,000 crores executable over 3-3.5 years provides strong visibility. 90% export, shifting toward composites (25% of order book vs 20% revenue). Margin expansion this quarter from favorable assembly vs component mix; expected to normalize. ₹150 crore capex for new facility over 18-24 months. Forex tailwind from USD/EUR appreciation.
Subsidiaries (Global & China): LMW Global (Dubai) revenue ₹51 crores with ₹5.6 crore loss; order book ₹22 crores. LMW China revenue ₹11 crores (down sharply YoY) with ₹7 crore loss; order book ₹128 crores. Both operate on short-cycle LC-based model.
Company-Specific & Strategic Commentary
Diversification Enabling Resolution: Board approved enabling resolution for six new divisions including EV, advanced technology, pharma/specialty chemicals. Management emphasized this is exploratory - no immediate investment commitments; significant developments will be disclosed to shareholders.
Auto Winder Product Launch: Initial supplies in South India with positive feedback; meaningful order booking expected in Q4 FY27. Represents product portfolio expansion within TMD.
Cost Optimization Program: Other expenses grew only 4% YoY vs 25% revenue growth. VRS implemented in prior quarter; management maintaining tight cost discipline despite improving outlook across segments.
Supply Chain Resilience: Proactive supply chain management mitigated Middle East tension impact (helium, gas, logistics). Maintaining 4-5 month material pipeline visibility; commodity/logistics costs up 3-3.5%.
Import Substitution: Ongoing program across mechanical, electrical, electronic components in MTD and TMD where Indian alternatives meet quality/spec requirements. Price revision clauses exist in ATC and Foundry; being implemented in MTD.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| TMD Order Inflow | Gradual increase expected | State policies (Gujarat, Odisha, MP), FTAs, and modernization needs driving pipeline; not expecting sharp uptick like 3 years ago but steady absorption |
| MTD Margin Recovery | Targeting historical 12-14% EBIT | Requires full capacity utilization (currently 75-80%) and price increases to offset 3-3.5% cost inflation from forex/commodities; no specific timeline given |
| ATC Revenue Growth | Execution of ₹1,000 crore order book over 3-3.5 years | 90% export visibility; composite share rising; new facility capex (₹150 cr) to support scaling |
| Auto Winder Orders | Booking expected in Q4 FY27 | Initial customer feedback positive; rollout phase beginning |
| Capex - ATC | ₹150 crores over 18-24 months | Land owned; building construction for new facility to support order book execution |
| Capex - MTD | Planned for VMC capacity expansion | Current capacity can absorb 15-20% growth; further capex tied to VMC machining center demand |
| Commodity/Logistics Cost | +3-3.5% headwind | Middle East tensions impacting helium, gas, transport; R&D/design working on mitigation; price discussions ongoing with customers |
Risks & Constraints
| Risk | Context |
|---|---|
| Textile Capex Cycle Uncertainty | Order book secured but conversion to revenue depends on domestic spinning investment sentiment. Synthetic spinning margins under strain; interest rate outlook could delay greenfield projects. Management sees gradual not sharp recovery. |
| MTD Margin Pressure from Forex/Commodities | USD/EUR appreciation and commodity inflation adding 3-3.5% to costs. Price increases and import substitution underway but lag effect; margins compressed QoQ despite 36% YoY revenue growth. |
| China Subsidiary Turnaround | Revenue collapsed 85% YoY to ₹11 crores with ₹7 crore loss. Order book ₹128 crores but execution uncertain. No clear timeline for profitability. |
| ATC Composite Ramp Risk | Composite share only 20% of revenue vs 25% of order book. Technology stabilization and facility setup required; margins may normalize as mix shifts. |
| Export Concentration in ATC | 90% export revenue exposes division to global aerospace/defense cycle and geopolitical risks. Order book execution subject to customer schedule push/pulls. |
| Working Capital / Supply Chain | Maintaining 4-5 month material pipeline requires inventory investment. Helium, specialty gases, logistics vulnerable to Middle East disruptions. |
Q&A Highlights
TMD Order Book & Domestic Demand
- Question: What is the composition of the ₹3,200 crore TMD order book - greenfield vs modernization, large vs small customers? (Lakshmi Narayanan)
- Answer: Order book split ~70% projects (A-to-Z machinery), 30% unitary (modernization/upgrades). In downturns, unitary share rises. Customer base spans integrated mills, spinning-only, and converters; not concentrated in top 20 players. Secured with 10% deposits. State policies (Gujarat, Odisha, MP) and FTAs driving inquiries. (V. Senthil)
ATC Order Book & Capex
- Question: ATC order book composition (composite vs metallic), capex plans, margin sustainability, and revenue recognition policy. (Manish Goyal, Krish Mehta)
- Answer: Order book ~₹1,000 crores over 3-3.5 years; 25% composite (rising from 20% revenue), 75% metallics. Capex ₹150 crores for new facility over 18-24 months. Current quarter margin higher due to assembly-heavy mix (70% without material vs 30% with); will normalize. Revenue includes both value-add and product sales. (V. Senthil)
MTD Margin Trajectory
- Question: MTD margins historically 12-14% EBIT; what drives recovery to double digits and timeline? (Ritwik Sheth)
- Answer: Current compression due to operating leverage on lower QoQ turnover. Capacity at 75-80% utilization with 15-20% headroom. Product mix shifting to higher-value VMCs (20%+ of output). Price increases and import substitution to offset 3-3.5% cost inflation. No specific timeline but "push is towards full capacity utilization." (V. Senthil)
MTD Product Mix & J-Series
- Question: