Thank you, Shubham. Good morning, everyone.

Mukesh Saraf here from Avendus Spark. Appreciate everybody logging in to this 3Q FY26 earnings call of Sundram Fasteners.

From the management team, I'm pleased to host Mr. R.

Dilip Kumar, Chief Financial Officer; Mr. S.

Narayanan, Executive Vice President Marketing; and Mr. R.

Ganesh, Vice President, Finance and Projects. I now hand over the call to Mr.

Dilip Kumar for his opening remarks, post which we'll begin the Q&A. Over to you, sir.

Thank you, and Mukesh, good morning to all. Welcome to discussion on the 9 month Q3 results of Sundram Fasteners.

Are you experiencing any disturbance, Mukesh?

I think right now it's not there.

We've had a reasonably good quarter. The domestic performance has been very strong.

We've registered 18% growth in the domestic segment in both our OE and aftermarket business put together. The exports have moderated a bit, as expected, because of the tariff pressures.

The overall revenue for the quarter has come in at ₹1,359 crores. The raw material costs have been stable, and our gross margins are up compared to the earlier quarters.

After adjusting for inventory movements, it's slightly lower, but at the RMC stage, the gross margin is above 60%. We've had reasonably good control over both variable costs and fixed costs.

The only element which, as expected, is the tariff, and the full brunt of the tariff has started impacting. Some of our products are at 25%, some of them are 50% depending on the iron and steel content.

That has had an impact at the contribution stage. Our fixed costs have remained stable, have been consistent across the quarters.

The borrowings have come down because of better working capital management, relatively lower inventory. The depreciation impact has slightly come down because of lesser capitalization.

You may have noticed that, like all companies which have provided for the labour code impact, we've also taken exceptional hit of ₹11 crores. The profit before tax before the exceptional item was ₹174 crores compared to ₹186 crores the previous quarter.

The difference of ₹10 to ₹12 crores is primarily arises out of tariff. After adjusting for the one-time impact, we have reported ₹162 crores of PBT and after tax ₹128 crores compared to ₹120 crores in the comparable quarter.

Like I said, while it appears to be a flat number, but one should see it in the context of PBT before exceptional item where the growth has been from ₹153 crores in corresponding quarter to ₹173 crores. The 9 month number somewhat mirrors the quarterly performance with strong domestic performance and moderating exports.

Our contribution has been better for the 9 month period, about almost 1% higher than for the quarter. The EBITDA is at 17.3% for the 9 month period.

Directionally, in the earlier calls, we discussed whether we would touch 18%, but I think we are on that journey. After adjusting for exceptional item and the taxes, we have reported a ₹400 crore or ₹401 crore profit after tax for the 9 month period compared to ₹382 crores.

These are some of the highlights of our performance, and we are happy to take any questions which you may have.

Yeah. Hi, thanks for the opportunity, sir.

Sir, just want your view on the long-term perspective going forward how much the growth you're looking forward in the next 2 to 3 years, first. Second, now going forward, how much exports we are looking for in terms of USD,

and

about the margin, too. These are two first questions, and I'll fall back in the queue,

sir.

Hello, yes, sir.

Hello.

Maybe we can go to the next participant.

Good morning, sir. Am I audible?

Hello? Hello?

Is there

any issue with connectivity?

morning, am I audible? Hello?

Operator, is there any issue, connectivity?

Hello?

Hello? Good morning.

Am I audible?

Yeah. Good morning, sir.

Congratulations for your numbers on the domestic front. That's pretty solid numbers.

Sir, on the export front, I wanted to understand with the tariff-related issues and the demand, what is our strategy now to work on the exports? Because we are now seeing exports as a percent of revenue coming to 23%.

I think one time we were at good 30-33%. Just wanted the management's understanding on how it will try to mitigate this environment.

On the export front, as you say, North America is in a bit of strain and also the indications are that

Are you able to hear us now?

Is it clear now?

Yes, sir.

Yeah. On the exports front, as you rightly said, North America is in a bit of a strain now.

Even the indications going forward are that there would be a sort of a gradual quarter-over-quarter improvement. That said, from our perspective, we are trying to also expand and derisk the portfolio.

We are in touch and working with a lot of customers in Europe like say Poland, Romania, Sweden. We've got good RFQs, and we are working.

Some are in the final stages of conclusion, some are early yet. Even with existing customers, we are trying to expand and work on areas like UK where there would not be much of a demand contraction on account of the tariffs.

This is the broad approach that we have taken, and we are trying to see hope there because we've got a lot of enquiries from customers.

Right, sir. That's happy to hear.

Secondly, sir, if you can throw some traction on whatever the new projects are we looking at, any kind of new product addition, or any kind of new end-user industry we are targeting? Any kind of that perspective if you can give.

I think with respect to the new projects and new products, as part of our non-auto diversification

Sorry to interrupt, sir, there is still a disturbance from your line.

As part of our diversification into non-auto, we are expanding on the wind energy fasteners where Am I audible?

Yes, sir. Yes, sir.

Okay. With respect to the wind energy where we have had the first phase of expansion and moved the numbers from say 200 and odd crores to 350 on an annualized basis, with the further expansion of the wind energy business, we are looking to take it up to close to 500 crores on an annualized basis.

It has grown about 30% from the current level. That is one expansion and activities are on course.

The second one is with respect to our aerospace fasteners where we have been hovering around on a monthly basis about 2.5 to 3 crores, we have seen a jump of it's touching close to 5 crores which is witnessing a 50% to 60% growth. That is another area where we are seeing traction.

On the railway fasteners where we have been working through our dealer-distributor network, we see a lot of opportunities coming up on account of all this Vande Bharat and modernization of tracks. Those are the lines which we are pushing as part of our growth strategies.

Sure, sir. This is helpful.

My last question is, sir, on the EV-related orders that we've received from North America, any kind of status check if you can provide on the timeline, on the ramp-up? What do you expect on that front?

With respect to the EV project, as expected or required from the customer, we have had the capacities in place. During the last quarter or so, some amount of pull has been there.

Predominantly, it is on the ICE segment. Out of the project that we have worked out which comprised both EV, PHEV, and ICE, we are seeing some amount of trickle happening on the ICE segment with EV expected to pick up probably in the second half of next year.

That is the broad indication that we have. While the project is already completed, we are also working with putting for alternative use.

While we are working closely with the customer in terms of servicing their ICE requirements, but we are also working with alternate customers for better capacity utilization because these equipments are interchangeable between ICE, PHEV, and EV.

Sure, sir, understood. Thank you so much, sir, and all the best.

Thank you.

Yeah. Audible?

Thanks. Sir, just a clarification on what you said on EV.

You're suggesting that EV will start to pick up in second half of FY27. Is my assumption right or wrong?

Yeah. It may not be in line with the original project or assumption, but we'll see a trickle with respect to EV.

We are expecting a trickle in the second half of next year because the programs by and large have been postponed. It would start as a trickle and then maybe mature later.

Sir. Sir.

Sir, I have three questions just give it to you. What sort of growth you're targeting in FY27 in terms of revenue?

What's your planned capex in FY27? On the margin front, sir, you are pretty range bound in terms of margin, by what timeline we can see to break this range and inching towards the 19% to 20% of margin, sir?

On the margins front

On the margins front, we have already moved from the 16% odd to 17% plus. Like I said in my opening remarks, we are directionally going towards 18%.

That's the broad guidance that I can give you at this point. Like we have said many times in the past calls, margins which were hovering between 19% to 20% got impacted by the steep rise in RM prices.

Once they have moderated, they have not moderated to the extent you would have wanted, and our intermediate target is 18%.

We are here. We're just trying to figure out how to make call smooth.

Anyway, like I said, we are in the direction of 18%. That's our intermediate target.

We look forward to achieve that. We had dropped to below 17%, and we were more closer to 16% than 17%.

That has improved. Once the export business recovers, and you will see us achieving that 18% or crossing that 18%.

As far as capital expenditure is concerned, roughly we would have about ₹250 crores of capital expenditure in any year. Some of it, about 30% of it could be replacement capex.

We may look to add new lines wherever our capacity utilization has already touched 70% to 75%. That's the broad guidance on capital expenditure.

On the growth, we would endeavor to achieve a two-digit growth. Our business plans are based on market feedback and discussions with customers.

While it's slightly premature, maybe in the next call, I'll be able to give you a better indication. I would think, optimistically, that we would not look at anything lower than 10%.

Hi. Am I audible?

Yes.

Thank you, sir. Sir, my question is on non-auto segment.

We are aggressively have our goal to 50% of total revenue is target. Sir, is the margin profile of wind and aerospace segment currently higher than traditional automotive fasteners business?

How you're planning to take it forward in next 12 to 18 months? What is the total revenue coming from the non-auto segment in end of quarter three?

Currently

non-auto

comprises of aerospace Are you able to hear me?

The aerospace, railways, and wind energy, tractors, aftermarket segments comprise 38% roughly of our revenues today from about 30% odd has moved to 38%. That's because of the drop in export revenues.

The aerospace division and the wind energy businesses since wind energy has scaled up nicely and considerably, and they are quite profitable in terms of operations as well as returns. The aftermarket has been growing at a steady pace.

This year we've had very strong performance in the tractor segment. These will continue to do well because our wind energy is poised for next round of expansion.

Aerospace today is less than 100 crores. On that low base, you will continue to see robust growth in the coming quarters also.

I hope I've answered your question.

Okay. Sir, my second question is content per vehicle.

We're shifting from SUV to traditional hatchback, right, which is a higher horsepower businesses. Am I understanding correct, sir?

Is a more premium segment, right? Is it content per vehicle is increasing in our business?

Can you repeat the question?

No, on the SUVs, it will be more than the small car or the lower category segment. In all segments, we see movement towards the higher end and the premiumisation.

Concomitant content per vehicle increase is there for all parts in our portfolio as well.

Got it. Got it, sir.

Thanks.

Sir, thanks a lot for the opportunity. Sir, in terms of domestic growth, what would be the mix between fasteners versus non-fasteners into this?

How the mix would be between the CV and PV for the domestic market?

I think in the domestic market, the pick up or growth, it centers around cars, M&HCV segment for us and with strong presence in tractors. Those are the three segments which is driving the growth in domestic segment.

Okay. Okay.

Basically commercial vehicle and tractors are driving the growth, right?

It's all the three segments, that is how I would put it. Between commercial, M&HCV, LCV combined with cars and multi utility vehicles and tractors.

This is what is driving the growth of domestic segments. With respect to fasteners as well as others, I think we have been witnessing growth across all our product segment in the domestic market.

Okay. Okay.

Currently, what would be the mix of fastener in the overall domestic revenue?

In the overall domestic revenue, fasteners would be about 40% to 45%, sir.

Okay. Okay.

Perfect, sir. Perfect.

Thank you, sir. Thanks a lot.

Hello, am I audible, sir?

Yes, sir.

I'm so sorry. I might have missed out on the capex thing.

I just wanted to ask that you have done ₹217 crores of capex for the 9 month period. Will that start contributing to the revenues?

Second thing, what are the further capex plans for the year ending FY26 and any plans of capex for FY27? That's it.

Sir, as far as capital expenditure is concerned, we will probably finish the year FY26 with around ₹350 crores. I expect

Sorry to interrupt, sir, there is a disturbance.

I expect our capex to be around ₹250 crores next year. The capexes will start contributing.

Like I said, about 25% to 30% based on past experience is replacement capital expenditure which improves the productivity and replace the state-of-the-art machines. The remaining 60% to 70% could be adding directly to the revenue.

Investments are made with clear indications from customers. We have kind of agreement with the customers basis which we further make investments to expand our facility.

Okay. You mean that when the capex is done, it will directly start contributing?

Yes. Typically, the capital expenditure in auto where some of the furnaces or machines have to be imported and typically takes 6 to 9 months' time.

The number which you see as an expenditure would remain in capital work-in-progress for some time. Then the volumes to mature or ramp up may take further time.

Initially, in the first 6 months or so after the machines are installed, probably we'll have a 1:1 kind of a growth.

Okay. How much will that contribute to the revenue?

Like I said, if we are incurring about ₹300 crores, about ₹100 crores would be for replacement. The balance ₹200 crores would be for revenue.

Like I said, 1:1 is a safe bet to assume.

Okay. What are your utilizations right now, sir?

We have many businesses, and it varies from business to business, line to line, assembly to assembly. While it's difficult to put a number across the company's number, but each unit will have its own capacity utilization and equipment effectiveness.

Broadly, just to make it easy for you, I would say probably we are at 60% capacity utilization.

Okay. The guidance for FY27 was double-digit growth in revenue and 18% margin guidance, right, sir?

Margin, definitely yes. Like I said, slightly premature to discuss about the revenue guidance for next year.

I said we would not look at anything lower than double-digit growth.

I'm sorry, I missed out on the revenue guidance. Could you repeat it, sir?

We would not be looking at any number which is lower than a double-digit growth. That's what I said.

Slightly premature to give you a guidance. Maybe the next call, I'll be able to indicate with certainty.

Sir. Fine.

That is from my side, sir. Thank you so much.

Thank you.

Yeah. As the question queue builds, I just had some basic questions.

First is if you could just

kind of give us the revenue mix that you usually give across different cuts. Once the OEM, aftermarket, exports and then within that domestic, if you could give the breakup of CV, engine, all of that you usually give.

I think with respect to the segment-wise revenue, exports today stands at about 25% followed by

60%

to 62% coming from OE and 12% to 13% from aftermarket.

Right.

That is on the segment. In the domestic segment, whatever M&HCV, CV plus engines that would constitute about 35% followed by cars and MUV at 40% and tractors between 10% to 12%.

These are the major segment-wise split for domestic sales.

Okay. The mix hasn't changed much as such.

The fact that we are seeing an improvement in CVs, probably I was expecting some kind of a change there. What's the outlook for M&HCVs, sir, domestically?

How should that kind of augur for you guys?

Mukesh, see, I think the mix from the business OE domestic, OE retail, export perspective has changed a bit. Within the domestic segment, as you pointed out, the mix has not changed much because all segments have grown.

That said, see, next year, going forward, the rough indications coming for the commercial vehicle segment is roughly 8% to 10% growth over this year. On the

passenger

car segment also, it's around 8% to 10%. On the tractors, upwards of 10% is what is being indicated right now.

We are yet to receive the full-year projections from all the customers,

but

the overall sentiment is towards this.

Understood. Understood.

Just again on the domestic business, I think last couple of quarters, you had kind of indicated that you're working on a lot of new RFQs, especially for the SUV segment, and and that something should materialize in the next few months, next couple of quarters or so is what you had indicated. Where do we stand in those new businesses?

Obviously, just setting aside the industry growth, just trying to assess what we can do, over and above the industry growth in terms of new business or wallet share probably that we are looking at with certain OEMs.

Yeah. See, it's always our endeavor to keep increasing our share within the pie irrespective of the external environment.

As we said last time, those RFQs, some of them are matured, and some are in the final stages of discussion. On the existing customers' share with quite a few customers, we have increased share of business also, both on the commercial vehicle side as well as on the tractor side.

Okay. Because there are some questions around next year growth, fair to assume we should be well ahead of the industry growth?

If industry, say, is going to grow 10%, how much would you want to say outgrow the underlying industry?

See, if it is industry grows by 10%, I think we'll be outperforming them by say, from 10, we will be at 12%.

Okay. Right.

A question on the subsidiary businesses, any update there? The performance there has been just about average in line with previous quarters.

We haven't seen too much change, any update there?

With respect to subsidiaries, I will address Cramlington. That mirrors more or less the European truck market where we have seen a degrowth in 2025 compared to '24.

That mirrors the truck segment. The positive thing is the subsidiary is generating cash and it's managing the requirements on its own.

With respect to China, I think we have seen some uptick in construction equipment segment and the CV. That is pushing up the revenue within the China market because almost 80% of the revenue is generated within China.

The revival of construction and CV segment is helping in its momentum of growth. The worry point is with respect to China, the price pressures on account of capacity available.

That is one area which we are working on. Otherwise, I think the business has done reasonably well given the market conditions there.

Right. Lastly from my side, you did kind of mention that margins should be around that 18% mark which is close to maybe more than 100 basis points improvement in the coming year.

Any specific triggers for this? Is there some new export business?

Because export is probably a better-margin business, especially with the way Forex is moving, or any higher-value-add business that we are seeing coming through, any kind of drivers for this? Because capacity utilization remains low at about 60 odd percent.

Just trying to understand what could be the drivers for this margin.

There are three levers. One is the aerospace business which is high-margin business for us.

While it is not substantial part of the pie, these trickles are making a small difference.

Pushing

the margins from 17.3% to 17.4%, we are happy to take that. The second is the wind energy business where we have had 30% growth and that is poised for further expansion.

It is scaled up nicely, and the operating leverage is kicking in there. The third, like rightly said, is the exports.

We've had high-margin businesses which have moderated a bit. Like we also explained, now whether EV or ICE, we have the capacity.

Our

efforts have intensified in Europe as well, not only depending on America. I think we are no longer dependent on America as much as before.

As we enter into contract, enter into new businesses with higher margins, and you will see that also percolating down to much higher EBITDA.

Right. No, this makes sense, sir.

Great. Thank you.

I think we have one question in the queue. Shubham, if you could just take that.

Sure. Yeah.

Thanks for the opportunity, sir, again. Sir, my second question is on SEZ facility plant.

The capacity utilization level, sir, could you please share the current installed capacity of this plant in tonnage or in unit size and what is the current utilization level are here? On a margin profile, sir, given that this facility is focused on more specialized EV components and export markets, right?

Is the EBITDA margin profile of this specific plant is attractive to the blended company margin of 18%? If so, sir, how many basis points is that we can expect more EBITDA margin from this plant?

Yeah.

With respect to capacity utilization, I think already it was explained saying that we have each lines of business and given the market conditions few of them would be operating at about 70% plus and wherever with respect to EV or powertrain components that might be operating say sub-50%. It's a mixed bag for us.

With respect to the margins as we had explained, once the export business which has now moderated, if it comes back, whether it is in terms of ICE business or PHEV or EV, we should see an uptick in the overall EBITDA margin of Sundram Fasteners.

Got it. Thanks, sir.

Yeah. Hi.

I just wanted to understand on the export side, can you give a breakup of the geographical mix both for this year 9 month and how does it compare to last year 9 month?

I think with respect to the geographical presence with respect to exports, while there has been some contraction in the North American market comprising of US, Mexico, and Canada which generally used to be at about 70% or so, now we are seeing that say between 60% to 62%. That is on the North American market.

The presence in Europe which used to be about 20%, now we are seeing that inching up to 25%. Broadly, the shift is say 3% to 5% drop in North America followed by increase in Europe and the ASEAN region.

That's the broad geographical segment with respect to exports.

Right. Then is the margin profile for the export business similar whether it is to North America or to Europe or other regions?

The margin profiles are comparable. It depends on the product group which we are exporting.

It mirrors more or less whether it is to America or to Europe.

Okay. Thank you very much.

Hello, thank you for this opportunity, sir. Am I audible?

You are audible.

I wanted to ask on the side of BIS. Has the BIS been implemented by the government?

The government was to implement the BIS norms for the fastener imports we are doing. I wanted to ask on that side.

I think you are talking about the Quality Control Order, QCO.

BIS norms, yes.

Yeah. While the government has been pushing, I think still some amount of imports are happening based on representations from the OEMs to the government.

Nevertheless, we are also seeing some amount of business shifting on account of this QCO, and these OEMs have started interacting with us for sourcing fasteners.

Okay. My second question was, how much revenue of Sundram Fasteners comes from the auto sector?

Today the automotive segment is close to about 62% with non-auto comprising 38%.

My last question was again on the BIS side only that, sir, all the OEMs which are MNCs such as Kia, Hyundai and Maruti like MNC OEMs, they import an approximate of ₹1,100 to ₹1,200 crores of fasteners every year for their automobile segment. What is your view on that?

Can this market come to India if the BIS norms are implemented as an import substitution thing?

It is potentially possible, and that is why the QCOs have been issued to encourage domestic sourcing. Many of them also may not justify investments or scaling up for one thing because there could be low volume and they could be for certain luxury segment.

The OEMs may be also be reluctant because the suppliers are part of their global supply chain. There are many considerations in this, and one could be the quality, other could be the low volume, third could be the rigorous testing requirements.

Yes, it is an opportunity which we are eyeing, and as policy constraints are eased and government is also reviewing some of these imports at the HSN level, each code whether it's coming from China, which geography it is getting imported, the quantum, and they are also contemplating many policy measures. Therefore, it is an opportunity, but it will take some time.

Nothing specific. Like I said, we are looking forward to a reasonably good Q4.

I think the January month has started well. We expect the domestic market is robust, and the export pipeline is also expected to improve this quarter.

We hope to report good numbers as far as Q4 is concerned.

Thank you.