Good afternoon, everyone, and a warm welcome to the Q3 FY '26 earnings call of Avalon Technologies. To take us through the results today, we have with us from the management, Mr.

Kunhamed Bicha, Chairman and Managing Director; Mr. Bhaskar Srinivasan, President; Mr.

Suresh VR, Chief Financial Officer; Mr. Shriram Vijayaraghavan, Chief Operating Officer; and Mr.

Venky Venkatesh, Chief Sales Officer. Mr.

Bicha will give an overview of the business performance and will be followed up by Mr. Suresh's remarks on the financial performance, post which we will open the floor for the Q&A.

As we move forward, it is important to bear in mind that any forward-looking statement made during this call are subject to potential risk and uncertainties, both known and unknown. Now, without any further delay, I will hand over the floor to Mr.

Bicha for his initial remarks as CMD. Thank you, and over to you, sir.

Thank you, Jignesh. Good evening, ladies and gentlemen.

On behalf of Avalon Technologies, we extend a very warm welcome to our Q3 FY '26 earnings call. We thank our investors for your continued trust and support.

Your confidence in Avalon has been an important contributor to our consistent progress in execution, financial performance, and operational discipline. Q3 FY '26 marks our sixth consecutive quarter of sustained growth.

We delivered improved performance across key financial and operational metrics, including revenue growth, profitability, order book growth, net working capital days, asset turns, cash flow from operations, net debt to equity, and return on capital employed. We have also made steady progress in new product introductions, including semiconductor manufacturing equipment and power systems.

The external environment is also supportive of our long-term growth. US tariffs have reduced from 50% to 18%, benefiting our US export business.

In India, the government direction towards India Semiconductor Mission 2.0, with a focus on semiconductor equipment, aligns well with our capabilities and recent business wins. Our efforts to build a meaningful sales presence in Europe over the last few quarters also coincides with the India-Europe trade deal.

Overall, we believe we are well positioned from both a company and market perspective. Q3 FY '26 saw our highest ever revenue and profit after tax in the history of the company.

This is supported by well-diversified growth across both verticals and geographies. With improved business visibility, a better macro environment, and ongoing project ramp-ups, we are revising our FY '26 revenue growth guidance upwards to around 40% from the earlier guidance of 28% to 30%.

Moving on to the key financial highlights for nine months FY '26: Revenue for nine months FY '26 was at ₹1,123 crores, representing a year-on-year growth of 48.7%. Our average revenue growth over the last six quarters has been 46%.

Our focus on manufacturing complex box build systems continue to gain traction, with box build contribution improving from 49% in FY '25 to 53% in nine months FY '26. As of December 31, 2025, our order book grew 26.5% year-on-year to ₹2,016 crores, with an average execution period of 14 months.

In addition, long-term contracts with execution timelines ranging from 15 to 36 months is at ₹1,183 crores. Order book growth remains well balanced and diversified across industry verticals and geographies.

Gross margin for nine months FY '26 was at 34.6%, at the upper end of our guidance range of 33% to 35%. EBITDA for nine months FY '26 was at ₹116 crore, reflecting a growth of 59.2%.

EBITDA margin improved to 11.5% in Q3 FY '26, supported by operating leverage. Profit after tax for nine months FY '26 was at ₹72 crores, an increase of 83.3% year-over-year.

Profit after tax for Q3 FY '26 was ₹33 crores. India manufacturing operations, which continue to serve both domestic and global customers, accounted for 78% of our total revenue in Q3 FY '26, delivering a very healthy profitability with an EBITDA margin of 16.7% and a PAT margin of 11.9%.

Revenue from our US manufacturing operations contributed the remaining 22%. Net working capital continued to improve during the third quarter.

On a quarter-on-quarter basis, net working capital improved by 13 days from September 2025 to December 2025. Receivables reduced by 8 days sequentially.

Inventory declined by 3 days sequentially as programs moved into execution phase. Payables also improved by 2 days sequentially.

Overall, the improvement in net working capital supported a positive cash flow from operation of ₹51 crore in Q3 FY '26. We continue to follow a capex-light model.

Asset turns improved from 7.5 times in FY '25 to 9.5 times in Q3 FY '26. Net debt remained low, with a net debt to equity ratio of 0.04.

As a result, return on capital employed improved to 18.8% from 11.3% a year ago, reflecting continued efficiency in capital utilization. On the topic of tariffs, the long-awaited trade deal has been announced, with US tariffs on imports from India reduced from 50% to 18%.

During this period, we were able to recover 99% of the applicable tariffs from our customers, supported by our long-standing presence in the US, deep market understanding, and a strong customer relationships. More importantly, this period of elevated tariffs helped us accelerate on new set of business opportunities.

Alongside wins with the domestic Indian market, we accelerated new program wins in the US for US manufacturing, as customers look to diversify supply chains and reduce risk. At the same time, we have made progress in expanding exports to Southeast Asia, further broadening our geographic footprint.

With the tariff reduction now in place, another growth lever comes into play. India manufacturing for US customers becomes even more attractive, strengthening one of our core competencies.

As a result, domestic growth, new regions of export, and US-focused India manufacturing are coming together, giving us confidence in a strong and well-balanced growth journey ahead. Now moving on to key growth drivers and an update on major programs: We remain encouraged by progress across our three growth drivers.

One: existing business. This is driven by long product life cycles, mission-critical products, and steady recurring revenues.

Growth remained well-diversified across rail, aerospace, industrial, clean energy, and communication. In nine months FY '26, the industrial vertical contributed 35% of our revenue and grew 67% year-on-year.

Rail, as part of our mobility segment, contributed 16% and grew 70% year-on-year, while aerospace contributed 8% and grew 64% year-on-year. Clean energy accounted for 19% of our revenue and grew 35% year-on-year.

Two: new business wins. This is built on sustained effort over the past two years, with these programs now translating into fresh orders and production ramps across multiple verticals.

Our dual-shore model and the new Chennai export facility has supported this scale-up. The energy storage system program is fast-growing and ramping in line with our plan.

Also, we're making steady progress in aerospace cabin subassemblies. We have successfully completed the first tranche of prototypes for the communication customer, where we are manufacturing control units for satellite antenna systems.

We expect volume orders to commence from FY '27. Our prototypes catering to industrial processing sector and power sector have commenced.

In the semiconductor equipment, we have completed the project readiness phase for a key customer, marking an important milestone ahead of volume production. We expect this program to begin contributing meaningfully to revenue during FY '27.

The government's ISM 2.0 focus on semiconductor equipment aligns well with our capabilities and recent wins. We are progressing steadily in this space, partnering with global majors to deliver Industry 4.0-compliant complex systems.

Three: opportunity pipeline. We continue to see a diverse and expanding set of opportunities progressing towards finalization, with encouraging potential in both size and scope.

In recent quarters, we onboarded new customers across industrial and defense segment. Products include mission-critical power inverter platforms, critical components for an integrated battlefield command system.

In what could be the first for Avalon, we are bidding on exciting opportunities in advanced metal cockpit assemblies and landing gear components in the aerospace segment. Further, we are on the cusp of foraying into cable commodity with a major customer in aerospace.

Last, but not the least, we are witnessing increased interest from aerospace majors in our cable and electronics commodities. These opportunities are long-term in nature, and we hope to continue our focus on developing the aerospace vertical.

We will continue to provide updates as projects evolve. In summary, Q3 FY '26 reflects a period of sustained execution and disciplined, profitable growth for Avalon.

We delivered our sixth consecutive quarter of sequential improvement, achieved our highest revenue and profit to date, strengthened margins, improved working capital, generated positive operating cash flow, and enhanced return on capital, all while maintaining a capex-light balance sheet. Our growth remains well diversified across verticals and geographies, supported by a healthy, expanding order book, steady progress in new programs, and multiple growth levers coming together.

Recent tariff reduction, announcement of ISM 2.0, progress in semiconductor equipment, and expansion into new export markets further strengthens our long-term growth outlook. With all the three growth drivers gaining momentum, manpower costs stabilizing, and operating leverage beginning to play out, we are well positioned for the next phase of profitable growth.

We remain focused on execution and will share our FY '27 outlook once our budgeting exercise is completed next quarter. With this, I would like to hand over to our CFO, Suresh Veerappan, for a detailed overview of our financial performance.

Thank you.

Thank you, KB, and good afternoon, everyone. Thank you for joining the call today.

Our growth journey would not have been possible without your continued trust and support. We are delivering strong and sustainable growth, supported by improving profitability, cash generation, and capital efficiency.

Revenue growth was 49% year-on-year in both Q3 FY '26 and nine months FY '26. This performance has been accompanied by improvement in operating cash flows, net working capital, and return on capital employed.

Over the past few quarters, we have seen consistent sequential progress, with each quarter building on the previous one. This reflects the strength of our diversified business model and our disciplined approach to execution and capital management.

Growing domestic demand, the government's ISM 2.0 focus on semiconductor manufacturing equipment, and recent trade developments with the US are strengthening the Indian electronics manufacturing ecosystem. Coming to our Q3 FY '26 performance: Revenue for Q3 FY '26 was INR 418 crores, up 48.7% year-on-year from INR 281 crores in Q3 FY '25 and 9.2% sequentially.

For nine months FY '26, revenue from operations was 1,123 crores, delivering a year-on-year increase of 48.7%, supported by diversified growth across industries and geographies. In Q3 FY '26, revenue mix was 36% from India and 54% from the US.

For nine months FY '26, the revenue mix was 38% India and 62% US. India grew 35% year-on-year, while the US grew 59% year-on-year in nine months FY '26.

Gross margin for Q3 FY '26 was INR 143 crores, with a margin of 34.2%. For nine months FY '26, gross margin was INR 389 crores, with a margin of 34.6%, representing a year-on-year growth of 42.7%.

Margins remain within the guided range. During the period of elevated tariffs, we were able to pass on over 99% of the tariff impact to customers.

As a result, there was no material impact on absolute margins, although gross margin percentage was impacted by approximately 100 basis points during this period. EBITDA for Q3 FY '26 was INR 48 crores, up 38.5% year-on-year, with a margin of 11.5%.

For nine months FY '26, EBITDA was INR 116 crores, up 59.2% year-on-year, with a margin of 10.4%. Margin expansion during the quarter is driven by operating leverage as revenues continues to scale.

PAT for Q3 FY '26 was INR 33 crores, up 35.9% year-on-year, with a margin of 7.7%. For nine months FY '26, PAT was INR 72 crores, up 83.3% year-on-year.

Profitability continues to strengthen, delivering sustained, profitable growth. On the new labor code, our existing practices are largely aligned with the requirements, and we do not anticipate at this stage a material impact on the group's financials.

The estimated incremental impact of INR 33 lakhs has been recognized in the quarter. Financial implications will be further evaluated as relevant rules and clarifications are notified by the norms.

Moving to the balance sheet: Net working capital days improved to 118 days in December 2025 from 150 days in December 2024, a reduction of 32 days. Inventory days improved from 103 days to 97 days, while trade receivable days reduced from 94 days to 72 days over the same period.

Trade payable days increased from 46 days to 52 days. On a quarter-on-quarter basis, net working capital days improved by 13 days from 131 days in September 2025 to 118 days in December 2025, supported by improvement across inventories, receivables, and payables.

In the previous calls, we had guided net working capital days in the range of 120 to 130 by March 2026, and we are currently below this range as of December 2025. Cash flow from operations was positive at INR 51 crores in Q3 FY '26, supported by improved working capital management and profitable growth.

As of December 31st, total debt was INR 143.2 crores, with cash, equivalents, and investments of INR 113 crores, resulting in a net debt of INR 29.8 crores. Capex for Q3 FY '26 and nine months FY '26 was INR 10.7 crores and INR INR 35.1 crore, respectively.

We continue to operate a capex-light model, with asset turns at 9.5 times. Return on capital employed improved to 18.8%, compared to 11.3% a year ago.

Avalon's dual presence in India and the US provides strategic flexibility. Our India operations offer a cost-efficient and scalable manufacturing base, while our US facilities support localization and tariff management.

This positions us well to support customers amid evolving trade dynamics. With improved business visibility, we have revised our FY '26 revenue growth guidance upward to around 40% from the earlier guidance of 28% to 30%.

To summarize, Q3 FY '26 delivered strong operating and financial performance, supported by broad-based growth across segments and geographies. We continue to see growing demand from Indian customers and increasing program activity across other geographies, including the US and Southeast Asia.

With our established track record, dual-shore operating model, and expanding capabilities, Avalon is well positioned to capitalize on the opportunities ahead and support customers through the next phase of growth. Thank you.

We request the moderator to open the floor for questions.

Yes, thank you very much. Couple of questions.

First, congratulations on a good quarter. Secondly, talking about the guidance implication, 40%, that's obviously very strong.

That implies fourth quarter revenue growth of about 20%, 21%. Is that a continued conservatism, or are you thinking about it from a high base perspective, cuz last year fourth quarter was also very strong?

Secondly, you obviously went through a series of investments to increase your operational capacity. Are those investments done?

Secondly, if you're talking about your growth being much higher than probably expected at least externally, and these high asset turns, when do you need to probably reinvest to kind of continue to grow at a high pace in fiscal '27? Because that seems like several large customers coming on board in fiscal '27.

Thank you.

Thank you, Sumit, for your kind words as well as the question. I'll try to answer all of them.

If I missed something, just ask me. We have always maintained that we'll do asset turns between 7 to 10 times, and we'll continue to do so.

We still believe there's enough capacity, apart from the two new facilities coming up for space. We still think that our capex is around ₹50 crores a year, which is lower this year, but will be around ₹50 crores a year for next couple of years at least.

In the next 2 or 3 years, we may look for a larger facility or duplicating what we have in Avalon, but not in the near term or mid-term. Again, on the first part of your question is that yes, we are conservative, okay, because the different programs cut in at different times for us.

This last nine months has been tariffs, no tariffs, what tariff, what percentage. We were really reluctant to come out with a specific number because we didn't know.

We didn't know what the tariffs are going to do to our business. Very happy to say the team has managed this very well, and you've seen this growth in spite of the tariffs, okay, coming in both in India as well as in our geographies.

Saying that, we are expanding to other geographies also so that we'll never be in this situation again, where the tariffs just in our future. We will have it diversified, but our focus will also be on export, just not India, and India is very key to our larger growth.

Did I answer everything, Sumit, or is there something else I missed?

I think there was one question about your operational investments that you started at the beginning of the year, and you had said that that'll end by the third quarter. Although investments were made, maybe it was head count, maybe it was systems and operations, are those done?

You can see that in our numbers itself, it's been flat quarter-to-quarter. There'll be some swings as you grow at this pace, but by far, I would say for the existing programs, we are well covered.

Our hope is that we get much larger programs in the future. We will have to focus on basically people-based investments to get the right person on board.

In the short term, I think it is going to be flat or, plus or minus a few points. Suresh, you want to add something to that?

I think you have covered it,

KB. Okay.

Sorry. Go ahead, Suresh.

There'll be a combination of existing programs which continue to ramp up from pilot phase to ramp-up phase. Then there'll always be new programs which will come in parallelly, as well.

I think with the kind of pilot programs that are expected to ramp up, in the near term, we're covered in terms of investments. It's going to be a combination of both.

Got it. The one final question: in terms of this 99% recovery of tariffs, is there a rupee number that you can give us what was the leakage?

I'm just trying to understand if that goes away, that doesn't become a headwind, how much your margins could expand next year.

Typically, we do not share tariffs absolute number over there, but just to give you a heads-up on that, let's say without tariffs, our gross margin percentage would have been better by 100 bps. That's

perfect. Okay.

Thank you very much. Congratulations once again.

Thank you, Sumit.

Hi, sir. Good afternoon and congratulations on a great set of numbers, and so just wanted to confirm the numbers as you spoke in the opening commentary.

We said that revenues from US this time was around 64%. Is that right for the third quarter?

That's correct.

64/36, right? Could you just repeat the manufacturing number for me, please?

Sure. In Q3 FY '26, US manufacturing is 22% and India manufacturing is 78%.

Perfect, perfect, perfect. Thanks for confirming that.

Now secondly, right, in terms of areas of growth, right, we are obviously seeing a lot of broad-based growth across applications. Across each segment, could you potentially highlight what are the particular clients which you're sort of working for, not in terms of names, but rather applications?

Going forward, how do we expect that? We just spoke about how the existing base is obviously going to grow.

If you could just highlight some color on that. Further, the incremental growth which is going to come through, what are those applications which you're kind of looking at?

That's a tough one to answer when you're chasing broad-based growth, right? We would have a time when certain parts of industrial will be split into different vertical.

Let's say when there's meaningful growth in the semiconductor equipment, we will split that out from the industrial vertical. What we're seeing is growth in a lot of our segments where we have focused, and we're going to go deeper into the segments, because some of the customers we have are Fortune 100-type customers where there's enough room to grow, apart from the new customers.

Whether it's a commodity or a capability, we're going to target that. Did I answer that question for you, Tanay?

Yeah. Sure.

Obviously, the Indian operation margins have been extremely strong, right? I think they're scaling up out there quarter-on-quarter.

Would you sort of give some update on how we're looking to improve the US burn which we're kind of seeing right now quarter-on-quarter? Obviously, you're ramping up manufacturing out there, but any direction which you would sort of give in terms of the US margin profile?

Sure. With respect to US manufacturing, which constitute 22% of our business for this quarter, the PAT losses are at around -₹7 crores.

If you look at the last couple of quarters, it was approximately at around -₹9 crore each quarter. We've been talking about a possible operating leverage opportunity in US manufacturing as well, along with the India manufacturing.

The beginning of that is what we see this quarter. We believe that the next year with a growth in energy storage systems and some of the new businesses that we have won in US can help in that direction.

We are training towards the direction of a better profitable profile in the US manufacturing, as well.

You also will have to recognize that in the last 9 months, that was the best thing that we could have had where having a US manufacturing. Some of the programs are getting started prototyping there, and hopefully, in the next 6 months to a year, we may start moving some of it to India manufacturing.

It's just not a factory to factory, it is also the future of export business in India is tied to that factory.

Perfect, sir. Perfect.

Thank you so much for answering my questions, and wishing you all the very best. Thank you.

Thank you, Tanay Shah

Thank you for the opportunity. Congratulations, sir, for a very good set of numbers.

First question is regarding tariffs. Now, earlier because of 50% tariff, we was planning to increase our US manufacturing for some tariff-sensitive clients.

Now, what is the outlook on clients, especially on the stickiness and their comfort level after being better off in terms of geographies versus our other Asian peers? Do we still fit to increasing US manufacturing, or are we keeping it at 20% around?

Thank you, Archit. The ideal goal for us is 80/20.

We've always kind of said that, but today, we have a set of customers who are come to US, some of them want to stay in the US, do not want to take a risk for a couple of years with all these things changing on a daily basis. They have decided to in the next 2 years, they're going to make it there.

Then other half is going to move when things settle down, right, because some of these programs take 6 months to a year at least to get going. We've started on this program, we will not change the prototyping from our US location.

When the time comes, of course, cost does matter to the customer. He will make the choice when to move, but in the short term, we don't expect any knee-jerk reaction because these are large customers.

They have made their policy decision or, I would say, strategic decision to do 1 year in the US and then move. They have the option to do that, and once things settle down with these tariffs, because tariffs also are very relative, right?

It's one thing today, and then things could change in 2 months, okay. The good thing is business is coming from all sides.

Kind of. Just one thing I didn't understand was since we are recovering 99% of tariffs, how do it impact your gross margin still by 100 bps, when you said that if there were not tariffs, then your gross margin would have been better by 100 bps?

Right.

Okay. I'll take this question, Archit.

Absolute gross margin doesn't get impacted, but the gross margin as a percentage, because we incur tariff and then we pass it on to the customer, both the numerator and denominator gets expanded to that extent. As a percentage optically, it could have been 100 bps better.

Got it. My second question is regarding our manufacturing margins.

For us, despite our US manufacturing base increasing to 90 ₹192 crores, our EBITDA margins we've seen at -7% only yet, which was the same that earlier at 50 ₹40 crores also. Are we still investing over there, and what kind of scale do we need to achieve to start seeing a declining trend?

Secondly, on India margin, 16.7% are very strong, are those sustainable numbers, or is it just quarterly blips, and on an ongoing basis, we should expect around 13.5% or 14% of sustainable margins?

Sure, Archit. First thing's first, most of our business, if not all of our business, are recurring type of nature, long-term businesses.

There is nothing one-time or one quarter from a business perspective. These are all long-standing customers for us, that is our key strength.

With that said, our India manufacturing revenue, which constitutes 78% of our business, delivered 16.7% EBITDA and 12.2% PAT. This significant number is something that we have been talking in the previous quarters as well, where operating leverage can come and help once the revenue scales.

That is what probably we are seeing in the India manufacturing side. With respect to the US manufacturing, the energy storage system business, as well as some of the other new businesses started kicking in, and we have been discussing about this in our calls over the last four, five calls, as well.

Overall, the PAT has reduced from -₹9 crores in Q1, Q2 the last two quarters to approximately -₹7 crores now. Like you rightly said, EBITDA losses are slightly higher than the previous two quarters, primarily because of product mix.

If you look at from a full-year basis, let's say give it another quarter or two, from a full-year basis, I think it should get better, as well. In a summary, I think US manufacturing also, in later part of next fiscal year, can get much better than where it is today.

Sure. That is from my side.

Thank you so much, sir.

Thank you.

Thank you, Archit.

Hi, sir. Good afternoon.

Just quickly on the order book side, we have seen 25% growth on the order book side, whereas revenues has grown by more than that. Any reason why this slow down, or we are expecting to pick up in quarter four?

Thank you for the question, Vipraw. For me, we believe the order book has done really well in the last quarters.

It's grown 26% if you look at on a year-on-year basis, and our business is going faster. The key is, we're not tying all the orders.

We're giving you a 14-month number, okay, which is at ₹2,000 crores. We are giving you a number which is for 14 months to 36 months, which is ₹1,083 crores or so, 1,183.

Totally, we have ₹3,199 if you look at that for a 3-year period, okay. We've got orders from 3 years to 15 years after that.

We're not counting all that in the order book.

Just to add to that, KB: Vipraw, if you look at our FY '25 revenues, it was approximately ₹1,100 crores. Today, we have an order book of ₹2,016 crores, just to put that in perspective.

Secondly, for many of the new programs, we'll be probably having prototype orders right now getting reflected in the order book. Once it ramps up, the volume POs can come and get added in the later quarters.

Sure, sir. That makes sense.

Lastly, sir, on the ISM, since you mentioned ISM in your introduction, just quickly, is the company planning to go for any of these incentives in terms of goods capital in terms of manufacturing equipment, or you're just optimistic that as semicon comes to India, you'll be benefiting as a manufacturer, or you directly want to enter this ISM scheme? Yeah.

To answer your question, Vipul, see there's been the OSAT piece, then there's the fab piece. Now, we don't know the full details yet, but the ISM 2.0 talks about semiconductor equipment.

That's exactly where we have forayed in, okay. We believe let the details come out, and we believe there'll be something for us to finally use some PLI scheme or ISM scheme to get going into one of the industries of focus for us.

Also remember, we have just got into one customer. There's a few 100 customers out there,

to

put that into [unclear].

Yeah. Thanks a lot, sir.

Thank you.

Yeah. Hi.

Thanks for the opportunity. Just wanted to ask first question on this ISM 2.0.

See, what is the sort of revenue opportunity and TAM size that you are talking about with respect to your capital equipment manufacturing? That's my question number one.

Is there any import substitution angle that you're seeing here, or is it mostly an export market?

I missed the first part. You're talking of semiconductor equipment or

Yeah? Yeah.

So,

Yeah. This is primarily for the export market, it will come back to India.

It's just not for the Indian ecosystem, so that's why we are very much excited that once most of it is done, and with production starting, this is the first set of equipment we are making, the parts of larger machines. We anticipate to see more parts come through as we go forward.

It's not only for India, it's primarily for the global market.

Thank you. On the second part of the question is that hey, any way to size this market opportunity in India and globally?

We don't want to go there since it's, we have our own calculations of where we need to be, but let us let us get the approvals and the production going, and then we'll probably comment on that when we move this into a separate vertical in the near future.

Thank you. Just one last question on the India-US trade deal.

Can you quantify the impact of this proposed tariff reductions, if you could give some color on the duty advantage that you have versus Mexico or other Southeast Asian countries? That will be great.

We've been in the US for the last 25 to 30 years, we understand the market well. The last 7, 8 months, there've been a lot of customers on the fence because I can't say I can make it in India faster, better, cheaper, but you pay 50%, okay.

A lot of people are just put a hold to it. Today, with the 18% number, you're better than a lot of the Southeast Asian economies, better than China.

I think overall India stands to gain across the board. I'm just not talking about Avalon, but across the board.

With the combination of having the US front-ending and India back-ending over the future, that is, I think, the dual model we have is where customers are confident, as well as they know it's just not set in stone on this tariff, like somebody changes their mind every few months, like what happened with South Korea recently. Being in the two locations helps us quite a bit because customers not as concerned as just taking it out and having one country specific.

Does

that answer your question, Archit? That does.

Thank you. Maybe if I may, just ask one more question on this impact of commodity price increase in your business.

Understand that it's a pass-through for most of the EMS companies, but can you discuss if there is any lag in that pass-through, and how should we think about the impact of commodity price increase on gross margins?

Yeah. Hi, Santosh.

Shriram here. Recently, we have seen some commodity price fluctuations.

Like how we do with the tariffs, we're very active in terms of working with our customers to recoup possible. Obviously, a lot of this, there are puts and takes here based on different customers, different materials and scenarios.

We're actively working through that, and we ensure to the best of our ability these things are covered. We are trying to collect in the same quarter.

Within the same quarter, yes.

Just to add to that, we were able to maintain our gross margins within the guided range of 33% to 35%, sometimes slightly more over the last 5, 6 years. That is something that we've been doing in the past.

All right.

That should continue, right?

Yep, that should, always should.

Yes, thanks. Thanks a lot.

Thank you, Santosh.

Thank you for the opportunity. I have a couple of questions regarding our semiconductor business.

If you could broadly highlight how big is the opportunity that we are anticipating in the semiconductor space and what exactly

Can you just repeat the question? We just lost you for some time here.

Can you repeat the question, Karan?

Yeah. We wanted to understand how big is the opportunity in the semiconductor space and what products exactly are we targeting in that space from the customers that we have already onboarded?

What we're doing is part of their larger system. We're not making their whole equipment.

These usually are $20 million, $30 million machines, and we're doing small parts of that, okay? Again, we don't want to give a number, the opportunity.

These companies earn hundreds of billions, we are getting our small steps in there with the hope that it's going to be a big part of what we do.

Understood. Sir, apart from the customer that we have already onboarded, are there any advanced talks with other customers in the particular semiconductor space?

From the customer that we have already onboarded, do we have any confirmed order book, or is it in a prototype stage only?

The first customer is one of the top customers in the world, but we have prototyping, we have proto orders, and things going on. Then there's the production ramp, which is what we're waiting for for the orders to come in, and all that.

Saying that, we also have a second large customer in talks, but it's early conversations. As we have to prove ourselves with one, and then I think there's a lot which will follow, because this is a very difficult market in the sense of complexity, in the sense of what we need to achieve.

Because of our box build experience is where I think we are succeeding. I believe it's tip of the iceberg.

Understood. Thank you so much, and all the very best.

Thank you, Karan.

Yeah. Hi.

Great going, great numbers. Thank you.

I have two broad questions. One, in the context of the current environment, and also you kind of talked a little bit about all the excitement that's happening in the semi chain and all the other moving parts, my question is, as a management team, what are the two or three pieces on a 12, 18-month that is most visible and exciting to execute on both in India and the US?

I'll ask the second question after we go through this one. What I'm just trying to get is some color on what seems visible, tractionable, and growable quite well over the next 12, 18 months, and what's exciting within that?

Of course, like you mentioned, we've got the semiconductor vertical. We also in the industrial side have a certain set of, how do I put this, in the transmission business, as the world goes through a power supercycle, whether it's in India, US, wherever in the world, with the data centers coming in.

We are hoping to play a role in which we believe that we have started in India with one of the global majors, and started in the US with the other global major. I think that kind of excites us, because this is a 10, 20-year business.

When we look for businesses, we don't look for today's orders. Is this sustainable over 5, 10 years, right?

Some of the aero businesses are 15-year contracts, we can invest and reap the benefits of [cough] for the next 10 to 15 years to come, right? That's the aero business is growing, okay.

The number of planes which are coming out. We have number of parts in the two majors through Tier 1s, and I think that number will grow because the aero, if you look at it, has grown 60% year-over-year this quarter.

These are the type of business we look at. Is it sustainable over a long period of time?

That's why we're not in the consumer business, that's why we are in certain businesses which come and go, which are price-sensitive. We don't get into that in the long term,

okay. Okay.

I thank you. I'm fully supportive of not being in the consumer business and staying focused on the B2B side.

The second question is, if we kind of hear the whole commentary so far and what you all are talking about, would it be fair to assume that the growth rates in FY '27 sustain at the same levels they've done in '26, would we fair to kind of think a 25%, 30% top-line growth and sustainable margins over the next 12, 18 months?

I believe that we will do that number you mentioned, and more. We are conservative in our approach, but we don't just want to come out and tell the numbers.

For example, this year, we're upward twice, because we didn't know how bad the world is going, three times, okay, [laughter] and we will continue to do that. We are very confident of the future, and you need to look at us from a 3-year period.

Of course, there'll be one small quarter here or there where we have an issue, but a longer term, we're very confident, because the business we assign, like the last question I answered, is for the next 5 or 10 years, right? Once it comes in, it stays there.

Absolutely.

Just to add to that, the last six quarters, our average growth has been around approximately 46%. Some of the new programs what we are getting in have a long product life cycle, and we're just in the cusp of it ramping up, which means the amount of opportunity is also exciting for us.

It is just that we are in the process of completing our budget so that we will be able to give a better picture for FY '27 once we complete that. Just like the past, I think the next 3, 5 years is looking promising for us as a company.

No, absolutely. Look, I was just trying to get color on high-level growth trajectory, and I think that's a very fair comment you've given.

My last question is, assuming this tariff deal doesn't happen in the same format, it's been kind of headlined at 18%, da-da-da, but if it doesn't happen, does that, in any way, change your trajectory, or is your trajectory tenanted on this being the tariff playing out as articulated?

See, that the future, [laughter] I think lies in the governments. We can't comment on it.

When it changes, it changes. We're hoping it goes downwards, not upwards.

If you take the past, how we dealt with the last 9 months or 10 months since this this tariff thing started, we have not broken our stride, okay. We have continued growth.

It was confusing till when we're going to grow, but we have we've been, persistent, and there's some amount of luck also, that we have continually grown. I think that will continue, and if, a curveball is thrown on us, I think we will survive.

It's not, nothing will stop, because of the long-term nature of our customers and products is and it takes, months or even year, a year and a half to change. Even the customers decided, let's stick and see what's going to happen, right?

It's happened in a positive way now, but through the whole process, they've been very supportive toward what we're doing.

To add to that, KB, the opportunities what we have are in domestic, which is India for India, and over the last year or two, we have also grown the opportunities on India for Southeast Asia exports. Plus, within the last nine 9 months, the US for US is also accelerating in a nice way.

With these three growing, now with the tariff reduction, the fourth growth lever on India manufacturing for US customers has added to that. Our growth opportunities are well diversified, not dependent on one geography or one industry or one set of opportunities.

It is well diversified in its true sense.

Okay. If I can sneak in one more quick question, which is this whole BESS opportunity, which we're seeing in a very significant way coming out in power solutions that people are offering end customers, will this over the next 2, 3 years be a significant part of your entire offering?

This we do because it's country for country, right? In the US, they want to make in the US.

This we have worked on for 4 years or more, okay. Finally, the fruits of the labor has come through, and it is going to be a significant play for us into the future, okay.

We've already ramped up and ramping up further, and we're really excited on that. The company is well positioned to execute it.

It's a well sought-after product now. It's the highest end of BESS

here. Fantastic.

Keep up the good work, and we're fully supportive. Thank you so much once again.

Thank you. Thank you, Jeetu.

Am I audible?

Yes, Avinash, you are.

Thanks for the opportunity. Two quick questions: one is, what is the 9-month number for the cash flow from operations, if I would have missed out?

₹40 crores is the 9-month FY '26 cash flow from operations. Q3 is 51 crores.

9-month you said is 40 crores, and

9-month is 41, Q3 is 51.

Got it. With scale, what is the improvement in networking capital possible over the next 1 or 2 years?

We have done so far a very good job coming from 160-odd to 118, what is the fair assessment from your point of view over the next 1, 2 years?

In the past, we have operated even better than this, but with a current growth rate, I think what we had earlier guided was a 120 to 130-day by March '26. We've already surpassed that by reaching 118 days by December '25.

We hope to maintain and improve on this trajectory over the next 2, 3 years. Let's wait for our budget to complete, we will be able to share a little better picture on FY '27, but we are in the path of improving our net present capital.

Just to add to that, Shriram here. We've had quarter-over-quarter improvement in networking capital across inventory, receivables, and payables.

This is a structural improvement that we've been working on for a while, and you're seeing the benefits of that now. We're hoping that this continues over the next few quarters, and we will keep updating you as to how we're progressing on this.

We expect to continue this trajectory going forward as well.

Thanks a lot. That's all from my side, and all the very best to the team.

Thank you, Avinash.

Thank you, sir, for the fresh opportunity. Just one question: in our clean energy business, one of the large portfolio is energy storage system in the US.

We manufacture one of the customers who does this for residential customers over there. Is it revenue for our customer dependent on government subsidy in US for this solar product or energy storage product by battery management products?

If so, yes, then what is the visibility on government policies over there, and could we be affected by any, let's say, taking back those subsidy or anything?

Thank you, Archit. You see, the fastest-growing segment in clean energy in the US is battery systems for storage.

It's been growing in the last couple of years. It's not impacted by the pulling off subsidy in the sense which happened in the wind and some of the other solar stuff.

This is the focus for US because of the grid, okay, and with all the data centers coming in. There's getting closer to home.

Only issue is that you have to make it in the US, [laughter] okay, and we are well positioned for that. That's what we're doing, though some subparts go from India.

Okay. One of the requisites is that you have to make in US for those parts, and you cannot transfer it to India for manufacturing?

Part of it. We do the subsystems here, and then final there.

Okay. Thank you.

Thank you so much. That's it from my side.

Welcome, Archit.