S.J.S. Enterprises (NSE:SJS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to SJS Enterprises Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Jaya Kale from Elara Capital. Thank you, and over to you, sir. Thank you, and, good morning, everyone, and greetings to all.

0:46 On behalf of Elara Capital, I welcome you to the q two FY twenty seven earnings conference call of SJS Enterprises Limited. From the management team, we have with us today Mr. K. A. Joseph, promoter and managing director Mr. Sanjay Hapar, group CEO and executive director Mr. Mahindra Narevi, group CFO and Ms. Devanshi Dhruva, Head Investor Relations. I would now hand over the call to Ms. Devanshi Dhruva for her opening remarks. Over to you. Thank you, Jay, and good morning, ladies and gentlemen. We appreciate you joining us on today's conference call. We will begin the call with opening remarks from Mr. K. A. Joseph, our Managing Director, followed by a business and industry overview from Mr. Sanjay Thapar, our Group CEO and Executive Director.

1:36 After that, Mr. Mahindra Neredi, our Group CFO, will walk us through the financial performance for the quarter. We will then open the floor for questions. Please note that the duration of this call is expected to be around sixty minutes, with the first twenty minutes reserved for our prepared comments. Should there be enough time for all questions, please feel free to reach out to us via email, and we will respond to your inquiries at the earliest. Thank you once again for your time today. And with that, I will now hand it over to Mr. Joseph for his opening remarks. Over to you, Joseph, sir. Yes. Thank you, Savanshi, and good morning, everyone. I trust you all had an opportunity to review our investor presentation and the financial results for the second quarter and the first half of FY 'twenty seven.

2:27 India's automotive industry grew production volumes by 17.8% in Q2 FY 'twenty seven, led by passenger vehicles at twenty four point nine percent and two wheelers at 16.5%. Premiumization and the growing adoption of advanced features continue to expand our content per vehicle opportunity. In Q2 FY 'twenty seven, SJS witnessed a steady growth of 21.7% Y o Y in automotive driven by premium products, higher content per vehicle and deeper OEM relationships. Consolidated revenue rose to rose by 16.9 Y o Y to INR 2,827,300,000, led by robust growth in passenger vehicle and exports.

3:21 H1 FY 'twenty seven revenue grew by 20.4% to INR 5,437,300,000 of twenty point six percent, highest since our IPO. H1 FY 'twenty seven reported PAT of INR $1,327,500,000. Higher exports, favorable product mix and operational efficiency remain centered to sustaining profitability as we scale. On the capacity expansion front, our new SJS Ecoplast chrome plating facility in Pune commenced operations in August 2026.

4:08 And the Bangalore plant expansion is also complete with commercial production starting in Q3 of FY 'twenty seven. Further, the consolidation of Walter Pact's three facilities into a single integrated larger plant will drive operational efficiencies and support future growth. With a net cash of 3,318,700,000 at the end of September twenty twenty six, we have the flexibility to fund CapEx, strategic initiatives and potential acquisitions. Going forward, we remain focused on innovation, premium products and international expansion. Our design and R and D strengths, customer relationships with new program pipeline position XAIR well for profitable growth.

4:59 Now I hand over to Sanjay for the business and industry highlights. Over to you, Sanjay. Sanjay? Sanjay, sir? Yeah. Thank you, Joe, and good morning, everyone. We concluded the first half of FY 'twenty seven with steady progress on both financial performance and strategic priorities. Our focus on premiumization, deeper customer relationships and investments in technology and capacity continue to create new business opportunities, increasing our content per vehicle and widening our presence across automotive and consumer applications.

5:52 Let me take you through the key updates for the quarter and half year. In Q2 'twenty seven, consolidated revenue grew 16.9% year on year to 282.73 crores driven by passenger vehicles and a rising contribution from exports. Our automotive business grew 21.7% against industry production growth of 17.8%. Our ability to supply multiple aesthetic products across customer platforms continues to drive growth ahead of industry volumes. Uncertain macro's prolonged geopolitical conflicts and our planned rationalization of low margin SKUs with water pack India consumer OEM softened the consumer segment performance, partly offsetting strong growth in the automotive and export segments.

6:53 Further, two wheeler growth was led by scooters, 30.1% year on year growth for Q2 over motorcycles, which was 9.8% year on year growth and which is the core SJS segment that we focus on. A gap that has widened significantly this year, SJS automotive business grew 21.7% against a 13.2% industry growth for passenger vehicles and motorcycles combined, indicating an outperformance by SJS and continued share gains even as scooters where SJS has limited presence outpaced motorcycles. EBITDA rose 23.1% year on year to INR 896,400,000 with a margin of 31%, supported by better product mix, higher exports and operating efficiency.

7:51 Despite moderate revenue growth, EBITDA has continued its steady upward trajectory, reflecting the strength of our margin profile and disciplined execution. That grew 34.8% to INR 583,300,000 with a margin of 20.6%. On the capacity front, new chrome plating facility at SJS Decoplast in Pune commenced operations in August 26, adding 2x capacity and flexibility for new customer programs and emerging opportunities. Our Bengaluru facility expansion is complete with 20% capacity addition and commercial production likely to start in Q3.

8:36 SJS Display Electronics Private Limited is setting up an automotive displays facility in Huna, which will become operational in q two of FY twenty eight. We have also acquired the balance 9.9% equity stake in Waterpac India, making it a wholly owned subsidiary of SJS Enterprises. With full ownership, WaterPac is consolidating three Ranjangang plants into one large facility for efficiency and growth, and it is expected to commence operations by May 2027. We will continue to align these additions and customer programs and maintain discipline through commissioning and ramp up. Innovation remains at the heart of our product development as aesthetic products increasingly combine visual appeal with technology.

9:24 Our collaboration with DOE VariTronics is building our capabilities in optical cover glass, glass coatings and automotive electronic display systems, addressing the growing demand for digital displays in passenger vehicles. Combined with illuminated logos and a growing suite of advanced aesthetic products, these offerings significantly increase our content per vehicle and strengthen our standing with the OEMs as a capable, innovation led partner for the new vehicle launches. During the quarter, we won several new businesses from PBS, Mahindra and Mahindra, Hero Motocop, Stellantis, Maruti Suzuki, Bajaj Auto, Royal Enfield, Whirlpool, Godrej amongst others.

10:10 SJS Deco Plus added Tata Motors as a chrome plating customer, further increasing our cross selling opportunities across the SJS portfolio. We also added Harman and TADMI, which is Toyota Middle East, as our new customers and secured export orders from global OEMs like Celantis, Whirlpool in North America and TADMI, Toyota Middle East. Exports grew 23.1 year on year to $282,500,000 rupees. We are strengthening our presence in ASEAN, Europe, North America and expanding into Turkey, Brazil, Argentina, Colombia, South Korea and Germany. Our engagements with several large global OEMs are progressing well, and we see promising opportunities ahead.

10:58 We remain confident of achieving a 14% to 15% export revenue share by FY 'twenty eight. During the period, we received several awards for financial management, customer engagement and sustainability, and we continue to invest in employee development and manufacturing excellence. On sustainability, we began sourcing two megawatts of wind power from DB Renews Private Limited. We also joined the UN Global Compact, reinforcing our commitment to its 10 principles and the UN Sustainable Development Goals. Through our CSR initiatives in sports, health care, education, and women's empowerment, we supported 25 individuals with artificial knee replacements through Karnataka Marwadi Youth Foundation and partnered with Shikshaana Foundation on foundational literacy and numeracy programs across 50 government schools in Kanakura, benefiting about 3,800 students.

12:00 SJS believes in women empowerment, be it within the company or outside. Women now represent 17% of SJS workforce, up from 12 in FY twenty two, reflecting our continued commitment in building a more diverse and inclusive organization. Extending this commitment to community, we partnered with Varchar Seva Trust to launch a women empowerment project at Agara, Panchayat, Bangalore, training 200 women in tailoring and beautician skills to help them build sustainable livelihoods. Looking ahead on the business front, we remain focused on premiumization, exports, and deeper customer relationships with disciplined execution, financial flexibility, and visibility from new programs, we are confident of delivering profitable growth and long term value for all shareholders.

12:50 With that, I hand over to Mahendra Nareedi, our group CFO, to take you through the financial performance. We We in We the the progress pleased Let me take you through the our financial performance and key operating metrics. Starting with revenue. Our revenue grew by 16.9% year on year to INR 2,827,300,000, our highest ever quarterly revenue. An important milestone was achieved in September when our monthly revenue crossed INR 1,000 million for the first time in our history.

13:38 Growth was primarily driven by passenger vehicle and exports. Moving to profitability. Gross profit grew by 17.9% to INR 1,597,300,000 with gross margin improving to 56.5% despite higher raw material, crude price and start up costs. EBITDA grew by 23.1% to INR 8 and 96,400,000 with margins improving by 144 bps to 31%, both record quarterly performance. The improvement was driven by higher exports, a favorable product mix, operational efficiencies and our conscious decision to exit low margin product at WPI.

14:28 PAT grew by 34.8% to INR 5 and 83,300,000 with a margin of 20.6%, the highest normalized quarterly PAT margin since listing. Overall, profitability is growing significantly faster than revenue, reflecting healthy operating leverages. Coming to H1 FY 'twenty seven performance. Revenue grew by 20.4% to INR 5,437,300,000, while EBITDA grew by 28.9% to INR $1,696,000,000 with a margin of 30.5%. Reported PAT stood at INR $1,327,500,000, including a onetime gain of INR 241,700,000 from the sale of our old Bangalore facility.

15:21 Excluding this gain, underlying FAT grew by 39.4% to INR 1,085,800,000. Moving to cash flows and capital expenditures. Cash generation continues to be strong with H1 cash flow from operations at INR 1,070,500,000 and free cash flow at INR 1,077,300,000. Our total CapEx plan for FY 'twenty six to FY 'twenty eight is INR 2,700 to INR 2,850 million, covering our chrome plating and painting plant, SJS Bangalore capacity expansion, our display and power glass plant, maintenance CapEx and WPI plant consolidation. We have incurred INR 1,310,600,000 so far, including INR $822,000,000 in FY 'twenty six and INR 488,600,000 in H1 FY 'twenty seven.

16:17 Our chrome plating and Pandora project are now largely complete, and the remaining CapEx will be funded entirely through internal approvals. During the quarter, we also acquired the remaining 9.9% stake in Voltrapac India for INR 199,220,000, making WPI a wholly owned subsidiary of SJS. Despite this investment and acquisition, we ended September with net cash of INR 3,318,700,000 compared with INR 2,437 million at the end of March twenty six. Coming to return ratios. ROCE improved to 41.5% compared with 35.5% in FY 'twenty six, while ROE improved to 22.8 compared with 20%.

17:08 This improvement reflects better profitability, higher utilization of existing capacities, tight working capital management and a debt free balance sheet. Importantly, we are delivering the ROE while maintaining substantial net cash equivalent to approximately onethree of shareholders' equity. Our financial strength is also reflected in ICRA AA minus rating with a positive outlook. Finally, on our business mix and export. In Q2, passenger vehicle contributed 43.3% of revenue, two wheeler 38.9% and consumer and others contributed 17.8%. New generation products contributed 24% of total revenue. Exports grew by 23.1% to INR 282,500,000 during Q2, contributing 10% of revenue.

18:02 Export growth was even stronger at 45.8%. We remain on track to achieve our target of 14% to 15% export contribution. To sum up, SJS continue to deliver healthy growth, record margins and improving return ratios. We are generating strong cash flows, maintaining a robust net cash position and funding our growth investments entirely through internal approvals. With most of our planned capacity investment now in place, we are well positioned to sustain our growth momentum and create long term shareholder value. With that, I hand over to Sanjay sir to take you through the business outlook and opportunity ahead. Over to you, sir. Thank you. Thank you, Mahindra. Moving on to outlook.

18:47 As we enter H2 FY 'twenty seven, we remain confident of delivering profitable growth ahead of the automotive industry, supported by a differentiated business model, diversified product portfolio and long standing OEM relationships. Our priorities remain unchanged, increasing content per vehicle, building mega grounds and converting new programs into revenue, while maintaining operational efficiency and financial discipline. Innovation remains key to us central to our strategy. We continue to develop advanced solutions, including optical cover glass, automotive displays, illuminated logos and inboard electronics. Exports remains a key priority, and we are targeting 14% to 15% of consolidated revenue from exports by FY 'twenty eight, driven by deeper engagement with global customers, new program wins and entry into new markets.

19:37 SJS is expanding capacity with new and consolidated facilities at Pune and Bangalore, mostly coming online in calendar year 'twenty seven, positioning the company to meet rising demand and support future growth. Our strong balance sheet, cash generation enable us to fund these investments while evaluating acquisitions that add complementary products, technologies or customers. In a volatile environment, marked by elevated commodity prices, subdued sentiment, pricing pressure across the industry has intensified to some extent and dampened consumer sentiment resulting in dropping sales of consumer OEMs. In addition, the growth divergence between scooters and motorcycles within the two wheeler industry continues to widen, and our portfolio is predominantly weighted towards motorcycles with relatively limited exposure to scooters.

20:32 In light of the global macroeconomic environment, we have recalibrated our FY 'twenty seven revenue growth outlook to 1.2x to 1.5x of the growth of the passenger vehicle and motorcycle industry from 1.5x to 2x earlier. At the same time, we continue focus on driving cost efficiencies and an improving product mix gives us the confidence to raise our EBITDA margin guidance to 29% to 30% from 27% to 28% earlier. This moderation reflects a deliberate strategic recalibration rather than a retreat. By consciously stepping back from select low margin opportunities, we are positioning the business for stronger and more profitable growth ahead.

21:19 Before concluding, I wish you and your families a very happy and prosperous Diwali. With that said, I come to an end of my quarterly updates. Thank you, and we are now open to answer questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of from Goldman Sachs. Please proceed.

22:07 Hi. Good morning, and thank you for taking my questions. My first question is just for a little bit of additional clarity on the growth outlook. So over the past forty eight hours, it looks like a lot of sentiment seems to be changing around what might happen to crude oil prices and what might happen to metal costs. So in that context, if if there is a way of correction in some of these input costs and and crude oil prices, correct, there could be some second derivative benefit on on pricing as well as volume growth in the underlying industries that you serve. So just in the context of that, maybe this is premature, maybe it's not, but just wanted to understand what you think could be some of the upside optionality to this recalibrated outlook for the back half?

22:56 Mister, thank you for that question. Let me put that in proper perspective. So at SJS, we are committed to allocate manufacturing resources to the most profitable businesses that we see for ourselves. As you are aware, in the last two quarters, we were almost operating at maximum capacity. So the strategy for us was that what can we use our manufacturing resources to generate the best in class revenues and improve our already strong track record in terms of profitability. And we've done that, and that shows in the numbers. So our EBITDA has grown to a record 30%.

23:43 And, what we see with commodity prices easing, hopefully, let's hope that crude comes down and all the other commodities come down, that should improve buying sentiment. So so the segment that we address, the four wheelers, the two wheelers, the consumer businesses, So the consumer especially is driven largely by sentiment because... And this is something that we think will benefit from this macroeconomic future becoming a little more clearer. So we expect that growth will come back. But essentially, within SJS, we now have capacities in place to again restart or turbocharge our exports or... And also our domestic business, and that should lead to higher growth. So we see that over the next few quarters, revenue should come back on trajectory.

24:38 So from what we said was allocation of resources to profitable products to increase our EBITDA, we will now be driving growth along with that, thanks to this tailwind of improved sentiment. So I I think it will be positive, not only for us, for the overall economy, and that is a very positive it. That's a positive for me. It's economy a per se. Got it. Thank you. That's helpful. Second question is just around Tata and Stellantis. I think in recent quarters, you've been winning more business from Tata Motors, and Stellantis is one of the key customers which you think you can export more towards.

25:28 And over the past few weeks, there have been announcements from both those entities around expanding the scope of their partnership and potentially sharing more vehicle platforms. So as a supplier to Tata locally and and Stellantis globally, just wanna understand what you're seeing in in potential opportunity size from that expanded scope and partnership between these two key customers. We have extremely strong relationship with both. So, Stellantis, the business continues to grow. We've won new export orders from Stellantis for a new category of products, which is decals. They have a lot of vehicles in The US, and we are making steady inroads into grabbing more and more share.

26:16 With Tata, of course, we've been traditionally very, very strong for all the products that we have. We were, as I said, to the point of repeating, a little low on capacity, which has now come on track. So we have a brand new plant for SJS Decoplast. We have increased capacity at SJS Bangalore. We are consolidating and increasing capacity at. So we see these opportunities, great opportunities to scale up the business very rapidly. So, essentially, the theme that we have is that customer support is critical. We need to be sure that we are able to deliver to customer expectation if we take an order. So we have been circumspect that let us build capacity first before we target new customers.

27:06 Now the capacity is being done across all our plants. We are absolutely back in business, and we see a very strong trajectory for revenue growth coming from not only this partnership, but for all other customers as well. Got it. That's helpful. And last question is just around margin and just related question on D and A. So could you just clarify in a little more detail which are some of the lower margin products that you'll look to do less of going forward and and and what sort of products you're trying to vacate that capacity for? And also just related to that, we've had, I think, four successive quarters of depreciation reducing. So I just want to understand what's driving that and where that line item should settle out going forward.

27:54 So I'll answer the question on product margins, and I'll ask Manjar to talk to you about depreciation. So product margins, we have pruned in the last two quarters. We already have pruned the business. And in fact, in one case, we returned a large consumer business because we found that it was not giving us the margin that we wanted to. We won a successor business, which was a very high margin business. Unfortunately, the war in West Asia dampened that requirement so that the sport business was impacted, which I think now should come back with improving sentiment. So our product portfolio has been sanitized, and we are a high profit product mix across all the businesses that we do. So so all the pruning that had to happen has already happened.

28:47 And that is the result where you see our margins to be extremely strong, and they will become stronger when we increase, let's say, benefit from the softening raw material prices? Mahindra, could you take that question on depreciation, please? Yes. Sattendra Moli, the depreciation for the quarter, we had INR 108,900,000, which is lower than the last quarter. When we acquired the Worldpac, there was some intangible was recorded. And after the period of three years, this impact is now nullifying. This is starting from the quarter two of FY 'twenty seven. So approximately INR 10,000,000 is impacted there. So because of that, the depreciation amount has come down.

29:34 And we have capitalized this SJS Depot Plus, the Pune facility and the Bangalore facility in this quarter. The full impact will be going to start from the quarter three. So that is going to start next quarter, and we will have an increased depreciation starting from quarter three. Three. In order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two questions per participant. For more questions, please rejoin the queue. The next question is from the line of Ajax Frederick from Sundaram Mutual Fund. Please proceed.

30:26 Hi, sir. Thanks for the opportunity. The first question is on exports. So what are the low hanging fruits or the visibility or even the type of businesses we are closer to winning in the next, let's say, one year to eighteen months time frame? That's one. And secondly is, will acquisition be a route for enhancing our exports, let's say, to acquire a particular customer, etcetera, etcetera? So it's export related question plus acquisition, anything on works, anything being discussed, more on those lines, sir. Okay. And then low hanging fruit in exports really are, you know, we've cross selling of products to the existing customers.

31:16 So, Celantis was a very major customer we acquired. As I mentioned earlier, we won business for decals with Celantis. The opportunity set is even larger. But typically, what these companies do is testing on a program and then once they see that, yes, development is on time, they open doors to more products. So cross selling to export customers more product from our portfolio is one low hanging fruit. The other one is chrome plating. So there was a lot of pent up demand, and that is the reason why we expanded this set of this new plant for chrome plating. We see a lot of mega inquiries for chrome plating. At the moment, we are in the negotiation phase. As you can understand, the startup time for these such businesses is very, very short. So in some cases, customer has shifted tooling for us from us to us from some other suppliers. So this is a resourcing business, which can start very, very quickly. So we are looking at all these opportunities, and we are very excited about the Toyota opportunity in The Middle East because there's a lot of chrome plated plastic parts that they buy, large value.

32:25 And that is something that can be done very quickly with this new plant that we have. So these are these low hanging fruits that we are already addressing. Overall, in terms of inorganic acquisitions, whether that is going to drive exports, it depends on the company that we acquire. So as I said earlier, our rationale or lens to look at an inorganic opportunity is that can we bring add value, that means scale that business up very rapidly as we did this year's Decoplast, Forex in five years, so that is the sort of growth that we could potentially bring. So is that potential new target something that we could do on similar lines is one question to us. The other is can we leverage our capability of being a large supplier and using the buying leverage to improve profitability in that company. So exports is not really the lens. What we are looking at is that does it... If there's an opportunity to acquire a company overseas that opens doors to large global OEMs for the rest of our business. That certainly is an opportunity.

33:34 But specifically, to acquire a company that does large amount of exports, it depends on what target do we grow in. So so we don't go thinking in terms of what markets. We are looking at the overall business that if we can scale up the business, add profitability, and get it at the right place, those are these questions that we ask ourselves or give access to few markets. So those are the key lenses through which we look at an acquisition opportunity, not necessarily exports. Wonderful, sir. That answers my questions. Thank you, and all of us. Thank you. The next question is from the line of from Lucky. Sir, just a couple of questions. One, if you look at the non auto, it has not grown in H1 as well as in quarter two. So if you could give some comments on the non auto, what's happening and what is your outlook there? Because the PPTs and actually gave the outlook on autos and even outlook on export, but it misses 20% of the business. So if you could tell me what's the outlook there?

34:48 Yes. So the outlook is very strong. The reason that I said of what I talked earlier in my conversation, there were some low margin products that constituted a very large customer impact, a very, very sizable business that we chose to give away two quarters ago. So that we said in the last earning call also. So that we replaced with a high margin consumer business. That consumer business, unfortunately for us, is was focused largely on The Middle East, where there is a current turmoil going on in terms of the macroeconomic challenges that you have. So that will come back. So non auto continues to be an important part of our portfolio, and we hope to scale it up very well. But since we let go of a low margin business, that is the reason why you see that impact that our EBITDA margin for q two are 31.

35:48 That is largely because of product rationalization done. There is a new business that we acquired, so our strategy was perfectly in place. Unfortunately, that volume did not materialize because of this conflict in West Asia. So we are that is a short term hiccup. We are quite confident that this will pick up in the coming quarters. Okay. And sir, on the chrome plating capacity, what is the revenue pool size now that you add via that capacity basically what kind of peak revenue incremental peak revenue is possible from that capacity and thus scale up utilization of that capacity? So growth plating grows very strongly for us.

36:36 We've added two x in terms of capacity. So potentially, we could go to about 500 crores from this... With this new capacity addition. We finished last year about $2.40 crores. So we will almost double capacity, and our target really is to get there sooner than later. So if you look at the past track record, we've grown it at 3.5 x in the last five years, and we hope to do the next doubling of capacity in the next three to four years. So faster, the better. But we see a very strong order pipeline for that business. So we are very optimistic and positive in terms of our outlook for that growth of that business. And the last question is SJS display.

37:22 If you could tell us the now the CapEx, which will be committed in Phase one and Phase two and the asset tender? Mahindra, would you like to respond to that? Yes. Mr. Laki, for SJS display, we have guided that we will incur INR 65 crore. Out of this INR 25 crore is for the local bonding facility and INR 40 crore is going to be for the glass facility. Now coming on the asset term, since local bonding is like assembly, which have a generally higher asset ratio, we're expecting between four to 5x. And in the glass, we're expecting between two to 3x. So if you say on average, somewhere 3.5x.

38:14 Thank you. Thank you. The next question is from the line of Rakesh Jain from AXIS AMC. Please go ahead. Yeah. Hi, team. Firstly, appreciate the transparency on the consumer business outlook. Thank you for that. So just to follow-up on the display business. So now the key picks which we have put in, that's quite a sizable number for us to interpret on what could be the future aspiration would be. Two things. One, if you can help us understand because we incrementally see a lot of global MNCs either repurposing their display business capacity, either imports through imports or assembly in India now, the vehicle solutions business for them.

39:05 So in light of that, how do you see this ecosystem evolving in that? And within that, what would be our competitive edge when an OEM looks at the considerations that when you have an M and C and the domestic player, of course, we have POA Voritronics. So in light of that, if you can shed some color on a qualitative basis, how should one think about customer set? Yeah. So so two, three things here. So, typically, the opportunity is all about conversion of analog or digital clusters to be fully configurable displays. So all the two wheeler and the four wheeler companies which make instrument clusters are transitioning to this.

39:57 Now to make a display, typically, you need is local bonding of the backlight unit, the TFT screen, and the cover glass. So our TLA scope with the VOE Veritronics is to localize the display, low... Locally bond the display, localize the backlight unit, and also make the cover glass. Now our claim to fame for being a winner in this business is our forty years expertise in printing. So the cover glass typically is a printed part, which has... Which is glass, which is printed on the border. It has some specialty coatings either through lamination or through coatings and which we have a great deal of experience and expertise in. So we think that for cover glass, we should be potentially the number one player. It's not among the top two, three companies which will do cover glass in India. And remember, all vehicles in India will have displays in some for the other, some form of the other, small, big, large, and we are well positioned to do that. So that... That's one part of the answer. The second is that customers like to near shore.

41:18 Let's say these are aesthetic parts, and they would like the supply chain to be closed given the experiences in the past on global disruptions of the supply chain. You can't build a vehicle or you can't put a display with the vehicle standing on the yard. So you need to be very, very clear that, yes, my supplier is next door. So I think reassuring for OEMs is a critical part and for the the the government policy, really, in terms of increasing the local content and incent... Incentivizing the OEMs to invest in localization of these parts is the tailwind that drives the business. So for us, strategically, it was very important to choose the right partner. And I think in viewing, we have the right partner, which is a global leader in this business, operating out of China, so read competitive pricing.

42:12 So I think with the combination of our capability in India and our customer connect, our proven track record in terms of innovating and developing new technology products and offering them to the customers. So there's a very strong customer trust that we enjoy. Plus a strong partner all should lead to a very, very successful business, and that's what we are laying the foundations for. Got it. Got it. And the scope of opportunity, the initial phase is passenger vehicles. Just reiterating that. Yes. Yes. The passenger vehicles is the the mother of these displays because in terms of technology, in terms of capability, these are the most complex displays. And one passenger vehicle could have one display, two displays, three displays.

42:58 So that increases our TAM exponentially. And as I mentioned earlier, there's real estate entertainment which is coming. So very soon, I imagine you will see in terms real estate entertainment. And when one vehicle is launched with that, you would have an explosion of demand. So displays is the way to go, and I think we are absolutely on the track to achieve success in this business. Okay. Okay. Got it, sir. Thank you so much. All the rest. Thank you. Thank you. The next question is from the line of Pradyuma Chaudhry from Bohair Investment. Please proceed. Yeah. Hi, sir. Congrats on a constructive set of results.

43:44 My first question is, what was the utilization at stand alone SJS level? Because you've given the utilization at India, the two businesses. So I just wanted to know what the utilization at SJS stand alone was and why are we only going for the 20% capacity addition given that we'll again stumble upon bottlenecks? Sir, could you repeat the last could you repeat the last part of your question? Violi going for the 20% additions at SJS standalone given that, again, we'll be reaching bottlenecks in maybe one to two years time. Right? So so to... So let me answer the last part of your question first. So we already have a very large piece of land at Bangalore.

44:36 This was easy. So what we did was we just built a roof on top of the... A top on the top of a roof that we had. So it was low cost investment where we could gain... Joe, how much square feet of capacity have we added? Close to about 40,000 square feet. Right? Yes. 40,000. Yeah. So almost 40,000 square feet of land could be built on an... On the top of an existing building. So that was the reason why we increased that capacity. And if you recall, we had won a very large hero motocop business. We started with few models. More models are on the way. So there is a requirement for growth of our existing company plus a very large export opportunity for our consumer businesses also in terms of overlays, etcetera, that we do at the parent SJS.

45:33 So it was low hanging fruit where we could very quickly add capacity, which we have done. That is the reason why we invested in 20% capacity expansion. The other part of your question was how much was the capacity earlier? So if I am right, it was close to about 85%. Am I right, Maher? No. We were utilizing 70% to 75%, and now we have added 20% more. So let's say current supply chain is somewhere 60% of the plant. In our business, we always keep idle capacity because there is a up or scaling up on the festival seasons. So we are operating right now around 60%, and we can go up to, let's say, 80, 85%.

46:23 So the reason is that the printing business is a dashboard operation, so you need to have flexibility because the SKUs are so large that you cannot have a higher capacity utilization. I think if you do about 80%, it would be exceedingly good, but you need to keep that for that mode operation. So therefore, there are some capacity additional that's required. So that's the reason why we build this capacity. So are we planning in the coming months to announce even more capacities at in this stand alone new investment? No. No. For the moment for the moment, we have sorted. I don't think we need more capacity for the next two years.

47:09 But if we need be, we have enough land at Bangalore to start building a new factory and doubling capacity. So that is not the point at the moment. We have a lot of expansion that we've done, and there's also fungibility of the equipment that we have. So so the water pack plant also does partly printing. We are expanding capacity there. So I think we are good for the next two or two, three years in terms of capacity. Understood. And my second question was, as you mentioned time and again, like the current slight compared to our levels, this slowdown in terms of our growth compared to industry growth is mainly to do with the capacity constraints that we were facing. And so once this is sorted and once new orders start flowing through, we should again go back...

48:06 Probably go back to earlier levels of maybe 1.5 x outperformance on the industry. Is that right? Let me repeat that again because I think that is the the question that most people have. So we like to be transparent in what we commit, we would like to deliver that and more. So that is the reason why we highlighted that because of this, especially the consumer business, the export of some consumer businesses, which we had won some very large businesses, got impacted because of the war in West Asia. This war would... We hope would come to an end and things would normalize and demand would pick up. That could take a couple of quarters. That is the reason why we have guided that, okay, even though the demand may be muted because of external factors, our growth story continues to be extremely strong.

49:03 So let me put some numbers in place. So if you look at the four wheeler market and the motorcycle market, because that is the dominant market we operate in. In q two, this market grew by 13.2%. Our sales grew by 21.7. So we are actually at 1.7 x of the market growth. So we are outperforming the market. Even if I talk of the h one, so if I talk of motorcycle and passenger vehicles, the market grew by 15.3% in the six months of this year. We've grown at 26.6%. So that is again in that range of 1.7%, 1.7 times or 1.6 times of growth of the industry. So we are continuing to outperform.

49:49 I would like to stress that fact. Only since we did not have capacity. What I said was that we rationalize that I rather use capacity for high margin products, and we did not chase products with lower margins because we wanted to maximize high growth with high profit. And that is what we've done very successfully. So my fat margin for this quarter is 31%, which is a record. So so we have, I think, management navigated this challenging environment where commodity prices are going up exceedingly well, and this positions us very, very strongly that when these new capacities are in place, our growth will be back on that number that we mentioned earlier. So high growth.

50:39 So think of ourselves a very high growth, high profit company. This this work that we took largely was was capacity creation. Now that capacity is in position, you can... You will see SJS growing very, very strongly in terms of revenues as well. Understood. And, sir, my last question was on two eighty Sorry to interrupt you, mister SJS, but can you please rejoin the queue? Thank you. The next question is from the line of from MK Global. Please go ahead. Hello, sir. Good afternoon, and congratulations on a great success setting, especially in such a volatile environment. So just one small question from my side. So on the stand alone front, we had a very sharp growth last year because we officially won new businesses from Hero.

51:31 Now coming into two q, I think it is entirely in the base. I mean, that and then as you mentioned, the divergence between scooters and motorcycles, would these be the key reasons for slower growth in the stand alone operations? We were at about nine... 8.7% in two q. If you could just share some color. Since we've maintained margins, but revenue has not grown as much also. No. No. Largely, that is true. As I said, building capacity is critical, especially in the printed printing business because of the nature of the business that you have to have multiple operations before you finally can send a product out. So it was just that rationalization. Now that everything is in place, we expect this to grow. And the reason why we've added capacity is we see a very robust outlook in terms of order book across all our customers. So we continue to grow. So I...

52:28 Largely, it is that capacity piece. Now that capacity is in place, we can challenge large businesses. And in the short term, of course, we focus on profitability. But now property, the product mix being rationalized and being optimized, we look forward to accelerated growth. So your inference is correct. You should see very high growth in the... Over the next maybe a quarter or two quarters. It could take, as I said, some of our export business, which is also done through SJS stand alone, also would see a. Understood, sir. And sir, just a small clarification, if I may. The pruning of low margin products was done particularly in the WPI operations, right, and not in the stand alone business?

53:23 No. But the overall sentiment for exports for consumers, you're right. I was talking of one large business that we gave away where margins were low was in water pack. That is right. And we won the successor business, which is much better profitability... In terms of profitability. That should come back over the next one or two quarters. We hope the market situation should improve. In the stand alone, overall consumer segment, you know, the West Asia war didn't even... Didn't only impact West Asia. So there were a lot of challenges and issues in North America as well where demand for consumers was subdued. So that was a global phenomenon. So SJS stand alone does a lot of consumer businesses which got impacted as a result of this. So we expect over the next one or two quarters this to normalize.

54:14 So just for abundant caution, we said that, okay, next one or two quarters, the growth could be lower than what we originally have been traditionally forecasting, 1.5 to two x growth. So it was just transparent communication to the investor community. But let me underscore the fact that the net amount of EBITDA impact that was... That the company was to deliver is the original forecast, we will still reach that number despite all that. So so as an organization, we've navigated this challenge very well and used this time to rationalize our products, and we will be delivering the numbers that we did forecast at the beginning of the year very, very strongly. So so we see no challenge at all in terms of meeting our commitments in terms of EBITDA impact.

55:16 Understood, sir. Thank you so much for that, and all the very best. Thank you. Thank you. The next question is from the line of Nitin Agarwal from JM Financial. Please proceed. Thank you. Thanks for the opportunity and congratulation on the set of number. Sir, again, I just wanted to understand your outlook of outperforming the industry. You made two changes initially just to mention the underlying industry. Now we mentioned underlying PV plus motorcycle industry, and we have reduced the guidance from 1.5 x to two to 1.2 to 1.5 So wanted your sense that since you've already removed consumer delivered from the outlook, why have we reduced the guidance outperformance since we've outgrowing the industry by 1.7x, as you highlighted?

56:07 And related to that, we are missing autonomous scooter segment, which as a category is increasing, so contribution of 41%, now expected to go to 45% as per the OEMs. So what are we doing in order to capture the business from that category? Yes. Good question. So it is not that we don't do scooters. The relative weight on scooters is lower because the content in a scooter is lower than in a motorcycle. So obviously, we have traditionally focused on motorcycles. But given the strong growth in the two wheeler market, especially for scooters, we have a strategy in place. So the the Chrome business and capacity that we've created, we will use that to target. So a lot of these scooters use logos, use badges, use garnishes, use So we already do very large business with one customer.

57:06 Only our scooter business is not all as broad based. Now that we have capacities in place and we have the relationship already, So we are already in discussions to attack the scooter market also in a very meaningful manner, and that is what we intend to do. So I think we are... This last one or two quarters of building capacity, you will see in the coming year translating that into much higher revenue gains than the market, and we should be back to our normal trajectory that we forecast. But I think what is underappreciated at the moment or maybe not so clear, which I want to reiterate, you know, in terms of by rationalizing this product mix, we made your company stronger.

57:54 We are more profitable. This is a 31% EBITDA performance for this quarter and for the half year also, we are at 30.5%. This, I think, is industry leading, and we are a far far stronger company. Now with the capacity in place, we will drive that advantage even more. So to put that in perspective, I'm only repeating what I said earlier, that we are going to deliver the... In absolute terms, the rupee content of EBITDA and PAT will be absolutely where it was when we started the year. So so we are very conscious of what we commit, and we endeavor to deliver what we have said.

58:41 So so that, I think, should play out as committed to the market. So I'm quite confident of that. Just a follow-up on that. So the product rationalization that we have done, so have we done that in the automotive segment also along with the consumer delivered or then the consumer delivered segment alone? No. No. All all segments. So it was Okay. Plant wise look at saying that we have a finite resources. We have infinite opportunities. What do we chase? So we said, let's allocate resources to the most profitable business, and that is the result of that. I would say, I would complement my team on great execution. So we've delivered exactly what we wanted to deliver. So I'm extremely proud of my team.

59:30 Okay. Okay. Thanks. That that that makes sense. That's it from my side. Thank you. Next question is from the line of Hitesh Goyal from Origin Capital. Go ahead. Yes. Thanks for taking my question. First, congratulations. Very few companies have actually reported by a wide margin expansion. So congratulations on me. My question is actually related to Deco Plus. So if I look at Q on Q revenue, there is not much growth because the new facility has come up in August only. So how should we see this ramp up in the first year itself for Deco Plus? Because you've added Tata Motors as well, you've added Toyota Middle East also. So do we see decent revenue ramp up from third quarter onwards now? Yes. Some businesses will start from the third quarter.

1:00:19 And of course, the key factor behind success of SJS is that we are very, very focused on the customer. So any new business that I take, I do not take without building capability and capacity in house. So the new businesses, it's not that, you know, we we won businesses and then we said that, now we'll start figuring out how to build capacity. So that is not how we do things. We first have the capacity. We are very confident that the customer values us as a very capable supplier, trustworthy supplier. So once the capacity is in place, so we have started approaching the customers now. And this strategy business that I'm telling you is just a result of that. So within a week of our confirming to the customers that, okay, our plant is ready. They said here, we will ship some tools to you, start supplying to us. So that is the trust that we enjoy with our customers.

1:01:19 So building that capacity or filling that capacity is not so challenging. So we are very optimistic that we will accelerate revenues from that company now that we have capacities in place. And the second half, just to clarify, is second half is generally seasonally better for exotech. Right? Because, I mean, the automotive OEMs, second half is better than first half. Right? Largely, it is two of the entire industry, not just Deco Plus. Yeah. Yeah. Okay. Great. Thank you very much. Thank you. Thank you. The next question is from the line of Pooja Seth from Yes Securities. Please go ahead. Hello?, please continue with your question.

1:02:17 Sir, my question is, see, around the guidance which you have set for 1.2 to 1.5. So is it anything on the client side you are facing or some slowdown in the ramp up for their models that we are expecting that should be doing good for us. No. No. As I've explained earlier in the call that this was primarily on account of a large export driven business for consumers at one of our companies, plus our focus on motorcycles rather than two wheelers. So that for abundant caution, we guided the market that what we have mentioned earlier that we'll... Our top line will grow 1.5 to two x of the industry growth rate.

1:03:11 We thought that it is important to clarify that we are a motorcycle focused company. Even though we have capability to do two wheeler business, our focus was on motorcycles. So if you look at motorcycles, I will repeat what I said earlier in the call. If I count industry growth as four wheeler plus motorcycle, For quarter two, this segment, the industry grew at 13.2%, whereas we, SJS, grew sales by 21.7%. So this is far higher than the industry growth rate. We outperformed. Similarly, for the half year, the industry four wheeler plus motorcycle grew at 15.3%. We grew at 26.6%.

1:03:57 So there is no question. We outperformed the market by a wide wide margin. In terms of my overall revenue, as I have repeatedly said in this call, it was on account of a single customer for exports where we give away that business. And the overall revenue for the company, therefore, looks a little lower, but our outperformance for the automotive market is extremely strong. So it is almost one point seven one point seven, 1.8 times industry growth rate. So it continues to be significantly strong, and we will continue doing that. Okay. Thank you. Thank you, sir. Thank you.

1:04:43 The next question is from the line of from NBS Brokerage. Please go ahead. Hello? Hello? Am I audible? Yes. Yes. You are. On the set of numbers, sir. My first question is with the chrome plating plant expansion at Pune, which is completed in August 2026 and Bangalore's capacity, which is expected to be completed by Q3 FY 'twenty seven and Walter Pak facility consolidated by May 27 and the new display electronic plant in Pune by September 2027, what benefit the benefits are expected to materialize in '28 with the full impact in '29. Given that, what is the top line that the management envisions for the next two to three years, like in twenty nineteen, thirty, thirty one as these capacities scale up? My second question is, given the recent decline in crude oil prices and the easing geopolitical tension, how does the management expect the company to benefit from these favorable developments in the upcoming quarters?

1:05:48 Thank you. So let me answer the second question first. So despite crude oil prices and despite the currency challenges, we have delivered very strong margins. As I said earlier, for the first six months of the year, we are at a 30.5% EBITDA margin. Last quarter was 31. We've improved this from last year. So there's a quarter quarter improvement in profitability. That's because of the playbook that we set for ourselves that we need to allocate resources to high profit products. That was the focus. We've rationalized that. We've built the capacity, and we are back to normal. So if the crude prices and other inflationary pressures go down, of course, this will feed what we do, but we are quite happy with the 31% EBITDA performance.

1:06:44 We are okay with this. The next lever would be press the accelerator on growth, which you will see, thanks to the capacity that we have in place. So that's the second part of the question. Could you read the first question that you asked? Sir, with all these capacity expansions that we have planned, which are good Yeah. What what would the top line do we see? Right? That was the question. Yes, sir. Yes, sir. Okay. So the top line could increase quite dramatically because these... All these three products are at a very different price point. You know, in terms of what I've guided earlier is that we expect the display market to be close to 5,000 to 7,000 crore market by 2030, 2031. And SJS, we set ourselves the initial target that we should be at least 10 of this business.

1:07:35 So maybe a 500 or a 700 crore revenue coming out of this place by 2031 is something that we have set an internal target for ourselves. This is completely new on top of whatever we do currently. Our other businesses are more... We know these businesses extremely well, and that business growth rate is what I've guided to that whatever the industry grows, 1.5 to two times the industry growth is what you should expect by 2031. Okay, sir. Thank you so much. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to miss Devanshi Duva for closing comments. Over to you, ma'am.

1:08:22 Thank you, Huda. I would like to thank everyone for joining on the call. I hope we have been able to respond to all your questions adequately. For any further information, we request you to get in touch with us on email. Stay safe. Stay healthy. Wish you and your families a very happy and prosperous Diwali, and thank you once again for joining with us. Have a good weekend. Thank you, everyone. Thank you very much. On behalf of Elara Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.