Uniparts India (NSE:UNIPARTS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Uniparts India Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participants' line 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. Kanab Khanna from Ernst and Young. Thank you, and over to you, sir. Thanks, Ikra. Good afternoon, everyone, and welcome to the Q2 FY 'twenty seven earnings call of Uniparts India Limited. We have on the call from the management side, Mr. Gurdeep Soni, Chairman and Managing Director mister, full time director and group CEO, and mister Sandeep Sanija, group CFO, and mister, head IR and FPNA.

0:58 We must remind you that the discussions in today's call may include certain forward looking statements and must be, therefore, viewed in conjunction with the risks that the company may face. I will now hand over the call to Mr. Soni to take you through the financial and business update subsequent to which we can open the program q and a. Thank you, and over to you, sir. Sir, you may please proceed. Good afternoon, everyone, and thank you for joining us for the Uniparts Group earnings call for the second quarter of FY 'twenty seven. As we gear up to celebrate Diwali, I am very pleased to say that this year the celebration is more special for the Uniparts family.

1:52 Our quarter two FY 'twenty seven has been the highest revenue quarter in the history of the company. Revenue from operations stood at INR $3.79 crore, which is 37% higher year on year and 9% higher sequentially. I want to congratulate our teams across all our locations. Milestone like this are not the result of one good quarter alone, but are the result of work done patiently over many quarters, often when the market was giving us very little help. And that is the part worth reflecting on.

2:38 We have delivered this in an environment that remains genuinely uncertain. What made this possible is threefold. One, our customer relationships, which continue to deepen two, the way our teams maneuver constantly taking tactical decisions quickly to keep supply running whatever comes at us and three, the diversity of our platforms and segments, which means that when one part of the business is under pressure, another carries on. That is exactly what we are seeing today. Agriculture is still working its way back, while construction is moving strongly. Two updates on commitments we made to you earlier.

3:28 One, the restoration of this finishing shop at Lugana facility is on track to be up and running by the end of this calendar year. And two, in Mexico, our first customer dispatch will take place this month, which is an important step in strengthening our ability to serve customers closer to their operations. With that, let me take you through what we are seeing across our markets and then how Uniparts performed in each one of them. Let me start with the construction equipment for the North American and European area. In North America, construction activity linked to data centers, power generation and AI related infrastructure continue to drive growth.

4:19 In fact, the world's largest construction equipment manufacturer reported an increase of approximately 18% year on year in its construction equipment sales together with a record order backlog. In Europe, the market is steadier with actively driven primarily by infrastructure and green energy projects. Also in Europe, the nonresidential construction continues to grow faster than residential construction. Against this backdrop, Uniparts sales in the construction segment grew 49% year on year. Our traction is gaining new business awards in this segment remains very robust and we see construction as a key growth area.

5:09 Let me now talk about the large agriculture market. The large agriculture has taken the hardest hit in the farm market. Industry volumes for tractors above 100 horsepower and four wheel drive tractors are down roughly 17% this year. However, yet our revenue in this segment grew 10% year on year. In fact, this is a segment in which we have demonstrated the rewards of a focused approach. The market down 17%, we have grown. That growth has come entirely from new business and not from the cycle. A large focus of our business development efforts are on large ag segment as the new business awards move through the sampling and the testing and approval into regular production.

6:00 They will contribute meaningfully. When the industry cycle does turn, we will have that on top of all this. This is why large agriculture remains a priority for us even in a down market. A word on the small agriculture. As we have shared previously, after three years of continuous decline, the small agriculture cycle has started to turn, and we are now seeing year on year growth in this segment. Uniparts sales in small agriculture grew 25% year on year. The regional picture remains mixed. The outlook for small agriculture industry is expected to be flat or up 5% in The U. S. And Canada, expected to be flat in Europe and down about 15% to 20% in South America where we have very little market share.

7:00 I would now like to you to the quarter highlight. I would now like to bring you to the financial no, sorry. Okay. Sorry for the little break. The growth in India is estimated to be about 4% to 6% in the aftermarket. The aftermarket has improved to 16.5% of revenue this quarter against 12.4% in Q1 of FY 'twenty seven and fourteen point seven percent in Q2 of FY 'twenty six.

7:48 In absolute terms, the segment grew over 50% year on year for us. Those of you who were on our last call will recall that we spoke about an inflation driven pause in buying and said we expected it to normalize through this year. That is what has happened now. I would still caution that purchasing in this segment is discretionary by nature and some variability in the quarter to quarter should be expected. But the underlying platform is sound and this quarter demonstrates it. New business wins, in fact, have been very good and they continue to exceed INR $2.25 crores, concentrated largely in construction and large agriculture.

8:40 These wins span segments and geographies and reflect our customers' confidence across all three of our product platforms, whether that is the three point linkage system, the precision machine parts and fabrications. Importantly, the awards we secured over the last several quarters are now ramping up as planned. That conversion is what gives us visibility into the quarters ahead. And it is the clearest evidence I can offer that the growth you are seeing is built to last. With that, I would like to hand over to Sandeep Taneja for the financial highlights. Thank you. Thank you, sir, and good afternoon, everyone. I'll take you through the key financial and operational highlights for the quarter ended 09/30/2026.

9:29 Revenue from operations for Q2 FY twenty twenty seven stood at INR379 crores, representing 37% year over year growth and broadly in line with the guidance we had shared earlier. For first half of twenty twenty seven, the revenue from operations stood at INR726 crores, which was 32% higher against H1 of FY twenty twenty six. EBITDA for the quarter was INR89 crores, a strong 38% increase year over year and broadly flat sequentially. EBITDA margins for Q2 were 23.4%, which were comfortably above the 20% margin we target through the cycle.

10:15 EBITDA for H1 FY 'twenty seven was INR178 crores, which represented 67% of FY 'twenty six EBITDA. Profit after tax stood at INR54 crores, which was 37% higher year over year. For H1 FY 'twenty seven, the pad stood at INR111 crores, which is about 70% of FY 'twenty six pack. We generated about INR34 crores of operating cash flow during the quarter. Our trailing twelve month EPS stood at INR43.30, the sustained improvement in our earnings over the past year. Net working capital stood at INR 137 days of trailing twelve month revenue as of 09/30/2026.

11:08 We closed the quarter with net cash position of INR 172 crores after accounting for dividend of INR 41 crores, which was paid in Q2. This underlines the strength of our cash generation and balance sheet. Capital expenditures during the quarter was about INR 10 crores, which is in line with our investment plans focused on capability enhancement, productivity improvements and customer led growth initiatives. We are looking at CapEx of around INR 60 crores to be spent over next year. Most of these are approved and advances have been paid. These investments are backed by the growth that we are seeing we are seeing.

11:54 With that, I would like to hand over the call back to the moderator for question and answers. Thank you very much. We will now begin with the question and answer session. Participants are requested to use handsets while asking a question. And in order to ensure that the management is able to address questions from all the participants in the conference, Please limit your questions to two per participant. The first question is from the line of Digant Shah from TAM Capital Advisors Limited.

12:57 Hi. Thank you for the opportunity, and congratulations on the good set of numbers. I wanted to understand how is the demand environment in Europe, agri demand environment, given the Ukraine Russia war and there are reports that the agri exports is not happening because of it and also higher diesel and gas prices. So how is the demand shaping up? Thank you, Digant. This is Sanshriti Bhakrodia. Digant, as Chairman, also shared in his opening address after three years of continuous decline in the small ag space, the order books are improving.

13:46 I think this improvement in the order books comes also because the inventories have been depleted and the replacement cycle has come in. So even in Europe, we are seeing the small ag segment coming out of the trough and slowly on the path to recovery. In the large ag segment in Europe, we still see that the large ag is muted and it is still not recovered. This recovery is expected in 2027. Okay. Thank you. That's helpful. And another thing on the gross margin front.

14:33 Our gross margins have remained very resilient given the underlying commodity inflation in steel and other commodities is much higher. So what is the thing which is driving this resilience? So, Vidant, our material cost or cost of materials consumed tends to remain in the range of 34% to 37%. We have seen a price increase in steel. There's been a rapid increase of prices across the world in steel. We typically tend to our contracts with customers are that we pass on the raw material increase through to customers.

15:20 However, this part happens through a lag. So in this quarter, our material cost is 34.3%, which is broadly in line with where it should be, it is also seeing some amount of material cost that has still not been passed through to customers and that will come in as the price settlements happen. But to answer your question, because we don't control the steel prices, our contracts with the customers are that there is a pass through of these prices to customers. Okay. Are you... Mr. And Shah, sorry to interrupt you. Can you please rejoin for a follow-up question? Sure. The next question is from the line of Praveen Jayaraman from Avan der Spark Institutional Equities.

16:18 Congratulations on a good set of numbers. My first question is on the construction side. The segment has been having a good year on year growth and has been driving our top line in this period. How structural is the growth from here? We understand the demand drivers around the data centers, but can you give directionally on how the segment is shaping up, where the new orders are coming from, and any direction here would be helpful. Right. So Praveen, we saw the construction equipment recovery happening in the first quarter of this calendar year. And that recovery, as you very rightly said, in The U. S. Is driven by AI, data center and smart manufacturing recovery.

17:12 And these are all multi quarter contracts that are there in nature. So the current mix has momentum behind it, right? In Europe, this growth is coming from investments in infrastructure and energy transition. Again, these are multiyear contracts that come and there is structural momentum behind it. As you will see, our growth in the construction segment is higher and it is higher in The U. S. Versus in Europe. Our participation in the Indian construction industry is still limited. So yes, our growth we see our growth coming slightly more from The U. S. Than coming from the Europe from the European region. And we are very, very confident that this growth is going to continue for the foreseeable future.

18:08 Right, ma'am. Follow-up on this would be, this increasing growth in construction would be majorly coming from increased wallet share or with existing customers or new customer additions in the segment? So we've won new business with customers as well, and this is also an increased demand. And then as a third to it, which is where we've said this in the past where we won new business that we are executing and it's in year maybe year 1.5 or year two of execution there, the demand of the new product launched by the customer has been far more than what the customer had anticipated themselves. So there are three drivers to this growth. Right.

18:55 Right. My second question would be on the other verticals outside three gs and P and P. So we have been in fabrication, PTO and hydraulics. And in the opening remarks, fabrication was again mentioned as the third lever here. With the base revenues, which we have there, could we expect higher growth with the existing product we have there? Or it would be more like an acquisition based growth, which we could expect from the third vertical, which is fabrication? Yes. So Praveen, fabrication is something where for which we actually set up a new facility about two to three years ago in Ruzhana. And this is doing small and medium sized fabrications, as we would call it.

19:46 This segment has shown a significant amount of growth for us, all of which you're right, it is only about a percentage of our total revenue. But of our new business wins, this segment is roughly 12% to 15% of the new business wins that we are getting. And we are working with OEM customers on meaningful revenues to increase our fabricated product supply to them. So this is all organic. And we expect Fabrication to become a meaningful contributor within the next eighteen to twenty four months. Our ambition for this platform to become a full fledged platform remains. And the only addition that will come to it from an inorganic side would be any large fabrication that we will do, which is attachments like cement mixer or large buckets, etcetera.

20:44 Thank you. That would be helpful. Can I add one more question or should I join back? Sir, please rejoin the queue for a follow-up. Okay. Thank you. Next question is from the line of Bhargav Budhadev from Ambit Asset Management Company. Please go ahead. Congratulations on a good set of numbers. My first question is that in your presentation, you've written that on the construction equipment demand, especially in The U. S, the demand driver is data center as well as the air related infra. But post this midterm elections, do you see some sort of deceleration in terms of CapEx in this area? And in the event that happens, will it impact our business in The U. S. Pertaining to Construction Equipment?

21:42 Hardar, and thank you for the question. Hardik, as I was mentioning earlier, right, that fund that is coming from data center, AI, smart manufacturing, these are all multiyear long contracts, right? And given that they are multiyear long contracts, the visibility into these is significantly high. There are very low chances that such contracts get canceled. Now what are also just wanted to also let you know that while we are seeing this, this is only in The U. S. In Europe, we are seeing the growth, which is completely driven differently, right? It's because Europe needs to invest in infrastructure, Europe needs to invest in energy transition.

22:43 And as Chairman also mentioned in his opening remarks, the noncommercial construction in Europe seems to be taking off. So that's the second pillar, right? And ultimately, for our Construction Equipment is where we are also beginning to supply from Mexico. So that also adds to the growth that will come now for our construction segment. Understood. Understood. My second question is that, obviously, we have a fairly healthy balance sheet and a very good cash position. Are we looking to accelerate in terms of acquisition? I believe we are trying some acquisition in Europe on the hydraulic side, maybe in India on the fabrication side. So when can we sort of see some aggression in terms of an acquisition? Because, obviously, subsequent to that, your revenue growth in fabrication can really see a bump up.

23:48 So how does management continue to spend very actively time, effort, and and resources in evaluating acquisition opportunities? In the recent times, we've come close to two acquisition opportunities that we've walked away from. At this particular point in time, also we are evaluating about half a dozen acquisition opportunities of varied shapes and sizes. So this remains a focus area for us. Having said that, we are very, very judicious in the way we evaluate an acquisition. So acquisition has to be strategic, has to be value add for our customers, has to be value accretive for all stakeholders.

24:37 We are also very clear to an acquisition, which is a deep turnaround acquisition. So keeping all this in mind, as soon as there is something that we feel that investors should know of, we will come to you. On the fabrication piece, like I said, our current fabrication facility, discussions with customers, new business wins, give us the confidence that in the next eighteen to twenty four months, organically, also fabrication will be a meaningful third platform. Inorganic acquisitions of large fab will only be a top up to that. Thank you very much and all the very best. Thank you. Thank you.

25:23 The next question is from the line of Vinay Lakira from Lucknow Capital. Please go ahead. Yes. Hi. Am I audible? Yes. I just had... Just wanted to know your views regarding the new joint FTP and USD inquiry, like, in US. So so what would be the impact on these customers and on the company, like any views on that? Sorry, could you repeat the question again? Yes. So there has been a recent hello? Yes, can you hear me now? Yes. This is better. Yes. So my question was on the joint inquiry by FTC and USDA on the equipment companies in U. S. So just want to know know the... Your views on the impact on the customers and if there are any impacts on the company as well just to con...

26:22 In terms of quantify quantify the impact or maybe just the views on that? So number one, we don't speculate on any political or policy ongoing that happen. All I can tell you is that our relationship with customers, our demand with customers and our order books with customers remain very, very healthy. We are not seeing any impact on either their demand or their orders. Like Chairman mentioned in his opening remarks, the world's largest construction equipment manufacturer has declared that they are running on the historic on the highest ever historic backlog that they have, which is the case for the top three construction equipment manufacturers in The U. S. So I think we don't see any impact, and we will not speculate on what potentially could be.

27:24 Okay. Got it. And historically, has it ever led to any consequences on the operations in general? I mean, like, with... In the history of these operations? I think historically, you... What has what has impacted our operations is the industry cycle, the new business wins that we have and how our customer relationships have panned out. And then I think going forward, that's what's going to continue impacting our business as well. Thanks a lot, ma'am. Thank you. The next question is from the line of Sunil Jain from Nirmal Bank Securities Private Limited.

28:10 So if you see the other expenses, it has moved up. Was there any... Sorry, can I ask repeat? You Because your voice is not clear, sir. Yes, ma'am. Yes. My question relates to other expenses, which has moved up. Can you spell out what could be the reason and see if this the freight cost, which has increased? And related to that, whether the increase in the freight cost also, you can pass it on to the customer or no? Yeah. So this is Sandeep. So yes, you're right.

28:57 The primary reason is the freight cost, and we will pass this to the customer. There is usually a quarter lag in that. So next quarter, you should see a recovery coming. Okay. And the second question relate to the construction sector. So that is doing exceedingly well right now. You had shown very good growth in that. So typically, if you see the historical how could the cycle play out now when the interest rate has already started increasing? So if I understand this correctly, your question is how will the interest rate impact the construction segment, right? Yes.

29:43 Yes. I think we don't expect a material impact. A 25 to 50 basis point move does not really change the equipment economics when the fundamental drivers industry are improving, right? And the construction demand that comes up really comes up and rests on multiyear programs. So whether it is infrastructure, whether it is manufacturing, whether it's data centers, whether it is real estate construction, these are multiyear projects. And once the fundamentals start to come in, there is less sensitivity to rates. And, generally, how long is the cycle, miss?

30:29 These are all cyclical, and we had seen... If we go through last fifteen year, multiple cycle has happened in three, four year. So will there be... Is this, we can say, running towards more of a higher end of the cycle or still there is enough room available? See, the typical cycle tends to be from four to six years. What we are seeing right now in the construction equipment industry is a recovery that started in first quarter of this calendar or Q4 of last calendar. And I think we have enough visibility for the cycle to be increasing in the near two to three years. And I think this is also what our customers are seeing.

31:17 Also remember we are talking about the construction equipment sector, the company also services customers in the small ag and the large ag. In the small ag, we are seeing green shoots of recovery right now. So that recovery still has to be factored in. And the large ag, which is still in the trough, that recovery is still going to come. So I think from our perspective, we see growth for the foreseeable future. Great. Mr. Just interrupt you, Mr. Jean. There's a long queue. Please rejoin for a follow-up question. Fine, ma'am. Thank you. Thank you. A reminder to all the participants, you are requested to restrict your question to two per participant.

32:05 Should you have a follow-up question, please rejoin the queue. The next question is from the line of from Banyan Tree LLP. Please go ahead. Yeah. Hello. You mentioned... Spoke about your m and a acquisition strategy briefly. Could you explain a little bit more on which geographies you're looking to acquire? What kind of white space are you looking to bridge to an acquisition? Sure, Anandika. Our acquisition strategy is... Has been well defined, and I laid out again for you. We are broadly looking at three product platforms, if I could call it, for acquisition. One is the Hydraulics vertical, the second is the PowerTakeOp vertical and the third is the Large Fabrication vertical.

33:00 These three verticals that will help us horizontally work across system boundaries with our customers and increase our wallet share. In these segments, we are open to global acquisition, keeping in mind that hydraulic technology and PTO technology is potentially more prevalent outside of India than within India. And large fab economically is not going to make sense from an acquisition outside of India, so that's going to be predominantly an India focused acquisition. Understood. That's very clear. The second question was around so your revenue and your margins have met the guidance and exceeded it as well.

33:53 Do you have an updated guidance of financial year 'twenty seven and 'twenty eight for revenue and margin? So Anantika, we grew 32% in FY 'twenty seven first half, and we expect quarter three, which is seasonally to be in line with quarter one FY 'twenty seven. That is on the revenue side. Having said that, let's also see that the second half of FY 'twenty six, we grew 32% year on year as the recovery in the construction industry started to come through. So second half of FY 2027, the growth will be slightly lower in percentage terms even as the absolute revenue keeps rising.

34:42 So taking both together, we expect FY 'twenty seven revenue to be 24% higher than FY 'twenty six. Understood. And on margins? We don't guide to an EBITDA number, but I think the first half of this year shows the strength of our structure. Q2 delivered 23.4% EBITDA margins despite the raw material and West Asia inflation. Also, given that the equity market for most of June in September, we had lower treasury income. Also in quarter two, we had warehousing sales of 53% against the 56% in quarter one. So I think the first half has shown that structurally, we remain very, very strong. We are very comfortably placed to deliver the 20% margins over a cycle.

35:39 And I think we will continue to deliver that. Understood. Thank you so much. Thank you. The next question is from the line of Dheeraj Kumar Reddy from AlphaSquare. Please go ahead. Yes. Thanks a lot for the opportunities and congrats on great set of numbers. Ma'am, I just have a couple of questions. First, I think fairly you demonstrated how FY 'twenty seven will look like, but I wanted to understand what will be the drivers of growth for FY 'twenty eight? How should one see the fabrication unit shaping up for us? And if you can give us some color in terms of how the overall growth trajectory can look like with including drivers, I mean?

36:33 Dheeraj, the drivers for us on the growth side, let's go segment by segment, right? I think in the construction space, we are very, very well positioned. You heard Chairman's opening remarks, the industry grew, but in mid teens, we delivered a 49% year on year growth. We continue to win new business in this segment. In fact, 70% of our new business awards are either in the construction or in the large ag space. So one of the key drivers for us will be the construction industry, and this is just the market recovery plus the new business wins that we have. The second driver for us is going to be the small ag segment. The small ag, we started seeing order books come back, and we are seeing green shoots of recovery.

37:26 India has done well in the first half. We do see that maybe the second half in India is not going to be as high growth as the first half is, but the rest of the world green shoots are coming through. We have a dominant market position in this, so we will continue to reap benefits over there. In the large ag segment, where the industry has degrown 17%, we continue to win new business. We won a very large business in Europe last year. We just won a new order in The U. S. In August, our U. S. Patent for the lower link hook actually came through, which is also something that will only add value to us winning new business in the large ag segment.

38:17 So this segment will continue to grow for us. And as this segment comes out of its trough, the market growth will only add to it. The fourth driver of our growth is going to be our Fabrication segment. And over here, like I said, 12% to 15% of our new business awards are in the fabrication segment. And this is where, again, we are putting in a lot of effort with OEMs and discussing how we can service their needs from small and medium fab facility that we have in Ljubljana. So these are going to be our growth drivers going forward. Understood. And then today, if we see Fabrication is probably less than like 2% of the overall revenues, but do you think it will land at, let's say, at 810% by FY 2028 or 2029? Is it how one can like see this? And also, in addition to this, my next question will be because we have sufficient cash on the balance sheet, should we expect a dividend? Or is there something material which the company is looking out to do in the next six to twelve? Because this is more from a capital allocation strategy, how like in the medium term the company is really looking is what we want to understand?

39:39 So Dheeraj, fabrication in the next eighteen to twenty four months definitely has the ability to be a meaningful third platform, which, yes, in the high single digits, if not 10% of revenue share. So yes, I think that's the effort and the endeavor that the teams are making. That is also how we are expanding our capabilities in that particular facility that we have. On the question that you've asked on the cash that we have, The company remains completely committed to our inorganic ambitions, and we continue to evaluate it or evaluate, like I was saying, more than six dozen opportunities.

40:31 So the first user sorry, half a opportunity. And so as I was so the first priority of the use of cash would be towards an acquisition. But as you know, that in an M and A, till we don't sign the dotted line, nothing is final. Again, we will not make an acquisition only for the sake of making an acquisition. Sandeep also mentioned that we are looking at CapEx right now, which is about 4% of our revenue because there is growth that is coming through. And keeping the organic and the inorganic needs in mind, if we are unable to make an acquisition, the Board will take the most appropriate call for the growth of the company, for the shareholders and for all the stakeholders.

41:28 Thanks a lot. I'll just join the queue. Thank you. The next question is from the line of Sachin Gupta from Trinity Capital. Please go ahead. We lost the connection for Sachin Gupta. We'll move to the next participant. The next question is from the line of from Simple. Please go ahead. Hello. Good afternoon. Am I audible? Yes, Yes, you are. Yes. I have just two sets of questions. One is on the gross margin and clarification. So every quarter, we had this ForEx impact in the gross margin.

42:13 Is there anything in this quarter? So, Nikhil, this quarter, if you see the currency is actually not done much. So the impact is very, very minimal. Yeah. So then a subsequent question is that if you look at over last sixteen quarters, our gross margin profile has moved from a range of 60 to 65 to now. So, yeah, sustainably between 65 to 67. And there have been quarters where we've we've gone beyond 68, 69 as well. But considering this range that it has happened, would you say, is it the mix change towards more construction equipment which is driving this, or is it largely driven by the model mix of whether we are selling through India or selling through our delivery channel warehouses in US? So which would be a larger contributor here?

43:13 So Nikhil, our gross margin typically tends to be in the range of 63% to 66%. There have been outlier quarters as you have seen where some of the performance or the higher gross margin has also been impacted by currency, all right? Think it's also fair to say that product mix does play a role, but you're absolutely right that the larger role is played by the delivery channel mix that we have. Our warehousing sales is our highest margin product. Then the next is our direct export and locally, have locally sold as our lowest margin product. So quarters where we have a higher warehousing sales, we will see better gross margin.

44:03 Sure. Last question. See, one very interesting point is on the large ad, which I think sir also mentioned and we mentioned in the presentation. I wanted to understand now if you look at two years back in terms of the new order wins, what was the share of large ad? And how is that share today in terms of new order wins? So, Nikhil, any new order that comes in large ad has to go through a very rigorous cycle of validation and then field testing. Because in the large ad space, the frequent linkage system that is used requires to carry and allow the functionality of much heavier equipment.

44:55 So the validation and the testing cycles are longer and they can last from anywhere from eighteen to thirty six months. We started putting in a lot of effort about two to three years ago in large ag to win business over here. And that is why today you are seeing that roughly about 35% of our new business awards are towards the large ag segment. Okay. Sure. And one last on the... Sorry to interrupt you, Mr. Upandaj. Sure. Thank you. The next question is from the line of Senthil Kumar from Joynery Capital Services Limited. My question on working capital, which has increased over the last six months.

45:45 Could you explain the key factors driving the increase, particularly the rise in receivables? Sir, I'll ask Sandeep to take this. Yes. So you'll see a rise in receivables basically coming from two wins, right? One is the overall revenue size has gone up. So that has led to the receivables going up. Plus, we had one or two customers in The U. S. Market, which where there were some payment delays. One, we have already streamlined and the other one would most likely get streamlined by November. So but the bigger impact is coming from the increased revenue and some payment delays from the two OEM partners. One is resolved, one is going to get resolved in November.

46:36 And these are not payment disputes, just to be clear, Sensil. These are what I would basically call technical issues at the end of the customer that they themselves are very cognizant and are working through. But if you see our working capital days is at one hundred and thirty seven days at the end of September quarter versus one hundred and thirty six days, which was at the end of March. Yes. So we are stable there. Okay. So what kind of working capital days we can expect for this, by full year FY 'twenty one? So we expect to remain around one hundred and thirty six, one hundred and forty days because of the delivery models that we have. So as you would have read, we do sales from warehouses.

47:26 We have since it's export market, two months of inventory on sea and two months in the warehouse. So that's where our working capital gets blocked. Other than that, we manage receivables and the payables well to offset each other. So inventory is something that is linked to the way we do the business. And all of this working capital is factored into our inventory and our inventory costs with the customers. Okay. Thank you. Thanks for the information. Thank you. The next question is from the line of Resham Jain from VVD Asset Managers. Please go ahead.

48:18 Yeah. Hi. Congratulations on good set of numbers. So I have two questions. The first one is with respect to your inventory, if I see your inventory from March levels has gone up by 5% odd. While now we are tracking close to 30 odd percent growth Y o Y. Should one assume that within the working capital bank, which you have provided just now, the requirement of inventory has come down a little bit compared to what you have seen. I'm talking about absolute inventory. It has not increased in line with your revenue.

49:05 So you are right, Visham. Our absolute inventory has increased lower than the top line growth, So I think there is a lot of concerted effort which is going on across the organization to ensure we do not overstock and we are at the right levels of inventory. And I think as far as our working capital is concerned, as Sandeep was mentioning, we manage our receivables and payables to offset one another. So we are, you know, I never able to remain in that one hundred and thirty five to one hundred and forty days of working capital days.

49:59 Okay. The second question is given that last almost four quarters right now, we have already given that second half, you could see 17%, 18% kind of growth, implied growth based on 24% growth number for full year. Next year, how should one think because the base is quite high and the overall, some of the segments might do well, but what is your own kind of internal target which you're working with in terms of growth next year, '28? So, Vishal, our business model is designed such that over cycles, we end up delivering mid teens growth year on year.

50:49 FY twenty six and FY twenty seven are our highest focus because the recovery is just starting. Again, I'm just going to repeat that you know the construction segment recovery is in full swing, small ag, the green shoots are there, the large ag still has to come in. Plus on top of this, we've been winning quarter on quarter. We've been telling you trailing twelve months, new business wins are $2.25 crores. So I think we're very confident of delivering on an average, like we say over a cycle that's mid teens growth in restaurants. Okay, perfect. Thank you. Thank you so much and all the best. Thank you. The next question is from the line of Soumil Shah from Paris Investments.

51:38 Please go ahead. So basically, in the previous calls, we used to mention second half should be better than the first half. And looking at our order backlogs and construction side also doing well, do we still hold on to those targets? Or are we revising it? So, Sameer, that remains second half is better for us than first half. It's just that your growth percentage in second half FY 'twenty seven will be lower than the first half because the base of FY 'twenty six second half was higher. Correct. Correct. But you also mentioned to one of the participants that Q3 will be in line with Q2 or Q1, you said? Q1 because Q3 seasonally is typically our lowest quarter. Year on year, if you look at our numbers, Q3 is seasonally our lowest quarter.

52:39 If you look at what happens in the Indian Ag industry, it is also the snow season for overseas. It's also holiday season. This is called Diwali in India. It is a Christmas time for the Western world. So this is typically seasonally the lowest one of us. Okay. So it would be more than the Q1? It's broadly in line with Q1. Okay. Okay. And in terms of our Mexico business, so as we mentioned, our first customer dispatches have started. So how do we see this type of business contributing overall, if if we can have your views? So the Mexico business will be single digit single digit revenue single digit million dollar revenue this year.

53:29 And we are working with three customers over there. We are starting with one customer. The other two customers, you know, we need to get ramp up with and and they are waiting to ramp up their own requirements. So as that happens and as the current customer, we ramp up this business, so this revenue will go up. Okay. Okay. That's it from my side. Thank you and all the best. Thank you. The next question is from the line of Manza Jain from SGFO Family Office. Please go ahead. I think my question is answered, so I think I'll rejoin it. I'll join it later. Thank you.

54:14 Thank you. The next question is from the line of Shivam Vatra from Ambit Asset Management Company. Please go ahead. Hi, team. Thanks for taking my question and congratulations on a very strong set of numbers. I am in continuation with a couple of other participants' question. So largely, post midterm elections, there is a lot of say, CapEx in The U. S. Slowing down. So just wanted to understand, since our multiple times, have mentioned that a large chunk of our construction equipment demand is coming from that. How how is it correlated or what kind of deceleration can we see? And also in terms of the long term contracts that you highlighted, could these get delayed or could these see cancellations also from customers if if you could give a better sense as to actually what is happening on ground?

55:15 So, Shivam, right now, the same when construction of a data center or a factory premises, all of these start, these are multiyear contracts. This is not multiyear contracts for us, but this is a multiyear contract for our customers. And these contracts are signed, capital is committed upfront, right? So these these contracts may may have delays that are associated, but typically, they don't see any cancellation. We are not seeing any slowdown in our order book. We continue to see healthy growth. We also continue to see healthy growth in the European construction equipment market. And I think it's already understood that the investment that is being done by AI, that is being done by the private sector into AI and data center is what is driving this growth.

56:15 Got it. Got it. So largely, we don't expect any significant change in our delivery schedules with the customers. Sure, ma'am. We have... We are not seeing any change in our delivery schedules. In fact, if you see the largest construction equipment manufacturer in the world has just announced a $20,000,000,000 investment in North America in a new manufacturing facility catering to The U. S. Markets only. And I think that actually indicates the strength of the demand and the recovery of the construction cycle. Got it. Got it. And secondly, on the Mexico warehouse that is coming up, so we expect to do single digit million dollar revenue in the next six months of this year, right, H2 FY 'twenty seven?

57:12 And in q two, we are not... Q two numbers don't capture any revenue share from that. Correct? No. We are only... We've only started dispatches in November. Oh, got it. Got it. Okay. Thank you. That's a lot. That's all. Thank you. The next question is from the line of Ashitosh Tiwari from Equities Securities. Please go ahead. Congress on good numbers. Just on agriculture side, at the peak in FY 2023, we had a revenue of almost INR $9.70 crores. And last year, we had done INR $7.17 crores. And you also have own orders from large degree side, new orders and all. So when we go to again probably next two, three down the line, our revenues will be much higher than what we did in 'twenty three, right?

58:06 So I think, Ashutosh, if you are looking at that business, right, I think you also are seeing that our business so our business is built for derisking and diversification. And as we've been growing in the last sort of eight quarters, we've also been seeing that growth is coming from different segments, construction and large So we continue to grow with different customers and different product lines with the idea that we will maintain this derisking and our growth should be there across product platforms with three point linkage, PMP and now we're also investing in growing fabrication, and this is both in the ag and the construction cycle.

58:52 So in the absolute terms, the three point linkage product platform will grow as the ag cycle recovers and our new businesses ramp up. But whether 3PL is will be higher or lower percentage of our revenue at the next peak, that will depend on how fast the PMP fabrication segments also grow around the I'm not talking about percentage of the revenue. I'm talking absolute amount I'm talking about, that it will go back to higher than absolute amount, right, because you got new orders from It's the same thing on the Typically, should because we are already growing faster than we were at our last peak in FY 'twenty three, right? Yes. I think what I'm trying to explain to you is that the growth in any one segment is not dependent on that segment alone. It's also dependent on how we are growing the other two segments.

59:47 Yes. Yes. So I mean so that's one. And on the construction side, in terms of the order that you have got recently or in last one year, will that lead to, let's say, trend rate increasing over next one year in the construction side? So Ashutosh, our new order wins that we get what we tell you is a trailing twelve month figure, right? And that is the estimated annual value at peak of a new business. So it's more like an SiP where it is what we add every twelve months and not really just the size of the business. So every twelve months, every win adds to the revenue on the top of the previous wins from the prior period.

1:00:38 And each win then takes two to three years to reach its peak, after which it grows in line with the business. Now these wins can ramp up earlier or faster depending on customer, product adoption and market demand. So I hope that gives you a color on how we are seeing new wins add to the revenue. Thank you. Ladies and gentlemen, we'll take this as a last question for today. I would now like to hand the conference over to the management for closing comments. Over to you. Thanks a lot, everyone. To conclude, this cycle is testing the entire industry and we are using it to become a stronger company.

1:01:28 We have improved our cost structure, build a more resilient supply chain for our customers and deepened our partnerships with them. We are now well positioned to grow in the focus areas we have identified. And as mentioned, as farm demand in North America and Europe recovers, as our new business wins ramp up, we expect to be well placed to benefit from both. With this, would like to thank our employees, our customers, suppliers and shareholders for their continued trust and support. Thank you, everyone, and I would like to wish everybody a very happy Diwali. Thank you. Thank you.

1:02:13 On behalf of Uniparts India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.