Harsha Engineers International Limited ($HARSHA)

Ladies and gentlemen, good day, and welcome to the Harsha Engineers International Limited Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Rangwala, CEO of the company. Thank you, and over to you, Mr. Vishal Rangwala.

Thank you. Hello. Good afternoon. Welcome all of you to our Q4 FY '26 post results update call. As per the normal practice, I'll ask our CFO, Mr. Maulik, who will take us through a detailed key numbers for the results. However, I'm assuming most of you would have had a chance to go through this. And at the outset, before I talk about the results and everything, I just want to kind of quickly summarize, talk about what we are as a company and what we do. So we are primarily an engineering company with a big focus on a segment called bearing cages, where we are a very unique player within the market with having competency in steel, brass and poly products within bearing cases and a very unique position globally having all these competency and precision level catering to very good quality bearing companies and their needs for bearing cases. And that's our primary business. And beyond that, we have worked over multiple years with big global bearing companies to outsource and supply them this product globally. And we have earned a very strong market position within India and across the globe as well. So that being the primary product. Beyond that, we also operate in the subsegment of stamping components using our core competency. And we also have bushing as another product portfolio where both those segments, we are growing very well and plan to grow further. And we cater to a variety of industry through those segments, including renewable as well as automotive, consumer goods and other industrial sectors. And we are trying to grow business. We actually operate three facilities in India. Third one we just commissioned this year in Bhayla and two facilities, one in Romania, one in China. And through these five facilities, we supply our customer base across the globe. And we are currently working on growing business in various segment, specifically for us, growing with Japan-based customer, growing the large-size plate business, growing the bushing business as well as growing the stamping business are some of our big growth drivers as we look at our future. So this is just to get you up to date on the area we operate. With a little bit of additional background this time around, let me jump to the results this quarter. I'm happy to inform our stakeholders that in spite of current global turmoil, which we are witnessing and which could have upset the rhythm of doing business, particularly in Q4 of the current financial, we have done quite satisfactory and have met most of our internal performance expectation on the key fronts. I'm happy to note that our India engineering business including all the key verticals have done very well in Q4 and financial year 2026. Specifically, Bushing have also reported a revenue of about INR 127 crores for the financial year 2026, in line with our expectation, posting about 25% growth over last financial year. In the current year also, we are having a very aggressive growth plan in tune of 25% to 30% in this segment. Our sale of large-size cages grew by almost 14% in FY 2026 and stood at around INR 49 crores. And sales to Japan-based customer grew by almost approximately 12% in 2026. And total sales stood at around about INR 73 crores. And as much as the large-size state segment is concerned, we are working very aggressively for increasing our wallet share. And lastly, if we talk about Japan-based customers, the progress, those flow is positive direction, and we are committed to growing this segment as well. India Engineering business, which includes Harsha Advantek, which is a subsidiary and has posted a good overall, so engineering business, India has posted a good overall growth of around 14% in FY 2026. Notwithstanding the fact that Advantek new unit and it's still operating at a lower capacity utilization. Thus, in FY 2026, export from India have also posted a good robust growth, almost 17% compared to FY 2025. Our export to U.S. have also started picking up, duly encouraged by fact that recently additional import tariff on cages has been reduced to 0 in U.S. I'm happy to note that capacity utilization in Advantek is improving, and we should see the sales from this unit growing at least 3x in FY '27. Thus, while in this current financial advantage through posted a positive EBITDA of INR 4 crores has still reported a combined loss of INR 11.4 crores due to higher depreciation and interest. However, the bottom line is also expected to improve considerably in the coming financial year. In spite of this drag in the current year, our India Engineering business has posted an operating EBITDA of around 22% in FY 2026, which is quite satisfactory. Now let me talk of a foreign subsidiary. As hinted earlier, China had performed well with an overall top line growth of about 9.26% in FY '26 over FY '25. and has also posted a positive EBITDA of around 11%. As announced earlier, we have already commenced implementation of China brownfield expansion project of steel cages. We believe that this will significantly strengthen the business presence in China, and we should expand our product portfolio from a predominantly brass-based cages to a good mix of steel and brass cages. This project should come in operation in H2 FY '28, and we should also see some improvement in EBITDA in China going forward. However, Romania continues to perform below par as it is still having negative EBITDA, resulting into a combined foreign subsidiary losses of about INR 11 crores in the current financial year or FY '26. However, we are trying our best to improve our product mix by focusing more on cages in Romania from current level of around 22% to more than 30%, 35%. And we are also pushing our key customers in Romania to increase their offtake from Romania. We have also started firming up our CapEx plan for the second phase in Harsha Advantek Engineers, where our focus will be to create additional capacity for our key growth driver verticals. We will be sharing more details as and when the plans are finalized in the next few weeks. Now talking about our Solar Business. You might have seen that it has performed very well, achieving strong top line and bottom line growth in financial year 2026, mainly on account of continued tailwind due to mix of increasing awareness and a good policy support from the government as well as private sector. Lastly, I feel confident that the current financial year FY 2026, '27, we should achieve an overall double-digit growth in top line, though the growth in India Engineering would be a little bit more aggressive somewhat in mid-teens. We are also feeling confident that we should be able to at least maintain our current margin profile through our endeavor, though our endeavor is to improve it going forward. I would like to thank you for your continued confidence in Harsha, and I would like ask Maulik to walk us through more detailed numbers. Over to you, Maulik.

Thank you, Vishal. Hello, everyone, and good afternoon. I believe you have already seen the numbers and the presentation we uploaded for the investor call. For the quarter ended March 26, our Engineering segment at consolidated level have achieved top line of INR 382 crores and EBITDA of INR 77 crores in the last quarter against our adjusted EBITDA of INR 64.3 crores in previous quarter and adjusted EBITDA of INR 66 crores in the last year Q4. While for the year ended March 26, the Engineering segment has achieved top line of INR 1,444 crores at consolidated level against the INR 1,269 crores last year. We have reported our consolidated EBITDA for Engineering business at INR 264 crores However, our adjusted EBITDA is around INR 270 crores if we adjust it for new Labour Code impact. While last year, adjusted EBITDA was INR 227 crores for our Engineering segment. For the quarter and year-end, we observed the margin has improved as defined by Vishal Bhai, mainly on account of the higher export sales and strong India demand followed by the better product mix and cost control. We also have a positive impact on financial earnings as well as ERP. Solar business has achieved revenue of INR 183 crores for the full year with a PAT of INR 10.2 crores for the financial year '25-'26 against the adjusted PAT of INR 5 crores last year. Our overall working capital cycle at consolidated level remain around 130 days at the year-end against 134 days in the previous quarter and 127 days in the previous year. We have incurred CapEx of INR 120 crores in the full year and around INR 20 crores in the last quarter at a consolidated level. Our Bushing business has achieved INR 127 crores, as Vishal mentioned. Just one correction. Our combined loss of subsidiary company in the current year is INR 9 crores, not INR 11 crores, which has been said. and previous year, it was INR 14 crores.

INR 11 crores is on the Advantek.

And with this brief on the financial numbers, I request operator to take the Q&A from the participants.

[Operator Instructions] Our first question comes from the line of Vaibhav Shah from Equirus Securities. Please go ahead.

Congratulations on a good set of numbers. My first question is on the 27% revenue growth reported during the quarter. So could you provide some color on the contribution from pricing versus the volume growth? And were we able to fully pass through the commodity inflation of the previous quarters?

First of all, 27% growth which you have observed is a consolidated growth. And the major contributor is our solar business over there, which has grown almost 100% plus, INR 91 crores is the last quarter number, while our engineering business growth is 15.7% similar year-over-year numbers. So just to break down this number for your benefit, 27% is including solar. And if I remove the solar business, it is 15.7%. And on your question for the pass-through mechanism, yes, it is very well established pass-through mechanism with the customer. So as per our agreed late period, it automatically passed through to the customers. Different customer has a different late period. But effectively, you can say that on an average, on four months, everything gets passed through.

Just one clarification by our engineering consolidated India business, including Advantek is about 16.6% quarter-on-quarter. INR 28 crores is the Q4 contribution of sales coming from Advantek.

Was it entirely driven by the volume growth or was there some pricing benefit as well?

Majority is driven by volume growth considering that the last quarter, which is September to December, if you observe, there has not been a significant material movement. The movement started at the end of December and rain up to around February or March for the metal prices, including brass.

My second question is on the India Engineering business. So while we saw the strong performance in FY '26 and primarily driven by the exports, while the domestic revenues witnessed relatively modest growth. So could you help us understand the key drivers behind the strong export growth as well as the reasons for the softer domestic performance? And it would be great if you could elaborate in terms of the end user and the customer segments.

Yes, from our point of view, the growth in export is driven by improving market, industrial global markets, improving European market as well as U.S. market because of the, specifically the tariff impact. So we, those were the factors supported the global market growth and things like that. Other factor on the domestic market, I think that has also grown very well according to us. One of the factors which is masking that is potentially the byproduct sales, which might be masking that partially basis of the numbers. But overall, we are confident including India growth has been very robust in FY '26.

So just to add India cage business has grown by more than 10% on a pure India to India cage. That's almost 11%. And then there is further growth in India level supported by our Bushing business and our stamping business, these two have grown properly, so it's not only that Bushing has grown or stamping has grown. It is cage also has grown a good volume.

Understood. And sir, lastly, could you share your CapEx plan for the FY '27 and FY '28.

So we are in process of finalizing all the details of our CapEx plan. Right now, we are already what we have finalized, what we are already looking at is about INR 30 crores, INR 40 crores of maintenance CapEx in India in this current financial year. And my assumption is a very similar number would be there next year. Also, you are aware that we have started the China expansion project and declared an investment there. So, reference to that, about INR 70 crores CapEx is expected to be executed in current financial year and a further INR 20 crores we are expecting next financial year. These are some of the things which are already clearly firmed and finalized. And there are other things which we are still working on. We are expecting that based on planning activity, we will potentially add to this, but it is still under discussion.

So, it's predominantly as he said in his speech, the second phase of Advantek, we are starting to work on the deck and probably in the next few weeks, the plan will be frozen. But the work will start this year itself.

Your next question comes from the line of Jason Soans with IDBI Capital.

First question just pertains to the Romania and the China subsidiaries. I just wanted to know the absolute revenue numbers for whole of FY '26 for Romania and China both? And if you could also possibly give the PBT numbers as well?

Okay. Sure. We already said that combined loss is INR 9 crores for China and Romania, but I'm happy to share the independent number also, which we will definitely publish also on the annual report. Harsha China has done turnover of around INR 120 crores with a profit of around INR 5 crores as a profit after tax. And Harsha Romania has done a turnover of around INR 247 crores with a profit after tax around INR 14 crores loss.

Okay. So, the revenue is INR 247 crores and loss is INR 14 crores for Romania. And China revenue is INR 120 crores and PAT is INR 5 crores, correct, sir?

Yes.

Okay. And my next question just pertains to, in terms of the demand situation, if you go back two, three quarters, the situation in Europe was pretty weak. Now just wanted to know and Europe being a key market for us, just wanted to know how is the demand situation right now in Europe, specifically pertaining to the Europe subsidiary?

So last whole year, we are seeing demand has slowly improved over the year. And specifically for the European subsidiary also, the demand is continuing to improve. Right now, the indication that it is all positive growing and we need to, how we turn around the situation from a cost as well as pricing and all those profitability point of view is our main concern. Overall, we see very positive indication from our customer for our subsidiary in Romania.

Sure, sure. So, things definitely have improved from what it was. So that's heartening to know. Actually, I just missed out on one question. I mean, regarding the Romania and China subsidiary. So combined, of course, now Advantek also is in the mix, so I understand that. So combined, when you look at the loss on a combined level subsidiary, it's around INR 21.6 crores to be precise. Of course, it will be a combination of Advantek as well as the China and the Romania entities. Now I just wanted to know, sir, when you look going ahead, '27, '28, are we definitely on a trajectory to basically reduce these losses going ahead because we have done a lot of work on the Romanian subsidiary as well in terms of restructuring and China is doing well. Advantek also will ramp up. So understanding is probably there should be a decent ramp-up of all these things and probably losses will get to reduce considerably going ahead, '27-'28.

Yes, I think it's covered by Vishal in his introductory speech also that Advantek has a loss of around INR 1.5 crores or more because of the first year of operations and mainly despite of positive EBITDA, there is a loss on account of higher depreciation and interest on the loan we have taken over there. Gradually, this will reduce because utilization will increase in this year. We expect it to be more positive trend this year at Advantek level. While China is already in a positive territory and will increase there. And Romania is already on with customer, and we are hopeful this year to reduce this loss further compared to what we already reduced this year compared to last year and further, we will reduce in the coming period.

Exact quantification may be difficult, but definitely there will be reduction for sure, significant reduction.

That's very heartening to know, sir. That's good. And sir, again, so I spoke to you about the situation. I just want to know the situation domestically, the likes of our big three in terms of the bearing manufacturers, localization, CapEx, how do you see demand for that on the ground?

We see very positive picture. Our customers have significantly ramped up their demand and capacity in India, responding to probably all the signals from automotive as well as industrial market. And further, we feel that there will be another round of investment to cater to the existing or upcoming demand from our customers are the indications we see. So, we are very bullish. There could be impact of current war and petroleum prices and all that, that could have some impact from a short-term point of view. We don't know yet. But overall, we are very bullish and working towards growth. And we are banking on that to continue our growth journey in the domestic market.

Okay. So, things seem to improve. In the midterm, it was looking a little slow with all the restructuring, particularly one customer, one entity and all those. So now it's picked up the demand and you are seeing good demand trends going ahead.

Right now, we see good traction.

Yes. And just finally, I'll just join back in the queue. Sir, I just wanted to know in terms of revenue per geography, how do we, now of course, in the presentation, you can see that on a consol level, 58% of revenue is outside India. So, 42% is basically, I'm just talking about 26% for the year '26. So, 42% stays within India? And how is the other breakup, sir? How do you, just wanted a breakup of the geographies, what contributes to the total revenue?

We've already spoken in the past on this, Jason. Our majority geography outside India is Europe, followed by China, America, Japan and others. Europe usually contribute on a larger scale because there is a casting also from Romania in Europe and that also part of our overall top line. Usually, Europe in this micro is in total sales is around 19% in the total sales. And China and America will be around 10% plus and others will be there. Sorry, my bad, my bad. Europe is around 30%. My bad, I'm just correcting myself. Europe is around 30% in the total sales and China is more than 10%, America is around 6% and followed by Japan and others.

Okay. Sorry... So China and U.S. are 10% each and Europe is 30%, you said?

Yes, China is a little higher than 10% and U.S. is around 6%

Japan?

Japan is still not significant around 2% plus.

The next question comes from the line of Jaymin from Ardeco Asset Management.

First question is can you break down the full year export growth into the three buckets, the recovery in the end market, Europe or the U.S. wallet gains within existing customers or geography commercial

Sounding a bit muffled right now.

Can you hear me?

Better, if you're using any other mode, may I request you use the handset mode, please? It is better.

Can you break down full year export growth buckets? One is the recovery in the end market that is Europe or the U.S. Second is the wallet share gain within existing customer or geography? And any new commercial program for the new geography.

No, I mean we do not share this data to the investors. And basically, we've already given a good amount of breakdown of our export sales in the previous question itself.

So just wanted to understand, I mean, the growth we have seen for the full year basis. Is it more led to the recovery? Or I mean, have you break the new program within existing customers?

It's a mix of both. It's a mix of both. All three items are there, you are right, but we cannot give further breakdown to it.

Okay. And when we are seeing mid-teens kind of growth for the coming FY '27, how, I mean, how should we think about the contribution from export Advantek ramp up domestic demand.

I think Vishal has already covered in his speech. We expect India to continue to grow in a higher teen or mid-teen to high teens, and that will be contributed by both India growth as well as our export growth will continue. That's the expectation.

And when you look at your customers' performance, right now, they are using a pricing action to offset the inflation pressure in their respective geographies. Have you seen any change in the sourcing behavior or the localization that is benefiting you I mean that is going to benefit you from the near to medium term?

So I mean, I think what you are trying to say that our customers are looking at us only to offset the pricing. Actually, that's not correct because through our competencies, we have now become an indispensable partner with them because we play a very important role in helping them grow their product portfolio by making sure that cages are always available. So as you know, cages is about 5% of the total bearing cost in terms of value. Now the problem here is that customers, the big players have stopped investing in new facilities or upgradation of their facilities over a period of last many years, whereas we have a massive advantage of volume accumulation. So we have done absolutely up-to-date upgradation of technologies, skill sets, manufacturing capacities, everything. So it is not only the cost part, but it is the speed, the development at which if they want to develop a tool, they might take much longer time. We do very quickly. The cost at which we are able to develop that new tool, I think all these factors become very critical. And this is one product where a customer does not do any further processing. If you look at engineering, out, anything, they do grinding, but the cage they directly put it in the bearing and it's a very important component. So I think the cost is important, but not the parameter for them to consider.

My question was different. My question was, I mean part of the customer, they are facing inflation in the cost front. And right now, they are offsetting cost inflation with the pricing piece. We are not doing vendor consolidation or any change in the sourcing piece. Anything you are seeing from your side that would benefit you in terms of your vendor consolidation or increasing outsourcing.

That's an ongoing projects, Jaymin. As we already informed you, outsourcing is the area which is more beneficial to whenever there is a global scenario or global challenges. And it's an ongoing thing. There is nothing specific which we have to announce today. But yes, new product development and outsourcing activities and ongoing activities and pricing pressures are in our favor.

The next question comes from the line of Jay Shah from Genuity Capital.

Congratulations for a good set of numbers. I had two questions, sir. One was on the Advantek subsidiary. What in your estimate would be the time line to ramp it up to the maximum capacity? And what is the ballpark figure in terms of top line that Advantek can contribute? And second question is, sir, this is a bit longer term over the next 2, 3 years, I mean, keeping aside the current volatility. But since we are into precision components also and apart from that bearing cages, the CapEx cycle that we are seeing locally and even globally what do you see is going to drive Harsha's growth as a company over a 2-, 3-year period? What components or rather what sectors do you think are going to help Harsha achieve the long-term goals?

Let me take your first question, Jay. About the Advantek optimum capacities. So Advantek is still in a growing and fixed asset spending stage. But what I can say you is based on the current installation capacity, we expect it to reach to the peak in next 2 years, the current installed capacity, but we also expect it to get into the next phase of expansion also meanwhile. Hence, it is difficult to give you precise answers. But with the current installed capacity, we expect it can give us around INR 250 crores to INR 300 crores turnover. And as I just said, this will further enhance as we further go for expansion in our Advantek. And on your second question about growth and area where we can grow better, I ask Vishal to give you more insight.

So for us, cage is an important growth driver. And within that, we have identified that increasing the outsourcing or wallet share through in-sourcing to outsourcing is a very big growth driver for Harsha. And within that, large-size cages is there we see that a lot of manufacturing is moving to India, which should also additionally benefit Harsha bearing manufacturing moving to India. So we are also bullish on bearing industry growth and within that additional growth coming to Harsha based on the outsourcing as well as resourcing as well as India, so more India manufacturing and us having a big share of market in India and so on. So cage is a big growth driver for us, including even we consider Japan-based customers growing wallet share with them. Beyond bearing cages, we expect at least stamping component and bushing business to also grow much faster. We are expecting from a midterm basis, at least 15% to 20% growth in these 2 segments, we are expecting because we are investing in new capacity, additional product portfolio even in these 2 product lines. So right now, we expect that all three established currently established product lines should give us deliver a good growth numbers. And then further, we are looking at expanding this portfolio beyond. But in the short to midterm, these are all good growth drivers for us.

Just to quickly add to complete the story, as you would have seen in the presentation, we have given the data of SKUs that are being developed every year, about 500, 600 new SKUs. One SKU is one particular type of product, which has strengthened my SKUs to beyond 8,000. Now these are the new products which are the pipeline for cage to come to us going forward, and that is an indicator that how the pipeline is quite robust. On the bushing also and stamping, we are developing new products, new variations, multiple variations. So we are filling the pipeline there also. I think the serviceable market is much bigger. we should continuously see at least at the India engineering level a minimum 15% growth year-over-year in a normalized situation. We don't find any problem. Whereas the bearing industry per se globally doesn't grow more than maybe 7%, 8%. This is where we are.

Understood, just one more follow-up on the same, sir. Since you said that in-sourcing is a big strategy and a lot of manufacturing is moving to India and since Harsha is already engaged with all the bearing majors of the world. Is there any discussions with all these bearing majors to given Harsha's capabilities that more and more parts apart from bushings and even cagings and other components that they are looking at more parts to give to Harsha given your capabilities and your relationship.

So, we are not really going beyond stamping products with our customers. So, at times, we expand our portfolio with our customer beyond bearing cages, and we have successfully done that. But primarily, that would mean stamped product beyond bearing cages and a few other products. We do not really intend to majorly as we speak today, we are not having a strategy to go into any other specific bearing components beyond cages and related stamping and other components. This may change. But right now, that's our stated.

And there's a reason I have a very big headroom for growth. So in India, my wallet share is say 70%, 80%, 90% as with all these big customers, the wallet share varies from 10% to 20% on the established relations and maybe Japan [Foreign Language]

Understood. Sir, what was the reason, if I may ask that over the last few years that we couldn't ramp up the wallet share? Are they looking for facilities outside India? I mean, basically closer to the end customer or factories? And was that the reason that we couldn't scale up and that's why we are putting more money now in Romania and China?

So I think primarily the markets, last few years, we faced a big challenge of degrowth in our biggest market of Europe and a little bit in China side, specifically and even a little bit in U.S. last year. Now having said that, they have started coming back. So partially, our growth is driven by that. And also our growth currently is driven by all the new additional wallet share we won during that time, but realization got delayed. and now they are into execution. So we don't see that as a challenge as a wallet share degrowth, but more of we couldn't move the wallet share and the market softened over, our biggest market softened over the last couple of years.

So sir, would it be fair to assume in Europe, like it has happened in chemicals and even in some cases, casting forgings, a lot of big players have gone out of business. Has our sector also seen some consolidation, and that's why we are now more confident to get incremental wallet share?

Yes, you're right. See, I can't share any specific names, but yes, there is some consolidation. And that is also driving our endeavor to increase our wallet share. You're right.

Understood. And just as a last question, if you could throw some light on sectors that are really doing well in India and Europe and sectors as you would be speaking to your customers and their customers over a medium to long term?

So we are seeing, as I said, overall also across, I mean, without going into subsector, industrial has been doing very well last 6 months plus and current indication is that, that should continue. And we are seeing good growth on the automotive side, specifically India and some potential green shoots on the automotive across the globe, but not very clear about that one. In general, as yet, wind has not picked up in Europe, which we are one of the factor of the plant in Romania facility is quite focused on, was quite focused on wind as a primary market. So that is not yet a great news. But beyond that, we are seeing industrial sector across the board growing and supporting even we are seeing positive signs of railway in India and across the globe, some orders coming in specific to that and so on. But again, we would not have a very sharp insight into a subsector because at the end of the day, we supply to customers who assembles it and gives it to a sector or industrial or automotive.

The next question comes from the line of Saket Kapoor from Kapoor Company. Please go ahead.

Sir, if we look at our last two financial years, we have done CapEx to the tune of closer to INR 210 crores for FY '25 and INR 120 crores for FY '26. And now the plant and the property, plant and equipment closing balance is at INR 615 crores. So at peak utilization level, sir, what should be the likelihood number? I think so now with the inflationary trend, what should be the revenue trajectory that we are anticipating? Or how should we look at this number of INR 300 crores translating into the business opportunities going ahead?

So, before Maulik bhai gives you a specific answer one thing, the new CapEx of Advantekalso includes a fundamental infrastructure development, which will not immediately translate into a fixed asset multiple. As a revenue multiple. But yes, Maulik. That's right.

And that's why Mr. Saket, if you see our all plant and machinery is obviously the block we have. But considering the capability and followed by our maintenance CapEx, we expect the current set of business can easily reach us at India level around INR 2,400 crores to INR 2,500 crores and consol level can be around INR 2,700 crores to INR 3,000 crores depending on what kind of capacity we look into because at, we also have a casting capacity, which is the independent capacity from the cage. This is the input to your question, Mr. Saket.

Sir, last year, we did around, I think, more than INR 100 crores for the bushing segment. So what have we outlined for the current year? How are the order books for the bushing segment in particular?

Vishal has already covered in his introduction. The expectation this year, Bushing is also to continue similar growth trajectory of around 25% to 30%.

We did INR 127 crores in FY '26. In Bushing.

And in the caging part also, sir, I think for the large cages, we were finding it more headwinds going ahead. correct me there. So in terms of the product profile, which segment are you seeing better opportunities? And how should the category perform?

Large-sized cages have done about INR 50 crores, 14% growth this year. We expect at least this segment to keep on growing in mid-teens without any problem, 15% to 20%, no issue. A lot of things are in pipeline.

Sir, as you alluded to earlier that we are anticipating mid-teen growth for the current financial year. So, and what should be the EBITDA margin trajectory?

EBITDA, we continue to say, the blended EBITDA only. But we expect our EBITDA, as you must have seen in last few quarters, it has improved. And we expect it to continue to improve marginally. And over the period of 2 to 3 years, our expectation is overall increase of 100 to 200 basis points in our EBITDA. At the Consol level, India has been consistently doing about 20%, as you know.

Already given this. And this time also, we are coming up with our AGM also earlier. So a lot of insight and annual report would be at our disposal much early than what it used to be. So thank you for the team for looking into the matter.

Your next follow-up question comes from the line of Jason Soans with IDBI Capital.

Sir, just wanted to know the absolute value of the stamping revenue for FY '26.

Absolute value is INR 60 crores.

INR 60 crores. And this is also expected to grow by 20% next year?

Yes, yes. It will grow better, yes. Yes.

And sir, just a follow-up question. I just wanted to know, I mean, again, when I go to the past, I spoke about this, the Europe demand was weak. Now we are seeing situation improving on the ground. Just wanted to know, sir, what is your thought on because it's a very important market for us. What is your thought on the sustainability of this demand? Has something changed on the ground that demand trends are coming back? Just wanted some color. You've done a lot of restructuring, et cetera, as well. Is that working out well? Or has the macro situation improved? Just give us some color on the demand situation in Europe and how sustainable this can be?

So as I said earlier, Europe is slowly improving. There is no like a definite like a big stroke of improvement. We are seeing a slow, sustained improvement happening in Europe from a demand point of view. On the some improvement and structuring, we still see that there is an ongoing work. We don't have completely. We are not done yet, and there is a lot of still pending work within that in terms of creating a right cost structure. In Europe, we are continuing to face massive inflationary pressure in Europe, which is also adding to this whole challenge. So from an overall outlook, we are bullish on the demand side of it. We are seeing, I think someone was mentioning about there because of the downturn and the inflationary challenges, a lot of companies has an impact, and we are hopefully so far surviving. But we are also evaluating how long we can do with this kind of negative margins. So how we can quickly improve on the operational side further. And also, we are looking to improve on the top line faster. That's the intent. Having said that, I don't have a very clear direction or like an input from our customer on that demand improving to the level needed immediately, and we are continuing to work on the cost side of it. So again, a very healthy picture, but that's what we are working with right now, but very hopeful and positive.

And sir, just wanted to know in terms of bushing, you have seen very good growth and expectations are also for good growth ahead as well. So what is driving this growth in the bushing space, 25%, 30% is very healthy. So just wanted to know what is driving this growth, sir, on this point?

So this is primarily there is a conversion for design. So in the wind market, wind gearbox there is a conversion happening on, so if you look at a planetary gearbox, the planets which were earlier using bearings are now using bushings, and that is driving this drastic growth. So the underlying market is roughly the same or maybe growing the wind market, specifically in India, but it's the growth is driven by more and more design coming under the bushing concept vis-a-vis the earlier design of bearing concept.

So that's more driven through a design change, which is good.

Substitute market.

Yes, yes. And sir, just in terms of stampings, I would just assume that in terms of end user markets, it will be again varied between automotive and industrial. Is my understanding correct?

Correct. It's of automotive, industrial, railway as well as we work with one big chunk is going into consumer goods, white goods. So we are making big growth driver for us. One of the big growth driver for us is air conditioning compressor components as well as white goods like home appliance, some of the stamping components for that, and that is driving that.

White goods is okay. So it goes into white goods as well, which is pretty good, okay, with the AC market also going to expand. Okay. That's good, sir. And just finally, sir, I wanted to know, I mean, in terms of the Middle East crisis, we have seen this, of course. Now just wanted to know any issues during the quarter in terms of any logistical issues, shipping or any raw material price increases? Or going ahead, do you envisage anything impacting us adversely?

I think there is definitely an impact on the cost side of it. which we are trying to mitigate. I don't have a clear answer on that to what extent and where, we are seeing the impact across the board on the input side of specifically when we use some of the oils, lubrication things in our production, that all cost has a cost impact. Our plastic case material obviously has gone up. That is also an issue which we are dealing with or addressing it, countering it or working on passing on. But on the logistics front, so far, we have not seen any impact. specifically because if you remember this whole seal crisis happened about 2, 3 quarters back and anyway, taken the hit and impact a few quarters back. So that route shipping route has remained clear of current immediate crisis for us at least.

So considering that also, sir, I mean, you see margin you can basically improve from here on. I understand this can be a near-term pressure, but even considering this, you can expect going ahead, we can basically improve margins or at least maintain margins, current margins?

Our intention is that there is definitely pressure on other on the input material for sure.

The next question comes from the line of Hiten Boricha from Sequent Investments.

Sir, my questions have been answered. So you mentioned growth will be around for India as well as for overseas business. So I just wanted to know a very good growth on the solar segment from INR 140-odd crores to around INR 185 crores. So can you share the number on that?

So we expect solar also to continue grow well. I think you are asking for the solar growth, right?

I think it's grown around INR 35-odd crores..

It is also in the tailwind side and solar will continue to grow because the government policies are much favorable, especially in Gujarat territory. And we expect it to grow more than 25% also going forward.

And with that growth, our EBITDA margin should improve from current levels, right? It has seen a very good operating leverage from 4.5% to 8% level in FY '26. So there as well, right?

We expect Solar to maintain the last year reported EBITDA margin, maybe marginal improvement.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Vishal Rangwala for closing comments.

So thank you very much, everyone, for attending this conference. Appreciate your time so late in the day, and thank you, and have a good evening. Thank you. Thank you.

Thank you. On behalf of Harsha Engineers International Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.