MTAR Technologies Limited (MTARTECH.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the MTAR Technologies Limited Q2 H1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from MUFG Intime. Thank you, and over to you, sir.

Thank you. Good morning, everyone. On behalf of MTAR Technologies, I extend a very warm welcome to all participants on Q2 and H1 FY '26 Earnings Discussion Call. Today on our call, we have Mr. Srinivas Reddy, Managing Director and Promoter; Mr. Gunneswara Rao, Chief Financial Officer; Ms. Srilekha Jasthi, Head Strategy and IR. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on the exchanges on the company's website. I would like to give a short disclaimer before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinion and expectations of today. The statements are not guaranteed for our future performance and involves unforeseen risks and uncertainties. With this, I would like to hand over the call to Mr. Srinivas sir. Over to you, sir.

Hello, and good morning to everyone. Thank you for taking the time to join us today. Today in the call, I'm joined by Mr. Gunneswara Rao, Chief Financial Officer; Ms. Srilekha Jasthi, Head Strategy and Investor Relations; and Orion Capital, our Investor Relations partners. We have uploaded our updated investor deck, press release and business highlights on the stock exchanges and company website. I hope everybody had an opportunity to go through the same. To begin with, in Q2, we have recorded revenues of INR 135 crores with 12.5% EBITDA. And we are looking forward for a very strong second half, almost 2x of the sales done in the first half, with a revised guidance of 30% to 35% increase in revenues for FY '26 compared to our initial guidance of 25%, which is driven by robust order inflows scheduled for execution within the fiscal year. While there is a temporary dip in EBITDA in this quarter, this is a short-term phenomenon, and we expect a strong performance in the second half of FY '26, which is clearly indicated by the kind of orders which have come in, which have to be excluded within this fiscal year itself. Our annual EBITDA margin is predicted to remain around 21%, in line with our initial guidance, supported by improved operating leverage and higher capacity utilization Notably, the order book we have closed at INR 1,296 crores as of -- at the end of Q2 compared to INR 930 crores at the end of Q1. And further, we have received orders worth INR 480 crores post Q2 as on date. So based on the expected inflow of orders during the year, financial year '26, we are expecting a closing order book of close to INR 2,800 crores by end of the year, which is a substantial increase compared to last year, based on the additional orders coming in from clean energy segment, nuclear space, et cetera. We expect a robust performance in the segment, vertical itself in the second half of FY '26 with revenues of approximately INR 340 crores anticipated during the period. The solid oxide fuel cell, SOFC, industry continues to witness from growth momentum with the customers announcing plans to double its manufacturing capacity to 2 gigawatts by 2026, supported by large deals with various customers. Based on this, we have already planned the required expansion plans for the from the existing 8,000 units to over 12,000 units by end of March, which is a substantial increase, and further expansions are being planned for additional to go up to 16,000 units by September of next year and by March of next year to go up to 20,000 units capacity for this particular division. This is -- these expansions are purely based on the kind of orders we are receiving and the forecast we have for the subsequent years as well. The much anticipated fleet reactive orders are expected to be received in the coming weeks, totaling to approximately around INR 500 crores for where all the details have been finalized and the POs are expected anytime during this month itself. With the execution schedule over the next 3 years with various packages that we are going to work for and the highest order that we have received -- we are going to receive in this manner for the nuclear divison. So based on this, from FY '27 onwards, this vertical is expected to record significant growth backed by strong pipeline of all these new orders and also the orders are expected from the refurbishment reactors of 5 reactors have being refurbished, where tenders have been floated and we have participated in all such tenders in the recent past. As expected these orders would be expected in this financial year from the refurbishment as well. So we should end up close to about addition overall about INR 800 crores of orders kicking in into the company by the end of the year in the Nuclear Division itself. For the Aerospace and Defense segment, the company continues to follow strategic growth path engaging in key programs with leading MNC customers and domestic entities as well. And as you are all aware, we have also participated in the recently interest aligned with our long-term strategy. We also initiated discussions with new global OEMs and expanded program engagements with existing aerospace partners as well. And we are definitely in line with the development of various and some of them have also gone to volume production during the course of this year. We're witnessing a notable margin improvement in this vertical as well and expect to execute close to about INR 100 crores less worth of orders in this vertical during the current financial year. And the momentum of this with the completion of the for the various projects that we are doing, we have substantial growth happening in the coming years as well. In addition to this, the company expects a robust performance across the products and other verticals as well, with an annual revenue exceeding about INR 100 crores in this products vertical as well as in the current financial year. And moving forward, the products vertical as well will show a substantial improvement in terms of revenues based on the kind of orders we have received in the recent past. We are also clearing to our Oil and Gas division and with volume production expected to ramp up from next fiscal year once the new oil and gas plant becomes operational by June 2026. With strong order visibility across multiple sectors, the company is well positioned to accelerate its growth over the next 2, 3 years. We remain enthusiastic about the new opportunities and challenges that lie ahead, as we continue to capture this growth momentum. While working capital days are currently elevated due to higher inventory levels built to support purely the expected growth in Q3 and Q4 which is almost 2x of sales compared to the first half. The company anticipates reducing them to around 2 to 3 days by end of this fiscal year. This improvement will be driven by current efforts to streamline inventory management amidst the strong growth of the company is poised to witness. We continue to closely monitor working capital and cash flow management to ensure sustainable and energy growth as revenues expand across all business verticals. Now I would like to hand over to our CFO, Mr. Gunneswara Rao, who will discuss in detail on the financial performance for Q2 FY '26. Over to you, Gunnes.

Okay. Thank you, Mr. Srinivas Reddy. Good morning all. Thank you for joining us over the earnings call. I'm going to take care of quarterly performance, Q2 FY '26 versus Q1 FY '26. Our performance is more rated, that is due to inventory buildup for the next 2 quarters. So revenue from operations stood at INR 135.6 crores in Q2 FY '26 has against INR 156.6 crore in Q1 FY '26. EBITDA reported at INR 17 crore in Q2 FY '26 as compared to INR 28.4 crores in Q1 FY '26. Profit before tax stands at INR 5.7 crore in Q2 FY '26 as against to INR 14.8 crore in Q1 FY '26. Profit after tax was INR 4.2 crores in Q2 FY '26 as against INR 10.8 crore in Q1 FY '26. So I just want to discuss the working capital days as our MD has already highlighted, we wanted to bring down to 220 days present higher working capital base due to the inventory WIP built up for the next 2 quarters, revenue forecast, which is almost 2x of the first half of the year. Whereas in absolute terms, the working capital is reduced by INR 21 crores compared to the last quarter. Though the number of days were higher, the absolute working capital is lower by INR 21 crores. So we remain committed to improving this further and are targeting to 220 days by end other FY '26. Other positive sign is the cash flow from operation improved significantly to INR 39.8 crores compared to the negative INR 1 crore in the previous quarter. We expect this momentum to continue and are confident of surpassing last year's full year cash flow performance. The order book position of the company as of 30th September '25, stood at INR 1,297 crore, whereas as of 5th November, it was INR 1,703 crores, which is already disclosed to stock exchanges, recent orders whatever we have received. We expect a strong acceleration in order inflow during the second half of the quarter and remain committed to sustainable growth. Our outlook and strategic priorities in the company, the -- immediately, the company wanted to achieve the turnover 2x in the second half of the year. And as you all know that our customer is increasing their capacities in the domain. So we expect a significant growth in this sector and also civil nuclear power. In case of civil nuclear power, as our MD told, we are going to receive around INR 500 crores of orders in this month, almost everything is finalized, it is in the last moment, last phase. In case of aerospace, also, our verticals continues to scale at a healthy pace. We are seeing encouraging traction from the existing customers. Also, the existing customers have additional -- they have added additional scope into the our product portfolio, whatever we are delivering in timely manner and in quality -- 100% quality. And also, I just want to highlight that we are setting up the oil and gas sector in a dedicated asset at facility, which is going to be commissioned in the next year, second quarter onwards. And over the past year, we have seen strong tailwinds driven by national priorities from clean energy and civil nuclear expansion to greater self-reliance in defense manufacturing. These ships are creating an encouraging environment for your company that combined engineering depth with execution strength. Our diversified portfolio, our people and study investment we have made in capacity give us the confidence to keep the building on this momentum. In the near term, our focus as our MD told, maintaining EBITDA at around 21% and achieving around 25% above revenue growth in FY '26 compared to the previous year. Thank you for your continued support. We will now open the floor for questions and answers. Thank you.

[Operator Instructions] The first question is from the line of [ Sandeep Tulsiyan ] from Sundaram [indiscernible].

Thank you for sharing the road map for capacity expansion in clean energy going from 8,000 to 20,000 units over let's say next 18 months. If you could also share some details how much of this expansion would require you to set up a new facility and what kind of CapEx will it entail?

See, basically, initially from 8,000 to 12,000 we are doing in our existing plants, which will be commissioned by March. And that should be approximately around -- roughly around INR 35 crores to INR 40 crores. Already, we have -- the plan is to ensure that the expansion plan is completed by end of March. We already have the infrastructure in place. It's only the equipment, furnaces and related balancing equipment to be received, which we have already issued the purchase orders, and we should have them by March. And then based on the commitments driven by and the forecast and the way we are looking at things, we need to expand further by another 8,000 units going up to 20,000 units. So we are trying to set that up in our existing infrastructure That's the plan. And that -- the initial phase of 4,000 will be done by September of next year, and the additional 4,000 should be done by March of next year. So it should be close to about -- since we have the infrastructure in place, it should be close to about INR 60 crores of CapEx, which might require to go up to 20,000 level from 12,000 to 20,000. So that's the overall plan. The way the demand has been created upsurge in the overall demand. And this is what we are looking at having the capacity of 12,000 by end of March and 16,000 by end of September of next year and 20,000 by end of March FY '27.

Got it. Got it. Second question is also regarding you mentioned earlier that the would probably get a upgraded from 60, 30 over to 70, 30 gigawatt configuration. And also, you have, in the meanwhile, doing a lot more components for these which is increasing your wallet share within the total output for So just wanted to understand now what proportion of the final box here? And second related question to that is, in light of these tariffs, there was a plan to assemble these hot boxes in future in India, where are we in terms of the on that front?

See, we have already added as much wallet share as possible in the hot boxes that has been done over the last -- over our Q2, actually. And it's a continuous process. And at this point of time, see, tariffs are not being affected in terms of what we are doing today because of the kind of percentage of hot boxes compared to the overall broader picture, what you see with Bloom right now on your customer right now. So as far as the overall SME is concerned, that's a long-term plan, moving forward over the next 2, 3 years. But today, we would like to focus on the hot box related items. Then we also have the products division of ASP, which is also -- yes, we have received substantial orders compared to what we were doing in the first half of this year. So almost like 1,25,000 units each quarter we have to execute. And we also planned additional smaller expansion plan to enhance the capacity from 80,000 units per quarter to 1,25,000 units per quarter over there as well. And similarly, you can see a similar kind of upsurge in inquires as well from industry where they're looking at -- they were buying actually around 500 units per quarter, now it's gone up to 1,000 units per quarter. So we are seeing a substantial increase -- incremental increase in every area involved in the fuel cell segment apart from the hot boxes as well.

The next question is from the line of [ Viraj Parekh ] from [ Carnelian Asset Management ].

Just a few questions. First, I think you laid out a good CapEx plan of approximately INR 60 crores for hot boxes. I think for Weatherford, also, we are doing an amount of CapEx in the region of INR 100-odd crores. Given we are expecting a significant nuclear order and our working capital cycle is quite high, so I wanted to understand that over the next 3 years, how do I look at the function of the company? Are we going to be taking more debt? How are we looking to fund the CapEx and manage the working capital as we are growing exponentially over the second half and even the next 2 years going ahead?

Gunnes, do you want to answer that, please?

Yes. So regarding the working capital, as we all know, whenever we get orders from our existing customers, be it even clear power or fuel cell our working capital cycle in the fuel cells is around 180 days. So any incremental revenue will require 180 days of working capital required. So what presently, what we are trying to do is whatever is possible in the case of inventories and other things we wanted to reduce as much as possible. In case of fuel cells, the credit period is 45 days net, which means after reaching U.S. 45 days, it is to be counted. Around 100 days, it is our working capital. and 60 days for inventory and the operating cycle. So around 160, not 180 -- 160 days is working capital required. We are targeting to raise debt as of now. but we will use our internal accruals to both for CapEx also for the working capital requirement. Presently, if you look at my working capital, debt is only INR 77 crores out of INR 400 crores of -- almost INR 420 crores of working capital deployed in the company. So we are going to raise a debt of additional, say, maybe INR 150 crores, INR 200 crores to support the growth. And even if I take my debt won't be more than INR 250 crores at any given point of time in the next -- I mean in the near future. And also we are receiving advances. CapEx also we're going to raise a debt. As and today, our long-term debt is around INR 100 crores only. And every year, we are repaying INR 46 crores every year. So by next to 2 years, existing debt will be 0. And we will have a new debt of, say, maybe INR 150-odd crores we will raise for proposed expansions in oil and gas and fuel cells capacity buildup everything.

So are there any other CapEx plans apart from fuel cells and oil and gas?

No, that INR 150 crores as of now for the existing clients, whatever we have, as and when the new revenue opportunities arranges, we will take up at that point of time. So we are not incurring any CapEx on the anticipation of orders. So only once we have a confirmed forecast or orders then only we are incurring the CapEx.

Right. I had a question on the nuclear side. I think you're expecting around orders this month or this financial year for Kaiga-5 and -6. And you also said that we participated in a few refurbishment tenders. So keeping both of these in line, do we have -- in the tenders, we are expected to receive and the one who participated in provided that whatever the win ratio we have, we achieve it. Do we have enough capacity to cater to this -- to these orders? Or is it like this year CapEx may come back-ended?

Yes. We have the capacity to handle the whatever orders we are anticipating around INR 800 crores from both refurbishment and mega engineering. So we have a capacity only bottle like we have to address, which is not going to be more than INR 20 crores, INR 30 crores. Our existing capacities are there and which we can use for this INR 800 crores orders.

Got it, sir. And I also understand there was about some tie-up or some projects. So if you could like elaborate a bit on that, it would be helpful for us to understand the defense space what are we looking over the next 5, 10 years?

Yes. This is regarding -- can come again? I...

I think the advanced aircraft...

Okay, Project. Presently, we have signed an EOI with the Adani Aerospace. And we have submitted our expression of interest with ADA. So they will finalize the qualified people out of the 6, 7 people have participated in this race. So ADA will decide based on the qualification criteria and then they will see to all the eligible people based on the quotation submission of our quotations, it will be decided. And the financial first 6, 7 years, we have to develop 5 prototypes. Later on, 126 members of the aircraft is -- missile is required.

Okay. And then last question. This quarter kind of our margins and certain operating expenses led to kind of a weak kind of an operating margin for us. Anything specific this year? Is this the trajectory that you continue going ahead?

No. There are some projects in the domestic sector, which has a long lead time. We have to build the inventories. If you look at our working capital, which is almost INR 200 crores of working capital. All this working capital is made to order scenario, not made to stock scenarios. So we are building up the inventories for the future sales. That's what as we told earlier, second half of the year will be 2x of the first half of the year, our revenues. We have a confirmed orders. We are in line -- we are in the process of achieving that target.

Our next question is from the line of Meet Jain from Motilal Oswal.

Sir, my first question is on the fuel cells part itself. So we are seeing a good traction from the Bloom Energy in terms of ordering. So my question is regarding our margin profile with them going ahead with the bulk of the order coming in and the ASPs what we are seeing? And any operative intensity we are seeing from our Taiwanese partners also from this front?

Absolutely not, Meet, because basically, the demand is so high right now, in fact, the customer is looking at even 16,000 kind of units at this point of time, but we are trying to expand to 12,000 behind of the year. And also moving forward, as I mentioned earlier, we are looking at additional expansion of 8,000 more units in 2 different phases. Phase 1 will be by September and Phase 2 by March. But as far as the on hot box is concerned, even with regard to the products, if you look at the ASPs as well, we had a capacity of roughly around 70,000 units, and now we are moving up to 1,25,000 per quarter. So there is an incremental expansion plan and different divisions that we are looking at, at this point of time. And I don't think there is any kind of pressure in terms of pricing or tariffs or anything at this point of time. And even Bloom is expecting the tariffs to come down, but let's see how it goes, but that's not going to really affect the plan what we have in place with it.

Understood. Sir, on this, can you more clarify this what you're talking about is 1,25,000 products that we

That's the ASPs that we are doing, right? That's a separate division we have in the Products division, which we supply again to Bloom as well where we are doing -- we're going up to 1,25,000 units which translates to a substantial increase in the -- compared to the first half of this year.

Understood. Understood. And second part is on the working capital. As Mr. Gunneswaraji had already mentioned the working capital days, so more on that part. So as you know, in the working capital has been a bit of concern in terms of fuel cells and seeing a good strong growth in this segment. So any measures are you taking in terms of inventory management or management to -- or receivable side to bring it down to a substantial level? Any thoughts on that?

We are working on that. Gunnes, you can answer that.

Yes, yes. We are working on various initiatives in reduction of inventories and trying to increase our payable days. And in case of Bloom is only 160 days compared to our targeted working capital days of 220 days. So the more is the Bloom production, it will be 160 days. It is always it is going to be lower in the total number. So as far as the working capital, we are trying to ensure that we are just in time of bringing the material into the factory. So all those measures are -- we have taken now staggered deliveries. We have already initiated staggered deliveries space on the production requirement. So we'll try to achieve 220 days in the current financial year. And our long-term target is around 200 days next year and 180 days post a couple of years from now.

Okay. And sir, last question is on the current quarter. If you see current quarters, we have seen a in each of the segments, like be it aerospace, be it your nuclear, be it your fuel cells. So any light on that? Is there a deferment of execution or what led to us slow down in this quarter?

No, there's not -- see, we're really not concerned about Q2. The reason being that there are a number of factors. One is there has been a prolonged discussion on the tariffs with our customers during the quarter. And while doing that, it's almost look like 3, 3.5 weeks to push back the whole thing because we are exporting also in aerospace to U.S. We're also exporting, obviously, Bloom to U.S. So we have stuck to our position in terms of where we are and not to get the tariffs affected because we are in the technology area. And we have developed various innovative things for our customers over the years, which has put us in a very strong position to get them also the savings over the years. So that took some time to really push back and to discuss and finalize various things. And that's what we look at right now and the surge also happened at the same time subsequent to that and in a big way. So a lot of planning had to be done in terms of what we need to do. So that's why you can see the second half, we have a clear position where we have the strongest order book ever MTAR has seen before. And we are very confident of achieving twice to sales in the second half with higher margins, so that we end up with our guidance of 21% margin on a conservative basis. And also, we had set the guidance of 25% for revenue growth, which now we are saying it should be between 30% to 35%. That's around close to about INR 900 crores of revenues that we can generate for this year. And we see a very positive kind of forecast for the next financial year as well. I don't want to talk about numbers right now, but based on the kind of expansion plans we have, which I've explained, all of you can simply analyze all that stuff. But that's how it's going to be. So we'll give -- we'll give more details in the Q3 earnings call for the next financial year.

Sure. Okay. Last clarity question is the closing order book number. You mentioned around INR 2,800 crores, right?

That's right, yes.

The next question is line from the Balamurali Krishnan from Oman Investment Advisors.

First question is regarding this partnership, the partnership with Adani. So what is our scope in that one engines. How much share we are expecting and if it is go through?

Yes. Srilekha, you want to answer that? They're asking about the AMCA program with Adani the details, can you answer that, please?

Yes, sir. So when it comes to AMCA, we just participated in the expression of interest along with Adani as a nonlead partner, where Adani will be the lead partner with 50% equity stake, and we will be the nonlead partner with 50% equity stake. So the whole concept of this AMCA is whichever consortium wins this order, they need to form a joint venture and they need to take up the production of 5 prototypes. Later on, they'll be able to take up the product 126 aircraft manufacturing orders. So when it comes to this project, it's a very prestigious project to be taken by Indian ecosystem and every has participated [indiscernible] participated in the EOI. Once will get shortlisted in the EOI, we'll be able to participate in the bidding fees we need to submit the bids, post that only we'll get to know what are the winning changes. So it's a long-haul thing. We'll get to know who stands where in the coming 5 to 6 months.

So all the how long it will take able to know and further any time lines, ballpark time lines?

So coming to the time lines, like they might announce who got shortlisted in the EOI in the coming couple of months, post that we need to participate in the bid, which will take around 3 months-or-so. So by May 2026, hopefully, they'll be announcing who has won the bid. And then within 3 months, they need to form a JV and they need to take up that 5 prototype order. Government of India is planning to roll out first prototype probably by end of 2028-or-so. The time lines are very ambitious when it comes to AMCA as against LCA pages, which took a lot of years to develop. So they are trying to get this 5 prototypes in the next 10 years, which is a very ambitious time line. And if this program takes off well, it's going to be very good for Indian aerospace industry.

Fair enough. Srinivas sir, on the Bloom side, I think this year, you may close by around INR 500 crores from the Bloom. So I think Bloom has also won from so many orders in the recent time. So what is the indication from their end for the supply of this hot boxes in the coming years? How much we can expect?

No, I've already explained that, right, Bala? Basically, we are expanding to some 8,000 capacity to 12,000 by March. That's purely based on the order inflows, what we have. And then we are progressing to 16,000 by September and 20,000 by March of next year. So that itself is an indication the way it is growing in terms of the demand cycle, what we have and moving on forward as well. It's not about this 1 year, 2 years. I think we see a very good traction coming in for the future years as well.

Got it. One follow-up on so we are directly shipping them to U.S. So I think we have a plan to make a complete assembly of the so if it is done, then maybe we can supply these boxes directly to the customer site like maybe South Korea, like that. Is it possible, sir? Is it on cards or anything needs to be done in this year?

No, that's going to happen over the next 2, 3 years. But at the end of the day, most of the orders, if you see the AI data centers, most of them the orders are booked in U.S. and they also have enough demand in South Korea as well, and they're also entering into Europe in a very big way. So it's a transition which will happen over the next 2, 3 years. And there are a lot of outside factors also involved in that. But look, we have enough on our plate right now in terms of executing all these orders, substantial surge compared to what we had earlier, right? We were looking at hardly 3,500 and odd per year and stuff like that. But now we are looking at almost a phenomenal amount of -- see, we are expanding purely based on the demand and the orders received. So we should -- I think we should go step by step and ultimately achieve what we want to do, as you mentioned.

Good sir. Sir, any update on this electrolyzer part, sir?

Not as yet. There's enough surge on the existing hot boxes itself. And electrolyzers, it will take a little more time. Like we have already executed it. We have done it, we have proven it. So that the hydrogen part of the story will take a little bit longer than what we can think about right now.

The next question is from the line of Balasubramanian from Arihant Capital.

Despite tariff hurdles we're witnessing strong order inflows. Sir, my first question regarding the Bloom Energy dominant driver maybe INR 150 crore per quarter kind of revenue from FY '27 kind of we may expect. And sir, the first thing Bloom is entering it into a data center side, what is our scope of work in data centers and what kind of opportunities we have? And secondly, on the side, the battery program, when we expect the commercializations and permit opportunities and revenue size will we expect over the next 4 to 5 years time frame?

See, look, I've said this earlier as well. See, basically, our job is to supply the units to Bloom. The power generation is done by Bloom for all the data centers, which is really in a very big demand right now. There is a huge power shortage, and that's what they're capturing more and more orders. That's getting translated into our order book position out here in terms of what supplies we do to Bloom, right, that's point number one. And as far as -- so that's on the really good uptrend, the surge is also very high. So we have planned everything very well in terms of execution, in terms of expansion plans which I've said by March, we'll have 12,000 units of expansion plan in place. And by next year, we'll have another 8,000 moving forward in a couple of phases in September and March. So that's the plan what they're looking at, purely based on the order inflows and the forecast given, strong forecast given to us and to plan ahead of time. So fortunately, we had enough capacity to begin with around 8,000 units, which we never used it in the past. So we had that capacity, so which we are able to service with me to the requirements of the customer at this point of time, and we are increasingly 12,000 by March. So that's what we're looking at. And if you look at it even over the next 4, 5 years, this uptrend is going to continue. And coming to Fluence, we are still working on the prototype second prototype that we are doing. And once that is done, hopefully, I was talking to our team, and they said that we should be able to finalize the long-term agreement sometime during the year, mostly by Q4 of this year. And to begin with, then we had established the required facilities for them and we're looking at second half of next year to solely start the batch production. And then you look at probably around revenue growth of what you're looking at between INR 200 crores to INR 400 crores of revenue coming in over the next 2, 3 years. And then they keep going higher and higher from there on. So that's what we're looking at right now.

Okay, sir. Sir, we are targeting a 2x kind of revenue in H2 compared to H1. I just want to understand what are the key challenges we have faced in Q2? And what kind of implementations we are going to do to achieve those targets? And I have seen inventories have been ballooned to nearly INR 450 crore kind of range. And this inventory is especially dedicated to current order book executions are expected over long-term subecontracts also?

No. Basically, most of the inventories, whether it is in raw material or in work in progress are related to the existing orders that we have and also the orders that we have received, right? So all our existing -- you don't build inventories without any orders. So it's all -- some are short-term orders that are getting excluded and some are slightly longer term. So the challenges that we faced in Q2, as I mentioned earlier, is the tariffs, which we had to really negotiate and push back on various aspects. And then we were successful in terms of finalizing with our customers without affecting our bottom line. And that's -- that is more of a priority for the company looking at the long term of the company and not to get in a situation where we get into a situation where we reduce our margins and all that. So we stuck to our position in terms -- because we're in the technology area. And the overall BOM cost for Bloom is not much compared to what we do. So overall, it was a -- see, on the positive side, we have done everything possible to circumvent the tariffs and to ensure that the company's long-term growth and margins are maintained. That's what we're able to achieve in Q2. Obviously, during this process, it took almost 3, 3.5 weeks to do this stuff, so which what -- a lot of dispatches got delayed. But subsequent to that, everything is back to normal right now. It doesn't matter what the tariffs are. And we will be in a position to achieve the 2x of sales in the second half and also adhere to the much higher revenue guidance than what we have given earlier. And also, we'll be able to maintain the overall annual margins what we had guided earlier. So that's where we are today.

Okay, sir. Sir, on the margin side, last Q1, we did 18% and Q2, 12.3%. Now you're guiding 20% kind of margins. What are the levers to achieve those margins in H2?

So basically, the higher revenues, point number one. In terms of what sales we have forecasted for Bloom, we've confirmed dispatches close to around hot box itself, we've been at around INR 340 crores of revenues being generated there, it is very clear on our dispatch plan. And then the various other segments and products that we are shipping out. So obviously, with those kind of revenues, which we have never achieved before, right, we didn't even touch INR 200 crores in a given quarter in the past. Now we're looking at almost like close to INR 300 crores of revenues each quarter for this year. And I'm not talking about the next year, the next year is a different ballgame altogether. So that's going to compress our overheads going to the percentage, overheads are going to come down drastically and reduction in inventories. So a lot of things are going to happen to have much improved margins over the second half of the year to average out at around 21% EBITDA for this year. And you can see a substantial growth in the subsequent years with much better margins moving forward.

The next question is from the line of [ Abhijit Singh ] from Systematics.

My first question is on [Technical Difficulty].

Abhijith, you are actually breaking up and we're not able to hear you.

The last question is disconnected. So the next question is from the line of Nikhil Agrawal from Kotak Nondiscretionary PMS.

Sir, my question is more on the data center side. So while we are tapping the data center boom in the U.S. through Bloom Energy, do we see India in the market relatively as the country we're much better place on the

Yes. India needs to have the infrastructure as well, right? You need to have the gas pipelines and all that stuff. So already Intel has our units there in Bangalore. So it all depends on the kind of infrastructure that can build within the country to have this. So that's where we stand. So probably in the long run, we'll have that. It's not today to subsequent years. So look, right now, we have enough demand abroad in U.S., Europe, everywhere, South Korea. So we need to have the kind of infrastructure to have those kind of systems out there.

[Technical Difficulty]

I can't hear you well.

[Technical Difficulty]