S.J.S. Enterprises Limited (SJS.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to SJS Enterprises Limited Q2 and H1 FY '26 Results Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you, Subnali. Good morning, everyone. On behalf of ICICI Securities, I would like to welcome you all to Q2 FY '26 Earnings Conference Call of SJS Enterprises Limited. Today, we have with us from the management team, Mr. Joseph, Promoter and Managing Director; Mr. Sanjay Thapar, Group CEO and Executive Director; Mr. Mahendra Naredi, Group CFO; and Ms. Devanshi, Head of Investor Relations. Before I hand over the call to the management, I would like to congratulate the team for the strong quarterly performance. I'll now hand over the call to Devanshi to take the call forward. Over to you, Devanshi.

Thank you, Ronak, and good morning, ladies and gentlemen. Wish you all a very happy Diwali. We appreciate you joining us today's conference call. We will begin the call with opening remarks from Mr. K.A. Joseph, our Managing Director; followed by a business and industry overview from Mr. Sanjay Thapar, our Group CEO and Executive Director. After that, Mr. Mahendra Naredi, our Group CFO, will walk us through the financial performance for the quarter. We will then open the floor for questions. Please note that the duration of this call is expected to be around 60 minutes with the first 20 minutes reserved for our management comments. Should there not be enough time for all questions, please feel free to reach out to us via e-mail, and we will respond to your queries at the earliest. Thank you once again for your time today. And with that, I will hand it over to Mr. Joseph for his opening remarks. Over to you, Joseph.

Yes. Thank you, Devanshi, and good morning, everyone. I hope you all had a wonderful Diwali with your families and loved ones. I trust you had an opportunity to review our investor presentation and the results published yesterday. As we move into the details of the quarter, I'm pleased to share that SJS has gained strong momentum, consistently delivering robust growth and outperforming the underlying industry across all business segments. The company has delivered its highest ever quarterly performance across all key financial parameters, reflecting in both top line growth and margin expansion. The revenue for Q2 FY '26 grew at 25.4% Y-o-Y to INR 2,417.6 million, significantly outperforming the combined 2-wheeler and passenger vehicle industry growth of 9.5% Y-o-Y. During the quarter, SJS continued to advance its long-term strategy of becoming a one-stop decorative aesthetic solution provider. I'm delighted to share that SJS has signed an MOU with BOE Varitronix, a Hong Kong-based company to collaborate in the manufacturing of automotive display solutions for 4-wheeler industry. This marks SJS's entry into advanced display technologies. Such strategic alliances and investments strengthen our manufacturing capabilities and readiness to meet evolving aesthetic and functional needs of global OEMs. In addition of premium high-value products will further enhance our portfolio and increase the kit value we deliver to our customers. SJS is well positioned to capture emerging opportunities arising from premiumization, technology convergence across automotive and consumer industries, ensuring sustainable growth and reinforcing our leadership in decorative aesthetics. Lastly, I'm pleased to share that for the sixth year in a row, SJS has been certified as a Great Place to Work in the midsized organization category by Great Place to Work Institute. This recognition underscores our commitment to building a positive workplace culture and creating an empowering environment for our employees through various people-centric initiatives. With that, now I hand over the call to Mr. Sanjay Thapar, who will take you all through the business and the industry highlights for the quarter. Over to you, Sanjay.

Thank you, Joe, and hoping all of you had a wonderful Diwali. I'm happy to report that Q2 FY '26 was a record-breaking quarter for the company. SJS continued to maintain its strong growth trajectory. The company achieved its highest ever quarterly revenue of INR 2,417.6 million, up 25.4% year-on-year, outperforming the industry growth by almost 3x. This strong performance was primarily driven by our continued momentum, both in the 2-wheeler and the passenger vehicle segments. Some key business highlights. Q2 FY '26 marked the 24th consecutive quarter, where we have outperformed the industry. Our consolidated revenues were up 25.4% year-on-year compared to 9.5% Y-o-Y growth in the 2-wheeler and passenger vehicle industry production volumes. Automotive segment, 2-wheeler plus passenger vehicle revenue grew 29.5% year-on-year, driven by strong growth in the 2-wheeler segment by 44.3% and passenger vehicle segment by 16.5% year-on-year. H1 FY '26 automotive revenue grew 26.3% year-on-year, outperforming the industry growth rate of 5.5% Y-o-Y by over 4x. Consolidated revenue for H1 FY '26 rose 18.4% year-on-year. In Q2, the company recorded its highest ever consolidated profitability margins with EBITDA at 29.6% and PAT at 17.9%. We also achieved record exports revenue of $231.9 million, up 40.9% year-on-year, driven by new product launches and growing business from existing clients. Our focus on North America continues to strengthen, supported by investments in new product technologies and capacity expansion. Free cash flow to the firm, FCFF stood at INR 677.7 million with net cash position improving further, reflecting a very robust balance sheet. As mentioned earlier, SJS signed the MOU with BOE Varitronix to collaborate on manufacturing of 4-wheeler automotive displays in India. BOE is one of the world's leading display solution providers for the automotive industry. This partnership will leverage BOE's technological expertise and SJS's strong customer connect and manufacturing strength to create localized display solutions for OEMs. The collaboration will be formalized through a technical assistance agreement or a joint venture in the coming months. We also added several new customers, including Orafol USA, which is a supplier to Nissan, River, EV 2-wheeler company, Azad, which is an EV bus manufacturer and Same Deutz – Fahr tractors, reflecting our continued focus on winning new businesses and expanding our customer base. It is immensely gratifying to witness how SJS has evolved over the years. What was once our annual performance in FY '21 is now almost a quarterly run rate. To illustrate, FY '21 revenue was INR 2,516.2 million, whereas our Q2 revenues alone was INR 2,417 million Similarly, in FY '21, our EBITDA was INR 797 million for the whole year compared to INR 728.4 million Q2 that we delivered this quarter or last quarter. And FY '21 PAT was at INR 477 million compared to that, we achieved INR 432.7 million in the Q2 of FY '26. Our capacity expansion projects at Bangalore and Pune are progressing well. These initiatives will enhance our production scale and readiness to serve next-generation product demand across the automotive and consumer segments. This quarter, SJS achieved several industry recognitions, including the ACMA Kaizen Awards for cost saving and productivity, the CII Emerging Sustainable Practices Award, Grace Place to Work Certification renewal, QCFI awards for Kaizen and Quality Circles and CII CFO of the Year Award for 24-'25. We also take great pride in having received from Hero MotoCorp, the Hero Value Leader Award at the Global Supplier Summit, a recognition of excellence and strong partnership at an early stage of our engagement with one of the largest 2-wheeler OEMs globally. On the ESG front, we continue to make steady progress. We are pleased to announce that our solar power usage has commenced at both our plants at Pune. This underscores our commitment to clean and sustainable energy. While at Bangalore, almost 83% of our energy comes from renewable sources. Our target by the end of FY '26 is to ensure that approximately 60% of our consolidated energy requirements should be from non-fossil fuel sources. To conclude, Q2 FY '26 has been a milestone quarter, not only for the record financial performance and industry-leading profitability margins, but also for strategic initiatives that strengthen our foundation for future growth. As we move ahead, our focus remains on scaling up our presence in the premium aesthetic solutions, driving innovation for next-generation products, deepening relationships with global marquee OEMs and maintaining a commitment to sustainability and long-term value creation for our shareholders. I now would like to invite Mahendra, our CFO, to take you through the financial performance. Over to you, Mahendra.

Thank you, Mr. Thapar, and good morning to everyone on the call. It gives me great pleasure to share that quarter 2 FY '26 has been the best performing quarter in the SJS history, both in terms of scale and the profitability. Our Q2 financial highlights are: we have achieved revenue at INR 2,417.6 million, up by 25.4% Y-o-Y basis and 15.3% sequentially, driven by robust performance across 2-wheeler, passenger vehicle and the consumer segment. EBITDA at INR 728.4 million, up by 40.9% Y-o-Y basis and 24% sequentially, with margin expansions of 300 bps to 29.6%, supported by a richer product mix, improved operating leverage and the cost optimization initiatives. PAT of INR 432.7 million, up by 48.4% Y-o-Y and 25% sequentially with PAT margin improving by 278 bps to 17.9%. For H1 FY '26, our consolidated revenue stood at INR 4,514.1 million, up by 18.4% Y-o-Y, while EBITDA rose to 28.7% to INR 1,315.7 million. This translating to an EBITDA margin of 28.7%, up by 210 bps on a Y-o-Y basis. PAT for H1 FY '26 stood at INR 778.9 million, up by 35.7% on a Y-o-Y basis with margin improving to 17.3%. Now from a balance sheet perspective, SJS remains debt-free company with a strong net cash position of INR 1,588.8 million as of 30th September. Our cash from operations, CFO for half year H1 FY '26 stood at INR 1,077 million, matching the full year FY '24 levels of INR 1,087 million, reflecting the strong cash-generating nature of our business. Returns ratio remained healthy with ROCE at 33.6% and ROE at 20.4%. I'm happy to inform that we are returning to pre Walter Pack in the acquisitions level. New generation products contributes around 23% of our consolidated revenue in H1 FY '26, demonstrating growing adoption of advanced and premium solutions among OEM customers. Exports achieved their highest ever quarterly revenue of INR 231.9 million, up by 40.9% Y-o-Y, contributing 9.6% to our total revenue. This includes deemed export, which is supplies to Indian purchasing office of the global OEMs for use in their overseas plant that aligns with our strategic intent to strengthen SJS global footprint. Overall, these results reaffirm SJS's ability to deliver sustainable growth with strong margins, robust cash flows and a solid balance sheet. With that, I hand it back to Mr. Thapar to share his outlook for the future.

Thank you, Mahendra. SJS is very well positioned for sustained growth backed by our strong financial performance, operational excellence and a very clear strategic road map. Our net cash position at INR 1,588.8 million provides ample flexibility to fund our ongoing capacity expansions, including the greenfield chrome plating and painting facility at SJS Decoplast Pune and the capacity expansion at our Bangalore facility. These investments will strengthen our manufacturing capabilities and enhance our readiness to serve growing customer demand. A key pillar of our long-term growth strategy is to expand our global footprint and deepen customer relationships. We aim to increase export revenue share to 14% to 15% by FY '28, driven by geographic diversification, new customer acquisitions and increased traction from global OEMs. Our exports momentum in Q2 highlights our progress towards this goal. The innovation remains central to our strategy. We are actively expanding capabilities in optical cover glass and display solutions in India and will soon formalize a partnership with BOE Varitronix, through a TAA or a joint venture. Additionally, we are developing in-mould electronics, IME, illuminated logos and several new generation aesthetic products that combine functionality with design excellence. These initiatives will drive realization improvements and strengthen SJS position as a one-stop decorative aesthetic partner for our OEM customers. As we strengthen our relationship with major customers and expand both automotive and consumer segments, premiumization continues to be at the core of our strategy. By moving up the value chain through differentiated technology-enabled offerings, we expect to enhance our kit value and sustain our track record of industry outperformance. Given our strong performance in H1 FY '26, we have revised our guidance upwards, now expecting to outperform the industry growth rate by over 2.5% in FY '26, translating into enhanced value creation for all stakeholders. With a diversified customer base and expanding order book covering over 90% of FY '26 forecast revenue and a continued focus on innovation and execution. SJS is well placed to sustain its growth momentum and strengthen its market leadership. With that, I conclude my remarks. Over to you, Devanshi, and we are happy to take any questions.

Yes. Moderator Subnali, you can take questions.

[Operator Instructions] The first question comes from the line of [indiscernible] from Ashmore Research.

Sir, congratulations on a very good set of numbers. Sir, I actually like to know in 2023 and early '24, you are pursuing a lot of deals related to the consumer electronics, which is one of the most -- one of the high-growth sector in India. So currently, can you just throw some light what is your plan? In fact, you had some tie-up with Dixon also. But currently, if you can throw some light on this sector going forward, how you are planning?

Consumer businesses are center of our focus. We continue to do what we did with Dixon. We are exploring opportunities to grow this further. So this is an ongoing process. I at that moment, do not have any further update to share with you on specifically the consumer electronics segment. But overall electronics as a focus has increased. As we said, even the illuminated logos that we do are a part of the electronics foray, but that is automotive. For the consumer businesses per se, business are growing well. So whatever we forecast revenues we have, we are achieving those. And we are forever discussing new projects that we could engage with consumer appliance customers and third-party manufacturers.

Okay. And in terms of the overall diversification from the -- see, because many times this industry, specifically the 2-wheeler sector is pretty much cyclical in nature. And first of all, one of the great things I have seen that you have moved earlier used to give 1.5x. Now it is moving to 2.5x. That is a major change. So -- but in terms of the -- you mentioned that you want to increase your exports. But obviously, it will take some time definitely. So overall, in the next 3 to 5 years, what is your plan to move away from the domestic cyclicality of the 2-wheeler sector -- over 3 to 5 years, not now. Just now, Yes, please go ahead, sir.

Yes. So what I have maintained earlier, our focus very clearly is there's a very, very large market outside India. We are focused on building capabilities and relationships to tap that market. We have announced in the past, we won very large businesses with major automotive and appliance OEMs globally. We started supplying products to them from the last quarter. As you can see, our growth in the export segments have been quite significant. We've grown more than 40%. So those orders ramp-up is across multiple plants in these regions in exports. and we have started supplies to some of the plants. So the numbers that you see for our exports last quarter are a reflection of that. So overall, I think we are progressing very well. We've entered some new customers as well in the export market. So apart from Stellantis, we will be supplying to Nissan. We won a major business with a Tier 1 supplying to Nissan in the overseas markets. So that business is on the cusp of starting off now. So the overall balancing of our pie in terms of sales across segments, we are very, very conscious that on an overall level, we should not be overdependent on one sector, whether it is 2-wheelers or 4-wheelers for consumer. And happily for us, growth -- we see growth potential in all these areas. I hope I answered your question.

The next question comes from the line of Ganeshram from Unifi Capital.

Congratulations on the strong performance Sanjay, Mahendra and team. I have 2 questions. The first one is, in the past, you've told us about how the Stellantis contract or the Whirlpool contract the size and the period of execution. When we look at the new order wins that you received, could you give us a sense of quantitatively, what sort of opportunity size are we looking at? When do we sort of think of ramp up? And how we displace competition? How are we securing this?

Sorry, which specific market are you talking of? Or you're talking of a global phenomenon overall for the company? I didn't get your question quite right.

No, I'm just asking for the new order wins that you reported, for example, Nissan, if you could just give us a sense of what the opportunity size is for what component and what kind of ramp-up you're expecting? And if you could nuance it with how you're displacing your competitors in the overseas market, right? How are the negotiations going and what's giving us that edge?

Okay. So as I've said, India, we benchmark ourselves across the world with the major competitors that we have. And we find that all the printed decorated business, we are quite well placed in terms of the margins that we can generate. So there is a competitive edge that India has because these products, as I've mentioned earlier are a dashboard operation. They require printing, they require a very large number of SKUs to be managed and delivered very efficiently to customers. So our track record of supplying to multiple countries across the world, more than 22 countries we supply to, more than 200 customer locations we serve without a hiccup. So all that builds confidence. And as I said in my last earnings call, the business wins that we had or fantastic business wins that we had with Stellantis, so it is -- we are just a step away to showcase those business wins that if we can and where we have the wherewithal to supply parts, aesthetic parts, which have a very high threshold for quality. So customers are very, very conscious. So we are one of the very few companies, which have the capability to deliver this across the world in very large volumes at very competitive prices. So Nissan was one customer, which we were tapping and like we are tapping other customers as well. And we've been successful in winning the business there. And this is going to be, again, open the door to a very large global customer. And we are very proud of the fact that we won this and all marquee OEMs now find SJS presence very attractive, and we hope to grow this business. So I mean, as I said earlier, India, we are a leader. Globally, the opportunity set is so large that we are just tapping to this market. And this is just another example of what we have -- overseas businesses that we won with this major customer.

Yes. And just as a follow-up to it, if you could give us a sense of the opportunity size that you have with Nissan and how the execution period will look for this?

We do not or would not like to share the exact numbers because, as you can imagine, it's confidential data. We also have -- so we have some limitations there. But suffice it to say that the overall guidance that I've given you is 14% to 15% of our consolidated sales should come from exports by FY '28. So we are progressing well on that direction. We are continually bidding new businesses. We pitch for new businesses, and we are successful. So I think directionally, that's where we are going. And that should give you confidence that we are walking the path that we laid for ourselves.

And just for the second question was on the display technologies. I know we've been considering additional scope of work for a few quarters now. So just to check where we arrived at in terms of progress and how the opportunity size has evolved from what you had initially planned to where you are at right now? What's your thinking on the business there?

Okay. Our initial foray into -- the reason why we got into display technology was that this was a technology that was disrupting the dials that you have. So new generation vehicles have display solutions. Now these display screens require printing on the display screen, some special lamination and coatings, which are anti-reflection, anti-glare, et cetera. So we understand these businesses well. And we said, let's get into making of cover glass. Now when we started talking to customers about cover glass, they said that we are also looking at suppliers who could maybe assemble the display in India. At that point in time, we said that let's see if we can find a technology partner because we did not have any technical know-how or expertise in this area. So we've been successful in tying up with a very large and one of the leading global players in this business. So BOE is a global leader in this technology. We signed an MOU. And we are now -- we've also built a plant. We are now populating it with equipment to service the Indian market. So it's progressing well. So whatever we set for ourselves in terms of finding a technology partner, we are successful. The plant is -- the building is ready. We are now populating it as we speak in terms of mapping the opportunity set, and we will install equipment to meet the requirements of the customers. So that's the current status.

Just the last follow-up on that. as things stand today, what is your expectation in terms of time lines for when we would be sourcing customers and looking to start supplies?

So we are already pitching for this business. So these are discussions. So I would imagine that would take FY '28, we should be able to see volumes coming out of this plant. And then progressively once we have set the ground, then, of course, ramp-up should be fairly quick. It takes about a year to establish the plant and trials and approvals and all that. So that takes time. So FY '28 is what my best outlook is for the moment.

The next question comes from the line of Vijay Pandey from Nuvama.

Sir, a couple of questions on the export side. Just wanted to understand when we say 14% to 15% of revenue share from exports, from which of the key markets we are targeting, like currently, it's at around 9% or 10%. So how do we expect to go from here to 14%, 15%, especially given the tariff scenario and other things?

Yes. So the world is beyond U.S. So I don't think that U.S. will be out of the Indian markets purview. So as I've said earlier, the products that we produce are fairly niche, high tech. And when we benchmark competitors, who are today existing in the U.S., we are very, very well placed in terms of pricing power. We have the economies of scale. So understand the competition set we have. So these are fragmented players, who are much smaller, who focus on just one technology and -- so on the other hand, SJS has a whole plethora of technologies. When I talk to export customer, I can enter with one business. So let's say, a badge with one customer, but then I have 14 different technologies to offer. So our opportunities to win business is quite high. And unlike -- and most of these global customers want to deal with fewer and fewer suppliers. They want to deal with suppliers, who have the capability of delivering products on time of the highest level of quality. So at SJS, we've spent a lot of time over the last 10 years building and showcasing our capability. So printing business is -- the hub is India. And I think because of this dashboard operation that we have, we have a very strong competitive edge. So that continues to play out. Whenever we pitch for new businesses, we are getting very positive feedback from customers. And to answer your question on what specific target that we have in the world. So as we say, we are just stepping out of the shore of India. So the entire world is our playground. North America is a very large automotive market. That continues to be strong. Europe is very strong. Southeast Asia is a large market. India, of course, is a large growing market. So we have many businesses everywhere and even Latin America. So a lot of appliance businesses that we have, we have opened doors to customers in Latin America. Southeast Asia is something that we are working on. So broadly put, it's a $4.7 billion market out there. And I think we've focused on building our capability to address the requirements of the customer. And that is giving us very good traction. And we are confident that 14% to 15% of our consolidated sales from FY '28 should be from outside India.

Currently, what will be our exposure to U.S. and Europe separately like in terms of percentage?

You're talking -- asking you to forecast the future or what is the current level?

Correct. Correct. Correct.

So what -- so you want the forecast or what is the current exposure?

Current exposure, like quarter 1.

Current exposure to the U.S. is very small. So I think maybe about 2% of our sales come out of the U.S. Balance, I mean, Europe is very strong. Southeast Asia is very strong. Latin America is growing everywhere. Now the U.S. will increase because we started supplies to Whirlpool, as I've said earlier. So maybe this year will be higher. So I talk of data for last year. This year, of course, U.S. should be bigger, maybe about 4%, 5% of our sales -- export from the sale, exports.

And the Nissan business is also in U.S. only. So that will particularly increase.

Yes, it will start in the U.S., but then as Nissan is a global company, so we look at opportunities. So we will supply to an SUV, and we hope to open more markets within Nissan. So the idea -- the playbook is very simple. So enter one plant, showcase your capability, deliver good products, excite the customer and then they open up the doors for you. So that -- it's a very straightforward strategy that we have for growing business in exports.

[Operator Instructions] The next question comes from the line of Nitin from JM Financial.

Congratulations on a great set of numbers. I just wanted to know your outlook in terms of margins, are we -- the kind of margin we have delivered in this quarter outpaced our earlier guidance of 25% to 26%. Do we see these kind of margins sustaining going ahead as we have revised the guidance for the growth in terms of rest of the industry growth, we are expecting 2.5x now. So do we see EBITDA margin sustaining at this level? Or do you see normalization to happen going forward?

So the -- I mean, this quarter has been an outstanding quarter, thanks to the impetus given because of GST reduction. So all 2-wheeler sales have increased. Our share of premium products has even -- increased even faster. Exports, which are very profitable for us, have also increased. So all these have contributed to increase of margins in this quarter. Moving forward, strategically, as we said, we continue to balance growth with margins. Our internal focus as a company, of course, is to focus very closely on cost reduction initiatives across the plants. And I think that's a fair -- fairly well advanced science today in SJS. So the DNA of the company is to look at how can we eliminate waste across everything that we do and that has paid dividends. And the idea really is that this methodology and the sharp focus we have internally will continue to help us sustain the margins that we deliver. So historically, 25%, 26% is the margin profile we have. It will improve given our penetration of exports, but then that is a gradual process, which will happen over the next 3, 4 years. Intrinsically, I mean, maybe this year from '25, '26, our expectations are higher, so maybe about 27%, maybe 1% higher. But that's what -- if I'm able to sustain margins at 27% and grow -- outgrow the market for the next 4, 5 years, I think we would be fairly satisfied with the outcome that we have.

And the next question is related to again on the margin. So where are we seeing the margin expansion most? Is it the WPI, SJS Decoplast or this kind of business that is leading to this kind of expansion in margin?

Across the board. As I said, the cost reduction initiatives that we drive are across all plants. So we've seen great improvement in SJS Decoplast, as I mentioned earlier. So we've expanded sales 3x in the last 4 years. We've expanded margins, which you are aware of. At SJS, we continue to improve margins. At Walter pack, we continue to improve margins. So I think it's a fairly generic. All our products are niche and the higher we climb up on the complexity change, we have a good competitive advantage, and we hope to continue that momentum forward.

The next question comes from the line of Amit Hiranandani from PhillipCapital. Due to no response, we will go ahead and take the next participant. The next question is from the line of Deepan [ Narayan ] (sic) [ Narayanan ] from Trustline Holdings Private Limited.

So firstly, the strong 2-wheeler sales growth of 44%. So could you throw more light on volumes versus value growth and also the split between domestic and export growth? And how do you see the order book for 2-wheelers currently and visibility for future growth in 2-wheeler?

So fundamentally, our growth has come because of secular growth in volumes across all customers. So we -- all volumes for us have ramped up. We have increased our revenues also because of this new business of Hero that we acquired last quarter. So we continue to grow that business. Overall, the result of, I think, added, there are some of these products. We've added new businesses. We've ordered some very exciting electric 2-wheeler businesses also, which are quite value accretive. So 2-wheeler margins or 2-wheeler growth, we have outperformed the industry, and we will -- we see that momentum likely to continue. Any specific -- other question you had on 2-wheelers? So overall, this is the position. We outperformed the industry by close to about 44% growth for this quarter and close to about 38%, 38.8% growth for the first half year of this year. So volumes have been strong and our presence in the premium market and the value-added products that we supply, so our growth has been faster than the industry because of that premiumization theme [indiscernible].

And how do you see the order book currently and the visibility for growth in 2-wheelers business sustainability?

So overall, I would say that we have more than 90% of whatever we forecast for the FY '26 volumes is already in acquired business. So we see a very robust order intake we've seen during the year as per plan. And we continue to build on that momentum. So we are quite confident on an overall basis, not just 2-wheeler,2-wheeler, 4-four wheeler appliances all put together. We see good growth for the year. And as I said earlier, we expect to grow 2.5x of the industry growth for this FY '26.

So most of the growth has come from the stand-alone. So the subsidiaries have grown only by 11%. So how do we see the growth momentum picking up in Decoplast and Walter Pack divisions of ours?

No, the growth in the subsidiaries also have been good. Mahendra, maybe you could share specific data.

Yes. So, Deepan, please see us from a consol company, we are well diversified for 2-wheeler and 4-wheeler. We are doing the cross-selling in fact. But however, your specific question about our subsidiaries. So the Decoplast, we have grown by 22%, whereas the Walter Pack was a small growth happened this quarter because the customer base is something that they are growing. So -- that is why you are seeing the lesser into passenger vehicle. But yes, on our subsidiary side, they are growing very well.

So in fact, in Walter Pack, just to add to what Mahendra said is that Walter Pack, as we all know, one of the large OEMs, PV OEMs had lower volumes and now those volumes are coming back. So we are seeing Walter Pack performance also improving. It's flattish as of now compared to last year, it's almost similar. So we've bounced back out there also. And SJS Decoplast has performed very well with almost 22% growth.

So that growth just to add to what Devanshi said -- just to add to what Devanshi said the growth fundamentally is a function of the customers that you have and how the customers perform. Our content, of course, has added value. So at SJS Decoplast, we have increased cross-selling to 2-wheelers. We have a good 4-wheeler mix. We supply to the consumer business as well. So all of them have grown. So the growth at SJS Decoplast has been fairly robust. Walter Pack has a concentration with a few OEMs. Those volumes, while they have improved, still have a lot of headroom to grow, and that's what we're looking at. So what Mahendra said is right, don't look at us as an individual company because we strategically decide what products to offer to the customer and which plant to supply out of and what technology to use. So that's an advantage that we have over competition, having these 3 companies specializing in different technologies. So look at the consolidated growth number, that's what we've been maintaining for so many years now.

Lastly from my side, like the stand-alone gross margins fall of 200 bps. So that is due to product mix change in the stand-alone products or it is due to raw material price increase we have faced?

All we focus on cost reduction very aggressively. Exports have increased for us, which are high volume. We have operating leverage played out. So margin expansion fundamentally is on these reasons, yes, some other.

So the gross margin Deepan, you rightly said it's [ more the ] sales mix impact.

[indiscernible].

Sales mix. So now ideally, like we are supplying now more to Hero, so that kind of product change is having some impact initially and then we will slowly move on progress, right? That's right understanding.

No, it's not just Hero. No, it's not just Hero. We have also added a lot of other new projects also this quarter and in Q1 also. So it's not just actually about one customer or anything like that.

Yes. So as I said, exports have increased. We have also -- there's more usage of the decorative part that we have. So as we said, our product get launched on premium models and then they percolate down to the mid level. So there's been increased usage, for example, of illuminated logos. So that has also helped us increase margin and increase sales.

The next question comes from the line of Amit Hiranandani from PhillipCapital.

Congratulations team for one more outstanding results. I really appreciate. Sir, my first question is basically on the update on the China TAA, and we are seeking more details about the product realizations and when the revenue is likely to start, where the production is going to happen. If you can throw more light on this, please?

The China business, as we said, we finalized the MOU. What we said is that we are focusing on what investments would be needed. We are chasing new projects. So we are in that process, and this is under negotiation at the moment. So it is work in progress. And as and when we finalize our terms, we are at this moment looking at building or making a list of the plant and equipment that we would need to meet the requirements of the product that we've targeted. So it's work in progress. So that's the best answer I have for you at the moment, both in terms of negotiating the terms of our collaboration. But suffice it to say, BOE is a very, very large company. They have a very strong market presence across the world. So I think we have the right partner and negotiating terms takes time. So we are in active discussions, and we hope to conclude this sooner than later.

Sir, we are making this cover glass plus the TFT plus the backlights as well. So any rough estimates, what would be the product realization you expect?

So we said the content increase from what we have at the moment, the cover glass, we said depending on the size of the cover glass and the size of the display that you have, it could depend quite largely on that. But at this moment, this is early time. So I would not like to give a specific number. But every one of us can see the usage of larger and larger screens. So it's a very big opportunity set. We are still trying to do the math around what is the size of the market because we have customer announcements happening that people were going into a 7 screen are now going to a 10.25-inch screen are then going to migrating to a 12-inch screen and instead of 1 screen to have 2 screens and 3 screens. So it's a moving piece. So I would not like to hazard a guess today to say that what is the content that will happen. It will depend on the model category and the OEM strategy as well. But I would say that the next 6 months or so, we should have a fairly large clarity of what's happening. We, of course, will focus on 1 or 2 products first to build to set up the line, to prove the products and then expansion will happen. And by that time, I think the market in India also would have matured with the OEMs deciding the configuration of displays that we will have. And I've always maintained that, look, if you look at cars overseas, so China is a very large market, both not in terms of the driver information screen that you have, you also have rear seat entertainment. So it is like a movie theater on wheels. So I think that display is a game changer, given the affinity that a customer has to what features and what enhanced experience he has inside the cabin. So I think this is a very large business slated to grow, but numbers, we will have to wait and see how this market matures in India.