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

Ladies and gentlemen, good day, and welcome to SJS Enterprises Q4 FY '24 Earnings Conference Call hosted by JM Financial. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta. Thank you, and over to you, sir.

Thanks, Steve. Good morning, everyone. On behalf of JM Financial Institutional Securities, I welcome you all to this 4Q FY '24 earnings call of SJS Enterprises. From the management team, we have with us today, Mr. K. A. Joseph, Managing Director and Co-Founder; Mr. Sanjay Thapar, CEO and Executive Director; Mr. Mahendra Naredi, Chief Financial Officer; and Ms. Devanshi Dhruva, Head, Investor Relations. So as we do always, we'll start the call with a brief opening remarks from the management, followed by Q&A session. So with that, over to you, Devanshi. Thank you.

Thank you, Ronak. Good morning, ladies and gentlemen, and thank you for being with us over the call today. We appreciate it. Moving on. This is how we intend to take today's conference call forward. I will pass on the dais to Mr. K.A. Joseph, our MD and Co-Founder, who will make his opening remarks, then he will hand it over to Mr. Sanjay Thapar, our CEO and Executive Director, who will take you all through some of the slides of our presentation that has been uploaded on the stock exchange as well as on our website. Sanjay will take you all through the industry view, our business performance and also give a strategic outlook for the future growth of the company at the end. And Mr. Mahendra Naredi, our CFO, will update you all on our financial highlights, post which we will open it up for Q&A. Thank you once again, and I will now hand it over to Mr. Joseph to make his opening comments. Over to you, Mr. Joseph.

Yes. Thank you, Devanshi. And hello, and good morning, everyone. I trust you all had a chance to look at our investor presentation and the results published yesterday. While Sanjay and Mahendra will take you through the presentation later, I would like to quickly share some updates with you all. In FY '24 the overall business scenario in India has been robust with the country being one of the fastest-growing major economies, achieving a remarkable growth rate of 7.8%, while the global economy continued to face headwinds and geopolitical disturbances, high inflation and tighter monetary policies, we have had some impact on businesses. The domestic economic activity continues to expand at an accelerated pace, supported by increased consumer spending, strong domestic demand and consumption in our industry. During the year, we have completed the transformative acquisition of Walter Pack India. The Walter Pack acquisition has opened up a plethora of new opportunities for us within acquisition, we have penetrated deeper into the passenger vehicle segment and consumer segment as well, thereby further reducing our two-wheeler dependents. As a result, in FY '24, we saw a balanced contribution from passenger vehicle, two-wheeler and the consumer segment. Now coming to some of the key updates for the 18th consecutive quarter, SJS has delivered a better than industry growth, primarily on the back of Walter Pack acquisition, coupled with the strong performances across segments. I am pleased to inform you all that in Q4 FY '24, Walter Pack saw a strong recovery in its business as key OEM volumes picked up. EBITDA margins reached 25.5%, a significant increase from 20.4% in Q3 of FY '24. The order intake for Walter Pack also has been substantial, reinforcing our positive outlook of Walter Pack growth trajectory. Furthermore, Exotech recorded EBITDA margin of 18.1%, underscoring our commitment to operational excellence and profitability. I'm also delighted to announce that for the fourth consecutive year in a row our company was recognized as a great place to work in the midsized organizational category, highlighting our commitment to excellence. Last but not the least, I'm very happy to inform you all as a reward to our long-term shareholders for the first time since our IPO, the Board of Directors have recommended a final dividend of 20% on the face value. As we move forward, we remain focused on delivering quality products to our customers and building long-term relationships with all our stakeholders. We are dedicated in advancing innovation, maximizing efficiency and strengthening both businesses while also looking into new prospects of markets further. With that said, I would like to now hand over the call to Sanjay to take you all through some of the businesses and industry highlights for the quarter. Thank you, and over to you, Sanjay.

Thank you, Joe. Hello, and good morning, everyone. Talking of Q4 and this financial year gone by Q4 FY '24 was marked by yet another quarter of better than industry performance by SJS with a consolidated revenue growth of 75.3% year-on-year to INR 1,867.9 million compared to 22.8% Y-o-Y growth in the automotive, two-wheeler and passenger vehicle production volumes. This growth is primarily attributable to the successful integration of Walter Pack in India, along with the enhanced performance of our businesses in the passenger vehicle segment, consumer business and exports. During the quarter, automotive business has grown well for us, both in the domestic markets at 75.6% Y-o-Y and export margins at 40.3% year-on-year. On back of robust margin performance delivery, both by Walter Pack and Exotech, I am delighted to share that the consolidated EBITDA margin for the quarter improved 70 basis points quarter-on-quarter and 147 basis points year-on-year to 26.2%. At the end of quarter 4 of FY '24, the company generated strong cash flows of INR 756.2 million, and our overall cash and cash equivalents stood at INR 520 million. Our net debt reduced from -- reduced to actually INR 163.5 million on account of a very strong cash flow generation. In terms of production volumes, the two-wheeler industry grew by 26.4% year-on-year in Q4 of FY '24 with SJS's consolidated two-wheeler sales outpacing this growth at a growth rate of 44.3%. The passenger vehicle segment experienced even more significant growth with a 105.3% increase over the same period, surpassing the industry's growth of 9.7%. This remarkable growth in two-wheeler sales was primarily due to new business acquisitions, while the growth in the PV sector was largely attributed to a recent acquisition of Walter Pack India, which has expanded our PV business within the automotive segment. Overall, SJS in Q4 FY '24, consolidated automotive sales saw a substantial year-on-year increase of 73.5% with organic growth from SJS and Exotech's, automotive business at 35.3%, again, higher than the industry growth rate of 22.8% during the quarter. Simultaneously on FY '24, automotive industry, two-wheeler and passenger vehicles grew by 9.7% year-on-year, while SJS consolidated automotive revenue grew by 38.3% year-on-year, demonstrating around 4x industry growth rate and organic growth more than 19.7% year-on-year. I'm extremely delighted to announce that for the full year FY '24, SJS has achieved its stated guidance of 45% revenue growth and has exceeded its 30% plus PAT growth excluding amortization expenses, revenues at INR 6,278 million grew from -- grew 45% year-on-year, primarily on back of Walter Pack acquisition and the strong performance across all business segments. EBITDA grew 36.9% year-on-year to INR 1,599 million and with an EBITDA margin of 25.2%. And our PAT grew 26.9% year-on-year to INR 853.7 million with a PAT margin of 13.6%. Our PAT, excluding amortization expenses, grew 37.1% to INR 921.8 million, with a PAT margin of 14.7%. The growth prospects in the PV segment are promising, especially post the Walter Pack acquisition, Walter Pack is India's official in IMD, IMF and IMD advanced technologies generating almost 2/3 of this revenue from passenger vehicle segment. Our strategy to diversify across various product categories and multiple industry segments, coupled with our very strong broad customer base has effectively helped us mitigate the impact of industry slowdowns in specific areas and regions during the year. On the exports front, we have seen significant growth of 27.2% year-on-year during the quarter. Overall, for FY '24, we saw robust growth of 51.1% in exports to INR 483 million. The increase in export revenue this quarter is primarily attributed to the gradual recovery of revenues from North America and Europe. Our export initiatives are progressing steadily. Additionally, we have appointed a sales agent in South Korea to further enhance our presence in the East Asia region. We continue to expand the share of wallet by winning new businesses from key customers, like Mahindra, Tata, Skoda, Stellantis, Geberit, Whirlpool, Honda motorcycles, TVS, among many others. We've also added Minda Vast as a new customer, and I hope to strengthen our relations with them even further. Before I hand over to Mahendra, I would just like to give you a quick update on ESG and the CSR front. On the ESG front, our company is making great efforts to reduce our carbon ambitions, hence, we are in process of adding around 6 megawatts of captive solar power across our facilities. This strategic move is expected to yield cost efficiencies while significantly reducing our carbon footprint. It is noteworthy that our Bangalore facility already meets around 95% of its energy needs through renewable sources. We are now extending this sustainable energy initiative to our other facilities, aligning with our commitment to in environmental stewardship. Almost 75% of our consolidated power energy requirements across all facilities with soon be met by green energy. At SJS, we are also committed to fulfilling our corporate purpose while delivering long-term benefits to society. With regard, our environmental, social and governance metrics as essential for accessing our success. Our ESG principles are firmly integrated into our Board's governance framework, guiding our organization towards sustainable growth and protecting stakeholder interest. Through our corporate social responsibility programs, we strive to contribute positively to the societal wellbeing. Furthermore, our ongoing efforts in diversity, equity and inclusion have achieved substantial progress in enhancing the organization culture. It is satisfied to note that ever contribution for CSR equities for the year are helping improve lives of thousands of people in the environment in a positive manner. I would now like to call -- hand over the call to Mahendra, our CFO, to update you all on the SJS financial performance before I come back to talk on our future growth outlook. Over to you, Mahendra.

Thank you, Mr. Thapar. Good morning, everyone. Let's delve into the financial snapshot. Slide 12 to 15 provide a concise overview with Slide 14, focusing on the organic performance of SJS and Exotech and Slide 15, presenting the consolidated picture, including Walter Pack India. In Q4, our consolidated revenue reached INR 1,867.9 million, showcasing growth of 75.3% year-on-year. This robust performance attributed to the increase in our Walter Pack India addition and strong contribution from passenger vehicle, consumer segment and export business. Organically, our revenue grew by an increase in 35.9% on Y-o-Y basis, much higher than the industry growth. Moving to EBITDA. We achieved INR 495.3 million, marking a Y-o-Y growth of 82.2% with a margin of 26.2%, increment of 70 bps quarter-on-quarter in quarter 4. EBITDA margin was mainly driven by Walter Pack India's significant jump from 20.4% in quarter 3 FY '24 to 25.5% EBITDA margin in quarter 4 FY '24, excluding Walter Pack India, organic EBITDA for SJS and Exotech stood at INR 372.5 million, boasting a healthy margin of 25.5% and Y-o-Y growth of 37%. EBITDA margins have shown a positive trend, improving by 75 bps Y-o-Y primarily due to superior margin performance of Exotech at 18.1%. Our consolidated PAT for the quarter stood at INR 271.8 million demonstrating a robust Y-o-Y growth of 76.6%, with PAT margin standing at 14.5%, improving by 11 bps Y-o-Y and 156 bps quarter-on-quarter, primarily due to higher EBITDA margins. Organically, PAT growth stood at 48.5% Y-o-Y to INR 228.4 million, with a healthy margin of 15.8%. This growth was driven by higher EBITDA offsetting the impact of lower other income and increased finance costs. Our full year FY '24 performance has already been mentioned by Mr. Thapar that we are extremely, extremely happy to inform you that we have achieved our guidance of 45% of revenue growth and 30% of PAT growth, excluding amortization expenses on the intangibles. Our consolidated ROCE during the quarter stand at 20.4% and ROE, return on equity at 15.2%. ROCE was lower due to Walter Pack India acquisition and this will improve gradually over a period of time and with better inflection of investment over the next 1 to 2 years. At the end of FY '24, the company achieved robust free cash flow INR 756.2 million and our cash and cash equivalents is INR 520 million. During the quarter, SJS for the first time, had raised the long-term debt and our net debt increased to INR 683.4 million due to Walter Pack India acquisition. However, as promised you to all that significant portion of the debt will be repaid or adjust the cash by the end of FY '24. So now our net debt level stand at INR 163.5 million, reflecting our strong cash flow performance. The existing debt levels are mainly for working capital requirements. With the acquisition of Walter Pack India, we are becoming more future-ready as our new generation products contribution increased to 25.2% of our consolidated revenue during FY '24 from 9.4% in FY '23. Walter Pack India acquisition has effectively balanced our portfolio across two-wheeler, passenger vehicle and the consumer segment in the right manner. During FY '24, export recovered in a strong manner and witnessed growth of 51.1% Y-o-Y basis to INR 483 million. FY '24 exports constitute 7.7% of total consolidated sales. Both Exotech and Walter Pack are primarily domestic business, and hence, export as a percentage of consolidated sales is at 7.7%, while export are 12.7% of SJS standalone sales. I would now like to hand back the call to Mr. Thapar to discuss about our future plans and growth outlook.

Thank you, Mahendra. Moving to our outlook for future growth. In FY '24, our company was significantly has -- significantly outperformed the industry growth rate, thanks to our strategic initiatives, we are set to continue this trend, growing at, at least 1.5x faster than the underlying industry growth. We already have visibility of over 80%, 85% of our FY '25 order book in hand. This success is driven by a broad market reach, diverse product lines and very strong partnerships. Our strategic acquisitions have increased our current content per vehicle in passenger vehicle segment over tenfold in the past 2 to 3 years, is enabling us as a key supplier to the four-wheeler segment. In FY '24, we have delivered on our commitments driving substantial growth. We remain focused on enhancing product aesthetics, expanding globally and maintaining a strong margin profile solidifying our market leadership. We have been continuously defining and delivering on our growth strategies, and this is reflected in our robust financial performance. We are optimistic and extremely confident that we're moving ahead in the right directions with a formidable array of products in our arsenal and diversified customer base, we will consistently keep outperforming the industry. With that said, I come to the end of my quarterly updates. Thank you. And now we are open to questions, if any.

[Operator Instructions] The first question is from the line of Abhishek Jain from AlfAccurate.

Congrats for strong set of number. Sir, consumer segment now contributes 20% of revenue, and you have won many...

Sorry to interrupt. The current participant has been disconnected. The next question is from the line of Amit Hiranandani.

Many congratulations to the SJS team for a strong set of numbers. Sir, my first question is basically, if you can please help me with the Exotech and WPS FY '24 revenue EBITDA PAT number. And the total CapEx for FY '25 and '26, including all the expansion-related CapEx for WP and Exotech, please?

We already have disclosed our organic sales, particularly you asked about Exotech. For the quarter, Exotech is INR 44 crores, we have a revenue. And for Walter Pack, we have INR 48.5 crores turnover.

Sir, for FY '24, full year?

The full year basis. For Exotech, we have achieved INR 156 crore and Walter Pack full year because Walter Pack is only for consolidation for 9 months, so full year basis, for 9 months is INR 119 crores.

And sir, similar to EBITDA number, can you share for both the companies?

We will not be able to share the EBITDA number. We've given the sales number for your better understanding.

Sir, total CapEx for FY '25, '26, including expansion related?

So for the next year, we already said, we will have our maintenance CapEx plus we will invest into the -- our expansion, especially for the cover glass as well as for plating shop. So we expect that in this current year FY '25, we will do a CapEx of in the range of around INR 60 crores to INR 70 crores. But if I talk about for a larger, for the 2 or 3 year basis, the CapEx would be in the range of INR 160 crores, INR 170 crores.

We see a lot of traction in our business requirements from customers. And also the new plastics and cover glass that we are working on. So primarily, it is all related to this huge growth opportunity that we see for the company.

And sir, for the FY '24 INR 70 crore CapEx, can you break it down, please, like where we are going to spend it on Exotech and WPI?

Broadly, you can say maintenance CapEx in the range of INR 20 crores. And the rest will be for expansion.

Okay. And sir, just my second question is on the cover glass side. So if you can help us understanding more about the cover glass, what is the industry size or opportunity how much it's presently getting imported, what steps we are taking to increase the production target customers? And how much revenues possibly we can achieve annually for this cover glass?

So as we've said in our earlier calls, so this is a progressive adoption of the integrated display screen in cars. So as we've said earlier, this is going to be -- this is still at a nascent stage. This business adoption is happening. Currently, all the covered glasses and all the center stack displays that you see are imported. So it is difficult to give you a size of the market currently because it would depend on the adoption rate by the OEMs. But largely, let me explain to you. Already you would have seen many cars in the country with these larger space screens. Of course, depending on the category of the car, we have a large amount of smaller screen. But what seems to be clear is that the direction OEMs are headed and what is demanded by the end consumer is a display screen, which can have all the driver information at one glass. And that is the business that SJS is focusing on. So we will not make the display screen per se, but we will make the cover glass that comes on top of it, which give you some very special properties like anti-reflection, anti-glare, anti-fingerprint. So it's a very critical component and the market is still evolving.

Sir, just last one question. Is there any further surprise possible in the Exotech's margin for the coming 1 to 2 years?

Surprise, I will take it that you want positive surprise, right? So we always maintain our guidance that Exotech is a plating business, while we are a very efficient company, we try to reduce inefficiencies to the extent possible. Our guidance for this has been that we will be around 15%, 16% margin for Exotech. We outperformed that expectation this quarter. But then the normal expectation from this business should be in the same region of 15% to 16%. So I still maintain that guidance. But of course, our efforts are to keep improving.

The next question is from the line of Yash Agarwal from IIFL Securities.

Congrats on a great set of numbers. I just had a few questions. So the first one being on the export opportunity. So how do you look at exports from WPI and Exotech?

I think we are extremely optimistic. The reason being that the product portfolio that we had earlier than SJS was primarily two-wheeler focused. But with Walter Pack, we have IML, IMD and chrome added parts of Exotech and all these are products that are actually used by all OEMs globally. So we are in discussions with customers across the world, and we are extremely optimistic of the prospects of exporting these products.

Okay. And the next question on the raw material cost in case of the stand-alone business, right? So the RM costs have gone up 320 bps quarter-on-quarter. So is there any specific reason attributable to the same? And what would be your guidance going forward?

Not really. So fundamentally, quarter-on-quarter, depending on the product mix, the RMC would change a little bit here and there, but nothing very significant. And specifically in this quarter, we made a provision for some slow-moving stock that we have because we made a large amount of variance in the company, so close to about 7,000 SKUs. And the customer demand sometimes changes. So these go as some spare parts at some point in time. But as prudent management, we do make a provision for slow-moving stocks that we have in our inventory. So this is a routine provision base. That has accounted for this RMC increase or marginal -- very small increase that we see.

And lastly, on the opportunity in case of the optical cover glass side, so how do you see revenue panning out in the next 2 or 3 years? What will be the size of the plant? And how much revenue do you aim to clock out of the same?

So fundamentally, our view is that all cars in India will have an optical display. Now what is the time frame which will happen? It depends on the adoption rate by the OEM. The price point of this display would vary depending on the size of the display. So I would imagine that from cover glass return would be roughly from maybe INR 700 a vehicle to close to about INR 4,000 a vehicle. So depending on the size of the display and the complexity of what they want. So therefore, that is the broad guidance I can give you. How -- I mean, you can do your math, it's a very, very sizable market. We are engaging with customers for more than 2, 3 years now, prototypes have been given. So we are in this process of winning this business, which we've said in our earlier call, over the next quarter or 2 quarters, we hope to win this business. We are -- we have earmarked investments for a new facility that we will set up for this cover glass and we expect this to be a very significant growth driver in the next 3 to 4 years.

[Operator Instructions] The next question is from the line of Ajox Frederick from Sundaram Mutual Funds.

Congrats on a very good set of numbers. I have 2 questions. One is on Exotech. So you mentioned that the capacity plan for the year is around INR 60 crores. But during our earlier interactions, we -- I mean, we mentioned that Exotech capacity needs to be improved and current capacity will run for about INR 200 crores of revenue. So when are we planning on a decent expansion in that space? That's point number one. And point number two, since we are guiding for a 15% to 16% kind of margins, what exactly is sustaining this 18.5% or 18% plus margins for 3Q and 4Q? Those are the 2 questions on Exotech. I have one more on the standalone business.

So Exotech, as we said, we see good traction. We see a large export market. As I said, this was a business that we acquired 3 years ago. we've increased revenues. We doubled in revenue growth. We increased EBITDA margin. So we've done everything that we could. We have a legacy set of customers that we need to serve, which we are serving. And what I said is what will drive EBITDA margins moving forward is going to be the export market or the new customers that we acquire, which will benchmark selling prices to what exists in the export markets. The realization in export markets for chrome plating parts is much higher to till the time that becomes a reality and a significant part of my Exotech sales, I am a little shy to give you a guidance beyond 15%, 16%. Now as a manufacturing focused company, we focus on lean, we constantly focus on driving down waste and move out from our businesses' operations. So operational efficiency focus is what has driven margins in the last quarter. There is nothing -- no secrets sauce to it. We've just worked hard to make sure that we reduce rejections, we increased throughput and we optimize the utilization of existing capacity that we have. So that's what we've done and which we will continue to do across all our businesses. We are very closely focused on profitability, and we monitor it very, very carefully. The -- I'm sorry, there was another question saying when will capacity at Exotech will come on stream? Is that the question?

Yes, yes. So will this be enough for the capacity expansion, the INR 60 crores, INR 70 crores for the year for Exotech?

Yes. So we have -- okay, 2 years ago, we acquired a piece of land that we said that we are going to expand capacity for Exotech because we saw a very bright future and demand from customers. But after the acquisition of Walter Pack, we announced to the market that we are going to doing -- we are going to club the requirements of both these companies and do frugal investments. So that is what we are doing. Creatively, we've unlocked capacity by better capacity utilization. And then we have also marked up or entered into partnerships with some plating companies nearby to our plant where we have utilized their spare capacity. So we have the marketing strength and the wherewithal. We maintain a very tight supervision over quality. And we have been able to add supplementary capacity without really spending money. So that's, I think, the smart way of doing this business. But we will, in this year, also invest in another plating line for Exotech, which will be very well cost engineered and that is what we are working on for the current year.

Got it, sir. That's helpful. The other question I had is on SJS standalone margins. Sir, you mentioned about this RM provisioning. And if I go back, in 4Q FY '23, also, we had a lower margin. So is it a seasonal 4Q phenomena where we try to write off some of the products where we are not seeing good movement, and then we see a bounce back in the subsequent years, should that be the case? Or how should we read that margin dip and going forward?

So Frederick, that is not something usual. It is depending on the facelift by the customers and yes, in quarter 4 the two-wheeler customers had a facelift and hence forth we have created this provision. So it's not as usual. It's not something that belong to the quarter 4. It's depending on the strategy of the customer. And I would say it is a kind of a onetime in this quarter.

Okay. So -- okay. And so you are talking about this moving into spares, which means that 1Q can be slightly better than the usual run rate of margins once this...

No. So let me clarify. We don't spell spares to the auto market. When I talk about spares, we sell it to the OEM. So what happens is that with the population of vehicles on the road, there is a demand that the OEMs have for their spare part requirements. So nothing goes obsolete, now they have a sporadic requirements of a blue color, a red color for model A, model B, model C. So we don't scrap this material per se because somewhere or the other, something is utilized, but not everything can be utilized. So that's why we provision for it.

Got it, sir. And just slightly longer-term visibility on the margins. If I look 2 years ago, we were doing 31%, then in the end to 30%, now we are at 29%. So I know it's marginal movements. But will the trajectory continue like a 1% kind of the post steady state margins around 30%, let's say, 2, 3 years down the line for standalone SJS?

So what I maintained forever is really that don't look at us as some of the parts. So we have indicated strategy. There is a rationale behind acquiring Walter Pack and Exotech. There are some products and some processes that are fungible. We can offer a customer product A, product B. So depending on the competition intensity, depending on the price point or expectation of the customer, we offer one or the other. So I know that you analysts would like to analyze it slice-by-slice, but think of it, obviously, the larger company, so on a larger perspective, what I've said is, we continue to drive growth, outperforming the market and maintain an EBITDA margin of close to 25%. So that is what I have stated on many occasions, and we are absolutely on track demonstrating performance on the same lines.

The next question is from the line of Abhishek Jain from AlfAccurate.

Now the consumer segment contributes around 20% of revenue. And you have won many business in all 3 segments. So if you can throw some more light on the new business in the consumer segment? And how would be the revenue mix in the coming years?

I had a little difficulty hearing you because of an echo on your end. But what I understood is that you want to understand, what is driving growth in the consumer segment? Is that the question?

Yes, sir. Yes, sir. Consumer segment, what are the new business wins?

Yes. Okay. So what we have done is that we've added Reliance as a customer. We have acquired a Legrand business as a part of our consumer-facing businesses, thanks to the acquisition of Walter Pack India, and we've added a complete new vertical. So consumer electricals was not a part of our consumer business. So we've added that and that has given rise that the consumer today accounts for 20% of our sales pie. In addition to that, we've added Reliance, as I said earlier. We supply some products to them in large numbers. We've added Electrolux business for exports. We are doing atom of new business. So many new business wins for the consumer segment this year.

And the current revenue mix is around 20%, how would be the mix going ahead?

So I'm happy with the mix that we have. So we are for 37%, 36% for two-wheelers, 35% for four-wheelers and 20% for consumer. So I think I'm -- that's a very good mix and it will continue to be the same. The consumer business could increase by about 1%, 2% or these businesses could move 1%, 2% depending on the overall scenario of how -- what customer starts taking what products earlier. But I would assume that we are looking at secular growth across all these segments. And largely, this pie, I'm very happy with it. From where we were 70% skewed on four-wheeler -- on two-wheeler business in FY '19, '20. So to come to this stage, I think, is very gratifying for us.

Okay. And in Exotech, the current revenue run rate is around INR 42.5 crores on a quarterly basis. So -- and your total revenue -- at a peak revenue capacity is around INR 250 crores. So when you would be able to achieve INR 250 crores kind of the revenue on an annual basis?

No. So we are growing very strongly. As I said, we have debottlenecked that plant by doing some partnering with some companies. We are going to invest in a new line. So I would imagine that this will come through not the data. We don't really chase targets. So that the customers who are after us to give them products, so we see a healthy pipeline and growth will continue on the same trajectory as it has done in the past. So we are quite prudent in our forecast, and we feel that we continue to grow.

So are we able to achieve a run rate of INR 50 crores on a quarterly basis in the near term?

No, you're talking in terms of capacity or in terms of order book revenue. So revenue is a function of what new models get launched. So we are forever discussing and adding new businesses. So we will certainly reach that target. When will depend on what is the -- how does the market pan out.

[Operator Instructions] The next question is from the line of Chirag Fialoke from RatnaTraya Capital.

Congratulations on a strong set of numbers. I just had a couple of questions. The first one being, could you remind us what our current customer concentration is including the impact of WPI, so approximately, what is top 5 customers, what is top 10 customers including WPI?

We don't give out a list of customers as you can understand for obvious strategic reasons. But what I can tell you is some percentages, so Devanshi, you can just fill that in, please.

Same customers would be somewhere around 70% to 75% of our consolidated revenues. But in terms of customer wise, we will not be able to share any kind of details in terms of which customer, how much percentage.

Not customer-wise, but top 10 customers, including WPI at a consolidated level for the quarter were around 70%, 75%. Is that right?

70% to 75%, yes.

And could you share the same number of top 5?

Largest customer, Devanshi you can call out and in percentage terms that was no more than so much, no?

Yes. The largest customer for us on a consolidated level is not more than 14%, 15%. So that has also -- that concentration has also come down from earlier, which was around 20%. Now it has come down further to around 14%, 15%.

Perfect. Just one last question. I would love to hear the management's views on sort of the two-wheeler market overall. What are you looking at? How should we think about the medium term? Or for the overall market, where do you think it's headed? That's all.

Yes. So the two-wheeler market has shown some resurgence in the last quarter. So there is a good uptick of demand. Rural demand has come back. So companies are again optimistic but on overall basis, so it remains to see how the market pans out. But we imagine that 8% to 10% growth is what is likely moving forward, that's the market growth, we, of course, will grow faster. So what we've been maintaining is, we'll grow at least 1.5x of the market growth rate.

The next question is from the line of Khush Nahar from Electrum PMS.

Congratulations on a great set of numbers. So my first question was, apart from this industry growth that we're expecting, can you elaborate on which segments or which products would give us the extra like a growth in the coming 2 to 3 years? And my second question was on the competition, doing at the attractiveness of the industry, do we see any competition in terms of our competitors providing a better, bigger basket of products like us? Or are we still maintaining our market position?

So our market position, as I've maintained is extremely unique. So there's no company in India or no company's overseas also for that market, who has all these technologies and products that we have under one roof and we are designed to delivery company. So that maintains what it is. The second part of the question was where will growth come from in the next 3 to 4 years. So the point is we will grow our cover glass business that is expected to be a very significant part of the increased sale that we will do. The new technologies that we've got at Walter Pack, IML, wheel caps, logos, 2D, emblems. So all those are new products, which have -- and these products have large export potential as well. So we are exploring that business. Exotech, both the painting business and the chrome plating business, we see a very, very strong demand. This is all in addition to whatever we currently do at SJS. So as I said earlier, we see demand growing in all areas, in all segments of our business. But I call out these products because they are new technology products, where we have a full position, and we hope that they will grow strongly. But then this is a function of what is the off stack by the customer, what is the adoption rate, but then that's normal business for us. So looking -- so we have a very strong portfolio of products and technologies which can give us very strong growth in the coming 3 to 4 years.

The next question is from the line of Rohan Advant from Prad Capital.

Congratulations for a very good set of numbers. My first question is on Walter Pack. Walter Pack in the first 3 quarters used to average around INR 35 crores of revenue ballpark. And in the fourth quarter, we are at INR 48.5 crores. So I just wanted to understand that based on the order book that you have, is this run rate sustainable? Or was there some bunching up of holders that happened maybe some launches, and that has stepped up the WPI quarterly numbers? That's the first question.

Yes. So Walter Pack, as we said, there was a model change at some key customers in quarter 2 and that volumes have since then come back, and that is the reason why we have grown revenues. Also in quarter 4, we added some new products in Walter Pack, where we are in a very strong position, and that will lead growth. So coming back to, is this the trend going to continue, yes, definitely, the trend is going to continue because as I mentioned earlier, they are very -- they are in a niche position in terms of -- the customer connect that they have, they are -- it's a very stratified segment. Not many companies have the capabilities that Walter Pack has. And in fact, they're quite unique in that sense. So the run rate for this company also is going to be similar to what we said overall for SJS. So 1.5x industry growth rate is what we imagine because of premiumization trend that we see, more and more vehicles use more and more premium products rather than standard products than it would use for aesthetics.

Got it, sir. And secondly, if you look at the EBITDA margins for WPI, while we've seen a very good pickup and they are now at upwards of 25%. WPI before acquisition had even higher margins, 28%, 29%. So can we reach there sooner or later? Or this is the new normal around 25%?

What I've said earlier is that, look, I think we have a very strong track record in terms of delivering EBITDA margins. I said that for SJS, and I'm saying that for Walter Pack. So I'm happy with this 25%, 26% sort of margin. What I'm more -- focusing now more on is growth of that business. So we want to unlock and do something similar to what we did at -- after the acquisition of Exotech. So the idea really is maybe very rapidly scaled up the business. So this is exactly what we are wanting to do at Walter Pack and here the advantages that we have products that we didn't have too much competition. So we are quite focused on growth for the moment, margins will take care of themselves.

Got it. So on a consolidated basis, we should look at strong revenue growth and EBITDA margins around 25%, 26%. Is that the right takeaway?

Yes, that's correct.

The next question is from the line of Pradyumna Choudhary from JM Financial.

Congratulations on a great set of numbers. My first question is with regards to the cover glass, the new technology you've been talking about. So could you give us some -- maybe I missed it, but can you give some idea regarding when are we expecting -- like what stage are we in terms of whether we are getting RFQs and all? And when can we expect these to turn into orders for the company? And second would be on the Walter Pack side, like -- we will see, I think we were still dealing with some cases of rejection and all, so has that business stabilized fully now? And yes, like these 2 questions.

Now regarding the cover glass. So just to underscore, it's a very, very complicated product. It has its own time line in terms of validation, proving, audits and multiple audits. So we've already received RFQs. We've given prototypes. The customers like it. We've given quotations, which are under commercial negotiation. So we are in quite an advanced stage, but it's hard to give a guideline as to when the customer will award this business because at the moment, all this is imported. But we imagine that in the first half of this year, maybe I said the quarter or -- 1 more or 2 quarters, we should have good business because that is around the time that we will start investing in this new partner also that we see. So there are phases of localization that will happen. And we hope that in the next 3 years or 4 years, it should form us -- if we can part of our turnover going forward. That's what I said earlier.

And on the Walter Pack side -- also on the cover glass side, just a follow-up, sir, what could be -- like a very brief top-down sense of what could be the possible realization in this and the kind of margins we can hope for? And then that Walter Pack question whether the business has fully stabilized or are we still seeing some sort of ups and downs there?

Okay. So for the cover glass business, it is, of course, going to be a new business for us, new technology, but this is the first time an Indian company will start doing this. So margins could be low initially because ultimately, we will need to prove parts. We will do a lot of trials, parts will not be sold to the customer. So on the R&C basis, maybe we will not be where we need to be, which is our target overall for the company. But the direction is very clear. So this is the area where competition intensity is less. So I assume that in the long term, we will be able to get good profitability phase-wise. So Phase 1 could be lower margin, Phase 2 could be better margin, Phase 3 will be even better margins. So this is how it will pace out and as if any new technology product once you launch it, a lot of effort goes into proving validation, internal trials, which don't earn revenue to you. So it's just learning to walk before we run. And coming back to Walter Pack. Yes, so we have improve that business that is what is reflecting in the increased EBITDA margin that came through for this quarter. There are new products also that are being launched. So therefore, I'm saying that 24%, 25%, 26% sort of margins at Walter Pack is what we can expect moving forward. And the acceleration is of course, would be accelerating growth there, both in the domestic and the export market for the product and technology that we have.

Sir, just my last question. When you say that 85% -- our order book covers 85% of our revenue outlook for FY '25. So my understanding is usually in the case of auto, the schedule shared by the OEM is for the next 1 or 2 months. So when we are mentioning this order book, so what's our assumption like, like what kind of growth are we -- and putting for our end user industry?

That's what I said, 8% to 10% overall growth for the industry is what we're still looking at. Of course, we have some insights on specific models so that depends on what is the OEM to OEM performance for different segments because we have a very large area of products. It's not just one part have been delivered. So therefore, I would still say that 8% to 10% sort of growth is what we target in OEM volumes. And our sales, as I said, is going to be a little bit higher because our content per vehicle is higher and adoption of these higher content products leads to outperformance of the industry in revenue terms, when you look at SJS standalone revenues. So not SJS to SJS -- consolidated revenues, sorry, not that standalone.

The next question is from the line of Sukriti Jiwarajka from Laburnum Capital.

I just want to understand your product offerings and the resulting margins better. So also current portfolio, could you highlight for me which particular products would be the highest margin products? And in these offerings, what sort of traction we got in terms of customers added in terms of market share, would we compete within the margin products? And how has the overall competitive intensity evolved?

So I can't -- I will not be able to share with you individual product-wise margins for obvious reasons, that you can understand. But what I can say is that overall, we are not chasing volumes. We are in the area of high value-added products, which add to customer appeal. So our margins are always on the higher end. So if you compare us with typical auto component companies, I think we are very well placed, far ahead of most of them and we are happy with that. Now these are sustainable because the competition intensity for the product that we have is not very high. So earlier in the call, I had mentioned that we have close to about 15 type of technologies that we have under one roof from styling to delivery. And that is a basket that no other competitor in India or overseas has to offer to the customers. So -- and then anybody thinks on styling, we have the first port of call, and that's what I would like to believe that we are able to -- we have a large workforce working on doing prototyping, and we do this pro bono for our customers to engage them and to give them a menu card of options or what products can be offered to them for specific vehicles or specific applications. So it's a very long question. Maybe you need to understand our product portfolio a little better. But overall, it's a high-margin business where volumes are growing because there's a very strong tailwind towards premiumization. And the consumer is wanting better and better products. And these are what are the trends on the tailwinds that are driving growth in our business.

Got it. That's quite helpful. Overall, if I just take a step back for the same question, which is chrome plating would be the only product in the mid-teens margin profile and everything else I should assume would be at company level or higher, right?

That's right because chrome plating is a process technology. So if you have a chrome plating plant and you manage it well, you should technically be able to deliver the product. Of course, the differentiation between suppliers is that what does your customer connect, how strongly are you able to meet the quality cost, delivery expectations of a customer timely development, attitude, response time. So these are normal metrics that the customers track. But yes, you're right. Chrome plating when we acquired was a 12% margin. Last quarter, we grew it to be an 18% margin. My guidance is that it will continue to remain at 15%, 16% margin, that's what you should expect. Unless I create -- changed my customer mix very significantly, which we are, at the moment working on to get export business into Exotech, then those margins could be better. But for the historical reason, yes, that is the only business in the mid-teens EBITDA margin range.

And my second question is any outlook on a slowdown in passenger vehicles. And when you give the 8% to 10% industry growth number, does this include any expectation of PV slowdown? Or was that only a two-wheeler guidance? Not even the guidance, just industry projection?

So we are a blended company, as you would see, 35%, 36% of our sales come from two-wheelers and 35% from four-wheelers, so it is blended. So when I say 8% to 10% it is overall, PVs could be 6% to 7% because they grew very strongly last year, so there could be some effect of average is catching up. But we feel that new launches are going to come, but the larger trend that is driving our growth really is premiumization. So even though volumes may come down or volumes may not be maybe at 6%, 7%. But the content increase will be much faster, and that's what we've been addressing over the last 2, 3 years. We've increased the content in the passenger vehicle from INR 80 that we had about 4 years ago to almost INR 10,000 now. So our volumes will grow. And within the PV market, of course, SUVs are doing, they are bigger vehicles, which require more number of parts, bigger parts leading to higher revenue.

The next question is from the line of Ajox Frederick from Sundaram Mutual Fund.

Thanks for the follow-up. Sir, just a question on this content. Do you track content per vehicle per se? Let's say, two-wheelers, four-wheelers? If that is the case, how has that moved FY '24 [indiscernible]?

So there is no one answer to everything, depending on the specific model, you have content constituted. So entry-level buying would have something, a premium bike would have a completely different set of parts. So with the competition parting in the high-end segment, you have Triumph, you have Harley-Davidson and you have all these other vehicles, which are -- now -- so for us, that competition intensity increases in each segment, companies come to us to look at how to differentiate, and that's good news for us, and that's a good business for us. But we don't supply all products to all orders or all OEMs. So therefore, it's difficult to say overall, answer your question to say, how is the content increasing. It depends on vehicle-to-vehicle and OEM to OEM.

Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to the management for closing comments.

Hello. Yes, thank you, everyone, for joining us over this call. And due to time constraint, if anybody's questions have been unanswered, we are happy to answer it. You can reach out to us over e-mail or call and we'll be happy to answer that. Thank you, everyone.

On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.