Uniparts India Limited ($UNIPARTS)

Ladies and gentlemen, good day, and welcome to the earnings conference call for Uniparts India Limited and hosted by Go India Advisors. [Operator Instructions] I now hand the conference over to Ms. [indiscernible] Patel from Go India Advisors. Thank, and over to you, Ram.

Good afternoon, everyone, and welcome to Q4 and FY '26 Earnings Call of Uniparts India Limited. We have on the call Mr. Gurdeep Soni, Chairman and Managing Director, Ms. Tanushree Bagrodia, Portan Director and Group CEO; and Mr. Sandeep Taneja, Group CFO. We must remind you that the discussion in today's call may include certain forward-looking statements and might be there for you in conduction with the risk that company may face. . I will now request Mr. Soni who will take us through the financial and the business updates subsequent to which we can open the floor for Q&A. Thank you, and over to you, sir.

Thanks a lot. Good afternoon, everyone. It is a pleasure to welcome you to the Uniparts Quarter 4 and Full Year Financial '26 earnings call. The final quarter of FY '26 provided further evidence that the global agriculture and construction equipment tightly is turning. Order books strengthened sequentially compared to the quarter 3 FY '26, also the pace of recovery really across geographies and industry segments. At Uniparts, we had been observing the strength over the past few quarters, and we are therefore pleased to have delivered performance exceeding the guidance shared earlier. Therefore, to start with in quarter 4 FY '26, we delivered approximately 31% year-on-year revenue growth and about 18% sequential growth over quarter 3 at the same time, for the full year FY '26, revenues grew by 21% over FY '25. This was higher against the guidance of mid-teens growth that was even earlier. As communicated previously, towards the end of quarter 3, 1 of our facilities in [ Lugana ] experienced acquired incidents in the finishing shop. In order to ensure continuity of supply, we swiftly implemented interim arrangements, primarily leveraging our subsidiary operations and to a limited extent select external partners. I am happy to share the tea measures enabled uninterrupted support to our customers with minimal disruptions. And in parallel, the rebuilding effort is well underway. The incident is fully covered under our insurance policy, and the claim was filed during the quarter, we expect normal of patients who return on schedule. In March, fresh escalation in West Asia and reduced supply chain uncertainty that required swift action. Our teams responded with agility putting alternate arrangements in place rapidly to ensure uninterrupted customer supplies. While the evolving geopolitical situation has resulted in increasing input prices, some of this inflation is being mitigated by favorable exchange rates. Our foremost priority has remained business continuity and customer service, and we continue to closely monitor developments and will respond proactively as the situation evolves. Let me now come specifically to the industry developments and then start with the construction in the country. North America customer commentary and industry data point to continued growth in FY '27 for construction equipment. With demand expected to gradually strengthen through the year, the second half being better than the first half. The consumption market is supported by investment in data centers, advanced manufacturing and broader digital infrastructure spending in the United States. Specifically coming to Europe, the construction equipment market appears to have passed is cyclically low with early signs of recovery becoming more visible in quarter 4 of '26. In fact, the demand for compact equipment has been a bright spot and infrastructure spending supported by fiscal similar defense investment and energy transition, project is expected to provide a more stable demand environment throughout the year. This recovery is gradual with the outlook of modest growth anticipated for the full year. Therefore, taken together, these trends reinforce our view that the construction segment continues to offer strong visibility across regions plus combined with new business awards that we have had in the Uniparts and the improving industry environment is supporting growth momentum for part. Coming to the agriculture side, let me bring it up into 3 segments. Let's start with the small agriculture. The small and customer market in North America is on the path of recovery. live soft and dairy production is a leading demand. While the higher end of the smaller ag factor range is also showing resilience as farmers begin to cycle through equipment replacement. Overall, the segment is poised for approximately 5% growth in FY '27 in line with the industry estimates. In Europe, the small initial market is showing early signs of stabilization after a prolonged period of softening, the recovery is gradual across markets with momentum expected to build through the second half of the year. Overall, the outlook for FY '27 is positive with modest growth anticipation. And coming to India, the track industry demand remains stable, although we have to see how it reacts to the lane. With inventory replenishment gaining traction and order book strengthening Uniparts is well positioned to capitalize on the improving prices, our strong market share and diversified presence in this segment gives us confidence in delivering really healthy growth through. Let me talk about the large agricultural machinery continues to work through the current down cycle with leading OEMs performing that quarter 4 of '26 presents a cyclical trough. In North America and particularly, the industry volumes for large tractors continues to track down in the mid- to high teens year-on-year. However, in [indiscernible] sentiment is gradually improving. For Uniparts, in particular, the new program wins in Europe and a diversified presence across tractor platform positions the company well to participate in the recovery as production volumes normalized through the year. We also have the aftermarket sector and the aftermarket continues to be stable, contributed for Juniper across North America and Europe. Before sequentially, we expect Q1 to be in line with Q4. And overall, we expect second half of FY '27 to be stronger than the first half Overall, we do expect the growth in FY '27 to be in line with what it was in FY '26. So ported clients improving industry cycles, execution of recent business rewards and wins and a gradual recovery across the end markets. So if I talk about the strategic outlook, our new business momentum actually has gained meaningful traction with trailing 12-month business wins exceeding INR 25 crores growing over 12.5% about quarter-on-quarter. And encouragingly, these wins are distributed across segments and geographies, and this pipeline provides Uniparts with good visibility into the future growth. brief on the financial position for quarter 4 FY '26, Uniparts delivered an EBITDA margin of 24% and 22% EBITDA margin for the full year FY '26. The cash flow remains strong, and the company continues to be net debt free with a net cash position of INR 160 crores as of March 2026. This strong balance sheet and margin profile provides a solid foundation for sustainable EPS improvement as volumes recover and operating leverage plays out. In fact, the trailing 12 months, 8 years post the quarter 4 results is INR 35.07 which is 80% higher than that at the end of FY '25. This performance actually accounts for INR 3.4 crores impact on profitability due to the new rate code introduced in November 2025. During Q3 FY '26, the company declared a special dividend of INR 101 crores. In fact, the total dividend distributable for FY '26 was INR 170 crores. underscoring our commitment to disciplined capital allocation and shareholder return. With these few words, I would like to invite our CFO, Sandeep Taneja, to present the financial highlights for Q4 of FY '26. Thanks. Over to you, Sandeep.

Thank you, sir. Good evening, everyone. Here are the key financial and operational highlights for the quarter ended 31st March 2026. The revenue from operations stood at INR 339 crores, up 34% year-over-year and 21% quarter-over-quarter. EBITDA was INR 81 crores, up 95% year-over-year and 32% quarter-over-quarter. Corporate after tax stood at INR 51 crores, up 124% year-over-year and 53% quarter-over-quarter. Operating cash flow was INR 52 crores in Q4 and INR 174 crores in FY '26 cycle. Trailing 12-month EPS stands at INR 35.7%. Net working capital is 136 days on our trailing 12-month revenue. as of March 2026. Net cash position, INR 160 crores as of March 26. CapEx stands at INR 12 crores for the quarter. And the new business awards were over INR 425 crores in annualized potential over last 12 months. With that, I'll hand the call back to the moderator for Q&A. Thank you very much.

[Operator Instructions] The first question is from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, I wanted to understand the market and recovery mode right now. Is there any new product or SPA that we expect to supply to the OEMs going forward?

So, Madhur, this is Tanushree Bagrodia, and thank you for joining us again today. [indiscernible] mentioned, for FY '27, we expect the growth, which is coming from IFRS27, we're expecting a growth in line with FY '26. And this growth is, of course, coming not only from the industry cycle turning, but also from the new project wins that we had. And some of these new project wins or new products that we are supplying to customers. And so yes, the growth is anticipated to come from there.

So [indiscernible] you tell me what kind of products are you supplying and to which segment? Or will it be immediately towards -- if you could help me inertion related towards the construction segment or the -- how -- how should I look at some of the construction and [indiscernible] new product lines?

So [indiscernible], as Chairman explained, our new wins in the trailing 12 months has been about INR 225 crores. and they are broad based, that comes from the construction and the agricultural industry. Our emphasis on growth has been in the large ag and the PMPs so a majority of the new business that has come -- has come in from these 2 segments. And these are the 2 segments in which we will be supplying products. These are 3 on linkage in the late and precision machine parts in the P&P segment. These products technically remain overall, similar what we are manufacturing, but there are certain features and specifications of products that keep differ in order to order.

So madam, we did 24% EBITDA margin in the fourth quarter. So is it sustainable going forward?

I think if you look at our improving profitability, this is driven by the same -- this is driven by 2 things, right? First, the operating leverage is now clearly visible at the full year as volumes have now started to increase. Second, we have maintained conscious cost discipline through the year. So expenses have been incurred only where necessary, but most increases being limited to either being inflation-driven increases or variable expenses for variable expenses that have to be done, right? So as of the last year has demonstrated operating leverage is now working in our favor with margins expanding meaningfully. The full year revenue expanded at 21%, while the EBITDA has grown -- we have said consistently at 20% EBITDA sustainable over the cycle. And as volumes build through FY '27, we expect to operate comfortably above that level. The exact outcome of the EBITDA will depend on the pace of the revenue ramp up and the mix of the delivery channels.

Sir. And also, madam, now our rupee has significantly depreciated. So are we passing on the benefit of total depreciation? Or are we retaining it? And also steel prices also are at all-time high or near about -- so how are these 2 factors, I mean, coming together?

So Madhur, as we all know that the depreciation of a currency is linked to inflation. And so when we speak to our customers and we talk about FX pass-through, we also, at the same time, net it off against the inflation increase that happens. And that's how the customer contracts are designed and the customer negotiations happen.

And lastly, if you could tell us about the CapEx plan that we have for the possible future?

Madhur our CapEx plans remain unchanged at about 2.5% to 3.5% of our revenue, and that is consistent, and we will not be deviating from there.

Great matter now, Madam, just a feedback madam, we our company has a great track record of paying huge dividends and we are thankful for that. But if you could now with recent changes in tax policy, share buyback has become far more tax efficient. So I mean, straightaway instead of 36% taxation on dividend the buyback tax is for the shareholders, it ranging from 12.5% to 20% and even for the promoters, it is 30%. So even the promoters will state the way, say, 70% of the tax outgo if the company does a share buyback instead of a dividend. So madam, if you could kindly consider that solution.

[Operator Instructions] The next question is from the line of Sunil Jain from Nirmal Bang Securities.

My question relates to the fire because of that, you might have done outsourcing and not. So was there any impact on the margin because of that? And if yes, then how much was the impact one?

0 Thank you for your good wishes. The management and the team has worked very hard to deliver these results in a volatile year. As far as the fire incident is concerned, we are very well covered under an insurance policy. This insurance policy does not only cover the fixed assets on the inventory with any loss of profits that we have which includes any costs that we have increased costs that we incur due to the fire. So all of that is complemented we covered our under our insurance.

Okay, fine. So even if when it will come back, first of all, when it is likely to come back and even if it comes back, then we will not have any impact on the margin.

Right. So Sunil, the efforts are underway to rebuild and to be online by the analyst regard. And I think the LOE will ensure that any additional cost that is enjoyed due to the fire as the loss of profit, MOBs of profit. So any additional costs incur due to the fire are a part of that game.

Mr. Jain may we request you to please rejoin the queue. We have other participants meeting for them. The next question is from the line of [ Ashish Tiwari from Equirus Asset Management. ]

Congrats on very good numbers. So firstly, if I look at the CP revenue over the last 3, 4 years, almost come do 30% because tractor market has come down. But in this, we have not lost any market share, right?

So I think what has happened is we have grown with our customers in the construction segment. And that's a very clear derisking strategy that the company has deployed. And that's why you see that today, our revenue from CPL and CMV is almost 50-50 split. We haven't lost any market share. We continue to maintain our FOBs and we continue to grow with our ad customers. At the same time, we are growing with the PMP business as well.

Okay. So sir, I want to understand, let's say, next 2, 3, 3, 4 years period, if you again go back to the peak, our revenues in the 3 will be had and what we had peaked earlier, right? So as we are growing with different customers and different product lines, the idea is to maintain the derisking and to ensure that our growth is there in both segments of CPL and BNP and in both industries and in construction. So we will maintain our estate.

Sorry to interrupt, may we request Mr. Tiwari to please rejoin the queue. The next question is from the line of Sajal Jain from Wolford.

[indiscernible] set of numbers, delivering well amounted guidance. As you had a couple of questions from my side. Firstly, on working capital, we saw improvement from like 15 to 13 as driven by both your inventory and receivable improvement. So is this level sustainable going forward?

You know our business model, right? We do have a near showing for our customers there, we make in India, we ship to our warehouses overseas and then supply to customers just in time. With that, our inventory levels remain high, and there has been a lot of conscious effort put in to reduce the inventory, which is what has reduced the inventory from 146 days in FY '25 to 134 days in FY '26. The endeavor is to continue maintaining these levels -- at the same time, we brought the receivable days on the payable days almost at par in FY '26. And again, we are continuing efforts to ensure that these are maintained. So yes, we do believe that with the efforts, which should be sustainable.

Okay. As one other question. Is there any update on the acquisition that we've been talking about?

So Sujal, thank you for asking that question. And I think I'm going to address at that quite directly, we acknowledged that -- this has been talked about for a long time and investors really want an update. I think what I want to share to me is that we have evaluated about a dozen targets across the platform that we want to grow in. We have been closed in 2 locations and both sell a part for various reasons. In summary, at Uniparts, when we are looking at an acquisition, we have a clear framework where the target must add meaningful to our platform. It should be manageable in size, and it should be ROE and [indiscernible] Right? We don't want to do something just for the sake of being able to say that we have -- we've made an acquisition. The special dividend that we paid out in Q3 of FY '26 was partly because we evaluated an opportunity carefully and then decided markets to see -- so we do take our capital allocation very seriously, but we will update investors as soon as something concrete is on the table.

Thank you queue. The next question is from the line of Viraj from SiMPL.

Congratulations to you and the team for some set of numbers in such a timing environment. A couple of questions. First, if you can, [indiscernible] what is the gain from ForEx in the fourth quarter and full year FY '26. And second also give revenue mix by delivery came both for quarter and FY '26. And I think earlier you also used to share beef major components of the order range by, say, segment and region just -- so if we can also depot on an annualized basis. And lastly is on the aftermarket. I think those now normalized. We see a growth center not change to a level what it used to be as a percentage of revenue. So any color on how should we see this little segment playing

Your lines are unclear, right? I think if you move a little bit away on the mic it will help. I think your question that I understood you want to understand what are the

Yes. You want me to repeat?

So you want to know what is the sales by delinear channel, right?

Sales by delivery channel FX gain we would have in the fourth quarter and for the year and also the order wins, I think earlier used to give by segment and region, the major components you should give us effect in terms of large construction and region-wise. So that and the aftermarket, I think sequentially, why it has gone, but not to the extent where the business was earlier in the porcine revenue. So just trying to understand how should 1 look at next couple of quarters?

Okay. So I think if you look at the solar sales for FY '26 with the warehousing China has given us about 5% of sales, that is exposed to about 26%. India local deliveries was about 14% and U.S. local deliveries is about 8%. The growth of 18% sequentially, that has some quarter-on-quarter is largely driven by volume. And these volume growth was because of the tailwinds of the small ag recovery is beginning to happen and the new business wins that we were executing currently is a small part of it. The other question that you asked was on where we won new business, the new business wins has been broad-based. We have been indicating and we've been saying this for the last few quarters that are largest run base of growth remains in large and in EMV and the majority of our new business wins comes from these 2 segments. We continue to win new business in small app with our efforts towards PNB and [indiscernible] would be about 70%, and that is also the proportion in which the new business rails would come through. The aftermarket, the aftermarket on the tariffs is only the U.S., we also have an aftermarket in Europe. And overall, the aftermarket remains to be a stable contributor to the revenues for FY '26. And in the quarter 4, yes, aftermarket has had a better performance than FY than quarter 3 of FY '26.

The next question is from the line of Nirmam Mehta from unit PMS.

Congrats for a great set of numbers. So my question is, given that the end industries are recovering now and we have gained wallet share. So what is the kind of peak revenue potential that you can see in this cycle? And also on the capacity parts. So do we have enough capacity to cater because I guess we mentioned some time that we would need to do some CapEx to cross our previous peak revenues? So if you could talk about that.

Right. So let me understand your question again, Leon you want to understand what is the key revenue and [indiscernible] have capacity, right? That's the question that you have. So if you look at -- if you look at it from a capacity standpoint, we've always maintained that our capacity, including the maintenance CapEx that we do is in the range of doing the 5% to 3.5% of our revenue. When we do our CapEx, we always ask ourselves the question of saying that for this investment, if I were to make an incremental investment and we get better capability or a higher capacity. What this means is that when we get a new business, then at that point in time, we only need to do balancing CapEx and hence, that CapEx remains in the range of during the half to 3.5% of revenue. The second point to note on CapEx is that our business model is run in such a way that the steady-state EBITDA of 20% over the cycle allows us to invest in the business for our customers. And this invest continues even in the downturn. So even for example, in the last 2 years, we've continued to invest in capabilities across the group. We've done in-sourcing in the U.S. factory. And we also -- and we'll also continue to go build out our warehousing or near shore model with the investment in Mexico that we've done, right? So I think that's our CapEx strategy. And that is to ensure that we can continue to outperform the industry segment. as we've also demand traded. And which means that we are not constrained to any peak revenue. We can continue to access growth as it comes our way. and that's where we continue to execute the INR 200 crores to INR 225 crores is new business awards that we plan.

Understood enough. And secondly, on the P&P business, like you've mentioned that we've been focusing on this business for the past few years, so -- and we've seen that because we crossed up previous peak revenues. I think we bought we did in FY '24 also. So if you could kind of talk more about what kind of products are you working on in here and what is the kind of potential growth potential that this segment has?

So specifically coming to P&C, let me a structural view of what is the growth potential, right? I think the important aspect of her is to see provide things bushings, which go into articulated joints and are critical for the operations and [indiscernible] of equipment that are any and construction equipment customers manufacture. If you now look at who are our customers, right, let's just look at the top 3 construction equipment manufacturers globally. We are 100% supplier to them or we have a large shared business for the products that we supply, right? But there has been a section of that total relevant spend that they do on these categories. So that's the growth opportunity that we have. And that's the reason that we've been focusing on growing our C&P business. And that's why if you see over a 2-year period, where we were 50 where we were over 50% for our native business and about 45% for our P&C business, we are now about 50-50.

The next question is from the line of [ Anagha Mokeshi ] from Prescient Capital.

Congrats on a very good set of numbers. My first question is that we have been declaring orders of around INR 200 crores to INR 25 crores. So can you share like what is the total order book outstanding as of now, like because we are order wins, but like what is the total outstanding order book?

So [indiscernible] as Chairman mentioned, we are expecting a growth in line with the growth of FY '26 for the full year. right? And that growth is based on the visibility of the order book itself. So if you say that the growth is going to be in the range of the 20% that is there for FY '26 that give no visibility of the order book.

Ma'am, I get that. But in the past, like we have been bearing around about INR 200 crores of orders in -- but like there has been a period of like the growth has not been that strong. So is it like the order like order book did not calculate in the past and the translation will improve? Or what there's some like falling or if you can like give something on that.

So in the last 2 years, there were 2 or 3 effects that happened, right? One was at the mines the industry was on a downside on the that the ad and the construction equipment industries has seen in the last 40 years, 30 to 40 figures. And as that truck is happening, our OEM customers on demand are going down, right? And as their demand was going down, of course, our sales was impacted and hence, you saw that the order books were going down. I think that factor 1. The second factor is as a consequence of fact whatever new business that we want, either got delayed or was executed in a smaller amount. So that is what has happened. Because when we tell you that we won a certain of the book, so as of 31st of March, we have INR 225 crores of new order wins. This represents the annualized potential of new projects won in the caring 12 months. This is a rolling window. So old projects fall as we start generating revenue and new products coming. I think the facts in this number has held at a 200 crop now for a few quarters. And let's tell you 2 things that we have consistently bringing roughly about INR 200 crores of new business each year. And we are also converting older than then to actual revenue. And this is as the cycle is improving.

Thanks for the clarification. Another question is that what I understand is for the large dragon PMP segment, our margins are better. So with the increase in business from these segments, will we see some margin tailwinds from that also? So at our margins are decided by our delivery channel. And we've always said that when we look at direct exports, direct export is our base margin of what we say steady to 20% EBITDA margin. Our locally manufactured locally delivered deliveries are lower than that. And the warehousing sales business is somewhat higher than this. So it's not the end segment of the delivery channel that really drives the margins.

The next question is from the line of [indiscernible] Mandel from Edelweiss.

Able and a great set of results for the year given the fact that we started the year with all the tariff tantrum and we ended on a very positive note. So congratulations to the entire team for that. So Sanish, I have 2 questions from my side. One is right on the margin part. Now if I look at the EBITDA margin, right, as per my recall, this is the highest EBITDA margin ever, right, at least for the to 10 to 12 quarters breaker that I have. And also, if I look at the gross margin and EBITDA margin, right, on a quarterly basis for this quarter amongst a quarters. This is the lowest, right? So is there anything one-off in this 23.8% sorry, 9% EBITDA margin that we have reported in the form of currency in the form of mix or in the form of any of these tariff refunds that some of our customers might be getting right. Anything that you want to call one-off? And then on the same lines, right, when we talk about at least 20% margin, so there is a huge gap between the 20% and 24% what we have reported, right? So could you just help us understand on both these points, is there any one-off here? And in terms of about 20% and 24%, how should 1 the price thing between these 2 numbers.

So [indiscernible] a couple of things on margins, right? I think number one on tariffs, we always said that we are P&L neutral as far as status for concern. So I just like to reiterate that -- as far as tariffs are concerned, we are P&L neutral. Now when we look at quarter 4. And let's understand the results of quarter 4, our material cost of 35% is now come back to where we've always said our normal material cost would be in the range of 34% to 37%. I think there are 2 things that have happened in quarter 4 to give the kind of EBITDA margins that you were seeing. Number one, what is an 18% sequential growth that has happened, which is largely driven by volume, right? And that volume rise has obviously driven the operation leverage a larger room to play, which is now. So our fixed costs are getting absorbed better and the EBITDA is improving. The second thing is that sequentially from quarter 3 to quarter 4, our warehousing sales actually went up. This is our highest this is our highest margin segment, right, and hence, you are seeing the 24% margin. Coming to where we see our stable EBITDA margins, like I said, we have seen -- in FY '26, a 21% top line growth got the EBITDA to grow about 5%, right? So we do believe operating leverage will play out. We have cost conscious -- even today, we are not sanctioning any expense which is not necessary. So I think we are very comfortable in saying that we will be above the 20% level. But again, the exact outcome of this EBITDA will depend on the ramp-up of the volumes and the delivery channel mix that played out.

[Operator Instructions] The next question is from the line of Abhishek Shah from Valcore Capital.

I think this is in line with the margins, EBITDA margin pressure someone asked previously. Then how -- I mean we have heard a scenario where seats are higher. Employee costs we are hearing in North India has gone up at least 20% and which is a big component for us. I think it's almost 20% of our total revenue. And lastly, of course, raw material price station. So maybe putting that into perspective, how do you see sort of far [indiscernible] up? Because I think employee costs being one of the biggest things to consider in this.

So again, Again, Abishek, if you see the employee cost that is going up is a variable cost. It is -- the fixed cost has an inflation, which also gets a little bit taken care of by the currency depreciation that happens, right? The volume expansion also takes care of the safe to a large extent. And I believe, as far as we are concerned, the trade and the raw material component of the cost to the direct pass-through to customers, right? So the increase in volumes and the currency depreciation that we have does help us to mitigate some of the flat inflationary elements that are there. And like I said, the operating leverage ensures that the fixed costs are absorbed. Secondly, and that's what I'm emphasizing on this point as an organization, we continue to be cost conscious. Right? Even if you say the expenses that has gone up in percentage wise you won't see expenses going up. In absolute terms, also where you see expenses going up, they have gone up, either because they are inflation related or there are variable expenses that have gone up.

My second question is, I understood partially what you said. But second question is, if you look at the growth that you're talking about for this year, we could reach or maybe even across the FY '23 numbers that we had where we peaked last time when we had an EBITDA of close to INR 300-odd crores. At that time, I mean, our understanding when we used to speak to you at the bottom of the cycle was that we've done a lot of cost improvement measures. And with that, next time when we hit the peak, our margins will be a lot better than what they were in the last cycle. So is it a safe assumption that we could actually surplus that in terms of EBITDA margin, purely because of a lot of cost measures that we would have taken and maybe if you could talk us through in terms of what cost cutting that we would have done over the last 2, 3 years, that could help us.

Sure. Abishek happy to take. So the cost fanship measures that we've done in detail offline as well, right? But I think it's not as well as cost cutting as much as things becoming so conscious. For example, when we invest in new capacity. We are looking at -- how can this investment reduce our operating costs going forward, right? So that's one thing that we do very until to keep ensuring that our costs come down. That's the reason we did an investment in in-sourcing in the U.S., for example, right? So I think it's a cost-conscious environment that we live in. And I think if you look at the FY '26 results where we are roughly at about INR 1,200 crore turnover number, and you'll see when the last that we reached that number. Yes, our EBITDA margins are better than what they were at that time. Having said that, yes, we are endeavoring to ensure we take our cost consciousness. We continue to do good growth. We continue to grow business, get new business. But the exact our -- and given this trend continues, we are on a good path. But the exact outcome where the EBITDA to land will also depend on our delivery channels. And I think that -- that's something that I will definitely want to leave on the table. We are very comfortable today saying that we will be comfortably over the 20% number. But the exact number will be dependent on the delivery channel. So for example, now we are also getting into Mexico, right? We have 3 customers that we are talking to are in the ramp-up phase. But as the businesses start to stratify. We definitely are going to see another impedance coming to this profitability.

Because I mean that's right. I mean in the last 2 years, I think our business mix also has sort of improved and that would also sort of be another parameter to enduser margins basically. In terms of warehousing that we're doing?

I think we have said where we were at about 46% to 47% of our warehousing sale, right? At that point in time, we had said that in 2 years' time, we should be at the 50% level. And that is where we are -- so yes, the effort is to grow the business in the best cost manner for the customer. And to ensure that structurally, our margin profile remains the same, right? We had nearshoring showing in a large manufacturing footprint which now does is thoughtfully deliver on the deco model for the customers and maintain our structural profitability because that is what then allows us to go back and reinvest.

Fair enough. Fair enough. This is helpful. Just one last question. In terms of inventory levels at our customers that I mean, we used to talk about unit tariff times customers were at a very adjusted time inventory. How is the scenario currently? Maybe if you could give us some light on that? So she tariff or no is, right?

I think all our customers take a view saying that they have an end customer to serve at the end of the day. And they want to ensure that they have sufficient inventory to be able to deliver the product to their customer and time. And I think that will also see continued in the aftermarket, it leads to have inventory because this is a higher season sales, they really buy that inventory. In the case of the OEMs as the industry cycle is picking up, and they are sitting on backlog orders are ordering more or less. And hence, and hence, our inventories in our warehouses in absolute terms is going up, bearing in mind that the days of inventory are under control.

The next question is from the line of [ Sukumar from Sumangal Investments. ]

So can you tell me about the capacity utilization at your booth at division and the MP division, please.

So this will be in a batch and discrete manufacturing company. And for capacities are as good as our pop processes, right? And that's what I was mentioning when we are actually investing in our capacity, and we are improving our capabilities. We are investing in such a way that when new businesses come in, we are not doing additional CapEx but only balancing CapEx. And that is what allows us to ensure that our CapEx remains within the 2.5% to 3.5% range of our revenue, and that's the way we run the business.

So what I want to understand is your capacity fungible between the 2 main business wins.

So a lot of processes, yes, we can do for both PPL and PMPM. In certain cases, there will be certain processes which may last be fungible. But I think the capacity allocation and the capacity planning is done to ensure that we have adequate growth room available.

And lastly, during the IPO lead I think there were some products which are shown being catered to field and oil and gas industry. And Mr. Soni had put a lot of impressions on that. So what -- I don't think any meaningful progress has been achieved on that front. So can you tell the progress on that front?

So before those are products that we continue to manufacture and supply to the current customers that we have, and we continue to work to expand that product line as possible.

[Operator Instructions] The next question is from the line of Sunil Jain from Nirmal Bang Securities.

Again. First of all, the outlook on South America is showing some weakness. So how much is our supply to that particular market and will be impacted because of that? And 1 more question if I can take it. share of large ag equipment in overall sales?

So Sunil, if you look at our investor presentation also gives the geographic split that we have FY '26 at the end of FY '26 roughly about 53% of our sales has come from North America. About 25% from Europe, about 14% from U.S., about 5% from Japan. About 1.5% Asia, rest of the world is less than 1%. And what is the share of large ag in our business at the end of FY '26, it's close to 20%.

The next question is from the line of [indiscernible]

A question related to the tail -- so with John Deere and CNH moved on to smaller recovery and inventory replenishment. Do you see 3 payers growing faster than the company level basically growing faster than the PNP '27.

Sorry, Sujal, I couldn't understand you. Could you slowly repeat the question?

Yes. I was talking about our global OEM customers. John Deere and CNS were guided like for the recovery in smaller segment and also inventory replenishment in the con do you see PPL category growing faster than the PMT in the next year?

So Stan, as Chairman it can in his opening address, if you look at the small ag segment, it's looking at about 5% growth in North America and in Europe, the growth in small ag is expected to be stronger in the second half, not in the first half. India as Chairman also pointed out, which is a small ag market is seeing a robust capital market at the moment, but we also have to see how the monsoons pay out, right? So I think it's an evolving situation. It's safe to say that the industry cycle has turned, and we are looking at roughly about a 5% growth in the small ag segment overall. Last and is working through the lows of the cycle and coming back from Europe and ahead of North America in and construction remains more stable, more visible and less volatile. So I think that's how the 3 segments are performing.

[Operator Instructions] The next question is from the line of Viraj from SiMPL.

Yes, Yes, you wouldn't be the ForEx gain in the fourth quarter and for full year FY '26?

So Viraj the 18% sequential growth in the 31% year-on-year growth. A majority of that comes from the volume-led growth which is there.

No, no, I understand. But in terms of there be some gains. So I think in the second quarter also, we had somewhere around [indiscernible] to valuation because of depreciation, and I think in Q2 Q3 also, we had some gains. So I'm just trying to understand sort annualized rate, what would be the figure [indiscernible]

So Viraj that is on the inventory side, which is on the -- which impacts our material costs, which was about 2% in quarter 2. And that would be a similar number in quarter 4 as well.

Okay. So on a full year basis, what will be -- it will be around 2% of sales? Would that be right to say inventory value in this?

2% is a good number to saying like that's the impact on the material cost because of the currency.

Right. So that will not be the recurring rate? if the currency depreciates, it will recover the currency appreciate, then it will go on the other side. And I think we are very cognizant of this movement of the currency in -- thank you very much.

The next question is from the line of [indiscernible] from uses Capital.

Yes, Yes. So I mean the extent that this growth in the quarter 4 is coming through volume, it's volume driven, not a low price escalation that is done in the -- so are we expecting any price escalation in the coming quarter or thing? And the second part is also like do we also spend anything on R&D for future growth from the product part or any -- are we involved in any discussion with any other like partners, strategic partners or are you things like that?

So most of the growth that we are anticipating going forward is also volume led, and that is, again, driven by the fact that the industry cycles are turning have strong execution on the new businesses that we are selling, right? So both of these are leading to the growth in the order book and hence the growth in the top line. We do invest in R&D. So of course, given that we work with the world's largest customers on the agriculture and the construction equipment side. We have to have engineering teams that can work with their engineering teams to understand feasibility of products to collaborate on specific solutions. And I think that's the reason we are also able to bring a new business and especially in segments like large ads, right? That's one segment where we've invested in, we've got significant new business wins in the last year. We've grown strongly and today's -- at the end of FY '26 20% of our revenue. So all of this comes because we work very closely with our customers through our engineering teams on designing solutions together.

So any new product that is on the development or anything like that?

So we continue to work on new products, along with our customers. And that happens across our segments.

The next question is from the line of Satish Shah from [indiscernible]

I just wanted to ask, would it be possible to give the geographical split within the two segment.

The geographical place within -- is there no investor foundation, [indiscernible]

I mean within the new segment as in how much more [indiscernible]

You can contact our IR team, and we can help you through that.

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

I just want to say that the financial year '26 tested our team in many ways that go beyond the imposed business cycle, things like navigating the tariff headwinds, the uncertainties stemming from the West Asia crisis and managing through the disruption that was caused for the payer. Through all of this, I think our people responded with resilience and agility that we are genuinely proud of. We do remain focused on executing our strategy with discipline, which is also including deepening customer posters broadening our presence across segments and geographies and building a business that is stronger and more adaptable than before. The new business momentum we are seeing is a direct connection of all that effort. And lastly to our employees, our shareholders, our partners and the communities we operate in. Thank you for your continued trust and support, and we look forward to delivering on the promise of that trust in the quarters ahead. Thank you, everyone.

Thank you. Ladies and gentlemen on behalf of Go India Advisers, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.