Virtuoso Optoelectronics Limited (543597) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q3 and 9 months FY '26 Post Earnings Conference Call of Virtuoso Optoelectronics Limited. Today on the call from the management team, we have with us Mr. Sukrit Bharati, Managing Director; and Mr. Sajid Shaikh, Chief Financial Officer. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risk and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to detail us about the business and performance highlights for the period ended December 2025, the growth perspective and vision for the coming years, post which we will open the floor for Q&A. Over to the management team.

Thank you, Vinay. Good morning, everyone, and thank you, everyone, for taking the time out and joining this call. I would like to start with the discussion on the financial performance for both the Q3 as well as the 9 months ended for FY '26. Starting with the quarter third, the third quarter performance. Q3 has been a good quarter for us, kind of a comeback quarter, if I have to say. The net sales for Q3 are almost INR 205 crores, which is almost double than what we were able to do in Q2. Of course, historically as well, this is generally a good quarter. What is important to note here is that the EBITDA margins have been very healthy for Q3, stand-alone basis. If you see, it's in excess of 11%. The absolute number is roughly INR 23 crores for Q3 alone. PBT is also very healthy in line almost with the EBITDA, it's 5.1%. And in terms of value, it's about INR 10.5 crores. PAT margins are also very healthy at 3.4% and the absolute number here is about INR 7 crores, a little more than INR 7 crores. So that's what we have done in Q3. I would just like to add one more point over here is that till last year, as a company, we were not declaring quarterly results. However, we had given an update in the previous year, a quarterly update, a business update that we have given, which contained the top line numbers. So whatever comparisons going forward, I'm going to talk about are only on the top line numbers, if I have to compare this year versus the last year. So that was Q3. As far as the 9-month numbers are concerned, we have been able to breach the INR 500 crore. We stand at about INR 505 crores. EBITDA is a shade under 11% at about INR 55 crores roughly. PBT margin is also pretty healthy at 3.6% and the PAT stands at about INR 10.3 crores, which is 2% of the number. When you see Q3 of this year versus Q3 of last year in terms of top line, we have grown by almost 36%. We have shown a very healthy growth in the EBITDA numbers primarily because of the other product that have come into play. So beyond AC, there are other products like the refrigeration products that have started to contribute. And moving to that, this kind of a product mix has helped us deliver a healthy EBITDA and hence, a healthy PAT margin as well. So this is a brief on the financial numbers that we have been able to achieve over the last 9 months and quarter. I would like Sukrit to take forward in terms of the business updates.

Thank you so much, and a very good morning to all of you. And once again, thank you for taking the time to join. So post the financial update, just a quick update on the overall business activities of the company. So over the last 9 to 12 months, as we've been updating, we've been investing in not just the AC business, but also diversifying our other businesses. And we are happy to share that the other businesses have now started contributing in terms of revenue and are becoming EBITDA positive stand-alone, which is helping the overall results of the company. To go section by section and division by division. So AC vertical, we have launched our own ODM designs, which is also shared in the PPT. And we have onboarded some additional customers as well based on the ODM designs that we have launched. So AC, we are diversifying not just as an OEM to ODM, but also with multiple customers. Over the next 3, 4 months for the current season, we are running on full capacity or we have an order book which is expected to run on full capacity for the next few months. So that is a good sign. Of course, capacity expansions are also planned, but they will happen in due course. The capacity I'm referring to right now is only the Nashik capacity that was installed and not the Chennai capacity. Chennai capacity, we have taken charge in January. We hope that by Q1, the plant will become operational and the real benefit from that plant will only come for the next financial year. So that was on the AC division. Coming to the next vertical of refrigeration, refrigeration has also picked up. We are seeing strong demand in refrigeration also, where existing capacity, again for the next few months in the season looks to be completely booked. And we hope we can keep building on that. And there also, the planned capacity expansion that we had earlier planned to do in this current year, but we have -- we deferred it for about 6 months, but that also we will continue doing by Q1 or Q2 in FY '27. So that was the refrigeration segment. The EMS and lighting segment continues to be good. The expansion that we have planned in EMS is ongoing, and we expect to double our EMS capacity by Q1 of FY '27. So that will start contributing maybe towards the end of next year or the year or in FY '28. So that vertical also is doing well stand-alone, but the growth in that vertical in numbers possibly should come towards the end of '27 or in '28. The fourth vertical of compressors, we are happy to share that we are already at 50% plus utilization in compressors, almost 3 months behind our internal schedule. And we have a good order book for the entire calendar year where almost 60% plus capacity is already booked and we are looking to book almost 70%, 80% capacity, which is currently installed of 2.8 million in that segment. We also want to see how the government decision on QCO comes in March. Based on that, we will decide on a quick ramp-up to add another 5-odd million capacity. So we want to scale up to 7.5 million if the direction from the government is in line with whatever we expect. So that was on the fourth segment. The fifth part of the component business. So the plant -- the component plant in Chennai and the component plant in Sanand have also become operational. Chennai, of course, became operational last year. But -- in Q3, it became EBITDA positive. The Sanand plant last month has become EBITDA positive. So we are -- so that is also helping and contributing to the overall movement of the company. So that was the -- that was a quick update. I see a good demand coming from various customers across product segments. Of course, this month -- this quarter and next quarter are our peak seasons. And we hope that with a decent summer, the numbers should be at their peak. So I mean, that was a brief update about how things are in the company. Thank you so much, and I think we'll open for questions.

[Operator Instructions] We'll take the first question from Akash Jain.

A couple of questions. One is, I think you briefly alluded to this compressor expansion and the government decision that will hopefully come in March. So if my understanding from your brief is there then basically the expansion from 2 point -- from the current capacity doubling it and also the fact that we were doing expansion to go one level deeper on backward integration and increasing margins that are both contingent on what you -- what the outcome of that government decision will be. Am I right? It's not just capacity expansion, but also backward integration, both of them are linked to that decision?

So the lateral increase in capacity is dependent on customer capacity booking, which is an ongoing process. So that may, may not happen -- that may happen regardless of the government decision because if we -- if we are -- in discussion with 2, 3 customers and if we get a strong order book from them, then regardless of the government decision, we will go for lateral expansion in capacity. Backward integration will, of course, depend on the government outcome. So the 2 parts. One is lateral increase in capacity is dependent on customer order book and not so much on the government decision. The backward integration will depend on government decision.

But the customer order book to some extent is also dependent on the government decision, right? So I'm just saying if the government decides to delay or the decision is not as positive as we are hoping for, then obviously, the imports from China continues. And to that extent, the customer order book may also get impacted, if I'm not mistaken, right?

Correct. So if the government says that there is a finite time for which extension is being granted and that is probably a definitive time line, then also lateral expansion has no impact because still it is a clear guideline that ultimately the decision is favorable. But if there is no finite time line and it is an indecisive decision, then yes, order booking will also get slower. But the only silver lining there is that regardless of government decision, local supply chain building is something that brands are trying to do irrespective as long as pricing is similar. And we've so far been maintaining similar prices with customers. So I believe the shift will happen. Of course, not as fast as it will happen if the government decision is strong.

Understood. Another very basic question, Sukrit, maybe you would have answered that earlier in some other con call. See, we are seeing metal prices going up. And I understand clearly on the AC side, obviously, our margin to some extent will be protected by the customer. But can you give us a sense of what happens in the rising metal prices scenario, both on margins as well as inventory gains and loss? And how much part of the business is protected back to back by the customer? And how much of the part of the business is something where some exposure or risk we are running? Can you please help us understand a little bit of that?

So maximum customers, we are on a conversion pricing model. So there the cost is transferred and the impact to us is minimal. In most cases, I mean, majority currently, we are operating like that. There are some customers which are price-based where pricing gets done on a quarterly basis. So in that case, it is a setback for a specific quarter, but next quarter, it sort of corrects itself. So if you ask us, we are not expecting a massive impact of copper prices on our margins in the coming 2, 3 months.

There may be some impact on the short term because of inventory gains and loss also because there may be a delay in passing on some of these costs to the customer. But over a period of time on a rolling basis, you think everything will stabilize to the current levels?

Correct.

We'll take the next question from [Sidhant Gill].

Sir, my first question is regarding the 10 lakh units. Is it included in the Chennai plant?

It is, yes.

Okay. And what is the capacity of the Chennai plant?

About 300,000.

Sir, can you please give us the revenue breakup for this quarter as well as for 9 months in terms of segment?

You want segment-wise revenue breakup?

Yes.

I don't have the exact numbers, but for the last quarter or the last 9 months, out of the total INR 500 crore revenue that we have done, roughly INR 300 crores to INR 320 crores would come from air conditioning business. About 80 -- INR 70 crores to INR 80 crores is coming from EMS business and INR 60 crores to INR 70 crores is coming from refrigeration and the remaining is coming from compressor, about INR 15-odd crores probably from compressor and remaining from components.

Compressor is INR 15 crores?

That was because it started mass production only in mid-November, mid-November or December.

Right. And sir, are we still sticking to the guidelines in the last quarter, you mentioned that we are looking at INR 200 crores of revenue for the compressor business in the next financial year?

We are, yes.

So are we sticking to that guidelines?

We are, yes.

We'll take the next question from Garvit Goyal.

Sir, in your opening remarks, you sound very positive across the segments. So do you think for this year, we will meet our guidance of INR 800 crores to INR 900 crores with 2.5% to 3% net margins? And what is the outlook looks like for FY '27 sir, across the segments?

So we are holding on to the guidance, yes, for this year. There's no change in that. That is point number one. Point number two, for the next year, we'll give you more accurate numbers probably by end of March or in the April call rather than giving it now. I think -- we'll have more clarity. We'll share it with you then.

Okay. And on the refrigeration segment, last quarter, you mentioned that you started doing the assembly for a couple of customers. So are you seeing any major demand traction here, particularly in this segment? And any color on the size of the market in India?

So it's a small -- it's not a very big market because the market that we are catering to is the premium segment in refrigeration. And currently not a massive product segment for us also within the refrigeration portfolio. But the demand from customers that we have is consistent, even though overall monthly value is about, I think, INR 1.5 crores, INR 2 crores, not a massive number, but it is a consistent number. And the size of the market, my estimate for the frost-free and multi-door segment is between -- should roughly be about 0.5 million in the country. So it is a growing market, but currently a small market. The only advantage is that nobody else in the country, no other OEM or ODM is currently doing multi-door refrigerators assembly or production in India as far as our knowledge goes. So that was one highlight for that product. But I think it is a slow and steady approach. Let's see. If there is more demand, we will further invest in that segment. But otherwise, we'll continue to assemble those products as per customer requirements.

And lastly, on the product mix change. We are reporting good margins in this particular quarter mainly because of the non-AC products. So what is the trajectory of margins do you think going ahead? Like are these kind of margins sustainable or quarter-over-quarter or -- any color on that, sir?

So guidance of margin, we are still maintaining 9% to 10%. Of course, the intention is to have better EBITDA margins, but we continue to hold a 9% to 10% guidance on EBITDA.

We'll take the next question from Shreyansh Jain.

So I have a couple of questions. So first about the Star Eltech Chennai facility. Do they only have ODU capacity or IDU, ODU both? And will we be making for V Star only or other brands as well?

We intend to make for multiple brands, not only for them. That is point number one. Point number two, they have both IDU and ODU capacities. So they have --they're fully backward integrated except for molding. Plastic molding is outsourced.

Okay, sir. And sir, second question, are there any players who do contract manufacturing in deep freezers, or they are mostly dominated by brands in-house?

So there are -- I mean, of course, there is one player who does OEM ODM in this segment solely. And there are a couple of other players who are manufacturing for their own brand also, and they're also doing OEM ODMs. So -- but totally not more than 4 or 5 players in the entire segment who are branding for somebody else.

Understood. And sir, one last question. On the compressor part, sir, out of 2.8 million capacity, how much are we using for internal consumption? And how much of the capacity are we going to sell to third parties?

Our internal consumption will not be more than maybe 0.3 or maybe 2.5 to 3.5 lakhs in the next financial year, which is about 0.2 or 0.3 million. So sorry, 0.0 -- sorry, 0.2 million. The remaining everything will be outsourced -- will be for outside customers.

Okay, perfect. And sir, one last question on the washing machine side, how is it ramping up? And what would be the time to reach peak capacity utilization?

Washing machine, the season starts effectively in April, May. We are -- we've completed the initial pilot, and we are looking at a field trial stage of the product. We are hoping that we will start ramping up towards April or May this year.

We'll take the next question from Piyush Jain.

Couple of things from my side. You said compressor is a 28 lakh capacity and this is only respect to you said we can increase a 50 lakh basis the government decision or something. So can you give some capacity utilization number for current quarter or let's say by next year, what type of percentage utilization we will be achieving this... This business can be what size? How to interpret this 28 lakh capacity is how much business this can generate and additional 50 lakh? You talked about additional 50 lakh or total 50 lakh, just clarify that?

So first part, refrigeration market, quickly, it is about 22 million currently in India, out of which 14-odd million is currently imported. 13 million to 14 million is currently imported. The rest is with some -- there are other -- the large Korean companies that are manufacturing compressors locally. So predominantly, the balance quantity comes from them as per our understanding. That is point one. Point two, the 2.8 million capacity that we have can achieve a top line of about INR 400 crores based on the product mix and the size of compressors that we make. That is point number two. Point number -- so that answers the second, third question -- second question. The third part of the question for this quarter, we are looking at a 50% to 60% capacity utilization. And post April, we are looking at a 60% plus capacity utilization.

Okay. And this capacity will be increased basis whatever government positive decision 28 million to 50 million or 78 million?

To 75 million, yes. To 75 million, 78 million, yes.

Another question is from broader perspective, so whatever I have interacted you in the past, for current year you said if AC business works out maybe a INR 900 crores to INR 1000 crores, whether we will be able to achieve that guidance considering this Q4 is largely a [indiscernible] And for the longer perspective where do you see after -- because last 12 to 18 months we've not done lot of new product compressor, deep freezers and components or heat exchangers. So what kind of revenue we can see from '27, '28, where the all segments start firing?

So two parts. This year -- the revised guidance that we had given for INR 800 crores to INR 900 crores we are maintaining probably --so that is point number one. Point number two, next year guidance, of course, like I answered previously, we'll probably share with you by April because once we have more accurate numbers. But it is looking to be a strong year. And overall, the revenue diversification in terms of product mix will be much better than it is now. So we believe AC in the overall revenue will go down -- will be about 60% to 65% and 30%, 35% will come from the other products that we have invested in, in the last couple of years or last 1.5 years. So the product mix becomes better. It also helps us maintain 9% to 10% EBITDA margins overall as a company. So that was the -- so that is how it will look like. I hope I've answered your question.

Last question from my part, there's -- two parts. One is this INR 100 crore PLI is this started on EBITDA whatever we are receiving or we have not received a significant amount?

It is factored. It is factored, yes.

So, till now how much we have consumed this PLI and how much is remaining out of this amount?

So in INR 100 crores the total PLI value that we are going to realize is about INR 40 crores -- the exact number is INR 37 crores plus INR 20 crores, INR 57 crores.

INR 57.5 crores maximum.

INR 57.5 crores is the maximum permissible out of which half roughly has been factored for over the last 3 years, half is pending.

And last question, how much share of our business from Voltas has reduced recently or something percentage dependent? And how many new customers is AC segment specifically we have added?

So we are seeing a strong demand from Voltas and they continue to be -- I mean, I believe the numbers that we expect from them are similar or higher than what we did last year. But the other customers, we've added 3 customers currently onboarding maybe another customer this season. So 4 additional customers this year in AC apart from Voltas. And -- but the share of Voltas has either remained the same, volume of Voltas remain the same or is expected to grow based on the current numbers that we have.

We'll take the next question from Dhruv Jain.

So my first question is related to the inventory issues that we've been seeing, right? So I think a couple of your peers have spoken about inventories being [piled up in the channel] while you maintain that you have a very healthy order book. So is that a risk for the first quarter? Or do you think that the new customer additions will sort of offset the impact that you may have because of this issue? Obviously, everything is dependent on summer as well, but some thoughts would be very helpful.

So of course, we have a smaller base as against our customers. The second thing was with a larger customer variety, I think your inventory levels tend to be higher because you have to maintain a larger variety of inventory. So we were fortunate that last 6 months when -- I mean, during the 5, 6-month lean season, which hit the industry, we were not sitting on as much inventory as our peers. We were fortunate that way. Inventory levels with customer addition will go up slightly, but I don't believe they will have an impact on numbers for production, if that is the question.

No, I was talking about channel inventory.

Sorry. Channel inventory, sorry.

So I mean, fourth quarter, I mean, from whatever commentaries that most of the AC brands have spoken about, channel inventory seems to be high. So while you said that you have a very strong order book in the fourth quarter, is that a risk at some point of time in the season that numbers may see a dip? Or because you have significant customer additions, which were not there last year, you think you'll be able to offset most of it?

So I think we'll be able to offset most of it, point number one. But point number two, channel inventory, I think dried up by the end of I mean, dried up in the sense, it significantly reduced by October, November from whatever discussions we've had. December onwards, of course, the channel has again started buying material. And I believe industry has been doing good numbers in December and Jan overall as far as primary sales are concerned. So unless secondary sales are muted, I don't see a challenge with primary sales continuing. So that being said, I mean, that is industry in general from whatever we are understanding based on discussions with our customers. But we believe we'll be able to offset that challenge. Hopefully, there should be no hiccups in this season.

Sure. And sir, with this customer diversification, how should we think about your top customer share going down, say, in the next 1 or 2 years?

We hope we'll be able to have a good hedge, but that also depends on how quickly we scale and how much the market scales. But we are hoping that we can maintain a healthy share with Voltas also because they've always been our anchor customers, and we want to continue being one of their largest suppliers. But giving an exact mix is difficult, but let's see how things pan out.

Sure. And sir, just on washing machine, my final question. While you're starting this year, how should we think about the scalability of that vertical? I mean, how are you thinking about it in the next, say, 1 or 2 years?

So as of now, in washing machine, our installed capacity is only for one mold basis which what we are planning. We have to further -- once the first model picks up and does well, we will look at adding more capacity. Currently, if you ask us, it is more of a offset for us in terms of seasonality because it is a cross as far as seasonality is compared against refrigeration and also air conditioning. So hence, it is a good product segment to be part of. But this year, we are not -- we will first evaluate how the product does in the market. And if it does well, then we will plan to ramp up in FY '28.

We'll take the next question from Anik Mitra.

Sir in one of earlier con call of Voltas, I've heard that they are trying to build up their own capacities, it's related to backward integration. So on that -- I wanted to understand your point of view.

Sorry, which customer did you mention?

Voltas.

Voltas. So Voltas has already created their capacity from -- I mean, of course, everybody knows from 2 plants in Chennai and Pantnagar. I am not aware of their expansion plans, if there are any further expansion plans.

Can it reduce the orders from Voltas going forward? What is your assessment?

So I mean, I cannot answer a long-term question as of now, but we don't see -- I mean, we see a healthy demand coming from them now also. And basis on whatever I understand, they want to have a decent portion of their purchase coming from other manufacturers. So to that extent, I think demand should be good.

Sir, you said 28 million of compressors having potential of INR 400 crores of revenue, correct?

2.8 million, 28 lakhs...

Correct. 2.8 million compressors having --potential to generate INR 400 crores of revenue. And after April you are saying -- 60% plus capacity utilization. It comes around INR 240 crore plus revenue from the compressor.

Correct.

And sir, I just want to understand regarding your capacity Cross Flow Fans. What is your current capacity and what is your plan going forward?

So Cross Flow Fan capacity, we will -- we are increasing to match with effectively our capital requirement. We are not selling Cross Flow Fan as a stand-alone product. So we are only matching the capacity with our ideal capacity as of now.

And sir, what is our -- currently with the second largest customer, if you can name?

Sorry, we would -- we avoid sharing names of customers.

We'll take the next question from Nithya Shah.

So just wanted an understanding on the current debt level considering there's lots of capacity expansions. Next year, how do you see the debt levels coming up? And if you think we would need further fundraising for the same?

So we are, of course, evaluating fund requirement, and we'll raise wherever there is necessary. But we are still evaluating based on what segments and how they are panning out, including compressors and air conditioners. Air conditioners, of course, the capacity ramp-up is already planned, and I think we will achieve the required capacity. As far as debt is concerned, debt from the current level of this financial year, debt might go up slightly, but I don't see major debt getting added to the books because of capacity expansion, unless we have to do a major expansion in compressor. But we take it step by step. So both on the equity raise, we will decide once we have some commitments and decisions based on how the government takes a stand. So we will effectively try and balance debt and equity at a similar ratio. And so currently, our debt and equity debt is less than 1 as far as debt equity is concerned, and we want to maintain a similar ratio as we go forward.

Okay. Understood. And sir, quarter-on-quarter, are you seeing an improvement in overall demand across products? What has been the outlook? If you could share some color on that?

Yes. Quarter-on-quarter, of course, numbers are also -- depicting it. So the demand has gone up. And fourth quarter and Q1 next year, I see -- I mean, I see the demand to continue. And depending on the season, we'll know what happens in Q2 and Q3 or how strong is the demand in Q2 and Q3?

We'll take the next question from Disha.

So just 2 questions. So you mentioned the AC sales will go down to 60%, 65% next year, right? And the remaining 30% to 35% will come from other components. So in the medium term, what would be the comfortable level of this? Like how much would we reduce this AC sales? What would be the comfortable range to share that?

I think overall, we are happy with AC being 60% to 70%. We don't anticipate AC to be any lower than that, point number one, because AC being a larger, I mean, category as far as growth is concerned, we are happy with the 60% to 70% share. And within that 60%, 70% share also based on the OEM ODM model and the product mix, it also diversifies well. So the overall idea of dependence on maybe very few customers or very few product segments that over long term, we wanted to mitigate and those were the steps that we took in the last couple of years. Happy that some of these -- most of these steps are panning out in the right direction and whatever little capacity expansion and product addition that we have to do, we plan to do in the next year, 1.5 years. Okay.

So this mix do we expect to sustain over the years?

Correct.

Okay. And just on the CapEx number, I think this year, we were targeting INR 100 crores. So how much have we done till now? And what's the sort of CapEx that you envisage for FY '27?

So we have, I think, done almost close to INR 120 crores so far, and we are looking at INR 130 crores to INR 150 crores number by March end in CapEx.

Okay. And for FY '27?

FY '27, we are still studying the situation. So it is still a little dynamic. But by April, I think we'll give you a more accurate number.

We'll take the next question from Harsh.

So my question was more on the RAC segment. You mentioned that the primary demand has been better in December and has continued till Jan. I just wanted to understand further in the sense that how much of it is on account of that BEE rating changes. There could be some ramp-up happening over there in terms of new production happening for the OEMs [indiscernible] brands. So just wanted to get a clarity on how much of that demand is sustainable and how much of it is majorly because of this change?

No. So demand is sustainable. I don't think -- so every year from how much ever we understand the market, demand -- I mean, the channel starts picking up inventory in December. And then this demand keeps continuous till February, March. And then based on the season, how fast liquidation happens, the demand -- the tail of the demand continues in Q1 or end of Q1 or first month of Q1. So that is the typical trend. This year also, there was no change. Of course, I believe most of the sales that happened in December were for the old table material because there, people have some price advantage in terms of -- and probably brands have also priced more aggressively for the older table models. And hence, the demand was there. But January also saw good numbers with both old table and new table. So I don't see a reason for this to change significantly in February or March or April.

Fair enough. So you're saying that this could sustain given that with the caveat that the secondary demand should sustain from here on?

Correct. And from a manufacturing standpoint, the primary demand is what drives sales and stocking drives sales for Q4. How deep Q1 goes or H1 goes depends on how the market behaves. So we -- even if the market was like it was muted, we did not see the impact coming till Q1. So this year, hoping it will be a more aggressive market. So demand might sustain to the end of Q1 or maybe mid of Q2 also.

We'll take the next question from Jitendra Pradhan.

My question is on the RAC like your comments. So in Q4, we are confident of doing INR 200 crores plus of revenue from RAC to meet our guidance of say INR 800 crores to INR 850 crores?

[indiscernible]

And sir, the point on the secondary primary sales is understood but sir, I mean Voltas has mentioned that there are like 5 to 6 reserving entry in the channel. So the -- next how the summer grows out the secondary sales happens that will dictate the overall production volumes involved. You have visibility till Q1 but what are your read on the situation given there are some kind of price increases happening BEE norms and all. Do you think that could dealt the overall demand in the secondary sales momentum this year?

I don't believe it should have a significant impact because -- I mean I don't see that as a challenge. I think with BEE rating increase, the customer is ultimately benefiting in terms of power saving. So that is a plus that gets passed on to the customer. Also, the pricing impact in terms of the BOM cost is more on the 5-star models and not so much on the 3-star models. So of course, definitely some price increase in terms of the metal price increases will get passed on to the customers. But we have also seen GST reduction coming in. So net-net, I don't think there will be a major impact because of that.

Understood, sir. Understood. And sir, like we don't have any margin pressure, right, because of all this OEM inflation that is happening, [indiscernible] and all like that scenario, that environment is bit inflationary.

So we are not facing anything like from OEM side, we are not facing any kind of pressure to reduce our margins. And pressure of course is there all the time, there is no scarcity of pressure. But like I said with most customers because we are a quarterly -- pass through pricing or we are on a fixed based on market driven pricing in terms of sheet metal so it may have a short-term impact, but long term, we are hoping that it'll average out. So no long-term impact, yes.

Finally, sir, what has been your read through for our company on the budget announcements especially on the white goods part, on the PLI and the [ECMS]? I mean what are your thoughts, curious to know your thoughts on the budget announcement because they seem to be pushing a lot in terms of manufacturing and going up in the value chain? So what are your thoughts and what are the implications for our company?

So one, overall, the general direction continue to be in favor of manufacturing, which was the primary hope. Of course, there was not too many announcements specific to our specific company. So no negatives, no positives. I think it was just a reaffirmation on the direction and strategy. So we are happy with that. Apart from that, the push in electronics, which is ECMS and other aspects, we plan to capitalize on how much ever to whatever extent we can because we are also expanding on EMS and we are doing all of that. So we see how much we can derive value. But the core businesses today, there was no change in strategy, which is a positive sign.

So anything on the PCBS like would that be something in your like something that you would like to do at some point?

PCB manufacturing maybe for captive in the future, yes, but we are not looking at any major inroads in PCB manufacturing.

We'll take the next question from Akhil Shah.

So I just wanted to know if there is any updates on the [indiscernible] listings?

So we are in process of that. There is one technicality in terms of the traded volumes that we are discussing with BSE, which is a criteria of BSE, but not with NSE, but the documentation is in process, and we are hoping to file soon. So once we get that clarification from BSE, we'll file. But even after filing, we are looking at a 3-month tentative time line for the migration to happen. So once we file, I think we should have a clear date. So we are waiting for feedback from BSE. And if they give a green signal in terms of everything, then we will file immediately.

So tentatively, how long should it take?

Hopefully, H1 probably.

We'll take the follow-up question from Garvit.

Just one question on the washing machine side. You mentioned a significant ramp you were expecting in FY '28. So just wanted to understand what is the peak revenue that we can achieve with the existing capacity on that side? And what can be the utilization we are expecting in the initial year FY '27, sir?

Peak revenue, we can currently achieve is about INR 100 crores. And capacity expansion, what I mentioned was '28, we'll decide based on how '27 goes, how much capacity we plan to increase or we plan to maintain the same capacity. We have not decided that. Once the product goes into mass production, once we have feedback from the customer and market, we will then further take call of capacity expansion in '28.

And what kind of utilization do we expect in FY '27?

We are hopeful between 15% and 17%.

We'll take another follow-up from Sidhant.

Sir, what are the EBITDA margins for the compressor business?

EBITDA margins with the China competition being there and without backward integration are about 5%. But just to elaborate on that, the asset turns on the current business are very good. So we are looking at a 5-plus asset turn as far as the last mile manufacturing that we are currently doing. So it is a good asset turn, low EBITDA business. The EBITDA goes up as we improve backward integration. So that will depend on more investments. So the asset turns come down, asset turn comes down as we backward integrate, but EBITDA margin improve.

Sir the overall 9% to 10% of EBITDA margin which we are hoping in the next financial year, is it based on 5% compressor margins or more than that?

It is based on 5%.

Okay. Sir, earlier, we used to highlight 6 crore units in the LED EMS space. Right now, I can see the present it's 4 lakh CP. So what is the conversion basically?

So actually, LED product, we have a large variety of products. So it is difficult to define product-wise capacity. It becomes more chaotic. So we are defining capacity on the EMS business and along with lighting because in the EMS, we are also doing other boards and products. So it is easier to define the machine capability capacity in EMS rather than the product capacity.

Okay. So then what kind of realization can we assume on per unit CPH levels?

So per unit CPH is very difficult to again define because it depends on what is the value. But the current EMS setup, we are capable of doing about INR 150 crore, INR 180 crore top line.

On 4 lakh units?

4 lakh CPH, yes. With our product mix.

Right. And sir, what exactly is the holdup in the migration to the main board -- because the earlier rule specified that we need to spend 3 years in the SME.

Correct. So 3 years is complete. We have submitted everything saying we are asking them for a formal go ahead before we file documents, and we are waiting for that approval. We are waiting for that clarification from BSE.

Okay, sir. And sir, last question, sir, what kind of channel inventory levels were there in Jan?

I have -- I don't have accurate numbers, sorry.

There are no follow-up questions. Since there are no further questions, sir, would you like to give any closing comments?

Right. Thank you so much all of you for taking the time, and we look forward to connecting with you in the next quarter. Thank you.

Thank you. This brings us to the end of Q3 and 9M FY '26 call. You may disconnect.