Virtuoso Optoelectronics Limited (VOEPL.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q2 and H1 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 risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to briefly run us through the investor presentation, giving us the business and performance highlights for the period ended September 2025, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.

Yes. Thank you, Vinay. Can we have the presentation please?

Sajid, are you able to see it?

Yes, I can see but you'll have to go a little back I think. You have ran forward. So good evening, everyone. Thank you for joining this call. I think the numbers we have already declared. I'm just running through the same. So this is a comparison that is put on your screen, which compares H1 FY '25 and H1 FY '26 as a comparison. So at a top line level, the half year of '26 has been pretty similar or flattish in comparison to last year. We did about INR 305 crores of net sales last year. This year, it has been INR 298 crores. However, the good thing over here is that at an EBITDA level, the company has performed better. Even despite the fact that there is a slight dip on the overall number, the company has done about 13.5% more EBITDA. So versus INR 28.1 crores of last year, we have done about INR 38.9 crores (sic) [ INR 31.89 crores ] EBITDA margin. It stands at about 10.6% in terms of percentages, which is up by 163 bps. The primary reason for this has been a larger contribution from non-AC products. So as we move forward during the Q&A, probably we'll answer this in a little more detail. The PBT is slightly lower than expected. The PBT has come to about INR 7.8 crores, which is about 30% lower than last year. PAT level although seems much more lower, it is at 1.1% versus 2.4% that we did last year. But a large part of that can be attributed to the fact that there has been a huge component of deferred tax liability, which has come on, on the table here, which has brought down the overall PAT levels. So that's primarily broadly the numbers -- financial numbers for H1. Can you move forward, please? So this tells basically how we have grown over the years from '21 to '25. The CAGR in top line has been 43%. When we consider the PBT, the CAGR has been at 56% in absolute value-wise. EBITDA has grown by about 37% and PAT has grown by about 48% year-on-year over the last 5 years. Next slide, please. These are the annual statements. I think we can skip this for now. Way forward, Sukritji, would you like to take this?

Yes. So good evening, everybody. And once again, thank you for being part of the call. So last quarter, of course, in terms of AC sales has been a little slow. Even though the demands are strong, we expect we have a strong order book also looking forward. The -- I mean, 2, 3 reasons, coupled with -- I mean, 2, 3 reasons. One, of course, season being bad, inventory was high. And second, there was -- there's a change in B rating. So newer specs were not released on time, which are being released now. So all the factors combined, I think Q2 was slower than expected for us. Anyhow, what we -- the way forward is as follows. We see a strong order book for the next 6 months or next 8 months for the upcoming season, which is a good sign for us. So we intend to sweat the assets, all assets that were created over the last 12 months, whether it is in Nashik, whether it is in Chennai or Sanand, we want to start doing that, point number one. Point number two is our backward integration continues to grow and become stronger. Even though sales were muted, we have continued to expand our capacities, and we are continuing investments because we believe this is only a temporary phase of 3, 4 months. And we will be back in full sale action by end of this month. So things on that side are good. So we have started our own new tool room for manufacturing tools and molds. We are also further expanding our EMS capacity, which I will further talk about ahead in the presentation. And that is what we are doing. As far as diversification of customer base and product segment was concerned, 2 years ago, we started the journey of diversifying from AC being our primary revenue driver. So now we are happy to share that we are diversifying not just within product segments, but also within customers for AC because now we have more capacity. Like we discussed during the last call, our capacity ramp-up is ongoing for 1 million pieces per annum, which is 10 lakh pieces. And next year, we want to further increase this to about 18 lakh pieces of CBUs of air conditioners, so which will be a major leap for us as far as capacity expansion is concerned. We are also happy to share that we have launched our ODM range of air conditioners in the market. And we are starting to work with additional customers because we have additional capacity, including our current customer in the AC segment. So we hope that we'll move up the value chain by not just diversifying products, but also diversifying customers within the same products. High potential categories. So we believe both compressor and commercial refrigeration are also high potential categories that will give us immediate growth. And commercial refrigeration has been picking up well. We have a steady stream of orders and a strong order book there as well for the next year. We also have an excellent set of customers that we are working with in the commercial refrigeration segment. So that is where we are expecting a good 35%, 40% growth, maybe higher because it's a smaller base to come from commercial refrigeration and compressors. We can go to the next slide. So the capacity expansion that I was talking about. So our current EMS capacity is about 400,000 cph, which is components per hour as far as line capacity is concerned. We plan to double that capacity to 800,000 cph by mid-next year. So this will be our first major investment in EMS post -- I mean, in the last few years because the major -- most of the investment was going towards air conditioners and commercial refrigeration. AC, like I mentioned, this year, we will complete our capacity of 10 lakhs, and we will start ramping our capacity towards 18 lakh. To this extent, we have recently also tied up with a factory which is available in Chennai, and we have taken that factory for operational lease for a period of 5 years, where we will manufacture -- we will start manufacturing of air conditioners from Chennai also in Q4, so which will also add to our geographical presence, and it will give us additional tool designs and tool platforms that are already available in that manufacturing unit. So that manufacturing unit, we will start operating from first week of January, and we plan to start commercial production by end of Q4. Water dispenser continues to be similar. Deep freezer, we are seeing a strong demand, and we will ramp up the capacity from 150,000 to 400,000 before the end of the next financial year. Compressor, our current capacity is about 2.8 million. And the order book for next year, we already have a 50% booking of capacity in compressors for next year. And currently, we are maintaining the same capacity. But if things are aggressive and the QCO policy continues where the government does not extend the compressor import restriction, then we will look at expanding the capacity within next year itself for compressor manufacturing. So that is where we stand as of today for our capacities. Growth drivers continue to be strong demand, of course. Overall, the demand has been good even though barring the last 3, 4 months. Localization continues to be a focus area for the government, not just for -- I mean, not just for ACs, but also they are now considering other components like compressors and other parts of refrigeration for the next round of PLI. So I think that is a good sign. We have a strong customer base, and we keep learning from them. And of course, the government is definitely active with all the policies, state policies and central policies. Right. So now as the company stands today, these are our primary verticals. Air conditioners, of course, continues to be still a dominant vertical as far as revenue is concerned. AC components is structuring well, both for our capital requirements and with what we are supplying to others. Washing machine, we plan to do. We have already done our pilot production lots. We plan to start mass production in a month or 2 once we complete our field trials. The refrigeration products. In deep freezers and water dispenser, I think there is a slight mistake in EMS. We need to get that corrected. In EMS, we are doing electronic controllers, and we are also doing LED lighting. In refrigeration, we are doing water dispensers and freezers. We have also started doing some assembly of refrigerators on the higher-end refrigerators for a couple of customers, which is an SKD assembly as of now, and it is still a small part, but that is also something that we have started doing over the last 2 to 3 months. Compressor within the subsidiary of VOEPL, VCPL, we have -- we are happy to share we have started commercial production and we have started supplies to our customers from that segment vertical. I think it was a very quick turnaround and start-up of a compressor plant. I think we were able to, from start to finish, do it in less than 8 months, for which I think the credit is due to the team heading compressors. VPPL has 2 plants now. One, of course, is in Chennai, which is operational and is generating revenue. That plant also has a good order book for the next 6 to 8 months. The plant in Sanand that we set up is in the trial phase now and will start commercial production maybe in mid or end of December. Some photos of our manufacturing units. So the compressor line and refrigeration, of course, is what has increased in the last year. These are the finished product verticals that I mentioned, semi-automatic being the new one and the latest one on the block and the compressors, of course, we have started commercial production. Components, like I mentioned, we are doing all of these components in-house, and we continue to strengthen on controller boards with the expansion in EMS. These are, of course, some benefits, I think we have as a company. One is backward integration in manufacturing. We are clear and focused about staying core to manufacturing. And working with larger brands and the leading brands, even multinationals is teaching us a lot, and we continue to learn. Location-wise, I believe we are well placed and centrally located, which also helps. PLI during the last, I think, 6 months, we increased our sanction from INR 50 crores to INR 100 crores. So that sanction also we were -- we've gotten. Right. Thank you. So that was a quick presentation about what has happened in the last few months. I think we can open the floor for questions. Thank you so much.

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

A couple of questions. One is on the AC part. This capacity expansion from 10 lakh to 18 lakh units seems to be a new development because in the last con call, I think we had not discussed expansion of AC more. And it's a little surprising because in the current environment, it's a little bit surprising. And by current environment, I'm not saying AC demand being weak. I think the current environment in terms of most of the OEMs have increased their own capacity for in-house manufacturing, right? We have seen that happening to Voltas as well with the big increase in capacity in Chennai. And so in such an environment where we are seeing a lot of these OEM guys getting PLI benefits and doing their own in-house manufacturing, how do you -- from a comfort point of view, what gives you comfort that we will be able to increase capacity significantly and utilize it? I think that's one part on the AC side. On the -- the second question is on compressor. I think you mentioned that is -- are you seeing a slight bit of risk in terms of the government again, simplifying the compressor imports and this whole trend of BIS on compressors and then pushing manufacturing in-house in India, do you see that getting postponed a little bit? What is the feedback on the compressor side and the policy decisions on compressor side?

Right. So thank you for the questions. So first question, as far as capacity expansion is concerned, 2 things. Once -- since that now we are talking to more customers as far as AC is concerned, we see a stronger demand in the market, point number one. Point number two, for the next couple of years, I think the peaks are going to be very strong. And to cater to the peaks, you will need some buffer capacity. And if we don't have the buffer capacity, we don't want to be in a situation where we are not able to cater to our commitments to our customers during the peak season. So capacity expansion has 2 reasons. One is, of course, catering to peak requirements, which come in the next couple of years. That is one because customer satisfaction is very critical in those times. The second reason is that even though -- we believe even though some brands, like you mentioned, are taking manufacturing in-house, there are a lot of Tier 2, Tier 3 brands who are also growing aggressively. There are a lot of brands who have also decided to not increase their in-house capacity beyond what they have today. So in case the season -- I mean, in case we see a growth of 10%, 15% in the market, we will suddenly run short of capacity is our anticipation. So even though we may not utilize more than 50% or 60% of our capacity in the next financial year if we -- once we achieve that 18 lakh number. But in FY '28, we believe almost 70-odd percent utilization is possible for the expanded capacity. That was point one. Point two was as far as QCO is concerned, in our compressor plan, we expect that the government may give a few months or maybe a year's extension partially or completely for compressor imports. But looking at all the investments that have been committed in India now, both for rotary and reciprocatory compressors, I believe that the government will not unilaterally take back these QCOs. The current QCOs that have been reversed are more of -- more on the core metals. So I don't see it propagating across all products. But of course, this is a policy decision, so we cannot comment. As far as our capacity is concerned, we have already booked half of our capacity. And even if the QCO restrictions get extended with the capacity that we have, we are confident that we will continue to book it because customers get better service in terms of delivery. They don't have to wait for 3 months for delivery of material. After they give forecast, they can pick up material based on their comfort and availability. That is point number one. Point number two, in case of any service challenge support required, they have local support available. So import, as long as we match import prices, I don't see a challenge with capacity utilization. That being said, if QCO -- our margins, of course, will be lower by 2%, 3% if the QCO does not get extended, but I don't see a major hurdle in capacity utilization.

Just one quick follow-up on this. So the AC plant, the new AC extension that you're doing in Chennai, will it be catering to only Voltas because obviously, Voltas is a big plant in Chennai now? Or is it going to be catering to...

Other customers. So we have already started tying up with additional customers who we have -- who we will begin supplying in the next month.

We'll take next question from [ Achu ].

Am I audible?

Yes, please.

Yes. I have only one question regarding REC, most of the big companies, they are saying there is slowdown in REC. So if you have contracted them in the recent time, you need to sell REC products to the partners, right? Have you had any conversation in recent times, like how is the demand going on? Is the inventory cleared up? What is the status of RECs I want to under to understand?

So our general feeler from the market is that overall situation is improving as far as inventory is concerned. Second, the demand is -- I mean the overall industry is maybe similar or 5% plus/minus as against last year. So there is no major degrowth, but because of the policy shift as far as the table change is concerned. And second, because people planned for a much bigger season, there was a temporary buildup of capacity. I see all of that regularizing by December, January because everybody started planning for the upcoming season, and we already have a good order book. So I don't see that being a challenge.

[Operator Instructions] We'll take next question from Sidharth.

Sir, my first question is on the washing machine side, sir. What capacity are we looking for the washing machine? And what will be the realization? My second question is on the compressor. Sir, what kind of revenue should we consider in FY '26 and FY '27? Because if we are targeting 50% of our order coming from compressor, that is close to INR 200 crores. Is that number right? And sir, my third question is regarding the inventory. So what kind of inventory is in the channel? And can you also give the breakup of the INR 300 crores in H1?

So washing machine, we are looking at a capacity of about 200,000 to 250,000 pieces per annum, with a utilization of about 50% to 70% in the next calendar year. Realization value, one washing machine sells for about INR 6,000. So anywhere between -- I mean, INR 60 crores to INR 100 crores is what we're looking at from washing machine in the next year -- calendar year. That was question number one. Washing machine, we are doing 8 to 9 kilos category as of now to start with as far as the product is concerned, semi-automatic twined up. Second question with regards to compressor, yes, with a 50% capacity utilization, we are looking at a number -- revenue number of about INR 200 crores coming from compressors in the next calendar year. Third question, as far as inventory in the channel is concerned, we may not have the most accurate figures, but inventory is still slightly high, but it is -- I think people have already started building up inventory for the upcoming season. So I would not say that inventory should now be a cause of big concern. I think people have started preparing for the season. And up till March, unless the next season is delayed or slowed or something of that sort, we still will continue to get strong requirements from the market.

Right. Sir, the last question, sir, what will be the H1 breakup in terms of segment?

H1 breakup, 50% of our revenue roughly came from air conditioners. 15% to 18% came from commercial refrigeration, about 20% came from EMS and the remaining came from components.

Okay. And sir, year-on-year, what was the degrowth in AC?

Year-on-year degrowth in AC would be about -- H1, about 30%, 35%.

75% last year, it has gone down to 52%.

Correct, yes.

We'll take the next question from Arun.

I wanted to ask last year, the AC numbers, we have gone down by 30%, 35% approximately. So what makes us believe that next year will not be similar? I mean, how are we optimistic on this? And based on the INR 7 crore investment which we made in Chennai, what is the revenue and profit potential in that? So that is my first question, sir. Could you...

So a couple of things. One, this year, like I said, the anticipation of a bumper season increased the inventory, which I think the industry has sort of learned from. So I don't think the same exact mistake will happen or not a mistake, but the exact mismatch will happen next year, point number one. Point number two, apart from the industry, the table change is expected. So that was second reason of the slowdown, which is not going to happen next year. The third thing is earlier, we were only an OEM where we were dependent on one large customer -- one primary customer for most of our AC business, which is changing this year, where we have become an ODM and we have our own lineup of product lines, and we are looking at multiple customers. So all the 3 factors combined gives us confidence that we will have -- plus the order book that we already have for the next 6 months is much stronger. So that gives us confidence that next year will be significantly better.

And the INR 7 crore this thing, investment in Chennai, what could be...

Correct. So Chennai, the investment, the operational lease that we are taking is to ensure that we have additional capacity in Chennai. It will add about 2.5 million capacity for air conditioners. So we can realize roughly about INR 400 crores from that facility.

So this is per year, sir?

Per year, yes.

Okay. Great. Sir, one last question. For the other products, I mean, which we are entering like compressors, et cetera, do we already have customers, I mean, available with us? Or are we pitching it? Like, for example, Voltas was our existing for AC. So I mean, is that the same customer or we are expanding to multiple?

No. Fortunately, now we have customer tie-ups for all products that we are doing.

Okay. Great, sir. Any names like which could be...

We will refrain from names, but we have good multinational customers in all segments.

We'll take the next question from Garvit.

Sir, coming back on QCO part only, just to understand more, you mentioned current QCOs are taken back on core metals. So what does that mean, sir? And how we are not going to be affected because of this? Because you mentioned 50% is already booked. So just trying to understand earlier we used to speak about we will get the orders because the Chinese compressors are getting banned or maybe not able to match the quality and that is why they will not be -- they will mandatorily be forced to get out of the country, right? So now how you are picturizing our capacity to be utilized going ahead with these QCOs are taken back?

So a couple of things. One is the compressor market as it stands today has 2 directions for us. One direction is just the assembly part, which we are doing now, which is the final leg of manufacturing that we are doing for compressors. For doing this, the advantage that we can give to the customer or we are giving to the customer is better delivery time lines, more just-in-time sort of delivery, point number one. Point number two is local support. So as long as we, with our partners in compressors, are able to match landed prices of customers when they import vis-a-vis China, we don't see a problem for them to buy locally. They have certain advantages. They get better payment terms and they get delivery when they need. So to that extent, capacity booking, like I mentioned earlier, I don't see it being a challenge. That being said, if the government enforces QCO, we see that -- we expect a vacuum in the market, which will help us probably get better rates in the market and will also help us in backward integrating in the compressor value chain. So as far as capacity growth is concerned, compressor capacity will grow on 2 factors: one is the assembly capacity that we have for the final leg of manufacturing to grow that; and second is to backward integrate the component ecosystem for compressors. So if the QCO is implemented, we will backward integrate very quickly. If the QCO continues to get extended, we will first establish the last mile manufacturing capability. We will ensure that we have a robust supply chain with our customers. And if the customers are satisfied, then we will grow the grow the business, and we will invest more in it. So we -- the compressor QCO, which was extended by 1 year last year is due to -- that the extension is due to lapse in March 2026. Post March, we are anticipating some extensions to come, whether it is for a few months, whether it is for partial quantities, whether it is for certain models, we are not clear. But once we have clarity on that, we will devise our further expansion plan. But current capacities, we don't see a problem for the next 12 months at least.

Got it, sir. And what kind of margins do we expect here? Like we mentioned 50%, we will be getting the revenue, right, [ INR 200 crores ]. So what kind of EBITDA margin we'll be doing on that?

So EBITDA margins, we are expecting anywhere between 5% and 8% as of now, depending on which model and product mix.

Got it. And secondly, about the guidance. So what is our -- are we going to revise our guidance for this year and next year as compared to the earlier numbers? So if yes, what are those numbers, sir?

The guidance remains similar. We are expecting about INR 800 crores to INR 900 crores top line this year.

And about next year, sir?

Next year, we will share it in due course.

We'll take the next question from Akhil.

So actually, my answer -- my question got answered. I had the question on the same lines. So as we see this compressor unit getting -- so the production of compressor will get onboarded and this operational lease getting into play, so a lot of units will get onboarded. So I wanted to ask on the same lines, like what will be the guidance, as you told, because in the last call, if you remember, we gave a guidance for INR 950 crores to INR 1,000 crores top line, right? So what is...

Actually, after Q1, we had said INR 900 crores plus/minus INR 100 crores. But yes, so I mean, looking at the loss of growth in the first H1 -- I mean, in H1, I think INR 800 crores to INR 900 crores would be a more accurate number.

Okay. Yes. And the margins, we are looking at 7% to 8% margin?

EBITDA, we are looking at about 9-ish.

9-ish, okay. Okay, fine. And do we have a guidance for next year also, like anything for next year?

Not yet, not yet.

We'll take the next question from Kunal Tokas.

Am I audible?

Yes, you're audible. Thank you.

Sir, just wanted your guidance on the PAT margin for this year.

PAT margin, anywhere between 2% and 3%.

For the full year despite making a suboptimal margin in the first half?

For the full year, yes.

Okay. And can you also give a breakup of CapEx in value terms by segment for FY '26 and FY '27?

I don't have the exact numbers. But to give you a rough idea, '26, we are looking at a CapEx of about INR 100 crores overall, INR 100 crores to maybe INR 110 crores, which is spread across AC and compressor and primarily AC compressor and EMS. So 50% would be AC, about -- sorry, 40% AC, 40% compressor and about 20% on EMS as far as this year is concerned. Next year, we are still finalizing our CapEx numbers. Primarily, we are slightly -- we are still contemplating the exact CapEx amount for the compressor vertical. But barring the compressor vertical, I think we are looking at a CapEx of about INR 50 crores going in air conditioners and another INR 50 crores going in refrigeration is what we are looking at overall next year apart from compressors.

And just a clarification in how much would the CapEx be for half 1, first half?

About INR 70 crores.

Okay. That you have already spent in the first half?

We have already spent, yes.

We'll take the next question from [ Achal ].

Yes. Am I audible?

Yes, you're audible. Yes.

I wanted to just check your perspective in terms of for the season, CY '25 season, right, what would be the industry volume? And how much is in-sourced versus outsourced in your opinion? And how has that changed over last year? If you could give some sense on that? And then I'll ask a follow-up.

So I've been -- may not be the best person to answer this. But I think last year, the number was about INR 1.5 crores totally. This year also the number expected is between INR 1.5 crores and INR 1.6 crores as the overall segment is concerned. As far as in-sourcing and outsourcing is concerned, my estimates would be about INR 0.8 crores would be in-sourced and the remaining is outsourced is our estimation.

And has that changed according to you or not really compared to last year...

I think some capacities are definitely coming online, but effectively, capacities coming online will not be much, much higher. So anywhere between INR 0.8 crores to INR 0.9 crores, I would say, is in-sourced and the remaining is outsourced.

Are you talking about CY '26 season? Or you're talking about CY '25 versus '24?

'25 versus '26.

Okay. Okay. So instead of INR 0.8 crores, it could be INR 0.8 crores to INR 0.9 crores for next year is what brands would make in-house. Have I understood right, sir?

It is my assumption, yes, yes.

Okay. Okay. Number two, I wanted to just check in terms of the cost as we are in the process of finalizing the contracts, et cetera, what is the extent of cost inflation? And if you could break it up in terms of metal cost and nonmetal cost.

So major cost inflation has happened because of increase in copper prices. Copper prices from an average of $8,000, $8,500 per tonne has gone up to now almost $11,000 per tonne. Effectively, the impact of $1,000 per tonne has an impact of INR 500 on our BOM effectively for a typical air conditioner. So an increase of $3,000 has an impact of almost INR 1,500. There has been some positive impact also, whereas sheet metal or whatever steel has -- or mild steel or steel has not increased or they have reduced partially. Some polymers have also reduced. So the net impact, I believe, is about $1,000 to $1,300 on a typical air conditioner.

So what happens in this case in terms of the pricing, is the entire $1,000, $1,300 is getting passed on, the customer is picking up the bill or we have to share some part of the pain?

So I mean, it depends on -- it varies from customer to customer, of course. Customers where we have a quarterly pass-through pricing, there it gets passed on because it gets averaged out in their overall purchase. Where we are finalizing orders for 6 months or 9 months or full season, there, of course, we have to bear at least part of it, if not the entire amount. But normally, where we bear the risk, we try to have better margins or better I mean, conversions -- slightly better conversions to hedge that risk also.

Right. Just a clarification, sorry, if I'm going deeper into it. So the average realization for REC for a full unit for us would be somewhere around INR 17,000 to INR 18,000?

Yes, correct.

So -- and we make about 9% on that in terms of the margin, EBITDA level margin, sir?

Correct.

So that gives INR 1,600 per unit kind of margin. And if we have to bear even INR 500 or 50% or 40% of this inflation, our margin can take a 25% knock. So when you are looking for the margin estimation for FY '26, what have we budgeted? Have we budgeted a flat margin versus Y-o-Y or we have budgeted already some correction in the margin given the cost inflation?

So AC, we have budgeted some correction in the margin for the coming year. But fortunately, the other products are adding -- they have a slightly better EBITDA, so which is -- overall, I think we will continue to maintain 9% EBITDA. AC may drop by a little bit, but the average will still be 9%. And this is a temporary drop again because there was a huge volatility in copper. Once it corrects and if copper goes down, let's say, then maybe you make it up also. If you see a blended average across the year, it does not have as strong as an impact as you are calculating on paper today because we also don't buy raw material at only the peak. We also buy it over a period of time. So the average impact normally is not more than -- I mean you asked me absolute delta, so I told you absolute delta. But normally, the impact will not be more than INR 300 to INR 600 or INR 700 averaged across the year.

We'll take the next question from Sidharth Jain.

So one thing, what is the peak debt that you'll anticipate to go to in the coming year, because we have another INR 100 crores plus of CapEx planned for next year, excluding the compressor part. And so what is the debt level that we anticipate to see next year?

So debt -- our basic guideline is that we want to be -- debt to equity, we want to stay below or around 1 is our guideline as far as debt is concerned. If there is a gap, we will look at raising equity, of course. But our internal guideline is that we want to be around or less than 1 as far as debt to equity is concerned.

Understood. And right now, our AC composition as a part of our total revenue is around 75%. Where do we see that moving in the next year? And in that also, how much would be from the primary client? And how much do we see that coming from other clients because wily started discussions and I guess you will start supplying from the coming months as well?

So next year, we see about 70-odd percent coming or 65% to 70% odd coming from AC again, next financial year. And that is the whole AC vertical. Within that, we will have a split against 4, 5 customers. So the largest customer probably out of the 100% AC pie would be about 50-odd percent.

Understood. Got it. And one just operational thing to Sajid. By when can we expect that we start trading on the main board? Any intimation from the exchanges or what are the communication that is going on with them?

So we have already started the process. The documentation, et cetera, is being reviewed. We're just trying to see if everything is there. I mean we are compliant to every -- because there's been a new guideline that has come along in the month of October. So we are also trying to just juxtapose our position with that and see. But I think we are on course. Let's see if everything is okay, we should be able to make the application before the end of this month.

Okay. Application, how long does it generally take after the application?