Ladies and gentlemen, good day and welcome to the Q1 FY 2027 earnings call for Aequs Limited. As a reminder, all participants' lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand over the conference to Mr. Manav Paul from EY. Thank you, and over to you, sir.
Thank you, Buddy. Good evening to all the participants on the call and thank you for joining in. We welcome you to the Q1 FY 2027 earnings call of Aequs Limited. Before we proceed, let me remind you that the discussion may contain certain forward-looking statements that may involve known or unknown uncertainties and other factors. These statements should be viewed together with our business risks, which may lead to actual results and performance differing materially from what is expressed or implied. To take us through the results and answer your questions today, we have the management of Aequs Limited represented by Mr. Aravind Melligeri, Executive Chairman and CEO, Mr. Rajeev Kaul, Co-founder and Managing Director, Mr. Harish Bang, Vice President, Finance. We will start the call with a brief overview of the previous quarter and then conduct the Q&A session.
With that said, I'll now hand the call over to Aravind, sir.
Thank you, Manav. Good evening, everyone, and thank you for joining us. Q1 FY 2027 marks a strong start to the year we described in our investor day. A year about translating our expanded capacity into the financial returns. This quarter demonstrated exactly the beginning of that translation. Consolidated revenue grew 55% year-on-year to INR 3,955 million, up 8% sequentially on what was already a strongest quarter in our history. Growth was broad-based. Aerospace grew 40% year-on-year, and our consumer segment nearly tripled, reflecting the consumer electronics ramp at Hubli. Consumer contributed 19% of our revenue this quarter, up from 10% a year ago. I want to address the profitability picture directly because the headline and the substance point in the different directions this quarter.
Reported EBITDA at INR 215 million is lower than the Q4, but that movement is mainly due to other income foreign exchange, which was unusually high in the Q4. On the operational basis, excluding the other income, EBITDA improved from INR 42 million in Q4 to INR 148 million, a more than three-fold sequential improvement driven by narrowing consumer loss. That operational trajectory, not the currency line, is the measure of execution, and it's moving exactly as we committed. Our consumer segment EBITDA loss narrowed by INR 112 million sequentially. The path to consumer EBITDA breakeven by Q4 2027 now has its first quarterly proof point. Let me share the highlights from Farnborough. We just came back from there last week. From which our strongest air show yet. We signed the long-term agreements with two new aerostructure tier one customers expanding our global base.
We signed our first contract to fully integrated Airbus A320 wheels with Safran Landing Systems. Aequs will deliver completely assembled wheels built from India-sourced aerospace qualified aluminum, forging, machining, surface treatment, and assembly all within the Belagavi Aerospace ecosystem. That is 100% make in India for a flight-critical product. Notably, these wins come after a quarter end order book of over $1 billion. We should see these new wins reflect in the next quarter order book. Given the scale and the delivery of requirements of these new wins, we're evaluating acceleration of aerospace CapEx plan to ensure that required capacity is available in line with our customer timelines. Our FY 2027 priorities are unchanged from what we set out in May. First, grow aerospace revenue profitably 25%-30% with a segment EBITDA margins above 20%. Q1 delivered 40% growth at a 23% segment margin.
Second, drive consumer utilization to unlock the cooperating leverage embedded in our existing asset base. Third, more consumer EBITDA breakeven by Q4 FY 2027, which will be a major inflection point in our consolidated profitability. At a consolidated level, we continue to expect approximately 45%-50% top-line revenue growth for the full year with a doubling of our operational EBITDA. A target that is weighted to the second half of consumer utilization builds through the year. Since our listing, we have seen exceptional broadening of our shareholder base and a rapid deepening of our investor engagement with a long-term manufacturing story. In a remarkable short period, we have achieved a breadth of shareholder participation that a manufacturing company typically takes several years to build. An acknowledgment of our strength and our differentiated platform and the magnitude of the opportunity before us.
On the CFO transition, as communicated in May, Dinesh Iyer stepped down at the end of June, and our search for a full-time CFO is progressing well. In the interim, Harish Bang is leading our finance function, and he will take you through the financials shortly. With that, I'll hand over to Rajeev Kaul, Co-founder and Managing Director to take you through the operating performance.
Thank you, Aravind, and good evening, everyone. I will begin with our aerospace performance. Aerospace revenue increased by 40% year-on-year and 6% sequentially to INR 3,222 million. The growth was supported by higher customer build rates and the progression of additional parts into production. During the quarter, we added 86 new parts, further expanding one of India's most extensive aerospace manufacturing portfolio to 5,740 parts. The defining achievement of the quarter was our aerospace order book crossing the $1 billion mark, following a 13% sequential increase from $ 889 million. This milestone is a powerful validation of the trust placed in Aequs by leading global OEMs, the scale and depth of our program portfolio and the enduring strength of our aerospace business. Our aerospace focus remains on scaling production in line with customer build rates, moving awarded parts into serial production and increasing value addition across our integrated manufacturing ecosystem.
We are selectively expanding into higher value adjacencies, including aeroengine and landing gear system components. Our integrated ecosystem remains a key differentiator, bringing multiple processes together at Belagavi to reduce complexity, strengthen control over quality and delivery, support and continuously at a breadth of parts that is difficult to replicate for others. Beyond the continued growth of our existing aerospace operation, the proposed Hosur ecosystem represents the next phase of our expansion. It will extend Aequs' integrated manufacturing model into new areas of opportunity and strengthen our ability to participate in larger, more complex programs over time, and we expect revenues to kick off from FY 2029. Moving to consumer. Revenues increased by 190% year-on-year to INR 734 million as production volumes increased across the portfolio. The consumer segment achieved 16% quarter-on-quarter revenue growth while operating at a similar capacity utilization level as Q4.
This reflects enhanced throughput, better product mix and improved execution, enabling the business to drive higher revenue from the existing manufacturing footprint. We expect utilization to improve through the course of the year as this ramp progresses and remain confident in the trajectory towards our profitability goals. Our priorities in consumer remain clear. In the near term, our focus is on steadily scaling the existing product portfolio, improving utilization across our operations. As the business matures, we intend to deepen our customer relationships by broadening the component portfolio and progressing towards integrated kit supply. From FY 2030/2031 onwards, our ambition is to engage earlier in customer new product development cycle and evolve from a component supplier into preferred manufacturing and co-development partner. We have a clearly defined roadmap ahead and remain focused on executing each phase with discipline.
To conclude, Q1 saw continued aerospace growth, a larger order book, further expansion of the parts portfolio and measurable sequential improvement in consumer performance. The operation priorities for the remainder of FY 2027 remain disciplined program execution, consumer scale up, utilization improvement and careful deployment of capital against customer backed opportunities. I will now hand over to Harish Bang, Vice President, Finance, to take you through the financial performance in greater detail.
Thank you, Rajeev, and good morning, everyone. I will take you through the key financial performance highlights for Q1 FY 2027. Revenue from operations increased by 55% year-on-year and 8% sequentially to INR 3,955 million for Q1 FY 2027, supported by continued aerospace growth and scale up of consumer. Reported EBITDA, which includes other income, stood at INR 215 million with a margin of 5% for the quarter. EBITDA for Q1 FY 2026 was INR 399 million. The year-on-year comparison reflects the recognition of consumer electronics operating costs in the current quarter, whereas these costs were capitalized in Q1 FY 2026. EBITDA for Q4 FY 2026 was INR 321 million. The sequential comparison was affected by the movement in other income, which reduced from INR 279 million in Q4 FY 2026 to INR 67 million in Q1 FY 2027.
Excluding other income, operational EBITDA increased from INR 42 million in Q4 FY 2026 to INR 148 million in Q1 FY 2027, an improvement of approximately 3.5 times, with the margin increasing from 1% to 4%. Revenue, including proportionate share from joint ventures, increased by 53% year-on-year and 8% sequentially to INR 4,301 million. EBITDA stood at INR 307 million with a margin of 7%. In aerospace, revenue increased by 40% year-on-year and 6% sequentially to INR 3,222 million. Segment EBITDA stood at INR 731 million representing growth of 35% year-on-year although it moderated sequentially from Q4 FY 2026 due to significant other income in Q4 FY 2026 which mainly included foreign exchange gain. The aerospace business continues to grow strongly, supported by higher customer build rates, the progression of additional parts into production and $1,004 million order book.
Consumer revenue increased by 190% year-on-year and 16% sequentially to INR 734 million. The segment's EBITDA stood at a loss of INR 361 million, compared with a loss of INR 74 million in Q1 FY 2026 and narrowed from a loss of INR 473 million in Q4 FY 2026. The year-on-year comparison reflects the commencement of consumer electronics commercial operations and the resulting recognition of operating costs in Q1 FY 2027, whereas these costs were capitalized in Q1 FY 2026. Sequentially, the consumer EBITDA loss narrowed by INR 110 million or approximately 24%, supported by increasing production volumes and improving operating performance. The continued progress in utilization and cost absorption will support the next phase of improvement as we advance towards consumer EBITDA break-even by Q4 FY 2027.
Depreciation and amortization stood at INR 453 million, compared with INR 246 million in Q1 FY 2026, reflecting the expanded consumer electronics asset base. Sequentially, depreciation remained broadly stable compared with INR 455 million in Q4 FY 2026. Finance cost reduced from INR 358 million in Q4 FY 2026 to INR 189 million in Q1 FY 2027, following debt reduction undertaken during the previous quarter, including loan repayments of approximately INR 2,527 million, and a net reduction of INR 789 million in short-term and working capital borrowings. PAT stood at a loss of INR 532 million for Q1 FY 2027. The reported Q4 FY 2026 PAT loss was INR 541 million, included an exceptional gain of INR 90 million, which included a corporate provision reversal. Excluding this gain, the adjusted Q4 PAT loss was INR 631 million. On a comparable basis, the PAT loss therefore improved sequentially from INR 631 million to INR 532 million.
Turning to the balance sheet. Total equity stood at INR 14,332 million. Cash and cash equivalents were INR 2,340 million, with a further INR 537 million in other bank balances for Q1 FY 2027. Cash flow from operations was negative INR 414 million, primarily reflecting the additional working capital required to support the higher operating cycle. Capital expenditure during the quarter was INR 830 million, and closing cash stood at INR 2,340 million. We saw an improvement in the working capital efficiency, with net working capital days reducing from 127 days at the end of FY 2026 to 125 days in Q1 FY 2027, which is calculated quarterly annualized basis. This reflects better conversion of the higher operating scale into cash, supported by improved receivables and payables management, even as inventory was maintained to support the ongoing production ramp-up.
Our financial priorities remain focused on advancing consumer towards EBITDA break-even, sustaining aerospace momentum, improving utilization and cost absorption, managing working capital, and maintaining discipline in the execution of our investment program. To conclude, we have had a strong revenue growth across the board. While reported EBITDA was affected by low other income, the underlying operating trajectory improved meaningfully. Operational EBITDA increased approximately 3.5 times sequentially, and the consumer EBITDA loss narrowed by 24%. These developments provide a stronger foundation for continued improvement through the remainder of FY 2027. With that, over to the moderator to open the floor for questions. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from the participants in this conference, please restrict your question to two per participant. Should you have a follow-up question, please rejoin the queue. Ladies and gentlemen, we will wait for a moment while the questions queue up. The first question is from the line of Gaurav from Avendus Spark. Please proceed.
Hi. Thank you. Thank you for the opportunity, congrats for the good set of numbers on the aerospace side. The first question pertains to if you can share the details on this contract that you have won for this A320 wheels with Safran Landing Systems. The question is that how big is this order? Number one. Number two, is it safe to assume that the profitability in this work would be higher than the aerospace segment average which you have today, which is about 20%-23% kind of EBITDA margins that you do in this segment?
If you really look at it, Gaurav, it's first time in India we have a complete Make in India wheels all the way from aluminum source to the finished part. That's the first achievement. One of the longest agreement we have signed in our history of Aequs, I would say 15-year agreement we have signed with the right adjustments and everything. So that basically gives us a very good foothold. The beauty about this is leveraging every capability we have in the ecosystem. Means obviously, if you look at across the margin, it's much larger margin to us. But each businesses will deliver the right level of returns, put it that way. Its ROCs are used right level and delivering that. So I think I cannot comment on the specific margins, but it's a great asset and it's a globally very attractive offer for the customer.
The first time ever customer has done this outside of their own facilities. This used to happen in-house. That's another feather in the cap for Aequs to be able to take something out, the capacity, which instead of they investing, they're working with us to make sure that leverage our ecosystem. That's what I would say at this point in time.
Got it. I'm presuming that it's a single source order for you.
Yeah.
For this. Okay. Second question on the consumer electronics segment, and if you can just help me understand the utilization in more detail. That last quarter, the utilization was about 23%, as per the presentation. This quarter, despite seeing a sequential growth in revenue, we have seen a utilization coming down to 22%. So have we increased the capacity, and as a result, we are seeing this utilization on a lower side. Second in terms of, I'm not sure if you want to share, but what is the yield that you are really getting in this segment, as we speak, and are we on track of reaching the breakeven EBITDA level by Q4?
The consumer segment achieved 16% quarter-on-quarter revenue growth. First is that, okay? That is a much better this one to see our utilization of the performance while operating at a similar capacity utilization at Q4. That demonstrates how we are utilizing our capacity core business. This reflects basically through the enhanced throughput, better product mix, and improved execution. This is one of the major business drivers to drive the higher revenue from the existing manufacturing footprint. Okay? It has remained capacity while they demonstrated a similar level. Enhanced revenues are right next to see how we are getting there.
Yeah.
Utilization.
It's ultimately a combination of utilization and yield to get the higher revenue, right? We can derive from that.
We expect also utilization to improve.
Absolutely.
Over the course of the year as the ramp progresses.
No, my question was that the utilization of depth Q- over- Q from Q4 to Q1, and yet revenues are up. Have we taken any capacity expansion as a result, numerically we are seeing a lower utilization?
No, we have not done any capacity expansion.
No.
It is not because of the capacity expansion.
Better utilization of the assets, put it that way, obviously, that also includes yield.
Okay. I have more questions.
I think we are still committed on the Q4 breakeven EBITDA for consumer. We are on the path. We feel confident as of today.
All right. Okay.
Okay.
I have more questions. I'll get back in queue. Bye-bye. Thank you.
Thank you. The next question is from the line of Jyoti Gupta from Ashika. Please proceed.
Good evening, sir. I have two questions. One is, why is the depreciation so high in the first quarter? Second, if I consider that INR 400 crore effectively is your revenue, then you would achieve full year should be close to something like INR 1,600 crore, while the guidance is somewhere close to INR 1,800 crore. Third point, I want to understand that other incomes, which you're saying is basically revaluation of reserves, maybe the foreign exchange part, which is actually lower, which is why your overall revenue has come down. What is the guidance on this other income going forward? If I have to look at pure revenues other than the other income, then exactly how should we look at this?
Fourth is, while the numbers have sequentially improved, there is still the ramp-up of consumer electronics completely the way we are looking at from 23%-46% doesn't seem or could be achieved by quarter four FY 2027. Just wanted to understand that.
Jyoti, Harish here. I will take a couple of questions from here. First one was depreciation. If you see our Q4 depreciation was also close to same number, about INR 453 million or INR 455 million. Our Q1 depreciation is also in the same range. Q4 is what we got all the Q3, end of the Q3, entire capitalization was stopped, and commercial operations for consumer electronics was started. Q4 was a full quarter of getting that depreciation with a low utilization. It will remain similar level as it was in Q4. That was the first question.
For the next all three quarters, we will see such high depreciation numbers?
There will be similar depreciation which is there. Of course, unless we add more CapEx, the depreciation will increase. That is something we have given. Your second question was on the full year projection.
Yeah.
Yes, Q1 we did for about approximately INR 400 crores. Right. As we said that our utilization in consumer is improving and Q4 we will see utilization of 40%-50%. That means our revenues in Q4 would be higher, which would take us to a full year growth of 45%-50% at overall level.
Okay.
On the other income, just to clarify, there are no revaluation reserves as such. It's typically driven by two things. One is the interest income and all those things, and second is foreign exchange fluctuation. Typically, foreign exchange fluctuation is what we don't project for future period. Our interest income will remain in the similar line as what it was in Q1. Going back to your fourth question, maybe I will have Aravind or Raju talk about it, ramp up from 20% to 40%, how we'll go from there.
We have currently, the way what we have projected is Q4 to be EBITDA positive is based on this assumption. At this point, we are fairly confident to get to 40% to 50% of capacity utilization.
Okay. I come back in the queue. I have more questions, I'll come back in the queue.
Thank you. The next question is from the line of Disha from Trinetra Asset Managers. Please proceed.
Thank you for the opportunity. My first question was around you have announced a significant investment over the last few quarters. Could you also help me understand what are the expected assets Over these new investments. How do you look over the ROIC profiles once these investments are stabilized?
Sorry, the first question was expected capital expenditure. Sorry, I missed that. What was it? Can you repeat?
Follow up It was around what is the expected asset turns over this new investment, and how do you see the ROIC profiles over this investment once they stabilize?
Sure. I think as we mentioned in the last quarter as well, our consumer asset turns overall would be about 1.5x, and that remains stable. ROIC profile also on a steady state basis would be in the similar range, 18%-20% as aerospace.
Okay. My second question was, with this evolving global trade policies and tariff changes, have customers accelerated the localization or diversified their sourcing towards India? Have you already started incremental business from this shift, particular from this shift?
This shift, you're talking tariff?
Yes, sir. Tariff changes and policy
We are not seeing any specific concern to this tariff, what tariff changes are happening. Our customers have taken strategic view of where they want to be as a supply chain, global supply chain to be. Based on that, they're committing the supplier allocations and everything. We're working with them on those activities. We feel their strategy has not changed as far as we know. Aerospace, nothing has changed. Even consumer side, we are very clear that whatever is there, nothing has changed. Very stable as far as we are concerned.
Okay. Just one last question. The consumer manufacturing, which is the strategic growth area right now, are you seeing a structural improvement in the customer demand, or is it the current recovery is largely driven by inventory restocking? For this current quarter and for this FY 2027
This is all driven by the customer demand, basically. Whatever we are producing, we are shipping. There is no issue with the demand.
Okay. Got it. Thank you so much. I'll come back in the queue for my next question.
Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one now. Participants who wish to ask a question, please press star and one at this time. The next question is from the line of Akash from Amrapali Capital. Please proceed.
Hi, sir. Thank you for the opportunity. Actually, I have a couple of questions. First, currently, on the consumer side, company is doing approximately 23% of capacity utilization. As of now, I wanted to know how much capacity utilization is in the current quarter, and let's suppose the company is targeting for the upcoming for 2029, how much utilization rate will be there, and which segment? There are a couple of things that there's an electronics segment and cookware and tiles. Which product has a major focus of the company? Second question I have to know. As of now, company has guided for the 18%-22% kind of EBITDA margin for upcoming next two to three years. I also wanted to know how much the company has estimated for the PAT margin kind of thing.
Is any estimation for upcoming two to three years as a full year forecast? The management has guided, in next two to three years, we are going to PAT positive. How much the company's PAT margin will be there?
First, please let me address your capacity utilization. Current quarter, we did around 23%, and we still hold by Q4 to touch 40%-50%. I cannot give you any more view than next quarter and all those things at this point in time for consumer.
On the EBITDA margin, yes, we are guiding towards 18%-22%, and that's what we have laid down in our investor day as well. On PAT, again, we have a few milestones what we have laid in front of us. One is, of course, PAT breakeven by H1 of FY 2028, consumer PAT breakeven by FY 2030, and we'll have a decent ROC, decent PAT in FY 2031, which will translate to about 20% steady state ROC in FY 2031.
Okay. Sir, on the PAT margin side, let's suppose if I'm forecasting the PAT for FY 2030, so what threshold I can assume?
Right now, I think we stick to the milestone what we have given. We are not disclosing anything beyond this.
Okay. Okay, sir. Thank you, sir. I will join the queue back.
Thank you. The next question is from the line of Deep Shah from New Vernon Capital. Please proceed.
Thank you for the opportunity. My question is on the Hosur plant. If you could just give us some details. Firstly, how much is the investment going to be and when do we see phase one getting operational? Also on the Belagavi plant, which is end-to-end vertically integrated, when do we see that happen at the Hosur facility? That's my only question.
Yeah. The Hosur facility is integrated, focused on engine and landing gear components, it is going to be end to end, just like what we are doing in Belagavi for the aerostructure focus predominantly. The first facility will come between September to March timeframe of next year, of 2027 to 2028. That's why Raju was reflecting that 2029, when we'll start seeing some revenue coming out of that facility. That's going to be our first machining facility. Then we'll have forging and various other vertical integration to happen in that location. All investment predominantly on the vertical integration side will be done by 2030 timeframe. Machining will continue to happen over a period of time. That's the roadmap we are giving. We're committed about INR 1,900 in total investment in that, including our JV partners and investment in the JVs, what we have.
Our JVs will get extended from what we have in Belagavi, focused on those capabilities into that zone.
Sir, could you please repeat the investment including JVs and how much?
INR 1,900 crore.
Thank you.
Over a period of 10 years, actually.
Thank you so much.
Okay. Thank you.
Thank you. The next question is from the line of Deepak from Kotak Institutional Equities. Please proceed.
Yeah. Hi, sir. I just wanted to first understand the rough split within consumer between toys and ATP, and I just wanted to check in terms of the potential ramp-up of the new customer in toys during the second half of the year.
Deepak, Harish here. We look at the consumer as an overall level. We do not provide split between the two sub verticals, as we mentioned in the previous call as well.
Sure. Maybe the ramp-up
On the toy side, Mattel is scaling up well.
Yes.
We continue to see that as a strategic customer to us, just to give you clarity on that side of it. Okay?
Sure. Maybe just overall CapEx for the next two years, specifically this year, how much are incrementally do we invest in consumer and aero and maybe just this year and next year also, if you could sort of highlight that.
Yeah. This year, what we laid down, our total CapEx overall, including aero and consumer, would be about INR 660 crore for FY 2027. We stick to this number. In terms of future CapEx, again, we have laid down a plan of from this year to FY 2031 for the next five years, investing about $350 million-$400 million of overall CapEx.
Yeah. Any split that you want to share for this year between the INR 660 crore?
INR 660 crore, originally we had given a split of about INR 500 crore for consumer and INR 160 crore for aerospace. We may see some acceleration in aerospace CapEx, maybe that may be compensated by some reduction or saving in consumer. Optimization in consumer. Overall, it will remain same.
Sure. We are already at 70% utilization. What is the maximum we can do in aero before we would require, or is it just machining and all of this land and anyway we have all the facilities?
Yeah, look, we are continuously adding already since last December for continuous machine addition happening. Literally, we're adding a machine a week right now at this stage. CapEx is happening in aerospace continuous basis because you see that order book, right? Order book growth means it only comes because we can get up to 75% comfortably. As we are also increasing the order book, we'll have to put a CapEx in there to support it.
Yeah, sure sir. Maybe I just missed this in your opening remarks, but what is the contract value potential size of this wheels contract that we've received? If you could sort of quantify.
We're not disclosing that contract value.
Sure.
It should show up in order book next quarter, because none of the Farnborough, whatever we have done, is not reflecting right now in our order book.
Yes.
It will reflect in the coming quarter.
Sure. We should see more upside in the order book and the sequential acceleration should continue. Okay. Sure, sir. Those are my questions. I'll get back on the queue.
Thank you.
Thank you. The next question is from the line of Abhishek from Nivaka Ventures Private Limited. Please proceed.
Hi, sir. Thank you for the opportunity. Sir, I just wanted to understand, because this industry is precision manufacturing and you are dealing with lot of processes in your workflow, how have you been thinking about the talent management for the next five to 10 years? Let's say if you see a lot of growth in the sector, and you need a lot of talent. How have you been thinking about building the talent?
Well, look, if you have visited Belagavi, you should come down and see Belagavi. We are in tier three. We have chosen to be in tier three. We have been able to build this vertically integrated ecosystem from scratch using the talent, mostly regional. Okay? It's pretty much fresh out of school, because when we started, the country did not have aerospace capability, so we had to build from scratch. We have inherent ability to train the people, deploy the people. That has never been a constraint to us. We welcome the overall growth in the industry, and we feel very strong about our process of inducting people and developing the people and retaining the people. Also at the same time, our joint ventures have helped us build capability and further expand our ability to retain people.
This is the inherent, the fundamental DNA of the organization to develop people from scratch, from fresh out of school. That's what we have done, and we continue to do that.
Thank you, sir.
Thank you. The next question is from the line of Gaurav from Avendus Spark. Please proceed.
Thank you for the opportunity again. Sir, just one question on the consumer electronics segment that the CapEx that you have committed of about INR 400, 100 crore in this segment. Is it subjected to your utilization ramp-up? Meaning, in case the utilization ramp-up is slower for this year, you would not commit this CapEx? Second, this CapEx is for the capacity augmentation, or you are doing more backward and forward integration for the similar process?
This is for the capacity augmentation, first of all. Also new programs, as we get into new programs with the customer.
All right. Irrespective of the utilization ramp-up, you would commit this CapEx?
Yeah. The utilization, if it is not going to happen.
Yeah.
We will not have to expend. Some portion of the CapEx will not happen.
Yeah. Some portion will not happen.
All right. One more question, if I may.
That is for the three years.
Yeah, please.
Okay. Got it. One more question, if I may ask that. In the aerospace segment, let's say because you're targeting more landing gear and engine, are there any capabilities that you would like to build over next few years so that you can get more and more engine component orders?
The whole Hosur is going to be new capabilities. A whole lot of new capabilities. We have a roadmap of that. Obviously, it's internal. Our goal is to be the largest manufacturer of aero-engine components. That's the goal, what we have established, and we are working on that path, vertically integrated products.
All right. Got it. That's it from my side.
Thank you. The next question is from the line of Archit from Nuvama. Please proceed.
Hi. Good evening, sir. Thanks a lot for the opportunity. I just have one question. To appreciate the numbers that we have reported in the consumer segment, while we are not splitting it out into its two parts, could we at least get a directional sense as to the consumer electronics has grown and the toys segment has de-grown or vice versa? Just wanted to understand if there's a significant volume ramp-up that we have seen in consumer electronics. The guidance that we have for four Q to break even on EBITDA, it bases consumer electronics. If you could just clarify for the quarter and the directional sense for F 2027, that'd be very helpful. Thank you.
If you really look at it, the consumer overall utilization was low, even before consumer electronics was started. Overall, our utilization has to improve both of them together in a tandem to get to where we need to get to. We can't just have one not used and other one used. It's not going to get us there. The good part is we have key customer on each of these verticals, each of the sub-verticals, and both are committed over a growth. It's execution. That's what we are working to right now. The utilization end basically cuts across both the businesses, and that's where we see right now.
Right, sir. Just on a quarter-on-quarter basis, we have shown growth in the consumer space. That's where I was kind of trying to pry upon to understand whether this will be led from the electronics side or the toys side, just to appreciate that number a bit better. That was my limited question.
It's a tandem growth, that's what I'm trying to tell you, because both are underutilized capacities, right?
Right.
That's the reason I'm saying, utilization was about the same, when we did in the past.
Got it.
We always communicated that our toys utilization was low. We communicated that when the consumer electronics was not there yet. Right. We're increasing both the utilizations.
Understood.
We're not breaking up the both of them bottom line, That just gets into situation of where certain assets are also could be used here both the common way.
Got it. Did I also hear this right? We are entering into a few more programs on the consumer electronics side. Beyond the scope that was already assigned to us, is that a fair reading or the understanding that I got from Rajeev earlier?
Yes.
Okay. Thanks. Thank you, sir. That helps. Have a good day. Okay.
Thank you. The next question is from the line of Jyoti from Ashika. Please proceed.
Sir, I would like to understand why do we have other expenses so high? Why is it doubling, I mean, while it has come down on a sequential basis, but on a Y-o-Y basis it is doubling. What components would actually be affecting it throughout the year and other expenses part?
Jyoti, as I mentioned earlier, Q1 of FY 2026, did have the consumer electronics piece in the P&L. The expenses were getting capitalized. Right? From Q4, all the expenses came into the P&L, and that's the broader reason why we see an increase in the other expenses and even some employee benefit, all the expenses in fact.
Would this be at similar levels or is it going to go high in the subsequent quarters just because we have.
No.
Consumer electronics added?
It has a bit of variable as well as fixed component. Variable will kind of slightly grow as the revenue grows. Fixed will remain pretty much same, at least in the given next near term.
The fixed part would be 30% of these other expenses, or is it 50/50 fixed and variable?
I think that would be too much of disclosure at this moment, Jyoti.
Okay, sir. Thank you.
Thank you.
That was my question.
Ladies and gentlemen, if you wish to ask a question, please press star one at this time. To ask a question, please press star one now. The next question is from the line of Nagendra Maurya from Growthx Capital. Please proceed.
Hi, sir. Good evening. Am I audible?
Yes.
Yes, you're audible.
Hi, sir. Thank you for the opportunity. I have just two questions. As I see the capacity, sir, number in terms of million hours from base of FY 2026 has increased from 3.62 million to currently 4.78. I just want to understand where do you see the total capacity numbers in the next two, three years? If possible, if also provide the split between aerospace and consumer.
We don't really project that basis because it depends on the components type we sign up and type of machines we sign up. The combination of that will get there. Again, aerospace could be different and consumer is going to be different. I think it's just a tracker to see how the growth is happening from the overall capacity perspective, but not something we model the business on. We model business more on where we think revenues are going to come from and type of components we do. That's what happens.
The next question is from the line of Vansh Modi from Swan Investments. Please proceed.
Hi. Am I audible?
Hello.
Yes, you're audible.
Okay, sir. Thank you for this opportunity. I just want to ask that around the INR 1,700-INR 1,800 guidance for top line for this year, what is the segment mix that we're targeting between consumer and aerospace?
As we guided earlier, our aerospace growth will be about 25%-30% over FY 2026. Consumer we see about 125%-150% over FY 2026.
Okay, got it. Thank you.
Thank you. The next question is from the line of Mahesh from LIC Mutual Fund. Please proceed.
Hi, sir. Thank you so much for the opportunity. Sir, given the growth we are going to witness for next three years, what kind of investments we required? If I had to take a longer-term view, like three years in terms of putting both in working capital as well as the fixed capital.
We have laid down a five-year plan starting FY 2027 to FY 2031, wherein we have laid down a capital expenditure requirement of about $350 million-$400 million over a period of next five years.
Working capital, about 125 days net working capital.
Net working capital.
What we are assuming right now.
Total will be like $500 million, right?
Yeah.
I mean, whatever that translates to.
Okay. How much that can come through internal accruals, or is it that we have to raise money from the market?
Yeah. We did communicate that most probably about INR 150 million kind of a raise we will have to do. Right now this year, we are not planning to do anything unless there is advance pull in or CapEx or inorganic piece.
Sure. Thank you so much, sir.
Thank you.
Thank you. The next question is from the line of Deep from New Vernon Capital . Please proceed.
Thank you for the opportunity again. My only question is again on the wheels order that you mentioned about. Could you just explain it in much more detail as what the actual product is? What are the components that we will be manufacturing? That's my only question.
We will be manufacturing the aircraft wheel for Airbus A320. Just without the tires. We don't do tires. The whole wheel, completely finished wheels, is going to be manufactured, including assemblies. Actually, wheel in aircraft is two half wheels joined together, becomes a full wheel, and there is assemblies there. The whole thing is going to be done out of Belagavi. All the way from raw material sourced within India, and we are approved source now, we're the qualified source. We are already doing the forging of the wheels and some machining of the wheel, but now we are going to be completely finishing the surface finishing and assemblies, all that element also going to be coming in.
Just on raw material for both consumer electronics and aerospace. Do the suppliers help you procure raw material? Do you do it independently? How easy or difficult it is for raw material, like super alloys, et cetera. I mean, just if you could throw some light on that.
Both sides actually, in the super alloys and all these titanium customer really supports on both sides to source the material.
If you really look at it, we deal with hundreds of different material, raw material globally sourced. Out of that, only we're able to get maybe one or two alloys right now in India get qualified. We have worked for last several years to get it done. It's a long process to even aluminum. We produce a lot of aluminum in the country, but not necessarily commercial aerospace qualified by our customers. There are only two grades we have been able to get it done. Only for that also for forgings, not even for otherwise. We have a long journey to develop this ecosystem on national basis. It's a journey, but that's why I call. Hope we can accelerate some of these things and some of the wins what we have had, kind of wins we have had, more of those vertically integrated.
Oh, got it, sir. Thank you so much, and all the best.
Thank you.
Thank you. The next question is from the line of [Praveen Gupta] from [San Ventures]. Please proceed.
Hello.
Yes.
Yeah. Thank you for the opportunity. Sir, you stated that this year you're planning for an INR 660 crore CapEx, and next year it is going to be at Hosur factory INR 1,900 crore. How are you going to fund this? What is going to be a mix for this internal accrual and debt?
INR 1,900 crore Hosur CapEx, what Aravind mentioned earlier in the call is over a period of 10 years, not next year.
Oh, okay. Okay. All right. Thank you.
Thank you.
Thank you. The next question is from the line of Rushikesh from Impetus Arthasutra Private Limited. Please proceed.
Hi, sir. Am I audible?
Yeah.
Sir, my question.
Yes.
My question is on the consumer side. Can you share the customer's name in the consumer side, in consumer electronics, toys, and consumer durables?
Yeah. In consumer electronics is one of the largest consumer electronic manufacturer brand. We cannot share.
Okay.
Because of confidentiality, Tramontina is our consumer durables side, Mattel is our toys.
Okay. Thanks, sir.
Thank you. The next question is from the line of Vansh Modi from Swan Investments. Please proceed.
I think with INR 1,800 crores of top line and the guidance that you've given for consumer segment aerospace, what is the blended EBITDA margin that you're targeting for this year?
This year we are targeting to doubling of our operational EBITDA as compared to FY 2026. That's the target for FY 2027.
Roughly around INR 180 crores of EBITDA. Is that right?
Yeah. Whatever that number translates to, yes.
Yes. Also, just one more question, sir. For the next two to three years, how do we see the share of consumer business going up of our overall top line? Because from this year's guidance, it is expected to be roughly around 20%-23%. Then over the next two to three years, how do you see that transitioning?
If you see Q1, we are at about 19%. As our utilization increases, the share will start increasing. I mean, on a period of five-year basis, I think we would be about 40/60 consumer.
Okay. 40%-60%. All right. This is expected to generate an EBITDA margin of less than 20%, compared to our aerospace business which is above 20%. Is that right? Is that the right understanding?
Aerospace, we have guided at 18%-22%, consumer 18%-20%.
18%-20%, yes. Okay, got it. Thank you. Thank you, sir.
Thank you. The next question is from the line of Rashmi from [Bright Quality]. Please proceed.
Thank you for this opportunity. Sir, my question is that with global original equipment manufacturer increasingly pushing for supply chain de-risking and nearshoring, how much of your raw material sourcing is currently localized within India versus imported?
I think our raw material is like 99% is imported.
Okay.
I don't think there is any possibility of changing that anytime soon.
Okay.
We don't have any qualified sources in India for that to change.
Thank you, sir.
Thank you. The next question is from the line of [Ravin Gupta] from [San Ventures]. Please proceed.
Sir, whenever we allocate this CapEx, what is the ROC at a management level for each of the CapEx, either within aerospace or within the consumer electrical space?
Yeah. Our ROC targets on a steady state basis remain same, 18%-20%. That's how we look at it whenever we allocate the capital.
Okay. Going forward, do you feel that consumer electronic, because of the less capitalization, is going to be more in terms of revenue than aerospace?
No. We see aerospace, already a large base, still continue to grow right now at 30%-40% level, whatever we have guided. With that kind of growth, we still see consumer going to be, next five years at least, still lower than the aerospace. Even higher growth of consumer.
We have already reached the utilization level of 80%. You said that although our aerospace is going to be INR 120 crores or so, in next years, if we have to grow, we have to make more capital allocation in the aerospace division.
We have done that already, capital allocation planning.
Okay. May I know, how much is that?
Hosur we said INR 1,900 crore. Another INR 2,800 crore we're investing between consumer and aerospace in Karnataka. That also we have guided.
Yeah, for the next year, how much it would be, sir?
We have not finalized the next year numbers.
All right. Okay. Okay, thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand over the conference to management for closing comments. Over to you, sir.
Thank you everyone for joining the call. Look forward to discussing further with you in the coming quarters. Thank you.
Thank you.
Thank you.
Thank you. On behalf of Aequs Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.