Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Hindustan Aeronautics Ltd., hosted by Elara Securities India Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities. Thank you, and over to you, sir.
Thanks, Pooja. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY2025 and FY2025 conference call of Hindustan Aeronautics Ltd. I take this opportunity to welcome the management of Hindustan Aeronautics, represented by Sri D. K. Sunil, Chairman and Managing Director, with additional charges of Director of Engineering and R&D, Sri Berenya Senapati, Director of Finance and CFO, Sri Ravi K., Director of Operations, and Sri M. G. Balasubrahmanya, Director of HR, along with Sri Shailesh Bansal, Company Secretary, along with their team. We will begin the call with a brief overview by management, followed by a Q&A session. I will now hand over the call to Sunil, sir, for his opening remarks. Over to you, sir.
Good afternoon, ladies and gentlemen. It gives me great pleasure to welcome all of you to Hindustan Aeronautics Ltd. annual earnings call for the financial year 2024-2025. I trust you have had the opportunity to review our financial results, which were announced yesterday and posted on our website as well as filed with the stock exchanges. This is the first interaction I am having with you after taking over as CMD of HAL. We are ready to engage with you today, providing insights into our financial results, offering updates on the physical advancement of our projects, and addressing any clarifications you may seek. The year 2024-2025 has been a significant one for HAL, marked by opportunities and challenges. Through unwavering perseverance and resilience, we successfully navigated the year and concluded it on a strong and positive note.
We have achieved many positives during the year, which I would like to recapitulate for your benefit. Hindustan Aeronautics Ltd. has been bestowed with the prestigious Maharatna status on 12 October 2024. Hindustan Aeronautics Ltd. is the first defense PSU to be named Maharatna and is the 14th CPSC to achieve this status. The first AL-31FP engine for the Sukhoi Su-30MKI was delivered under the 240 engines contract, was delivered on 30 September 2024, within one month of contract signature. We inaugurated the state-of-the-art propellant tank production and CNC machining center to meet the growing needs of supporting six launch vehicles, LVM-3, India's heaviest and most powerful rocket last year. An out-of-court settlement with the State of Maharashtra resolving the long-pending dispute at sales tax issue on supplies and services by Hindustan Aeronautics Ltd. to Defense Services was concluded.
The final settlement was made at INR 2,471 crore against the disputed demand of INR 10,079 crore, and the amount was fully reimbursed by the Indian Air Force. We have received new orders aggregating INR 125,280 crore, the details of which I will detail subsequently. HAL received certification for the upgraded version of the Dhruv Civil Advanced Light Helicopter from DGCA. The Mistral missile firing was conducted successfully on the LCH Prachand at Integrated Test Range, Chandipur, Odisha. HAL received restricted military type certification RMTC from CEMILAC for HTT-40 basic trainer aircraft. Now, I would like to update you on the financial performance of the company. During the year, the turnover of the company increased to INR 30,105 crore from INR 28,162 crore, an increase of 7% over the previous years.
This was achieved despite certain challenges we faced on the supply chain for LCA Mk1A, as well as grounding of the ALH fleet due to an accident. The revenue targets could be achieved with the help of the AL-31FP engines and RD-33 engines production. On the revenue front, the growth rate is around 2%. This is due to one-time impact of INR 1,502 crore in the revenue of the previous year from change order three of the LCA IOC contract, adjusted for the same. During the current year, the top line we grew by 7.25%. The profitability of the company remained robust during the year. We achieved profits before tax of INR 10,820 crore, which is 35% of revenue. The profitability was achieved with the help of improved operational efficiency as well as improvements on other fronts.
The operating profit to revenue was at a similar level of previous year at 27%. The other income has accounted for 8% to overall profitability. The other income primarily accounts from interest income was at INR 2,566 crore against INR 1,899 crore of the previous year. Cost optimization is one of the focus areas of the management, and through optimization of manpower costs, overhead, and increasing outsourcing content, we were able to improve the overall profitability of the company. The inventory holding, you may find, to be at an increased level from 159 days to 263 days. We believe this is necessary considering the manufacturing cycle time of 18-36 months. The work in progress buildup is essential to meet the delivery timelines.
The order book of the company improved to INR 1,89,300 crore against the previous year order book position of INR 94,127 crore as of 1 April 2024, and after liquidation of current year turnover of INR 30,105 crore. The increase is on the account of the conclusion of manufacturing contracts of INR 1,237 crore, namely 240 AL-31FP engines for the Sukhoi Su-30MKI for INR 25,500 crore, supply of 156 LCH Prachand INR 62,777 crore, supply of 12 Sukhoi Su-30MKI aircraft at INR 13,454 crore beside other upgrade programs. During the period, we also received ROH repair and overhaul orders of INR 19,271 crore, design and development orders of INR 3,180 crore, and export orders of INR 493 crore.
Further, the order pipeline looks even more promising with the anticipated contract of 97 LCA Mk1A, 143 ALH for IAF, Army, and 10 DO-228 Dornier for the Indian Navy Coast Guard, and upgrade of 40 Dornier for the Indian Air Force are at various stages of approval. The aggregate value of the order pipeline is estimated at around INR 1,00,000 crore and are expected to materialize within the next one to two years. In addition to these manufacturing orders, we also expect to receive ROH repair and overhaul orders of around INR 20,000 crore. These orders will keep our manufacturing lines busy till 2032-33. Going forward, the order execution will gather momentum. During the year, we expect to scale up the deliveries of LCA Mk1A, ALH, LUH, and HTT-40 aircraft beside continuing the deliveries of engines. Now, let's turn to the initiatives aimed at driving future growth and expansion.
These days, we are focusing on two key strategic areas, namely capacity building aimed at fulfilling customer commitments and capability building to prepare the company for the future. The emphasis has been on proactive procurement, enhancing capital expenditure, and increasing investment in research and development and indigenization of key components with an aim to achieve Atmanirbhar Bharat. We are investing significantly on our manufacturing lines for both helicopters and aircraft. Significant investments are planned for increasing the manufacturing capacity for helicopters, fighters, trainers, and aero engines at various locations. These enhanced capacities would not only enable Hindustan Aeronautics Ltd. to speed up execution of the existing orders but also free up capacities for additional orders from our customers. In line with our strategic goals, we have formulated a comprehensive CapEx plan for the next five years with an estimated outlay of INR 14,000-15,000 crore.
This investment will focus on expanding manufacturing capabilities and setting up ROH facilities for various platforms. Additionally, we plan to develop manufacturing infrastructure for LCA Mk2, GE F414 engines, and IMRH engines, along with facilities to support design and development activities for the IMRH, AMCA, and other related projects. To conclude, Hindustan Aeronautics Ltd. remains firmly committed to driving sustainable growth through strategic investments in capacity and capability building. Our investments in critical infrastructure and strategic assets will further strengthen our manufacturing and R&D capabilities. We believe these initiatives position Hindustan Aeronautics Ltd. to not only meet the evolving demands of the defense sector but also to play a pivotal role in driving self-reliance and technological advancement in aerospace and defense. Thank you for your continued support.
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 the touchstone 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, and please limit your questions to one per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Umesh Raut from Nomura. Please go ahead.
Hi sir. Good evening and congratulations for the very good set of numbers. My first question is pertaining to LCA program, Mk1 and Mk2. In case of Mk1, what kind of delivery schedule that we are now expecting over the course of the next three years in terms of units? In case of LCA Mk2, where exactly are we in terms of negotiations with GE for F414 engines? We are hearing that there is an update regarding renegotiation in terms of cost happening for that particular engine. I just wanted to kind of hear your thoughts on these lines.
Yeah. Thank you for the question. On Mk1 Alpha, as you are aware, the GE engine has been pulled up. However, General Electric has been able to solve their supply chain issues. The first engine was delivered in April of this month, and we have already fitted it on the aircraft and tested that. GE has promised a supply of 12 engines in this calendar year up to December. This is confirmed, and they will be sticking to this schedule. We will be getting 11 more engines in this year. The visibility is that 12 aircraft will be ready this year with these engines. We expect that since they have overcome the supply chain issue, the deliveries, I think, will continue in the succeeding years.
We should be over this supply chain problem as far as the engine is concerned, and the supplies in the succeeding years will, I think, be smoother. Coming to your question about Mk2, Mk2 is now at the manufacturing prototype stage, and we expect to fly the prototype in the next year, first quarter of next year. As far as the engine, the 414 engine, which is powering that, for the initial prototypes, we do have engines. There is no holdup on the prototype testing and certification part. We are now engaging actively with GE. We have had a series of meetings, and we have focused on two parts with GE. One is on the amount of technology transfer as well as the pricing. Today, we are working on the first part of the technology transfer.
We expect that in this financial year, we will be able to come to a conclusion of this deal. Just to give you a perspective, the Mk2 will do about three years of, it will take three years to certify. If it starts flying in 2026, we expect the certification to be completed in 2029-2030.
Thank you.
Got it.
Got it.
Just one last question on.
Also, we request you to rejoin the queue for follow-up questions.
Okay.
Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.
Yeah. Hi. Good evening, everyone, and thanks for the opportunity.
Yeah.
My question is on the AL-31FP engine. I just wanted to understand the delivery schedule for that and what are the indigenization levels currently in this particular platform. Also, we had signed an MOU with PTC Industries for some specific indigenization perhaps. I just wanted to understand whether that MOU will translate into actual orders. That was my question, sir.
Yeah. The AL-31FP engine is 240 engines, which we will be delivering at the rate of about 30 engines per annum. Over eight years, this order will be liquidated. Today, currently, the indigenous content is of the order of 57%, which we are trying to enhance by indigenizing more of the material within the country. We are working with Bidhani for indigenizing some of the raw materials, and this is an ongoing process. Coming to your question about PTC, PTC is specializing in titanium casting. We are working with PTC, and they are making parts for us. We see that they have also installed a new plant recently. We are very happy that the private sector is coming up and installing and investing more. I'm sure we will be working more with PTC, and definitely, they will become an important part of our supply chain.
Okay, sir. Thank you. I have some follow-ups. I will come back in the queue.
Yeah.
Thank you. The next question is from the line of Atul Tiwari from JP Morgan. Please go ahead.
Yes, sir. Thanks a lot. My question is on the revenue growth in FY 2026 and 2027. What kind of revenue growth would we expect, and what will be the EBITDA margin outlook for the company?
Yeah. I think Mr. Barenya Senapati, our Director of Finance and CFO. Maybe you could take that.
Yeah. Good evening. The EBITDA margin will be maintaining. If you see, our EBITDA margin is around 38%-39%. If you remove the interest income, EBITDA will be around 31%. We will be maintaining the 31% at operating level. Revenue growth, the guidance is 7%-8%, whatever is there. We will try to continue with that.
Sir, despite the resolution of LCA Mk1 bottleneck, we are unlikely to see double-digit kind of revenue growth this year.
Double-digit growth, yes. Double-digit growth, we are expecting. The guidance at present level is 8%-10% because some of the contract amendment was there in the current year and previous year. To neutralize that, and then we'll maintain the revenue growth.
Sir, over medium term, let's say over the next two to three years, can we expect mid-teens, 12-13% kind of revenue growth, or are we likely to grow only at 8%-10%?
We are expecting a double-digit growth from next year onward. It may so happen in the current year also. The guidance is 8-10%, and it may so happen double-digit growth from the next year onward.
Okay. Thank you. Thank you.
Next.
Thank you. We'll take our next question from the line of Harshit Patel from Iquira Securities. Please go ahead.
Hi. Thank you very much for the opportunity. My question is on the LUH program, the light utility helicopter. We are still awaiting the order for limited series production of 12 numbers. Why is this program being delayed so much? Is it undergoing a fundamental design change? By when do you expect the bulk production order of 20 all numbers?
Yes. As you have said, we have been looking at an order of 12 numbers, which have been in the pipeline. Basically, there have been a couple of setbacks on the design. Actually, the basic aircraft itself, the IOC has been obtained regarding some flight control software and something to do with the aircraft dynamics. We have a couple of issues which are being tackled. We expect that in this financial year, we will be able to solve these issues. There are also, this will be allowing us to go further on the order. We expect to conclude this deal for 12 numbers, which, by the way, we have already started producing with our internal funds. We have already built eight aircraft. There is no fundamental change in the aircraft structure, dynamics. Overall, the aircraft are ready.
We need to solve a couple of mostly software-related issues. We expect to do that this year. Then we will be able to deliver these helicopters in quick time because we have already built them, and we are going forward on that.
Understood. Sir, can I ask a second question?
Yeah. Okay. Please go ahead.
Sure. My next question is on the Sukhoi Su-30MKI upgrade program. Has there been any update on the same? By when do you expect to receive the order for the first batch of 84 units? Could you share how large this potential order could be?
You see, the Sukhoi Su-30MKI upgrade that we are attempting is a very ambitious program where the whole avionics is going to be changed, right from radar to mission computers to the displays. It is a very extensive avionics upgrade. This year, of government approvals. We expect that in the next six months, we will be able to get this project going. The DND part will start growing. The aircraft order itself will kick in about five to six years. The IOC itself is five years. The aircraft order will come in for this 84, as you have said. The value is expected to be around INR 60,000 crore. That will start kicking in from the sixth year onward.
Once the design and development has come to a certain maturity and we have reached the IOC, by that time, the other contract will start for the fleet modification. We expect that this order will come to fruition maybe in about five years' time, by which time the design and development will be completed.
Understood, sir. Thank you very much for answering my questions, and all the very best.
Thank you.
Thank you. The next question is from the line of Amit Mahawar from UBS Group. Please go ahead.
Hi sir. Good evening. Sir, I just want to understand the dynamics for MRO business. How will it grow, and how has it grown this year? Even the light that you're manufacturing has to scale up significantly in the next three years as you approach 16-plus LCA Mk1A execution. How will the profitability remain at the current level? Thank you.
Coming to your point about the manufacturing growth, you see, for LCA, we have established two lines in Bangalore. We have now invested a few hundred crores, and we have established the third line at our Nashik plant, which is expected to roll out in the next couple of months. The first aircraft will roll out from that line. Coming to capacities, we will be having this kind of installed capacity of about 24 numbers. Additionally, we also have built a model of getting the fuselage components from private sector partners. For example, the wings will come from L&T. The center fuselage will come from VEM Technologies. The rear fuselage will come from Alpha-Tocol. The vertical fin and air intake and the radar will come from Tata Advanced Systems Limited. That will add to this quantity.
If last year, this year, we were able to get this calendar year, we got the first rear fuselage from Alphatocall. We expect that as these private sector players with our support ramp up and they start producing, we will be able to get further aircraft sets from the private sector. The expectation is that if we add about six from the private sector, we will have a capacity of almost 30 aircraft per annum. This is the way we are approaching this ramping up of the production to meet the 83 LCA and the subsequent order. The question about ROH, maybe DF, you could answer?
Yes. The repair line overall, if you see with the addition of a new manufacturing platform, definitely, it is going to increase. There will be also some phase-out of old aircraft. If you see, it is continuously growing at the rate of 5%. With the addition of LCA and ALH and LCS, it will grow in the subsequent years, but not immediately in one or two years or three years. As far as your profitability is concerned, your operating profit to revenue is around 27%. With the kind of the mix of sales, I mean, turnover, manufacturing, and the repair and overall, we will be maintaining the operating revenue at, I mean, operating profit to revenue at 27%.
Okay. Sir, if I—yeah. Any question? If I can clarify again.
Yeah.
In MRO, the risk of old platforms phasing off, which might impact the MRO adversely, that naturally, in the last five years, grown at 14%-15% plus, right? I was just referring to the phase-up in manufacturing, phase-up, which might be very, very sharp in the next three years. There is a risk of MRO declining in the next few years, and particularly FY 2025, if you can share the MRO number. Thank you.
No. You see, we have about 300+ 340 ALH flying in the field. We have 250+ Sukhoi Su-30MKI s. We have the Jaguars, which life is extended. You can see that the Jaguars are going beyond 2035. The Sukhoi Su-30MKI s will extend up to 2050 eventually, overall. We are adding more and more of the Dorniers. We have 150 Dorniers in the field. The ALH, the Dorniers are going to increase. This is a continuous business. Your phase-out, what you're saying, is only for the MiG-21. A couple of squadrons have been phased out. If you look at our current support of the fleets, we have 40 LCA, which is going to increase, and the first LCA is going to come up for overall in 2026. This is a continuous business.
With our fleets, whatever we have manufactured and supplied, these are going to be continuously coming up for overhaul in the next couple of decades. We do not see that this ROH business is going to go down. Even the Chetak, Chetak, which we expect will be phased out over the next five years. The rate at which the aircraft come is slow. We see that the ROH is going to be very robust, and it is going to be a continuous fleet. It is going to be a significant part of our revenues.
Helpful, sir. Thank you and good luck.
Thanks.
Thank you. The next question is from the line of Jonas Bhutta from Aditya Birla, MS. Please go ahead.
Thank you for giving me the opportunity and congratulations on a great set of numbers. Two quick questions, sir, and I don't know if this has been covered earlier as I joined the call later. What was the delivery number for this year in terms of aircraft plus helicopters? What was that absolute number? Secondly, we see that the provisioning in the P&L has come off. If you can explain what led to that, because I'm presuming the Sukhoi Su-30MKI that got damaged while undergoing repair and overhaul would have led to some bit of write-off of almost INR 800 crore-plus. If you can help us understand what led to lower provisioning and what could it be next year.
This provisioning of 800, it's not a write-off. We have made a provision of INR 804 crore towards that accident engine. Regarding last year's provision, there were some MRO recoveries and all those things against the lone engines. There was a little bit of extra provision made in 2023-2024. This year, that INR 804 crore is against the accident engine. Still, discussions are going on with the Indian Air Force. As a prudence, we have made a provision of INR 800 crore.
This INR 2,500 crore number that we see for the year 2025, what could it be in 2026, roughly?
Yeah. It will be at the same level. This provision, whatever is against the replacement, liquidated damages, and all other warranty provision, it will be at the same level. It may deviate 3%-4%, 5% within that. Even a specific kind of thing like this accident and all those things, this year, there is an extra provision of INR 800 crore. It will be at the same level.
Yeah. Coming to your question about the aircraft number, you see, this year was actually quite a difficult year. We had a double whammy in terms of lack of supplies of the engine from General Electric. Even though the airframes were lined up, we could not make good on the deliveries of the LCAs. However, that is behind us. As I said, the first engine was delivered in April.
GE has overcome their supply chain issues, and they assured us that they will supply 12 engines this year. That is the kind of deliveries we hope this year we'll be able to make. Unfortunately, we had the ALH incident, and even though the aircraft were ready because the fleet was grounded, which the fleet grounding has been removed, and now the aircraft are back in action. That also could not happen last year, and that will be covered up this year. Definitely, we were still able to meet our numbers in spite of these kind of events. Next year, definitely, these deliveries will happen.
What were the numbers, if you don't mind? And for 2026, what is the MOU target, sir?
Last year, we had planned to deliver 24, 25 was one FOC, and how many were those ones?
Two Dorniers.
Two DO-228 Dorniers and one FOC of LCA. As far as the helicopters are concerned, it was six or five. That was.
Roughly, 14-15 numbers were delivered.
Yes. Yes.
What is the MOU target for FY 2026, sir?
Can you say that? We will be able to cover up. As I said, you see, whatever we had planned last year, we already have built those aircraft, whether it is the helicopters or the aircraft. We have already built those. That definitely we will be able to deliver.
I think CMD has already answered in the first question itself regarding LCA.
We will be able to deliver those aircraft.
So.
Will be delivered.
Thank you. Thank you so much. All the best.
Thank you. Thank you.
Thank you. The next question is from the line of Deepan Vakhali from Philip Capital. Please go ahead.
Thank you for the opportunity, sir. Sir, I have just one question. Sir, within your order book, what is your pending orders for ALH, and how much of it is for Army and Air Force variant and the split between Army and Air Force and Coast Guard and Navy? When do we expect a resolution for the Navy and Coast Guard version for the same?
Yeah. You could tell the numbers for me. The Army and Air Force break up.
Army, Air Force, yeah.
Army, it is 20.
20 helicopters.
20 helicopters and Coast Guard, 9.
Yeah.
When do we expect any resolution on the grounded fleet for Navy and Coast Guard? Where is the current status?
Yes. On the Navy, we have instrumented two helicopters to look at this particular, peculiar condition why this has happened over in spite of large, we have almost 400,000 + hours of flying on the ALH. This is the first time that an incident of this type has happened specific to the Navy and Coast Guard. We have instrumented two helicopters, and we will be flying them to simulate exactly those conditions. We will be doing it in the next couple of months. We expect a resolution by early July, where we will have enough data, and we will be going back to the certification authorities with the data. The way forward will be decided. My expectation is in July, we will have resolution of this.
One more question. Sir, where are we on the Airbus and HAL deal for civil aviation, and what is it that we can expect going ahead in FY 2026 and beyond?
With Airbus, we have an MOU where we will be doing the C-checks for the A320. We have set up the facility at Nashik, and we are now going through the certification process along with DGCA. Next will be EASA. Those processes are in place. We are putting the people, the certifications. Those are going on. By end of this year, we will have that. We have already started some work with IndiGo. We expect that this will start generating revenue in Q1 of next year, or maybe it would go to the next financial year. Today, we are investing in building up the facilities, manpower, and getting the requisite certifications so that the C-checks can be done at Nashik.
Thank you so much, sir. This was helpful. All the best for FY 2026.
Right. Thank you.
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Hi. Thanks for taking my question. My question, again, is for LCA. You said there will be 11 more engines coming in, and you'll be doing 12 deliveries in, I think, calendar year 2025. Wanted to understand, has the timeline changed for the overall 83 deliveries? What is the assessment on the number of engines coming in in the subsequent years from GE?
See, as I said, even we had a very high-level meeting with the GE top management, and we went and had a look at their facilities. We also understood that due to COVID and post-COVID, they have had a lot of issues with their sub-vendors shutting down and taking time to ramp up. As you are aware, in aerospace, whenever you shut down a production line, when you come back, you have to do a recertification. That is what has taken time. The recertified engine was completed in March. Recertification was completed in March by GE. The first engine was delivered in April. We have already tested it and fitted it on the first aircraft. I think that is behind us. GE has assured us that they will be delivering 12 engines in this calendar year.
With this, I feel the flow will continue at roughly maybe two engines per month. That's what we expect. Though the firm commitment is 12 engines this year, I hope that with the supply chain issues behind us, the subsequent deliveries will continue. We will be able to catch up and ensure that the deliveries to the Indian Air Force will happen as per schedule.
Right. Sir, additionally, for the helicopters, since we got the order, what is the capacity and with the CapEx which you announced, to what capacity will the helicopter capacity go in the next one or two years?
You see, we have an order for 156%. That is 90 for the Indian Air Force.
66 for.
66 for the Indian Army.
IAF.
IAF, sorry. 66 for the IAF and 90 for the Indian Army. Today, our plan is to execute this in about five and a half, six years max. That is, the initial deliveries will start in 36 months. We will deliver the first batch. The batch size will be about 30 aircraft per annum. We will be able to deliver these helicopters between 2027.
27?
Right. Starting 2027, 2028, two to five years from then, these helicopters will be delivered. We have capacity in Bangalore as well as our new factory in Thuvkuru, where we will be able to produce the number is about 30 helicopters per annum.
The total current capacity is 30, 30, you said?
Sorry to interrupt you, sir, but we request you to rejoin the queue for follow-up questions.
Just a clarification I wanted on the helicopter capacity currently and what would be the expansion.
We have invested in the Thuvkuru plant exactly for this reason. Our Bangalore capacity will continue for the ALH. Eventually, the Thuvkuru factory will become the main center where we will be producing the LCH, and going forward, we'll be producing the LUH. All our investments are going into Thuvkuru, and we have built already this factory. We already have capacity there. As of now, we have 30 capacity in Bangalore. Going forward with the investments, we will be able to produce 30 LCH at Thuvkuru. That kind of investment is already in place.
Perfect. Thank you so much for taking my question.
Oh, okay.
Thank you. The next question is from the line of Hardik Rawat from IIFL Capital. Please go ahead.
Thanks for the opportunity. I just wanted to understand our stated target is for 12 LCAs in the current fiscal. What sort of revenue would this turn into, the 12 LCA? What will be the revenue potential this year?
Twelve LCA, what will be the revenue?
See, I cannot tell you the exact number, but it will be in the range of INR 3,000 crore.
3,000 crore for the 12 Sukhois?
Yeah.
I have another question, if you'd allow me.
Yeah.
With regards to the Tejas Mk II development, where are we on that, and how exactly when are we expecting that to potential commercialization in terms of only talk that you've had with IAF or something like that?
Yeah. The first flight of the prototype is expected next year, early next year, 2026. Certification is typically three years, so 2029. The production should start in 2030-2031. That is what we expect. Normally, we also do a concurrent production. When the certification has come to a certain maturity, we start doing the production. The production will be in 2030-2031. That will be the initial part. 2029 will be the certification, and then we will be getting into production.
Got it. Sir, thank you. I have no question, but I'll call back in a bit. Thank you.
Sure.
Thank you. The next question is from the line of Teena Virmani from Motilal Oswal. Please go ahead.
Thank you, sir, for taking my question. Sir, I have just two small questions. One, if you can provide breakup of revenues across manufacturing, ROH, design and development, and exports for FY 2025. For the manufacturing revenues beyond Tejas for FY 2026 onwards, which all platforms, as per you, will be contributing to the revenue recognition, and how will it scale up? These are my two questions.
Yeah. You can now. Steve, you can take that.
Yeah. Our manufacturing percentage is around 23%. And repair and overhaul, around 7%. So 30%, and balance 70% will be from repair and overhaul and supply of spares.
Manufacturing is 23%, and then 7% is what? And design?
7% is our design, export, and other developments, other sales. Supply of spares and repair and overall will be around 70%.
Okay. Okay. On the manufacturing revenues beyond Tejas platform, which all platforms will be contributing to revenue recognition?
These are mostly engines. AL-31FP engines and RD-33 engines.
Realize also.
S33.
Current year. Only two engines.
Sir, then execution of these projects, wouldn't that lead to a slightly higher double-digit kind of revenue growth in the manufacturing revenue if we include Tejas plus all these engines?
With the increase in the manufacturing, we are expecting this. There was some contract amendment in the current year. With neutralizing that, we are expecting minimum growth of 8%, and it may also grow beyond 10%. What guidance we can give you is around 8%-10%.
Got it. Got it. Later, if you can address what kind of contract amendments.
That we can tell you only after our RE and after six months. We will have another meet and I can do that.
Thank you, sir.
Thank you. The next question is from the line of Sachin Maniar from 3P Investments Managers. Please go ahead.
Hello, sir.
Yeah.
Hello.
Yeah. I want to know about the delivery schedule for Sukhoi 12 numbers, how they are being progressing over the next three years. Second question is, what will be the ROH and spares ordering flow for this year?
See, Sukhoi Su-30MKI , 12, there is a lead time of two years. We will be starting that production in 2026, 2027. It will conclude in 2028, 2029. Maybe slightly more than one and a half years because the first year will be more, and second year we will taper off the 12 numbers. This is the schedule for the Sukhoi Su-30MKI . There is a lead time because we have to get the material. The line had stopped, and we are reviving the line. The lead time is about two years to start the production. Your other question?
Repair and overhaul, our order will normally get in the range of INR 20,000 crore every year.
Okay. Thank you.
Thanks, Sachin.
Thank you. Our next question is from the line of Jyoti Gupta from Nirmal Bang Securities. Please go ahead.
Thank you so much, sir, for the opportunity. The numbers are quite in line with my estimates. I would like to understand what were the reasons that, I mean, apart from LCA Mk1, we do have platforms in helicopter, which is LUH, Rudra, and all, wherein the manufacture of engines is Safran and HAL in collaboration. Why in FY 2025, you could not deliver the helicopter platforms? Apart from, did we have any issues in terms of the intermediate jet trainer where the engines are provided by UEC Saturn? And Dornier, I mean, you were able to deliver Dornier in FY 2024 to a number, and that too at a very short period of time. What constrained the company from delivering additional or rather honor our obligation of delivering Dornier in FY 2025?
Okay. To answer your question about ALH, you are aware that the entire fleet was grounded after we had an accident with the Indian Coast Guard helicopter. We were able to now get those Army and Air Force helicopters off the ground about a couple of weeks ago. That problem is behind us. That is how, even though the aircraft were ready, we could not deliver. This year, we will be able to cover up on the ALH. This is as far as the ALH is concerned. The Dornier two numbers we had delivered to Guyana, these are the civil variants. We did not get a follow-on order. We are trying to still look at that. We are looking at multiple areas across the world where we can deliver these aircraft.
Notwithstanding that, we are building aircraft in anticipation so that as and when the order comes, we will be able to deliver. Yeah. These are the two questions, right?
Thank you so much. I'll call back in a bit.
Thank you. The next question is from the line of Harshit Kapadia from Elara Securities. Please go ahead.
Thanks for the opportunity and congratulations for a good result. I just wanted to check on the current conflict which happened. We saw a lot of drones being flying. Is there an area where the HAL and MALE drones where Hindustan Aeronautics is working? There was one which we saw in AeroIndia, Cat Warrior. Any progress or any new development on any new drones, if you can suggest the MALE or the HAL version? That would be of great importance. Thank you.
Yeah. As you have seen that these kind of unmanned vehicles are going to dominate. We have seen it very clearly. However, there are two categories in this. The kind of drones that are used are the low-cost, low-weight drones. This is a highly price-sensitive market, and there are plenty of players. HAL is not into that space. What we are looking at is the UCAV, unmanned combat air vehicles, which can carry missiles and bombs and so on. The Cat Warrior that we had showcased is a three-ton aircraft, and that development is on. It is still under R&D, and we have come to a stage where we are building the prototypes and testing the different technologies like the data link, the engines, and so on. That is still work in progress.
I think the market we are targeting is the higher end, which is the more capable vehicles. We will play in that area. We will not be able to compete in that price-sensitive, lower UAV market. We are not looking at that as a company strategy.
Understood, sir. Wishing you all the best. Thank you.
Thank you. We will take our next question from the line of Umesh Raut from Nomura. Please go ahead.
Thank you so much for giving me a repeat opportunity. Sir, I have one bookkeeping question. If I look at FY 2024 for you, you booked about closer to INR 2,100 crore of operational revenue because of provisions which were written back. For FY 2025, was there any provisioning which was written back and included in revenue from operations?
No. That is what I told you. There was some non-recurring revenue from operation in 2023-2024. For that reason, if you adjust that, then our revenue from operation still stands at 7.25%. Current year, no such reversal of provisions are there.
We got it. Just a clarification on margin guidance that you have given for FY 2026. You mentioned margins would be similar to earlier of FY 2026. Was that correct?
Yeah. Revenue from operation and we will be maintaining our profitability.
Thank you so much.
Thank you. We'll take our next follow-up question from the line of Atul Tiwari from JP Morgan. Please go ahead.
Yes. Thank you a lot for taking my question again. You said about 8%-10% revenue growth, and it looks like that even over the medium term, we may not get to 15%. How do you look at this kind of revenue growth number, especially in the context of a huge order book, which is already more than six times annual revenue? Obviously, you will get INR 1 trillion more orders, which will increase your book to build to eight-nine times. Should we not be aiming for 14-15% kind of revenue growth to finish this order book as soon as possible?
You see, in the aerospace and defense sector, a backlog of about six to seven years is considered healthy. That is the kind of number we will reach after this year. We will have about six years, less than six years of backlog. The idea is that we have to invest, but the investment has to be prudent so that we do not have too much capacity. We are now building capacity so that by 2031-2032, we will be finishing the LCA production. Then the LCA Mk2, our plants will start producing the LCA Mk2. The whole phasing is that we optimize the investments, and our plants will be occupied with LCA Mk1 initially, and later the LCA Mk2 will come in. This is the way we are going about.
Definitely, what our DF has mentioned as a guidance is the conservative guidance. I'm sure we will hope to do better than that. Perhaps we will give you later.
With the contractual delivery schedule, whatever is there, and with the repair and overhaul, the guidance at present for 2025, 2026, we are giving a guidance at that level. It may go up with increased delivery of LCH and LCA in the coming years.
Okay. Sir, your medium-term outlook, I mean, you commented on margins in FY 2026 at a stable level. Should we expect similar kind of EBITDA margins continuing over medium term as well, given you have some visibility in terms of very, very huge order book?
See, if you see our EBITDA, it is at the same level, hovering around 38%-39% with interest, I mean, other incomes. If you see the operational EBITDA, it will be around 30%-31%, and we will be able to maintain that.
Okay. Even over medium three, four years.
Yes.
Okay. So thank you.
Diversified product base allows us to give us that kind of stability. We produce engines, aircraft, helicopters. There is a very good range of products. It gives us this kind of flexibility so that we can maintain this kind of earning.
Okay. Thank you.
Thank you. Our next question is from the line of Nikhil Purohit from Fident Asset Management. Please go ahead.
Hi. I wanted to know by which year can the ramp-up for LCA Mk1 can happen to 24 units? And then, as you mentioned, the eventual 30 units as the private players come in. By when can that happen?
The 24 aircraft will happen in 2026, 2027. As I said, the private sector, they are still ramping up. We expect that next year, we will be able to get those. In 2026, 2027, we will be able to get the full advantage of all the investments in the private sector. I would say in the next two years, we would be able to reach that number of 30.
Thank you, sir. Ladies and gentlemen, in the interest of time, we will take this as our last question. I would now like to hand the conference over to the management for closing comments.
Yeah. Thank you very much. It was a very interesting conversation. The kind of interest that Hindustan Aeronautics Ltd. is generating in the stock market is very heartening. It gives us and the government great strength that we are such a valued company. I can assure you that Hindustan Aeronautics Ltd. is just not a commercial company. It is a strategic company, as you have seen in the recent past. We strive to meet the requirements of the Indian Armed Forces and as the backbone of the Indian Armed Forces. We will definitely strive to see that we meet the twin objectives of being a very profitable and forward-looking organization at the same time being the force behind the forces of the country. Thank you very much, and thank you for all your support. Good day.
Thank you. On behalf of Elara Securities India Pvt. Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you. Good day.