Welcome to Tata Motors Q3 FY 2026. I have with me Mr. Girish Wagh, Managing Director, and GV Ramanan, CFO and the Investor Relations. Today, we'll walk you through the results presentation, followed by Q&A. As a reminder, our participants, and we will take questions via the Teams platform. It is already open to you for submitting. Please mention your name and the name of your organization while submitting. I hand over to Mr.
Good morning, everyone. The standard I would say, I would like your attention to last paragraph on the left side. We've had a few exceptional items this quarter, and, just if you look at it, the impact has been on account of new labor code, which is impacting us by around INR 603 crore. Merger cost has been around INR 960 crore, and both these are gonna be one-time for us. Don't expect this on a recurring basis, an exceptional item. And we also have an acquisition cost, which is part of our Iveco, around INR 82 crore. Impact of all of these and other items stood at around INR 2,500 crore, our standalone financials, and at INR 1,600 crore are consolidated. Key highlights for Q3.
As you can see, our Iveco acquisition is progressing as planned, with all the regulatory approvals anticipated to be received by end March, and as we laid out the timeline earlier, the deal should get finalized by Q1 FY 2027. On the business front, a very eventful and exciting last week, wherein we had launched around 17 new next-gen trucks, and I think in order to flesh it out, Girish will share more in part of the business update. We've broadened our portfolio with the introduction of Prima 3540.K, our most powerful debut at EXCON 2025. Also showcased our new Euro-VI range in our growing markets in Middle East and North Africa. We delivered the cutting edge Prima range of electric prime movers to, you know, leading the way in driving advancement, clearly progressing on the zero-emission trucking.
With a view to strengthen India's LNG trucking ecosystem, partnered with Linde. Go to the next slide. Looking at the overall Q3 wholesale performance, this slide clearly details by period and product line. In Q3, the wholesale reached 116.8K units, a 20% YOY increase over last year. All the product lines registered a growth on a YOY basis, with HCV, I&LCV and SCV registering a double-digit growth. CV grew at 23%, I&LCV around 26%, all commercial vehicle grew at 15%, and our CV passenger business grew at 4% on a YOY basis. International business continued its growth trajectory with a YOY growth at 70%, mainly led by SAARC and in sub-Saharan Africa countries, especially Sri Lanka, which is kind of coming back as the economy is bouncing back. Go to the next page, please.
On the Q3 financial highlights, revenue for Q3 reached INR 21,533 crore, marking a 17% year-over-year increase, primarily driven by higher volumes. Margins continued to expand, with EBITDA rising to 30 basis points. In the same quarter last year, there was an impact of held PLI gain of INR 169 crore, which had an impact of 90 basis points. I'm also pleased to share that this is the 10th consecutive quarter of double-digit EBITDA margin delivery. The CV segment also achieved the milestone of a double-digit EBIT margin for the first time, which now stands at 10.6%. The profit before tax and exceptional items rose to INR 2,300 crore, an increase of INR 600 crore compared to last year. We recorded the exceptional items in this quarter, which I already shared with you, as part of the same PowerPoint.
The free cash flow was strong in Q3 at approximately INR 4,800 crore, outperforming the corresponding quarter last year. As of December 25, net cash stands strong at INR 3,900 crore, providing momentum for future growth. We go to the next page, please. The financial highlights on year-to-date basis. Revenue for YTD December reached approximately INR 57,000 crore, representing a 6% YOY increase. EBITDA margins improved to 12.4%, rise of eighty basis points compared to the previous year, while EBIT margin increased to 10.1%, which is a 130 basis points improvement year-on-year. Profit before tax and before exceptional items was INR 9,600 crore, reflecting a growth of approximately INR 1,200 crore compared to the prior year. Company achieved a strong YTD cash flow performance to date, generating around INR 5,200 crore in FCF.
The return on capital employed continued its upward trajectory and stood at a robust 53% as of December 25, supported by higher profitability. Investment expenditure amounts to INR 2,000 crore, which has been pretty consistent, the guidance provided earlier. Next page, please. Now, where did all this come from? So this is the EBIT walk. The PBT rose by INR 610 crore YOY, mainly due to higher volumes and better realization. Material and other costs increased largely on account of precious metal volatility. And fixed cost savings were lower, largely due to D&A coming down by around INR 193 crore, and partly offset by a INR 120 crore increase in employee costs due to an annual wage or a salary inflation. PLI and other incentives were down by INR 75 crore.
As I said, last year, we had taken a one-time accrual gain as first FY 2024 and 2025 were accrued together. So last year it was around INR 169 crore. This is the receipt of the PLI claims which had come through. Now, this has been partially offset by a gain on EPCG incentive accrual in Q3 FY 2026. Overall, EBIT margin improved by 100 basis points due to stronger net realization, model mix, and fixed cost savings. Go to the next page, please. Cash flow has been strong and consistent in Q3. We generated a cash of around close to INR 4,800 crore. The achievement was driven by strong cash PAT and significant working capital reversal, owing to increased offtake and consequently higher production levels.
Strong FCF performance and a continued net cash position led to a net finance cost gain of around INR 27 crore, compared to a charge of INR 125 crore in Q3 last year. Year to date, FCF stands at INR 5,200 crore, with a robust cash profit after tax of INR 6,300 crore, controlled capital expenditure, and a much lower interest expenses. Disciplined working capital management help unlock working capital gain on a YTD basis also. With Q4 typically our strongest quarter still ahead of us, we will continue to strengthen cash flows. Next slide. On a consolidated basis, Q3 revenue reached INR 21,800 crore with an underlying EBITDA margin of 12.5, and profit before tax and before exceptional items of INR 2,600 crore.
Q3 PBT reflects a mark-to-market gain of INR 295 crores on our investment in Tata Capital, as against a loss of INR 1,002.35 crores in Q2. On a consolidated basis, net cash stood at INR 6,100 crores. The CV business continues to demonstrate resilience and is well positioned to capitalize on upcoming growth. With this, I now hand this over to Girish to take you through the business slides. Over to you.
Thank you, Raman. Being on the first page itself, first slide, you see the range of electric trucks that we launched this last week on the 20th. We launched 7-ton, 9-ton, 12-ton, as also a 28- and 55-ton trucks and tippers in the electric category. In fact, as I also mentioned, we've been working very closely with the customers for very specific deployment of each of these vehicles. I think also very important is, these trucks have been developed on this intelligent modular electric vehicle architecture. This consists of modular base platforms, which we use on ICE also. In addition to that, modular battery packs house battery management systems, and e-axles that we've developed, which give us good flexibility to deliver solutions that meet specific requirements and also ranges. Going to the next slide. In addition to the electric trucks, we also launched...
Let me go one by one. Almost 17 new trucks, which also included those 5 electric on the first slide. So we introduced the Azura series, which is completely new platform launch for ILMCV segment, right from 7 tons to 19 tons. It gives state-of-the-art cabin, walk-through features, with comfort and convenience required for long distance travel. I spoke about the EV trucks. The left-hand side at the bottom, you can see the launch of all the truck cabins that meet the European safety standards, ECE R29-03, with which I think we bring higher safety on the roads, especially for the occupants, which is the drivers.
I think also something that all the transporters look forward to, which is increased payload, as well as increased fuel efficiency in the multi-axle rigid trucks and also tractors, is something we have delivered or launched in the heavy commercial vehicle segment. Those were the new launches, which cover almost the entire range and the most important expectations or requirements of the customers. Moving on. On market share, I think, there was a 100 basis points recovery from Q2 to Q3, essentially led by strong growth in the commercial vehicle, which is for us, three-axle and above trucks, 28-ton and above. Intermediate, light, medium, which is 7-ton, 5-ton to 19-ton, also saw a fair bit of recovery.
HCV and CV passenger, I think both the shares kind of remained same over the previous quarter at 26.3 and 35.9, respectively. Going next. In terms of fleet utilization, I think post GST, one has seen an increased demand, especially in specific sectors like auto, consumer durables, et cetera, and that has therefore led to increase in utilization of heavy cargo. Infrastructure projects also getting back on track post the rainy season, extended rainy season. The tippers also are seeing higher utilization. MCV cargo, ICV trucks also doing well due to e-commerce and the manufacturing segment uptick, as also is LCV. Buses continue to do well, as we see. I think, and more importantly, over a period of three years, there has been a significant improvement in the fleet utilization.
As you know, this is actually based on the data that we have internally, based on around 1 million Fleet Edge installations in trucks and buses. Now, based on some other data points, we have seen that the freight rates have also firmed up. In fact, we've seen in rigid trucks, in heavy, medium, as well as intermediate commercial vehicles, one has seen a 2%-5% growth in freight rates post GST 2.0, and therefore, has led to some improvement in the transporter profitability, especially in the segments that I spoke about. I think also very important to note is, the diesel consumption continues to be at a high level and has grown year-over-year. More importantly, the EV bill, the EV bill, bills rose almost 23% December on a year-over-year basis.
It also indicates availability of higher freight, or one can also say, the higher number of trips going on. Specifically by segments and trucks. On the trucks, I think the segment grew significantly after a flat H1. Our volumes grew by 24.2%, with HCV at 23.2 and ILMCV growing at 26%. All the segments have also witnessed a quarter-on-quarter improvement in sentiment index. And sentiment index is a combination of satisfaction with the current state of business, and how do the transporters expect the future state of business. This is also essentially led by increase in demand in certain sectors, post GST rate rationalization. There was a strong inventory buildup also happening in certain sectors. Generally, after monsoon, the infrastructure activity has gone up.
I have already spoken about freight rates, how they have inched up, which also augurs well as we go ahead. In buses, I think we have seen a strong momentum now with multiple tender wins, accounting to total almost 6,000 units, which we will now deliver over a period of next 10-12 months. Notable amongst these have been the Maharashtra State Road Transport Corporation, Gujarat State, Northwest Karnataka, Telangana. I think these are some of the tenders that we have won. These are all these Ace e- buses. We've also seen private segment volume growth, specifically in MCV buses, but also more in our vans, that is Magic and Winger. And while we had bid for the earlier 10,000 tender, we are also going to bid for the new 6,300 CESL tender that has come up.
In addition to that, we have also been bidding for the small, small tenders which have been coming outside CESL. On the small vehicles, we had new launches. Of course, first, Ace Pro, which happened towards the end of Q2. In Q3, we launched the Ace Gold in the Lean NOx Trap, lean NOx trap technology. I think both have got established well, and in fact, this Ace Gold diesel used to be the mainstay of our volumes till BS4. As I've been saying, I think these products have started picking up volumes and, in fact, have been instrumental in boosting volumes. Our Q3 retails are almost at 45,000, highest since Q1 of FY 2024. Going to the other segments, the parts and services business continue healthy double-digit growth on a YY basis.
In Smart City, we now have, of course, more than 3,600 buses, covered almost 50 crore kilometers. We continue to deliver uptime addition of 95%. In terms of decarbonization, almost 280,000 tons of CO2 has been reduced with these buses operating on the roads. In digital, as a part of Fleet Edge, I think we have come up with a new subscription plans, which are branded as Lite and Prime. And actually, this also becomes the most attractive value proposition in this particular industry for logistics, and this has, therefore, led to doubling of the subscription renewals for Fleet Edge. So absolutely on the right track. International business has been doing well.
This year, I think the shipments have grown 70% on a year-on-year basis, and the main contributors have been SAARC, with Sri Lanka coming back on track now. Sri Lanka has been contributing well, as also Middle East and North Africa. Some of the new markets that we've entered in North Africa also doing well, followed by Sub-Saharan Africa. Next. As we look ahead for Q4, I think Q3 has witnessed very good uptick in sales momentum, as also overall sentiment. I think as the consumption continues to be at a higher level post BS6 Phase 2, into expansion in some of the end-use sectors and infrastructure activity by government, we are looking at improved levels of demand in Q4 as well across all the segments.
And also, buses demand will increase now, especially because they are cyclical and do well in Q4 and Q1 of each financial year. And therefore, going ahead, I think on trucks, the sharp recovery in Q3, we are certainly looking forward to continue this momentum in trucks. And in fact, with the launch of these 17 new trucks, we will accelerate the volume growth and increase our presence all the segments. In buses and vans, as I said, we will now start deliveries against the strong government tender wins that we've had in the last two quarters. Small commercial vehicles, clear agenda of volume ramp-up, Ace Pro, Ace, as well as Intra. Parts and services, international business, both growing well. This year, we will get sustaining the momentum in this quarter and even ahead.
Therefore, overall, we will continue to drive strong financial performance and consistent delivery of a set of margin, a set of metrics, rather than looking at one or two metrics in isolation. With that, thank you, and over to you, Sneha, for the Q&A.
Thank you. Start with the Q&A. The first one is from Gunjan, Bank of America. Can you talk about the commodity inflation impact that you've had in the quarter, and how is it going to be a headwind going ahead? How significant is it, and have you taken any price hike to offset it? And second, realization has come off. So I think, Gunjan, you mean ASPs. ASPs have come off quarter on quarter despite the better M&HCV mix. What explains this?
Yeah. So let me take this. The first one on commodity inflation, we've seen commodity inflations specifically on the PGM, so the precious group metals. I think these are the first ones where we have seen higher inflation, followed by non-ferrous metals, led by copper. I think these two groups have been the main headwind, if I may say so. I think the total hit for us, 2, 3, has been around 50 basis points. As we look forward into Q4, these are the same set of commodities which are posing some headwinds, and steel prices also in open market have gone up, but this is something I think which will continue to be a point of discussion with the steel mills. We don't know how it is going to play out, maybe from Q1 of FY 2027.
So I think in Q4, we are looking at similar kind of an impact due to non-ferrous metals and platinum group metals. To mitigate this, we have taken a price increase of 1% in the month of January, from 1 January, across the range. And therefore, main purpose of this price increase has been this commodity inflation. With regard to your second question, which is the ASPs, I mean, you said realization, but it's more of ASPs going down. So see, I think while the HCV numbers have gone up, yes, you are right, but at the same time, the ILMCV numbers have also gone up, so have the small commercial vehicle numbers have gone up. And even in buses and vans, being a lean quarter for buses, actually the small van volumes have gone up.
Therefore, net, net, the mix has actually led to the realizations or ASPs going down. But on a Q1-Q basis, actually, we have been able to increase the realization. Now, coming to your question on replacement demand. See, while I had said last time that we are trying to develop some robust understanding on the replacement demand, so we continue trying to do that, but I can give some more flavor to you. In this quarter, the replacement demand for trucks is most likely gaining momentum post GST 2.0, because it has prompted the fleet operators to initiate vehicle replacement that were previously delayed. The shift has become more financially viable due to lower EMIs, resulting from lower initial prices. I must, however, say that some large operators are still assessing the best approach to input tax credit under the new GST regime.
The tax processes are yet to be fully streamlined. We expect better clarity, much smoother procedures in FY 2027, which can possibly, possibly accelerate this replacement activity. Overall, this trend is likely to support positive cash flow for transporters, maybe improve financing terms and tax benefits should improve their overall financial position and therefore maybe push replacement demand. If I may also add, I think a similar trend is being observed in the bus segment, where replacement demand could be a, a key structural driver. In several states, actually prioritizing the phased replacement of aging fleets across both intercity services and within city. This is also likely to support the demand as we go ahead into the next year. So that's the response, Gunjan, to all your three questions.
Next question is from Pramod Amte, and there are two sets of questions, so maybe I'll break up one set for you, Girish, and one for you, Raman. So Girish, for you, we've seen market share recovery from low of June. What has driven it, and is it sustainable? What are your ambitions for the next two, three years? And how is the truck operator profitability and health now versus pre-GST? And how is your supply chain created to cater for any demand surprises, and what parts are a challenge?
Okay. So Pramod, on market share recovery, as I said, I think this has been led by heavy commercial vehicles. And some of the factors, first is the growth in the tipper market, where our share is higher. We, in fact, have driven our shares further higher in tippers because of their revenue salience. We've also had specific actions in specific micro markets during the quarter, which have also supported market share recovery. In terms of what do we see going ahead, I already spoke. I think the new launches that we have done, they address almost every category, or most important categories, for logistics and transportation, and that should help us grow further.
You know, in terms of, outlook that you've asked for, or ambition, I think as we have said, that we are not looking at market share as one metric alone. We are looking at a basket of metrics now which indicate profitable growth. It would be market share, at times, revenue share, as we calculate internally. It would be profitability, it would be the free cash, et cetera, et cetera. And I think we have, therefore, ambition to drive this profitable growth agenda. That is the response to the first question. In terms of truck operator profitability, I think, as a response to Gunjan's question, to a large extent, I think this has got addressed. In terms of supply chain situation, if I may say, I think, with increase in demand across almost all auto sectors, whether it is two-wheeler, three-wheeler, cars, commercial vehicles-...
At some suppliers, and specifically in the area of castings, one has seen the capacity bottlenecks being reached, and therefore, I think there are specific debottlenecking actions which have already initiated in the supply chain. While I mentioned casting, I think in some other areas there could be two more items, but this is what is the higher level indicator in terms of supply chain capacities at this juncture. We don't expect a surprise, as you have mentioned, because I think there has been a good supply chain mapping which has been done. I must, however, add that the rate at which the demand has gone up, and therefore, production at all the OEMs is something which is quite significant, which has led to some stress. There is a working capital question for Ramanan?
Yeah. So the question is, two questions actually. One is, what has been your spend on the new product launches? Does it change your CapEx plans for FY 2026 and 2027? And on working capital, the release has been quite big. Is it sustainable?
Yes. So, Pramath, to your question on CapEx, I think our guidance, we continue to remain within the guidance that we had given, and we have been pretty disciplined in terms of our CapEx spend and without compromising on the need for new tech. So in terms of CapEx, I think we will continue to be within our guidance. Now, coming to your question on cash, I also see Kapil also has a same question on FCF, so I'll probably combine the two. We've been working to clearly smoothen the volatility in cash flow, and have been FCF accretive since ITD Q2 this financial year. The strong FCF that you see in this quarter is a clear result of strong operating profit, efficient working capital management and disciplined spending.
And as we kind of go forward, even on cash flow, we did give a guidance, and we are pretty confident that we will meet the guidance that we had given on cash flow. And generally, it's a known thing, always the second half of a year in a cyclical business like CE, is always favorable from a cash standpoint, and, and we will continue to kind of watch out for this and, and maximize. Thank you.
Next question, Girish. There are quite a few questions on the bus business, so I'll just probably combine all of those. So one is, can you share some color on the growth outlook for the bus business? And, recently you had mentioned an increase in bus body building capacity. Can you talk about, you know, what is your current capacity and utilizations? And also on the EV buses, how are the bus orders? And, would you think of consolidating all your bus body building businesses into one entity?
Yeah. So, Jinesh, let me first talk of bus business growth. So first of all, I think Q4, Q1 are traditionally high demand quarters, and that's how we are seeing these two quarters. Overall, next year, you should see the bus business growing at a higher single digit, is what we are looking at, at this juncture. In terms of bus body building capacity, yes, I did mention about increasing the capacity by debottlenecking, so it is roughly around 15% increase that we have done in anticipation of higher demand in Q4 and Q1. Your next question is about, you know, allocation of buses. So see, we have two bus body building facilities. One is the Tata Motors Body Solutions Ltd, and the second one is Automotive Corporation of Goa Ltd.
So one is, generally, there are specific set of models that we do, the two entities, although we have fair bit of flexibility. To get in efficiencies, we have allocated certain specific models in these two. As far as EV is concerned, currently, EVs have been productionized only in Tata Motors Body Solutions Ltd. But as we go ahead, yes, of course, we are going to productionize that in Automotive Corporation of Goa Ltd also. Yeah.
Yeah. So just staying on the bus business, there's a question from Jinesh as well. How many bus tenders did Tata Motors win in the recent 10,900 e-buses? Any reason for being cautious as this tender was under PM-eBus Sewa?
Yes. So Jinesh, see, as we have said very clearly, in this tender business, we are going to look at three things based on our experience of running these buses in multiple cities. First is the payment security mechanism, which was addressed in this 10,000-odd tender. We are also looking at an asset-light model, which was addressed indirectly in this tender, and therefore we participated through a consortium model. So in most of our bids, a consortium partner, who is a, a bus operator, was front end, front face. Part of the buses we also bid directly from Smart City. And then the third thing that we are looking at, of course, financial prudence, and accordingly, we quoted in these tenders. We have not won, or we are not L1 in any of these tenders.
And I think, we will continue to stick to these three requirements that I have spoken about, is, payment security, asset light, and financial prudence. As we go ahead, we'll get more and more knowledge on, each one of these three and see how we participate in the tenders. We want to be very patient for this business because this is just the beginning. As you know, the government has already said that almost close to 850,000 kind of buses will be converted into electric as we go ahead, and we have a sufficient runway ahead. I think on one hand, we are building a very strong, stable, business of running these buses, create robust systems in place, and therefore create a model with which we will start, getting into also operations of, these buses.
So I think that's where we are, Jinesh, as we go ahead. I think he has some more questions also. If you want, I can take those.
The other question was on the capacities that we have for M&HCV and ILMCV. Have you-
Yeah.
Yeah.
So, see, as far as M&HCV, ILMCV trucks capacity is concerned, we have a fair bit of flexibility in the sense we can manufacture these in all of our plants, Jamshedpur, Lucknow and Dharwad. As far as in-house capacity is concerned, there is no concern. What I answered some time back was with the sudden increase in demand across all the auto segments, has led to some capacity pressure in specific areas like castings, et cetera. So we are watching the situation. Wherever decisions are required from longer term perspective, we are going ahead with that, and we are at a very okay levels in terms of utilizations, prepared for the higher demand as it comes next year.
Next question from Kapil. What should be the direction of margins, and what are going to be the drivers for the same?
So, Kapil, I mean, in terms of drivers, you know better than all of us. So, realizations, of course, we have been focusing on that. On the cost side, I think in the call, we have spoken at least in two, three questions about where the commodity challenge is being seen. And to address that, we've already taken a 1% price increase from first of January. I think Ramanan has also explained in his presentation what are the other cost elements, which have hit us in Q3. Some of those are, of course, one time, therefore, we will start getting benefit as we get into the next quarter from here. So yes, I think we continue to work on a further margin improvement. I think, as demand goes up, further scale benefits will also come in.
Next question from Raghunandhan N.L. of Nuvama, and you know some of these have already been addressed, so I'll only pick those which are new. Can you indicate if the double-digit growth is likely to continue till September? And the share of tippers has gone up. Do you expect tipper demand to remain robust ahead? In HCV cargo, utilization is at about 80%. At what level of utilization do you think fleet operators start to add trucks? And another question on delinquencies and availability of finance.
Yeah, so thank you, Raghu. And, you know, frankly, I'll be delighted to give a one word answer to your question two and three, which is yes. Right? But, I think, I look at it like this: the Q3, because gone by Q4, we are seeing a YOY growth also because of the base effect. And I do see that base effect continuing in H1 of next year also, right? And therefore, if GDP continues to grow at this rate, consumption remains at a higher level, the infrastructure mining activity continues at this level, then I think we should see this kind of a growth. Share of tippers has, yes, indeed, it has gone up.
It is not only mining and infrastructure activity, but also the urban construction activity is also leading to an increase in tipper and the RMC products that we see. With the focus of government on these sectors, we see this demand to remain robust ahead. Your next question, Raghu, is, in HCV cargo, utilization is at 80%. At what level of utilization... Frankly, we still don't have that kind of, data and solid backup to say that, yes, I think we are close to this. But as I answered earlier, I think, with the drop in initial prices and some of the customers, especially the fleet owners, are looking at which of the, GST regime they should take, they should follow, right?
and therefore, this is something which should get clear as we get in towards Q1, and that is also something which should help replacement demand probably.... You also have asked a question on: Can you indicate ease of finance availability for operators, trends, and in delinquencies? So I know, yes, there was one report which was released in the quarter gone by on increasing delinquencies, et cetera. But that was actually based on data which was at least a quarter prior to that. Our direct connection, discussion with the financials, clearly indicate that the delinquency trends have stabilized, used, and are improving over the past few months, with clear green shoots visible across major financials. And in fact, see, I mean, this kind of a growth, 25% of the growth, isn't going to happen unless the financials bring in 25% more money.
I must also say the various delinquency buckets that they look at, 30-90 days or 91-180 days past due, have actually moderated compared to the earlier stress periods, supported by stronger collections, tighter underwriting and more disciplined risk management. I had also highlighted some stress in UP, AP, TS and Karnataka. Even in these states, there has been an improvement, although they still remain a bit behind other states comparatively. So I think, Raghu, this answers all your questions. I think he has asked another question.
We go to that. I'll give you a break, and I'll move to Ramanan.
Mm.
Warranty cost has increased by INR 94 crore. How much was the warranty cost to revenue this quarter, and what is the reason for the increase?
I think, Raghu, thanks for that question. The increase in warranty cost is largely on account of revision and rates, taking into account our claim trends and also the part price cost. Right? In terms of the warranty as a percentage, YTD, we are trending at around less than 2%.
So, I'll move to the next question from Nishit on exports. Exports have recovered sharply over the last few quarters. Which markets are driving this? And our exports are still much lower than the peak that you saw in FY 2017. So is it fair to expect strong double-digit growth in exports over the next two, three years as well?
Yeah. So see, you're right, exports have recovered sharply, and in terms of numbers, yes, we are still behind or much behind the peak in FY17. Very true. But I think in terms of revenue, we are already very close to that. Going ahead, yes, I think we should see a strong, double-digit growth, and I can certainly speak for the next year. And current markets which are driving this growth, which I also explained in the presentation, essentially Sri Lanka, SAARC, and also to some extent, recovery in Bangladesh. Also, a good recovery happening... Not recovery, I think fresh demand, so to say, for us in Middle East and North Africa. I think in this whole thing, our basket of international business markets have got pretty well-balanced. In FY17, Nishit, we had a very, very high salience of SAARC, very high salience.
I think it has moderated significantly now, and we are happy with the market mix that we have now, which we would like to continue to build upon. With the recently new set of products which have launched, international markets as well as some of the domestic ones, which can also go, yes, we will continue to drive growth in the international markets.
Next question from Amyn Pirani on buses. Unlike most segments in trucks, buses have already crossed the pre-COVID levels in terms of volumes. How should we think about growth in this segment? Is it a structural category, or will there be a cycle here as well going?
So see, in buses, especially in NCV buses, we know half the demand comes from government tenders, STU, et cetera. And I think that, post-COVID, one has seen a very strong demand coming from a lot of STUs. I spoke in my presentation about the new tenders, which we will be now be fulfilling over the next one year. I do feel that, yes, this should continue for some more time, and we are also seeing a good demand coming from the school vans kind of a category. In addition to that, I would say electric buses, which are just at, I would say, very, very initial stages of growth, can also be a category to look forward to in terms of higher growth as we go ahead. So yes, I do look forward to growth coming in buses as well.
Just a couple of questions which are unanswered from Raghu. One is, what are the current levels of discounts, and would you expect reduction in discounts given that there is a strong demand? And then can you talk of cross-selling opportunities between Tata and Iveco products in major regions?
So, Raghu, on the first point, I think, see, we have been ensuring that we keep on increasing the value, the position and the value being delivered to the customers, even in the recently launched products, we've been able to deliver significant profitability improvement to the customers. And then once that is established, then we see how much of that value we should be sharing between the customer and us. And I think therefore, going ahead, yes, there will be possibility of the discounts moderating further, but this is something which will depend very specifically on segment to segment, market to market, the behavior which will continue to be different in combination of geography and a particular segment.
In terms of cross-selling opportunity, Prabhu, I think I be in the position to give more details than what has already been said, but possibly, I think when we meet next or maybe one quarter after that, I think we should be in the position to give much better clarity on where all our products could be sold. I can only add that recently signed EU FTA will be good benefit to this particular lever, not only on the products, but it will also see good benefit on the components or aggregate that we are sourcing from Europe. Not a great extent, from revenue perspective, but still a good possibility, and also vice versa.
The next question from Gunjan Prithyani: Are you seeing a shift from used market to primary new market due to the GST revision and superior efficiency in the newer trucks, now that BS4 trucks have aged?
So, Gunjan, to what extent, not so much, because as I mentioned last time also, we now have 11 operational repair centers. Most of the inflow there is more of cars. We do have inflow of trucks, but it is still low. What it means is, the fleet owners are buying newer trucks and probably selling them off to the second user just before the end of the warranty period, and they are therefore selecting more profitable, newer trucks. Older trucks, which pass on to the second owner at some point of time, maybe third owner, then gets deployed over a shorter route, shorter duty cycle. That is the kind of behavior we are seeing. And in terms of overall replacement, I think you had asked the first question, which I have already tried to answer.
Of course, the answer is not fully satisfactory, I know, but this is the only thing that we know as of now.
Next question from Amyn Pirani: Which segment will see higher competitive intensity? Peers have also been aggressive in product portfolio expansion in heavier segments.
I think every segment will see competitive intensity. Yes, the intensity may vary a bit from segment to segment, but I can't think of any segment which will have very low intensity, competitive intensity.
Be able to provide any guidance across segments for growth for the next financial year?
I think, we, as I mentioned in the last analyst call also, I would certainly like to see how this whole quarter pans out, and then when we meet next, of course, we'll be in the position to give a better guidance for next year. But as it appears, as the momentum continues, next year, first half, we should see good growth on a YY basis, also because of the base effect of the year that we are in.
Let me just check for the queue, if there are any more.
Is the... Pramod has asked: How is the participation from SFO, MNCs? What is SFO? Small,
So he, probably, he means small fleet owners.
So, Pramod, if, if your question is about small fleet owners, we have seen participation across... And in fact, I mentioned, I think large fleet owners are, some of them are, in fact, deciding, you know, which credit, route they should they should be using for GST. But otherwise, small fleet owners are certainly coming ahead. Then his next question: How do you see cyclicality of industry evolving?
Maybe we take it another time.
Yeah.
Yeah.
Kapil has asked: Bus tenders, is there a cost pass-through clause? No. Kapil, no.
All that we have is questions. And then, thank you for participating. Any questions that remain unanswered, we can take it offline. Thank you.