Pritika Auto Industries Ltd Q1 FY27 Earnings Analysis

- The company plans a growth of approximately 15% annually for the next two to three years. - Revenue target is to reach around INR 600 crores within the next two years. - Capacity expansion is planned: adding 7,800 metric tons in FY27 and an additional 20,000-24,000 tons in FY28 (primarily through LFC technology). - Growth drivers include scaling volume with existing OEM customers and increasing high-value product mix. - New growth segments targeted are exports and railways, with focus on exports over the next 2-3 years to improve margins. - Initial revenue contributions from railway products are expected starting FY27. - Medium-term capacity utilization is expected to improve to 80-85% with ongoing expansion. - The company anticipates consistent revenue growth supported by stable tractor demand and infrastructure-related commercial vehicle growth.

- The company plans a 15% growth per year over the next 2-3 years, targeting revenue of around INR 600 crores by FY28. - EBITDA margins are expected to improve from the recent dip caused by raw material and freight cost pressures. - The focus on high-value large castings and machined components is aimed at enhancing margins. - Exports and railways are strategic growth areas anticipated to contribute meaningfully in 2-3 years, improving overall margins. - Capacity expansion of 7,800 metric tons in FY27 and an additional 20,000-24,000 tons via LFC technology by FY28 will support volume growth. - US operations are expected to yield higher EBITDA margins (18-20%) compared to India (14-15%) over time. - Earnings per share and profits are projected to improve in line with revenue growth, better product mix, and operating leverage as volumes increase.

- FY27 capex planned around INR 25-30 crores, primarily debt-funded this year. - FY28 capex expected to be higher, approximately INR 60-70 crores, funded by a mix of debt and equity. - Capacity expansion targets: add 7,800 metric tons in FY27, mainly green sand technology; add 20,000-24,000 tons in FY28 using LFC technology, crossing 1 lakh tons total capacity by FY28. - Strategic investment: Subsidiary Pritika Engineering Components acquired 100% stake in Omnia Engineering Inc., a Delaware entity, investing $50,000 initially, planning up to $100,000. This aims to establish U.S. market foothold and explore engineering opportunities. - Capex focus includes capacity expansion, machining capacity addition, new product development, and railway segment product development. - Expansion plans include potentially starting or acquiring U.S. manufacturing facilities in future. - Capital allocation will prioritize returns, maintaining balance sheet discipline without aggressive growth at cost of leverage.

- For the next leg of capex, Pritika Auto Industries Limited plans to fund through a combination of debt and equity. - The preference is to raise as much equity as possible with less reliance on debt. - This year’s planned capex of INR 25-30 crores will be funded by debt only. - For next year’s larger capex of INR 60-70 crores (mostly for LFC products), funding will be a mix of debt and equity, depending on equity raise capability. - The company aims to keep the debt-to-equity ratio below 1 during expansions, indicating balanced leverage management.

- The company is currently fully booked and overbooked for demand generated by customers. - The current order book is estimated to be over INR 500 crores, possibly INR 600+ crores. - Approximately 20% of the current order book comprises LFC (Lost Foam Casting) products. - The company expects a healthy order book entering FY27, supported by stable customer relationships. - Top customers include M&M Swaraj, TAFE, and Escorts, primarily in the tractor segment. - Growth plans include expanding capacity to meet rising demand, including new technology adoption (LFC) and segments like railways and exports.