DIVGI TORQTRANSFER SYSTEMS Ltd (DIVGIITTS) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to Divgi TorqTransfer Systems Limited Q2 FY '27 earnings conference call, hosted by Equirus Securities Limited. 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 "*" then "0" on your touch-tone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Ronak Jain from Equirus Securities Limited. Thank you, and over to you, sir.
Ronak Jain (Equirus Securities Limited): Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to Q2 and H1 FY '27 post-results call of Divgi TorqTransfer Systems Limited. From the management side, we have Mr. Jitendra Divgi, Managing Director; Mr. Hirendra Divgi, Whole-time Director; Mr. Sudhir Mirjankar, CFO; Mr. Mr. Satwinder Singh Sabharwal, Chief Growth Officer; and Mr. Deepak Vani, CEO -- COO. I will now hand over the call to Jitendra sir for his opening remarks. Over to you, sir.
Moderator: Ladies and gentlemen, the management line is disconnected. Please wait while we reconnect them.
Moderator: Ladies and gentlemen, thank you for patiently holding. Management line is reconnected. Over to you, sir.
Jitendra Divgi (DIVGI TORQTRANSFER SYSTEMS Ltd): Yeah. Should I Should I start? This is Jitendra Divgi here. Or Ronak going to make the introduction again?
Moderator: Sir, you may proceed.
Jitendra Divgi (DIVGI TORQTRANSFER SYSTEMS Ltd): Okay. So, good afternoon, ladies and gentlemen. On behalf of Divgi TorqTransfer Systems, I welcome everybody that has taken the time and the interest to come here today. Our shareholders, investors, analysts to for this earnings call of the second quarter and first half of financial year '27. I trust you had the opportunity to review the results we've posted. Before starting, I'd just like to take a moment
Jitendra Divgi (DIVGI TORQTRANSFER SYSTEMS Ltd): my best wishes to all of you and your families for the Diwali festive season. Just a point for the record that this discussion may include forward-looking, you know, kind of projections and actual outcomes may differ because of market, customer, execution, and other risks described in our presentation. So, I'd like to open by touching upon the significance of this quarter that has just gone by. As you would all appreciate, this was an important milestone for all of us at Divgi. We delivered a total revenue of almost 150 crores, 148.7 to be precise, which was an increase of 68% over the corresponding quarter for last year. EBITDA reached almost 44 crore rupees, growing 99%, while profit after tax reached 26 crores, growing approximately 146%. The EBITDA margin was 29.5%. These are meaningful outcomes, but I would encourage all of us to look beyond the headline numbers. This performance reflects several years of investment in products, technology, customer engagement, manufacturing capability, and disciplined execution. They also reflect the strength of a business model in which operating leverage can become increasingly visible as volumes and scale build up. One aspect of this quarter deserves emphasis. Our performance, I think, is not dependent on a single short-term event. It is a result of multiple operational programs moving forward in concert. Our established transfer case platforms are contributing greater scale. The EV transmission business is showing improved activity, and components and exports are broadening our earning space. For investors, the strategic significance lies in this combination. A company with several relevant drivetrain capabilities can engage customers at more points in their product planning cycle, and it can reduce reliance on the timing of any one program. This diversification is, to be sure, is still a work in process, but the first half first-half performance provides evidence that the model is beginning to take shape. Equally, we recognize that the automotive industry is cyclical. OEM production schedules, model launches, export demand, supply chain conditions, and changes in technology can all affect performance. We, therefore, evaluate progress not only by revenue growth, but also by quality of delivery, customer approvals, cost competitiveness, and the ability to convert program activity into sustainable returns. Our objective is to build a business that can participate in market growth while retaining the operating discipline required to different industry cycles. Let me now shift gears and make a few introductory remarks on the half year gone by. So, for the first six months of FY '27, total income was 290 crores, up 76%. EBITDA was at 85 crores, up 108%, and PAT almost at 52, up 162%. The half year EBITDA margin of over 29% is particularly encouraging. This combination of growth and profitability is important to us. We are not pursuing scale for its own sake. Our objective is to build a larger, more diversified drivetrain systems company while retaining engineering depth, operating discipline, and capital efficiency. We have made progress in the first half while recognizing that each business has its own demand cycles and execution requirements. So, what drove this progress? To me, three themes stand out. First, of course, is the transfer case business, which has continued to benefit from strong demand, platform refreshes, and the Indonesia program. Second, our EV transmission business saw a marked improvement in the second quarter after a softer first quarter, reflecting improving customer schedules
Jitendra Divgi (DIVGI TORQTRANSFER SYSTEMS Ltd): spectrum of awarded programs. This matters because our growth is no longer dependent on a single application or a single geography, is developing across multiple product families and end markets. A word about Indonesia and I would be remiss if I did not address the elephant in the room. The Indonesia 4x4 program is a useful illustration of the direction of our business. It demonstrates our ability to support an Indian automotive customer or customers, as their vehicle platforms address international markets and India overall becomes more relevant to the global automotive industry. It also demonstrates our manufacturing and program management agility. The ramp-up was completed in a relatively short period. We see globalization of Indian OEM platforms as an important long-term opportunity for our drive train systems. At the same time, our relationships with established international Tier 1 companies, including BorgWarner, Magna, and Toyota Tsusho, create channels through which we can strengthen our technology manufacturing credibility and access to global customers. Each opportunity, of course, must still be won and executed on its merits. The recognition we received from Tata Motors for execution excellence and business agility in supporting their In- Indonesia expansion is especially meaningful meaningful to us, because international programs test a supplier on several dimensions simultaneously. Engineering must align with vehicle application, manufacturing capacity must be made available at the right time, and quality and logistics must re- remain reliable as the customer ramps up. Our teams have worked across these requirements with a common focus on the customer. And I want to take a moment to specially commend our operations team across our plants who have done such a stellar job. We regard the recognition not as an end point, but rather as a benchmark for how we should execute as we go into the future. There is also a broader strategic implication. Indian vehicle manufacturers are increasingly evaluating opportunities beyond the domestic market. When an established Indian supplier can support the same platform or related applications in another geography, it has an opportunity to deepen the relationship and extend the useful life of its engineering and and other investments. This is the logic behind our focus on internationally relevant products and on developing the organizational capability to support customers with a global mindset. I want to shift and quickly make a few remarks about our overall approach in the United States market. As you are aware, we have esta- established a wholly owned subsidiary in Greenville, South Carolina, in the state of South Carolina, to build closer customer relationships and support our development pipeline in North America. The immediate objective is engagement, better engagement with customers, understanding customer requirements, progressing RFQs, and identifying the right sourcing and manufacturing solutions. We are also evaluating potential manufacturing opportunities. I want to be clear about a capital allocation approach though. Establishing a presence does not mean committing immediately to a large manufacturing investment. Any future investment will be assessed against customer commitments, program economics, operating risk, and the long-term strategic value it can create. We intend to preserve the flexibility that our balance sheet currently provides us. Our U.S. presence is inden- intended to bring us closer to customers and to the decisions that shape future sourcing programs. Local engagement helps us understand technical requirements better, respond to requests more effectively, and coordinate engineering discussions across time zones. The establishment of the subsidiary and our office at the Clemson University International Center for Automotive Research in Greenville, South Carolina, provide a practical base for this work. Initial team onboarding is an important first step, but building a credible customer-facing operation requires consistent follow-through on each inquiry. My approach is that we
Jitendra Divgi (DIVGI TORQTRANSFER SYSTEMS Ltd): be thoughtful about the sequence of investments. We can begin by serving opportunities through our existing Indian manufacturing base where that is commercially viable. If customer commitments and program economics support additional local value addition, we will evaluate those options in a structured manner. The existence of a market opportunity alone is not a sufficient reason for major capital expenditure. We will weigh overall strategic factors including tariff exposure, logistics, customer requirements, technology content, expected volumes, and returns before deciding on the next phase of investment. In conclusion, looking ahead to the remainder of FY '27, we are focused on sustaining execution and transfer cases, supporting the ramp-up of EV programs, deepening export relationships, and moving our emerging transmission opportunities through their technical and commercial milestones. The presentation we have uploaded sets out an FY '27 tar revenue target of well over 500 crores and long-term revenue aspirations in the region of 1,000 crores by '30, and going towards 2,000 crores beyond FY '32-'33. These are targets and aspirations, not assured outcomes. Their achievement, as you would appreciate, depends on customer programs, market demand, validation, sourcing decisions, and, of course, our own execution. Our strategy is to build a globally relevant Indian drivetrain company through technology-led innovation, customer and geographic diversification, manufacturing excellence, and financial discipline. With that perspective, I will hand over to our Chief Growth Officer, Satpinder Singh Sabharwal, to discuss the businesses and growth pipeline in greater detail. And, of course, at the end, we will be more than happy to take questions on points that we may have overlooked. So, Satpinder, over to you.
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