Nelcast Ltd (NELCAST) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to Nelcast Limited Q2 and H1 FY '27 Earnings Conference Call. 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Bhatt from EY. Thank you and over to you, sir.
Abhishek Bhatt (EY): Thank you. Good morning, everyone and thank you for joining us. On behalf of Nelcast Limited, I extend a warm welcome to all the participants on the Q2 and H1 FY '27 Earnings Conference Call. The results and investor presentation have already been shared and are available on our website as well as through our filings on the stock exchanges. Joining us today to discuss the company's performance and outlook are Mr. P Deepak, Managing Director and Chief Executive Officer, and Mr. S.K. Sivakumar, Chief Financial Officer. Before we begin, I would like to draw your attention to the standard disclaimer. Please note that any statements made during this call, including those in our presentation materials, that reflect our outlook for the future, or may be construed as forward-looking statements, should be considered in conjunction with the risks the company faces. These statements may not be updated from time to time. Further details are available at the end of the investor presentation and in our other filings on our website at www.
Abhishek Bhatt (EY): nelcast.com. Should you have any queries or require additional information following this call, please feel free to reach out using the contact details provided in the investor material. With that, I would now like to hand over the call to Mr. P. Deepak. Over to you, sir.
P. Deepak (Nelcast Ltd): Thank you, Abhishek. Good morning, everyone, and thank you for joining us today. To begin with Q2 of FY '27, it's been a very strong quarter for Nelcast. We achieved our highest ever quarterly revenue and profitability, with significant improvement in volumes and operating performance. More importantly, some of the operational challenges that we faced in Q1 have now been resolved, and operations have largely normalized. If you look at what drove the performance during the quarter, there were a few things. Volumes were strong, realizations improved, and we also saw normalization of operations following the issues we faced in Q1. Tractor demand was particularly healthy during the first half and supported our domestic volumes. Going into the second half, we do expect that the tractor industry to moderate from the level seen in H1. At the same time, we're seeing in the commercial vehicle segment is very good. M&HCV demand remains strong, and based on the schedules and forecasts that we see today, we believe the strength in commercial vehicles should more than offset the moderation in tractors. Coming to exports, this was another strong area for us during the quarter. Export revenue grew 78.3% year-over-year to INR 140.9 crores in Q2. And for H1, exports stood at INR 254 crores, growing about 31%. The indications we are receiving from customers continue to remain positive. Current volumes look healthy, so overall, we continue to remain positive on exports. The other important development is on our new products. We have been speaking about these programs over the last several quarters, first during development and customer validation, and subsequently about their expected ramp-up. We have now moved into production and started the ramp-up. A number of these products are in the early stages of this ramp-up during Q2, and we have seen some initial contribution, but we expect this to become more progressive and more meaningful in the coming quarters. We've also taken an important step in terms of value addition through machining. We're investing in machining capability to meet our customer requirement. This is an important program for Nelcast and expands the value addition that we can offer to our customers. Looking ahead, we remain positive about the second half of FY '27. Based on our current visibility, we expect FY '27 H2 to be better because of M&HCV demand as it strengthens further and the new products begin making more meaningful contribution. But overall, we're at an encouraging point for the company. Our existing business is performing well, exports remain strong, and new products that we have spoken about for several quarters have are now moving into production. And we're taking the next step in value addition through machining. We believe these developments will provide us with a strong platform for growth as we move through the second half of FY '27 and into FY '28. For the quarter, total revenue stood at INR 409.6 crores, growing 35.2% year-on-year. EBITDA increased by 70.4% to INR 36.4 crores, while EBITDA per kg improved to INR 14.3 per kg, compared to 10.3 in Q2 of last year. PAT stood at INR 16.2 crores, growing 240% year-on-year. For the first half, revenue was at INR 755 crores, an increase of 18%, while PAT grew 23.6% to INR 21.3 crores. With that, I would like to conclude my remarks and open the floor for questions. Thank you.
Moderator: Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Praneeth from SJ Investments. Please proceed. Mr. Praneeth, are you there?
Praneeth (SJ Investments): Hello, am I audible now?
Moderator: Yes.
Praneeth (SJ Investments): So, yeah, so thank you for the opportunity. So I wanted to understand in terms of strategic shift into investing in machining, because I think we've always been open about the fact that we wanted to be a castings player and machining will always have partners and vendors.
Praneeth (SJ Investments): return on capital also is a little lower compared to our casting unit. So, could you explain both aspects of why you are investing in machining?
P. Deepak (Nelcast Ltd): Yeah. So, the the decision to invest in machining was actually driven by by customer requirements. I think there was there were certain challenges with the with meeting customer requirements through outsourcing on these on some particular programs and that's part of the reason why we've chosen to enter into this into machining.
Praneeth (SJ Investments): Got it, sir. And this 75 crores is going to give us how what capacity of machining?
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