This article first appeared on GuruFocus .
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Revenue Growth:Revenue growth outpaced the industry, supported by greenfield project expansion and successful ramp-up of new customer programs.
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EV Revenue Contribution:8.5% of total revenues in Q1 FY27 came from electric vehicles.
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Profitability Impact:Profitability was impacted by elevated copper prices and increased manpower costs due to exceptional minimum wage increases.
Release Date: August 04, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue growth outpaced the industry, driven by greenfield expansion and successful ramp-up of new customer programs.
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EV contribution remained strong at 8.5% of total revenue in Q1 FY27.
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Greenfield plants achieved breakeven and maintained revenue run rate of around INR450 crores.
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Company is engine-agnostic and a key supplier to leading ICE and EV platforms, positioning well for future growth.
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Constructive discussions with customers are ongoing to recover cost increases, with a focus on long-term relationships.
Negative Points
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Elevated copper prices and increased manpower costs due to exceptional minimum wage hikes impacted profitability.
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Copper price pass-through lag of 3-6 months continues, with a 7% delta still sitting in current results.
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Minimum wage increases in NCR region (30-40%) have been absorbed, with uncertainty about other states.
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Greenfield plants have not yet started contributing to bottom line margins, with contribution expected only in 1-2 quarters.
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Potential for further cost increases from other state governments remains uncertain, adding to cost headwinds.
Q & A Highlights
Q: Can you quantify the impact of the minimum wage hike in Q1 FY27, and when do you expect customers to compensate for this cost increase? A: Gulshan Pahuja (CFO) stated that the wage increase was significant, with a 30-40% rise in the NCR region, and this has been fully absorbed in the current quarter's results. The company is in constructive discussions with customers for recovery, but no specific timeline was provided. Management noted that this is an unusual, regulatory-led cost, and they believe customers will acknowledge it given the manpower-intensive nature of the business.
Q: What is the breakdown of the 37% revenue growth in Q1 FY27, and what is the current capacity utilization at the greenfield plants? A: Gulshan Pahuja (CFO) clarified that out of the 37% growth, 7% is attributed to copper price inflation, while the remaining 30% is from volume growth, content increase, premiumization, and new model launches. Regarding greenfields, the revenue run-rate is maintained at around INR450 crores, with utilization at the same level as the previous quarter. The plants have achieved breakeven, but are not yet contributing positively to EBIT.
Q: Regarding the copper price pass-through lag, is the company shifting to a shorter lag period, and what is the current status of the shortfall? A: Management confirmed that the lag remains at three to six months for most customers, though they are in discussions to reduce this period. Gulshan Pahuja (CFO) noted that the current quarter has a 7% delta sitting in results due to the lag, compared to 17% in the preceding quarter. Some price hikes due from the March quarter are still pending and will flow into the September quarter.
Q: How will new vehicle architectures, such as zonal and 48V architectures, impact content per vehicle for the company's wiring harness products? A: Management stated that the company is fully geared up for any new architecture and has not seen a reduction in content. In fact, new architectures are more feature-loaded, leading to higher content per vehicle. The company is a design partner for future vehicles, particularly for Japanese OEMs, and expects complexity and features to increase, which is positive for the business.
Q: With the greenfield plants achieving breakeven, when will they start contributing to the bottom line, and will they eventually match company-level margins? A: Gulshan Pahuja (CFO) explained that the greenfields are at the same revenue run-rate as the previous quarter and are in the process of ramping up. They are expected to start contributing to the bottom line in one or two quarters. Management emphasized that the goal is for greenfields to merge into the regular business and deliver the same margins, with a focus on achieving a return on capital employed (ROCE) of more than 40%.
Q: Is the raw material cost increase, beyond copper, also subject to automatic pass-through, and how are these discussions progressing? A: Management clarified that for customer-specified components, any price increases by component makers are negotiated mutually with customers. The unusual minimum wage hike is a separate matter under constructive discussion. The company believes customers will consider these unusual costs for the long-term sustainability of business operations, but no specific percentage of recovery was disclosed.
Q: What is the share of high-voltage versus low-voltage business within the 8.5% EV revenue contribution? A: Management clarified that the 8.5% EV revenue share is not solely high-voltage business; it represents all business done for EV vehicles. No further breakdown between high-voltage and low-voltage was provided.
Q: Are there any new plant expansion plans for FY27, and how will the CapEx be funded? A: Management indicated that based on customer forecasts, they are working on expansion plans and may announce new capacity in the coming quarters. Gulshan Pahuja (CFO) confirmed that the CapEx budgeted for the current year will be funded through internal accruals, with no need for debt.
Q: If raw material costs stay at current levels, is it fair to assume gross margins will return to the historical 34-35% level in the next six months? A: Management stated that the first endeavor is to recover all lagging costs. However, even after recovery, the raw material-to-sales ratio will not be the same as in the past. The company focuses on return on capital employed rather than just margins, and aims to improve through localization and new product development over the medium to long term.
Q: Can you provide an update on the Pune greenfield plant and its customer additions? A: Management stated that utilization is being viewed in totality across all plants, not just greenfields. As utilization approaches 80%, the company typically starts expanding. Based on current forecasts, they may announce new expansion plans in the next few quarters, but no specific details on the Pune plant were provided.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
