Gabriel India Ltd

NSE:GABRIEL

Earnings Call Analysis

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Gabriel India Limited Q1 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. .

I now hand the conference over to Mr. Manoj Kolhatkar, Managing Director of Gabriel Limited. Thank you, and over to you, sir.

[Manoj Kolhatkar, executive]

Thank you, and again, a warm welcome to everybody present on the call. I hope my voice is clear. Joining me today on the call, we have Rishi Luharuka, our CFO; Nilesh Jain our Company Secretary; and our Investor Relations Advisors, SGA. So I'm joining -- and we are joining from different locations. So we have uploaded the results and the investor presentation for the first quarter of this fiscal on the stock exchange and the company website. I hope all of you had a chance to go through the same.

I'll give a brief overview of the company operations and take you along through the presentation so that, I mean, we understand more in detail, and I'm going to give some commentary, which -- and then we will open it up for questions as always later.

So coming to the presentation, if we refer to Slide 5 and 6. I mean Slide 6 is -- Slide 5 is the top line numbers. I mean the revenue, we had again a good quarter of INR 864 crores of sales with an EBITDA of 9% and PBT of 8%. Coming to Slide 6, where you can see the comparative. So the revenue growth Y-o-Y -- quarter Y-o-Y is 7.3%. However, EBITDA growth continues to remain better than the top line growth. So we did 13% growth of -- on EBITDA terms compared to the quarter -- the same comparable quarter in the last year. And similarly, you can see for EBITDA as well, it's almost a 20% growth. The net cash position is almost INR 330 crores, including the company loan to our Sunroof Venture and CapEx that we incurred is INR 30 crores in the quarter.

The next slide is Slide #7, which again puts all the figures in a competitive format -- in a tabular format, which you must have had a look, so again, here, you can see that the revenue growth has been healthy and the EBITDA growth has been better. And gross margin, in fact, if you see, even on a Q-o-Q basis, the gross margin, there is a slight improvement. Y-o-Y, of course, we did mention there's an improvement in EBITDA and PBT, but even on a gross margin basis, Q-o-Q, there is an improvement of 0.3%.

And then we go to Slide 8. This is, again, a quarterly performance. So we are sustaining the 9% EBITDA margins, which have been doing literally every quarter over the past almost 8 quarters. So you can see that on the graph, very well here.

Slide 9, which is again the P&L statement, we have been through the [ trial ] skip this and move to Slide 10, which shares the segment mix and the channel mix. So as you can see, the segment mix remains more or less the same. Two Wheelers still constituting the major portion, which is almost 63%, Passenger got 24%, CV of 11%. And in terms of channel, we had OE or -- the direct OEM sale of 87% and a replacement market channel of 13%.

Here, I just want to point out a small mistake in the presentation, the last line which says aftermarket has decreased, that should be read as commercial vehicle has decreased. So the CV has decreased from 13% in Q1 last year compared to 11% for Q1 this year. The reason, of course, we all know that CV is facing the burnt of -- a little bit of uncertainty, which happens during every election year, which is what we are seeing and which is what was expected as well. So that's why the CV portion has declined slightly.

Going to Slide 11, which basically captures our vision into '25, which is being among the top five shock absorber manufacturers of the world based on four pillars of exports, domestic dominance, M&As and technology.

Slide 13 is exports. Yes, we have had a bit of a challenging exports owing to a little bit of slowdown that we saw in Europe where we export to DAF of Netherlands and also due to the Red Sea crises, there has been a little lower offtake because they had challenges from other components as well. And also there's a bit of slowdown in Colombia, which is also a big export market for us. But yes, it will -- when both these will, for sure, pick up, we're confident and you should see that in the coming quarter as well.

In terms of the domestic market performance, Slide 15, which talks about the 2 & 3-Wheeler including aftermarket, of course. So there's a market share, there's a slight dip of from 31% in Q4. I mean the last quarter, trailing quarter to this quarter, 30%, which is -- I mean, and just a small change which happened because the motorcycle -- I mean, Bajaj sold more motorcycles of the competition compared to us because ours are mainly going to the export model.

And as you know, the export is still not fully taken off as far as Bajaj is concerned, especially in the African countries. Here within these we have had some good launches with TVS iQube ST, Ather Rizta, the new model, the Apache 160-Black Edition and our pipeline continues to be robust. We also -- I mean, I'll come to the electric market share, which actually improved further, which you can see on Slide -- please move to Slide 16, yes, you can see the Slide 16.

So in Slide 16, we can see that our market share has now grown to 87% with respect to EV 2-wheelers. So EV 2-wheelers as you all know, had slowed down, they're doing almost 1 lakh a month, they've dropped down to almost to levels of 70,000 per month now. We know that the FAME-III, the EMPS, the electric mobility promotion scheme also will be ending in September. But what we hear is the FAME-III, which is in the draft stage, so I'm sure something will come up. I mean that's the expectation of it and hopefully, we can see numbers we get further. But as of now, it's about give or take 70,000 per month of which, I mean, 87% share is by Gabriel.

And I'm glad to also share that yesterday, there was Ola vendor conference, the first time, they gave out awards and Gabriel got an award for the fastest development from Ola. That's heartening news for all of us.

Coming to Slide 17. We have the passenger car picture here, where the market share has improved slightly, 1%, 24% from 23%, we have won two new programs which are in the launch -- which are in the production stage. One is the Tata Motors' Curvv EV.

So as you remember, I had mentioned that we were working on an EV platform with Tata, so this was the platform and it has been launched now. I mean the response is good and Stellantis, the Citroen Basalt which also is a good way at a good price. Both these are supplied 100% by Gabriel. As far as market is concerned, we saw a healthy increase of passenger vehicles in Q1, almost 6%, why I say healthy because the base is high, but still we grew.

We are expecting -- I mean, the industry is expecting that there will be, of course, as a little bit of a moderation here, but it all depends on how the festive season goes. The inventory levels are high, which you may be again reading in the papers, but we expect that it should be in the range of between 4% to 6% by the end of the year. So growth is still, of course, welcome based on the high growth that we have seen over the past 3 years.

Coming to Slide 18. This is a utility vehicle, which is what is the happening area as far as the passenger car is concerned. And here, I'm glad to share that we have 35% of the market share in utility vehicles and most of the top and sort of UVs are serviced by Gabriel.

Slide 19 is commercial vehicle. We continue to be strong, in fact, even Ashok Leyland market share has, in fact, all improved further and we are almost over 90% as far as market share is concerned for all commercial vehicles in India. So we are looking to export that we have broken through. We are also talking to Fuso which is again part of Daimler, so through Daimler India, we are talking -- we're working on development of Fuso, which is of Japan and also some other customers, and we're also in discussions with Volvo. I mean, I'm talking of Volvo Global, we're already almost 100% with Volvo Eicher in India. Through that, we are discussing on Volvo Global as well. DAF, we already mentioned in the last call that we hired the RFQ for the axle dampers and we are working on the same currently.

Slide 20 is the railway presence, which is unchanged because, of course, we are now there, as mentioned earlier, we're there on every product that Indian Railways has in the market on the rails. So we're there -- even the Siemens E Loco, we have got the LOI, so we are working on this. It's a small volume nevertheless, but it's a good breakthrough because this is not exactly in Indian Railway, this is Siemens E Loco. This also opens up doors for us as far as the new customer is concerned, which is Siemens.

Yes. Slide 21 is the aftermarket, where we continue to grow. We almost hit INR 420 crores last year and even the first quarter has been good at almost INR 120 crores, so we continue to see -- of course, there is [ pressure ] in the aftermarket segment as well, but Gabriel being the leader at a very well-known brand name and through our new products which we launched in this -- and we have launched many new product lines, which -- the latest of which is the alloy wheel rims, we are able to get a good growth in the market place.

Slide 22 is the M&A. This is the actual picture of the IGSS -- Inalfa Gabriel Sunroof Systems plant in Chennai -- in [indiscernible], you can see the exterior of the plant and the picture. This is Slide 23, the picture of the assembly line and the polyurethane line -- so state-of-the-art plant very well maintained with all the production metrics or the KPIs being really among the best that Inalfa has seen globally.

So as far as the consol P&L is concerned, maybe I'll hand over to Rishi. Rishi, if you can just explain this slide.

[Rishi Luharuka, executive]

So overall, in terms of the Inalfa profitability, we closed the quarter with INR 82-odd crores of sales. which was more than 5% over and above our target number that we were anticipating at the beginning and with the 14% healthy EBITDA, we've mentioned that it is in the double digits and that's what this entity is currently turning out to be. In the good big deck that we've shared in the past, this is a cost plus R&D [ tech center ] while for the purpose of consolidation there is a revenue from operations being shown, but ultimately in the consolidation, it gets lumped off and is a part of my capital work in progress in the standalone entity of Gabriel. Here, we are handling the new generation of technologies for suspension. That's all, over to you.

[Manoj Kolhatkar, executive]

Thank you, Rishi. Yes. So Slide 26 is a picture of our European Tech Center. I mean this is the overall building of the facility that we have tried to show in a small circle where our office and -- now we also -- as I said, we also have a workshop, not only office, but we have some workshop to do our trials, do fitments and test our vehicles in the adjoining racetrack.

The next slide, Rishi. Yes. I think this is -- so this is the standard [ tech ], which all of you are aware. So I'll go back -- we can now stop as far as the Slides are concerned. I think that's been the overall picture of the first quarter. We just started off well. I mean, honestly, our expectation for sales was a little higher. But as you can see, the industry is looking at a little bit of moderation because you had some excellent view as far as the numbers are concerned for the industry.

So yes, we are, of course, treating the period ahead of caution and ensuring that we have a strong control on costs, and we continue on our EBITDA improvement journey as we have done for almost 8 quarters. So with this, I'll end my address at this part and keen to look up for all the questions that you have. Thank you. Over to you.

[Operator]

[Operator Instructions] The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities.

[Mumuksh Mandlesha, analyst]

Congratulations on the solid margins. Sir, firstly, just can you update more on this Inalfa TLA which is from [indiscernible] and on this particular thing, will the any royalty be changed, since there is no change now, the royalty [indiscernible] extra charges will remain same or that may change in the royalty [indiscernible].

[Manoj Kolhatkar, executive]

Okay. Thanks for the compliment on the good set of numbers. Coming to the TLA, yes, we did come up with a notification and as soon as we got it from the government from DPIIT. So yes, so we'll continue now through the TLA, TCA as we call it, which was what actually we -- both the partners right at the inception itself had thought that this will be a good way to go ahead because of, of course, foreseeable challenges.

And this is a long-term TLA. And this is -- so we will continue as strongly as we have so far. There's a statement that we have released yesterday again, which is backed up by Inalfa as well that their commitment to India market is very strong, and we will continue to work towards seeking support of the government and working out on options. So as far as royalty is concerned, the royalty percentage in the terms of the agreement which are, as you know, confidential. So we are held by the confidentiality agreement. So we will not be able to say more than that, unless Rishi, do you want to add something to this?

[Rishi Luharuka, executive]

Only one point Mumuksh, that the current construct of 5% royalty that we've shared is between both the JV partners, and that construct will continue until the resolution of the [indiscernible] approval comes through.

[Mumuksh Mandlesha, analyst]

Great, sir. Sir, on -- continuing on the sunroof side, can you update on any new order win, sir. And on the sunroof margins, sir, whether this kind of margins will be sustainable and also we get them improved due to localization and volume, sir?

[Manoj Kolhatkar, executive]

Yes, Mumuksh. So the margins, yes, they are definitely good. Rishi has those margins as well -- EBITDA margins. And with localization, the -- I mean, currently localization percentage is still low. But as we go into each and every program like I had mentioned, the Kia program, which will start production from January, the localization is even little better. And as the overall ecosystem of the sunroof has a system -- improves the supplier ecosystem, this would only keep on improving like we have seen in so many other products as well.

So with that, the margins will improve. But yes, obviously, we will have to hear some of the improvements with the customers. So fair to say that I think we should be able to sustain the margins for sure.

[Mumuksh Mandlesha, analyst]

Got it, sir. Any update on new order wins, sir?

[Manoj Kolhatkar, executive]

On new order win, we are -- specifically Hyundai and Kia both. There are a lot of discussion happening, as of now, we are not able to share more, but yes, definitely some positive discussions going on. And even with non-Hyundai and Kia customers, we have had very advanced discussions with -- we are in advanced discussion phase with Stellantis and with Skoda, Volkswagen. In the new platforms, definitely, we will -- I mean, we have an understanding that we will be getting our [indiscernible] and then [indiscernible] based on the reports. So yes, all in all, I think a very good order book, I don't see a concern on that front.

[Mumuksh Mandlesha, analyst]

Just on the space, sir, recently some peers that announced sunroof plants and I think one particular one which partnered -- Japanese market leader and this seems to be close to Japanese customers like Maruti and Toyota. So just on the Maruti [indiscernible] because, I mean, currently, they would have a few models with sunroof going and they [ would have add up ] more models. So how do you see the Maruti opportunity for us and also [indiscernible] on competitive intensity in this space?

[Manoj Kolhatkar, executive]

Yes. So see, the competition has been -- was expected to go up, because it's really -- what it -- was almost a blue ocean [indiscernible] we started. We are only the second or third year. So yes, it's a very attractive segment. And fortunately, there is room for everybody because the growth has been terrific. The SUVs are growing, SUVs are coming with bigger and bigger panoramic sunroof and more and more of us -- I mean, the traction in the SUV segment as far as sunroof penetration is concerned, is in some models as a 100%.

So there is definitely a scope for many peers. Yes, the competition, as I say, is always good for the customer -- end customer and for us as well, because we all remain sharp, so we'll have to see. As far as your specific question on Japanese, there are [indiscernible] that's a Japanese JV. But we -- again, as you know, we have a very strong relationship with Maruti Suzuki with -- inside the entire Indian auto component industry. In fact, Hyundai and Kia have got added as a new customer to us. In Hyundai and Kia, we had Santro model for suspension long, long back. After that we have not been a customer for Hyundai and Kia, but now through this we have got entry [indiscernible] the other customers, any which we have [indiscernible].

So yes, yes, I said it's a free market, so we'll have to see having the -- only the -- as the best person [indiscernible] the business. So I don't think it's that any particular business -- not going to be [indiscernible] because of some arrangements.

[Mumuksh Mandlesha, analyst]

So we -- I mean, we should be at least over medium to long term among the top 2 players...

[Manoj Kolhatkar, executive]

Yes, yes, yes. Absolutely, that's clearly our vision. Inalfa is #2 -- globally #2. They continue to support us strongly on all fronts even in new businesses. So yes, why can't we continue with #2 status in India, I mean that's clearly what we are also going for.

[Mumuksh Mandlesha, analyst]

Sir, this is for Rishi sir, just on this sunroof business how much has been investment till now, sir. And also can you mention the loan given to subsidy or quantify the loan, sir?

[Rishi Luharuka, executive]

So Mumuksh, the outstanding loan currently in the books of Inalfa as on first quarter in is INR 60 crores -- INR 59.5 crores to be precise. And in terms of total investment that we have put in that is close to INR 90 crores.

[Mumuksh Mandlesha, analyst]

Another [indiscernible] we're putting to the phase 2 expansion.

[Rishi Luharuka, executive]

That could be an additional line, yes.

[Operator]

The next question is from the line of Viraj from SiMPL.

[Viraj Kacharia, analyst]

Yes. Just three questions. First is on sunroof. The 14% margin, which we [indiscernible] 5% royalty pay out. Is that correct? And when you say the royalty payout is between two partners. I think the earlier communication was that it will be between three partners, one being the parent entity of Gabriel, second being Gabriel and then third being the Inalfa. So is there a change now how the distribution of that royalty, if you can share?

[Rishi Luharuka, executive]

So Viraj, first question, 14% is after the royalty payout. Second question is that the royalty split is between two entities. One is Gabriel and the other is Inalfa, parent entity. And the third -- the third part that you mentioned, that is the management fee. So the 14% is after the management fee as well.

[Viraj Kacharia, analyst]

So even after this management fee, which the subsidiary would pay to parent entity?

[Rishi Luharuka, executive]

Correct. The parent of Inalfa.

[Viraj Kacharia, analyst]

Parent of Inalfa or parent of Gabriel?

[Rishi Luharuka, executive]

Parent of IGSSPL, which is Gabriel.

[Viraj Kacharia, analyst]

Right. So when you look at stand-alone numbers, where does the royalty gets affected?

[Rishi Luharuka, executive]

The royalty is a part of the -- you're saying in my stand-alone result, right?

[Viraj Kacharia, analyst]

Yes.

[Rishi Luharuka, executive]

So royalty is one of the sale part -- please wait, I'll answer you that question...

[Viraj Kacharia, analyst]

Yes. See, why I'm asking this is, if you see this quarter, our communication in the past has been aftermarket in even 2-wheeler, they are the highest margin product cost or category costs, now aftermarket has seen a decline, [indiscernible] relatively lower growth compared to industry now, still despite all these high-margin categories doing okay or not great, we still own similar gross margin and similar EBITDA margin. So I'm just trying to understand what explains this better performance for us?

[Manoj Kolhatkar, executive]

So Viraj, well Rishi comes back with the figures, of course, the others maintain that -- this is going to be EBITDA accretive business for us. That was the plan, and it's going as per plan, number one. Number two, while you said that everything is under pressure, the 2-Wheeler is going well, aftermarket continues to do well and the -- as you remember, have something called Core 90, which is to ensure that we continuously look at the each and every element of the cost and keep driving it down. So even that has helped in our -- sustaining these margins. So there's a play from all sides, it's not that the core business -- the components of the core business are under failure. Even there, we have been able to incrementally keep on improving.

[Viraj Kacharia, analyst]

No. Sir, to put it differently, you talked about incrementally demand being relatively weak in our PV. PV [indiscernible] so far has been weak. So if one has to just understand internally and it is stand-alone, what levers do you think, you would have to further improve the profit margin. So if volumes were to be muted, how should one understand the drivers of margin improvement.

[Manoj Kolhatkar, executive]

So yes, in terms of aftermarket for sure, the Railway business is improving while it's a small part of our revenue, but -- good healthy margin [indiscernible] and that's improving and it was low after the COVID for at least 2 years, that's picking up. In addition, year pursuing exports on a more long term. Right now, while export, as I said, due to reason, it's down. Exports would also be our lever to improve our margins going forward. And in addition to that, yes, we definitely are looking at some other products. As you know, we are looking at some e-bicycle products, front fork, which should be at good margin. So yes, there are several fronts and then [indiscernible].

So you can't -- Viraj, you can't pinpoints. You have to take a host of actions, right, because things can happen in different segments differently. The good part is we are a company which is always very well balanced as far as portfolio is concerned in segments and as far as suspension is concerned. And now we have this additional sunroof digit as well, so from that perspective, I think, well-positioned, all I can say.

[Viraj Kacharia, analyst]

Okay. The quantum of royalty, if you can share. And just last thing, on the 2-wheeler segment growth sir, if I compare to any industry growth, we seemed to have underperformed. So anything to read there in terms of as of any loss of business or any...

[Manoj Kolhatkar, executive]

It's not loss of business. Viraj, as I said, it's a very marginal change that has happened, it's due to the product mix. It's mainly due to the product mix. So that's in all the models, as I said, particularly Bajaj, our product -- should their sale went down because it's mainly exports to Africa and you know the reason there, but it will surely come back. And also while we speak, I'm glad to share that we have been able to get business from Bajaj on models of Pulsar and Dominar as well now.

[Viraj Kacharia, analyst]

Okay. On the royalty amount, sir?

[Rishi Luharuka, executive]

Viraj, this is a part of the things of services group under the revenue from operations.

[Viraj Kacharia, analyst]

The quantum for the quarter?

[Rishi Luharuka, executive]

Sorry.

[Viraj Kacharia, analyst]

What will be the quantum for the quarter in stand-alone?

[Rishi Luharuka, executive]

That would be -- I'll end up sharing the percentage sharing, which I'm not able to currently.

[Operator]

The next question is from the line of Amit Hiranandani from SMIFS Limited.

[Amit Hiranandani, analyst]

Congratulations for recent stuff. Sir, just need some clarification on the sunroof JV so after going through the latest press release, so is our understanding correct that now instead of making a JV, a subsidiary format will continue and Inalfa will take some share in this subsidiary? I mean, is our understanding, correct?

[Rishi Luharuka, executive]

Sorry, can you please repeat that, Amit once?

[Amit Hiranandani, analyst]

Yes, yes, sir. Basically, after going through the latest press release, so I wanted to understand that instead of making a JV now, the subsidiary format will only continue, and Inalfa will take some equity share in the subsidiary, is this understanding correct?

[Rishi Luharuka, executive]

No. Let me take it from the top, Amit. So the intention was always to form a joint venture, right? Because of the government regulations of Press Note 3 because we were waiting for the equity infusion to happen. At this point in time, it is a 100% subsidiary of Gabriel. The PN3 approval right now has had a bump, which was already taken into consideration when we were forming the TCA. So at this point in time, the current construct, which is 100% subsidiary, with the TCA with Inalfa [indiscernible] that will continue.

[Amit Hiranandani, analyst]

Are we still reapplying for JV? So if yes then how will be the arrangement, how much Gabriel will own under JV?

[Rishi Luharuka, executive]

So yes, we would be looking at various options. And at this point in time, we are not in a position to share the construct or whatever various proposition we might have.

[Amit Hiranandani, analyst]

Okay. Understood. And sir, just on the -- continuing with the sunroof side, so most of the questions on the sunroof is answered, just wanted to know that we sold roughly about 23,000 units in Q4 and how many units sold in Q1 FY '25?

[Manoj Kolhatkar, executive]

Well, Amit, we are actually constrained on to give the numbers as far as the exact number is concerned, but our daily production rate is actually much better than what we saw in Q4 of last year.

[Amit Hiranandani, analyst]

Fair enough, sir. Sir on the FSD -- any new order for the FSD?

[Manoj Kolhatkar, executive]

Not yet, but we recently had a discussion with Maruti. They are interested in one particular vehicle, but they have actually now changed it to another upcoming vehicle where we will demonstrate the concept to them. So then definitely, there is interest from them as well as from Tata Motors both, two customers that I can think of immediately as far as FSD is concerned.

[Amit Hiranandani, analyst]

Okay. And sir, on the stand-alone EBITDA margin. So basically, it's Q-on-Q it's 9%, right? There is improvement despite increase in the revenue and better mix towards 2-wheelers and stability in the commodity price, so our target was to hit double digit label, so by when we can expect this, sir?

[Manoj Kolhatkar, executive]

So if you recollect, we have told that target was to get into double digits in 2 years' timeframe, that was what we're planning to. So to put is very precisely, it is somewhere in the next year is what -- next fiscal is what we're planning to, at least we -- by the end of the year, we'll get double digit.

[Amit Hiranandani, analyst]

Let's say, I mean, exports is presently weak and aftermarket is also in -- some gray market is emerging back again. So despite these headwinds, are we confident of hitting double digit?

[Manoj Kolhatkar, executive]

Well, yes, I mean you can take some confidence from the [indiscernible] continuously increased. So as I said, it can't happen in a jiffy. It has to be a journey and a slow and steady and creeping increase is something that is actually sustainable in my view, a flash in the pan is always very difficult. So which is the road that -- which a journey, we've adopted and we'll continue on this improvement part, and yes we target to be there at double digit certainly.

[Amit Hiranandani, analyst]

Any new product launch is planned ahead, sir?

[Manoj Kolhatkar, executive]

So two products that we had mentioned last time is in suspension category itself. One is the e-bike. So we recently were there in the e-bike show in Europe in Frankfurt. So we had some discussions there. So we're looking at engaging some export [indiscernible] export rules from this field because the customers here are completely new to us, but very, very exciting market. And I was there in the show myself and really absolutely exciting market, that is one.

And the second is the solar damper, which is used for damping the solar trays in the solar farms. So that discussion is again in a very advanced stage with one player as of now. They're hardware is very [indiscernible] with what we had to show, our design capabilities, our testing facilities. So yes, these are the two new ones.

[Amit Hiranandani, analyst]

Sir, these are the applications but basically -- product -- anything new, just like sunroof -- anything new we're planning?

[Manoj Kolhatkar, executive]

Diversification you mean. So there -- as I said, we are looking at options. I mean scanning opportunities in the market as of now, I can't share more on that front.

[Amit Hiranandani, analyst]

And lastly, if you can throw some more light on the solar dampers side because this is a new product for us. How is the traction or the realization, broad market size, potential any competitive landscape, if you can throw some highlight on this?

[Manoj Kolhatkar, executive]

So the market is huge, and it's only going to keep on increasing because of the overall push by the world on renewable energy, so clearly, it's a big market. The numbers are significant, difficult for me to right now share offhand. But the margin is again there, I mean, would be slightly better than what we are doing.

[Operator]

The next question is from the line of Abhishek Jain from AlfAccurate Advisors.

[Abhishek Jain, analyst]

Great set of numbers. sir, my first question on the sunroof side. Last year, your volume was around 23,000 units, and that was early in the quarter 4. What is your target for FY '25 in terms of the volume of sunroof?

[Manoj Kolhatkar, executive]

Well, Abhishek, as you know, we don't share the numbers as far as the targets are concerned, but like I answered earlier, daily production rate of the sunroof is definitely much better than what it was in the Q4 of FY '24.

[Abhishek Jain, analyst]

Okay. So quarter 4, it was around 8,000. So most probably that we are able to except the 10,000 to 12,000.

[Manoj Kolhatkar, executive]

Yes, it's almost close to that, yes.

[Abhishek Jain, analyst]

And sir, in this quarter, we have seen a very impressive margin of around 14% on sunroof. Is it after factoring royalty of 5%?

[Manoj Kolhatkar, executive]

Yes, Abhishek. It's after factoring of royalty.

[Abhishek Jain, analyst]

So most probably as the [indiscernible] will increase in the coming quarter and not because you will be able to the volume of around 180,000 to 300,000 units. That means that with the increase in the volume, margin will improve further?

[Rishi Luharuka, executive]

So the operating leverage should kick in, but there would be other cost pressures as well, so it's a new entity at this point in time. So we are targeting to -- around the margins that we have currently reported.

[Abhishek Jain, analyst]

Okay. And what would be the total investment under sunroof plant [indiscernible].

[Rishi Luharuka, executive]

So as of now, as we answered to Mumuksh, we've done INR 86 crores of total CapEx and the current loan outstanding from Gabriel to Inalfa is at INR 60 crores.

[Abhishek Jain, analyst]

So total investment would be around INR 140 crores, right?

[Rishi Luharuka, executive]

At this point in time, the total investment of one line that we have put in is at INR 86 crores.

[Abhishek Jain, analyst]

And for the second line, what would be?

[Rishi Luharuka, executive]

Another INR 40 crores.

[Abhishek Jain, analyst]

And total investment would be INR 120 crores, INR 130 crores, right?

[Manoj Kolhatkar, executive]

Yes, for two lines, yes, that's the number.

[Abhishek Jain, analyst]

Okay, sir. And my last question is on the 4-Wheeler side. Basically, as you mentioned that there will be growth of 5%, 6% for industry, but [indiscernible] the new business for [indiscernible]? So -- and that's why that incremental revenue will come in this -- in this year of around INR 120 crores. So can we expect that you will outperform industry growth and you would be able to achieve a growth of 17%, 18%, at least?

[Manoj Kolhatkar, executive]

So your voice was not -- Rishi could you...

[Rishi Luharuka, executive]

I think the question was around 2-Wheeler growth, coming forward.

[Abhishek Jain, analyst]

4-Wheeler growth, sir. What would be the 4-Wheeler growth in FY '25?

[Manoj Kolhatkar, executive]

As I said it will be around 4% to 5% give or take. That's what is -- what we had started with but there are views currently, which we are -- again, I'm going to what we have read in the papers from several OEMs that it may actually turn out to be a flat year, it all depends on how the [indiscernible] pickup goes.

July, fortunately, the month of July as far as the industry is concerned, there was a 13% growth in PC compared to same month last year. So that is good news. In fact, 2-Wheeler also grew almost 17%, 18%. But passenger cars grew by 13%. So we'll have to see how we -- I mean, as I said, how the pickup is in the festive season. So -- but I would say 5% growth is a good thing to expect.

[Operator]

The next question is from the line of Mahesh from [ Atal Investment Advisors ].

[Unknown Analyst]

Sir, just view on the [indiscernible] thing. Can you please tell, I mean, this could give you -- I mean, because we are about to grow and we were about to go for another line. So does this that Inalfa now will be like looking, I mean, taking a step back -- whether this growth should go ahead or not because the technology has been shared by them, right? So does this give a picture that the growth might a little be on the sunroof side, we might see a -- there might be some delay on that, if you could please throw some light there?

[Manoj Kolhatkar, executive]

Mahesh, no, not at all. I mean that's why immediately, after this, PN3 did not come through, we came up with the statement based on our discussion Inalfa themselves, they've clearly reiterated commitment to India as their key growth market -- and they're committed to Hyundai and Kia globally. It's not that India is one market only where they have Hyundai and Kia.

They have a huge exposure to Hyundai and Kia globally as well as, of course, Volkswagen as a key customers, Mercedes is a key customer. There's so many -- I mean they supply to the entire auto industry.

And India is, as you know, the only growth market currently on the globe so they stand committed and they have stated that they'll continue to seek the support from the government to find options and we have written very clearly while being fully committed to supporting IGSS through the TA. So absolutely no change in direction, change in the push or change in the plans as far as IGSS is concerned. As far as investment is concerned, support is concerned, new customer acquisition is concerned or any such work.

[Rishi Luharuka, executive]

Also to add Mahesh, the situation, this outcome also envisage as one of the options while the TCA was drafted and executed between both the organizations. It was taken into consideration the long-term commitment and the continuity of the business year and also the fact that Hyundai is a global customer to them and to that extent, so we're seeing the customer is extremely essential and as far as capital adequacy is concerned, currently we are putting the money on their behalf as far as the equity is concerned. And going forward for all kind of expansions, Gabriel stands committed to put the money to infuse over and above the internal accruals of the organization.

[Unknown Analyst]

But I just want to know what an option could be possible because it gives a picture like wherever they go, like [indiscernible], they just have a major share in the [indiscernible]. That's their thing there. So in this area also, we were thinking of giving them a 51% stake, if I'm not wrong? So what options are there on the table? I mean, because right now, the government has [indiscernible] also. What options are there? I mean, because it gives the pressure [indiscernible] like the growth trajectory might be little delayed, it seems like that currently. I mean, I'm not aware of all the things, but still if we put the [indiscernible] options to know what -- because Gabriel has [indiscernible] the technology taken from them, right? So you are always on the second step. So what -- I mean, I just -- that's the question, I hope you could answer that.

[Rishi Luharuka, executive]

So Mahesh, as we stated in the previous discussion, at this point in time sharing the various options would actually be in violation of the confidentiality clause. So we are not in a position to share that. But at the same time, we are actively evaluating the various offerings and discussing as to what would be the way forward. But certainly, one thing is for sure that the commitment towards the entity, the customer and the growth plan that remains rock solid.

[Manoj Kolhatkar, executive]

Yes, Mahesh, just to add, Inalfa is world number two. And they have formally put it -- I mean obviously, it comes from such a big company that they are reiterating their commitment to India as a growth market and that they'll continue support. So I think -- and like Rishi said, this situation was kind of envisaged as well, because of obviously...

[Unknown Analyst]

Yes, but when do you see the output -- I mean, will it obviously go on by what time could...

[Manoj Kolhatkar, executive]

It's very difficult because this itself took almost good 1 year.

[Unknown Analyst]

I understand, yes. That's the reason -- the thing is that I know that the talks will go on and they will find some option? Is there any timeline that you have formulated like [indiscernible].

[Manoj Kolhatkar, executive]

So Mahesh, the thing is it's not between us and Inalfa where the corporation remains absolutely strong. There is -- I mean, of course, the government also who has their own process and time, which is what we cannot just not [indiscernible].

[Unknown Analyst]

Yes, because my -- why I'm asking you this thing is because this was a growth engine for us and [indiscernible] started this event. So I just want to...

[Manoj Kolhatkar, executive]

No, no. I would not -- I mean, absolutely -- well, I completely would not second that.

[Operator]

[Operator Instructions] the next question is from the line of Akash [indiscernible] Alpha Investment Management.

[Unknown Analyst]

Firstly, congrats on good set of numbers for both [indiscernible] and Inalfa business as well. Sir, I'm sorry to hop again on the sunroof side. So you said that you were [indiscernible] in you expected this on some situation arises and you have to go this route. Sir, does this move deter you from finding [indiscernible] diversifying the production of something [indiscernible]. Are you more capital [indiscernible] or not?

[Manoj Kolhatkar, executive]

Sorry, sorry, are you holding the mic too close? There's a lot of the boom that I'm hearing. I don't know, Rishi are you hearing?

[Rishi Luharuka, executive]

Yes, yes. Same at my end. There's a lot of air that is flowing into the mic and can to please...

[Operator]

Sorry to interrupt, sir, the current participant has been disconnected, we will move on to the question from the line of Shashank Kanodia from ICIC Securities.

[Shashank Kanodia, analyst]

Manoj ji, 1 question to you, sir. So [indiscernible] has been taken [indiscernible] right and may be you are hearing for the last [indiscernible] call. So It might [indiscernible] question but it you can -- just wanted to take, are you looking for a better or bigger [indiscernible] group, sir? Or are you moving out of the group?

[Manoj Kolhatkar, executive]

Pardon, Can you repeat that Shashank?

[Shashank Kanodia, analyst]

Are you -- sir, just wanted to check, are you moving to a bigger group than the Gabriel Group or are you moving...

[Manoj Kolhatkar, executive]

Yes. Thanks for the question. I mean, of course, yes, I have actually decided to move on outside the group. I've been here for 13 years. So there -- I mean my personal reason is [indiscernible] my own decision after really wonderful period, which I [indiscernible] yes, and I'm sure it's [indiscernible] absolute solid footing. Maybe we can discuss it later, yes.

[Shashank Kanodia, analyst]

And sir, secondly, on the Vision 2025. So I think M&A and some sort of that sort was expected from us to take [indiscernible]. So it's been quite [indiscernible] be getting anything on that. And so if the team can...

[Manoj Kolhatkar, executive]

No. Shashank, we had told clearly if you remember that we're working on a couple of them, and we had told that this system, which is '24, '25 we should be able -- and that was our target, but we do at least one. And all I can say is yes we're working on advanced stages with a couple [indiscernible].

[Operator]

The next question is from the line of Akash [indiscernible] [ Alpha Investment ].

[Unknown Analyst]

So first off, congrats on good set of numbers for Inalfa and stand-alone business as well. So just wanted to quickly understand [indiscernible] this issue earlier as this create a challenge for us for our product diversification or merger and acquisition, whatever you're looking for in the future. And two, just to understand and have some clarity on the margin front for Inalfa in the first quarter if you hit 14%. I mean, not for a near-term target, just in terms of raising on [indiscernible] because there will be a lot of push and pulls now with the margin with ASPs going lower, but at the same time, localizations sort of improving.

So how do we -- on a year basis, on a year or 2 out, how do we think about margins? Is it we can reach from 14% to 18%, 20% or you would have to maintain where you are at the movement and pass on the benefits to the customers. So I just wanted to understand some -- just your thoughts on this, please.

[Manoj Kolhatkar, executive]

Okay, Akash, and now your voice is clear. So I'll take your second question, which is on the margin's front. Yes, you're rightly said. As of now, it's still growing margin, yes, for sure, maybe you can see -- maybe a little bit of improvement as well if things go well. But there is regarded competition going to be a -- I mean, I can't be completely, what you call, blind to the market developments that are happening.

So there is going to be a little bit of push on the pricing side. And like, again, you rightly point out the supply ecosystem will develop. And our efforts, you identified some localization opportunities already will certify that will help us offset to some extent, these pressures that we are seeing that we may see on the selling price.

Again, we don't know whether we would see, but we may see. So yes, I think we should be able to sustain and if at all, even improve it marginally, yes. And then we'll add new products, new technology products on the sunroofs. So that will help us take it further add as well.

[Unknown Analyst]

Perfect. Perfect. And just on the part where this -- the JV or whatever challenges that we face now, does it impede our ability to take up new ideas, find new acquisitions or on that?

[Manoj Kolhatkar, executive]

Absolutely no. I mean, not at all. I'm sure we'll find an engineer's way out on this -- as we discuss any results pretty [indiscernible], it is not totally unexpected. We'll find a way. And this does not dent or affect any of our plans as far as any other M&A activity is concerned for sure not. We have a healthy cash balance and the clear focus from the Board and from the company is to look at new opportunities. And something like this would be, of course, most welcome, which is [indiscernible] accretive.

[Operator]

The next question is from the line of [ Sunil Shah ] from [indiscernible].

[Unknown Analyst]

Yes. Thanks for the opportunity. First of all, thanks so much, Manoj sir, for taking a company to the great level, all the very best for the future and endeavors for you at a personal level.

Sir, my question is on the company's front. On the percentage terms and in terms of the content per vehicle, so in the 4-wheeler segment, when we are doing the shock absorber and the damper business, what is the sunroof business in percentage terms, let's say, hypothetically if shock absorber or the content per vehicle is roughly, say, INR 10,000.

And sunroof is like, let's say, 10x of that. So if in percentage on that in the 4-wheeler phase and the percentage in 2-wheelers for the new alloy wheels which we are talking about. Again, not in absolute rupees, but in percentage terms, how much is the content for vehicle going up, if you could kindly let me know?

[Manoj Kolhatkar, executive]

Thanks for your wishes. Coming to content per vehicle, yes, sunroof is definitely among the highest content per vehicle commodity in a car. So give or take, I mean while we can't share the exact figures, but I mean, I'm sure you know from the market research, but the content per vehicle of sunroof is almost -- again, it depends. It's very difficult to give one brush to the whole thing, but let's say, 4 to 5x suspension content per vehicle.

Now that's as far as passenger car is concerned, 2-Wheeler is a different ball game. Commercial vehicle is a different ball game but as far as passenger car is concerned, that is more or less broadly in the ratio.

And your second question on the 2-wheeler alloy wheel rims, we have started that in the aftermarket, of course. It's not an OE offering, but we'll start it in the aftermarket, again their content is -- 2-wheelers, again, front folks, front shock absorbers, so there are totally in different pricing as far as 4-Wheelers concerned. So alloy wheel rims would fall somewhere in between.

[Unknown Analyst]

Sir, so alloy wheels, when we kind of look at OEM supplies, is that the intent and will be a [indiscernible]?

[Manoj Kolhatkar, executive]

Sunil, to be honest, it's an interesting commodity for one thing, it is -- it fits into the [indiscernible] frame of agnostic products, because like [indiscernible] all sunroof, it is agnostic to the powertrain. similarly, the wheel rims will also remain agnostic to powertrain. And there's a huge and growing demand in aluminum wheel rims. So it's an testing product, but we're tied up with somebody right now where we are buying from them and selling it as aftermarket product, and we'll evaluate it as we go forward.

[Unknown Analyst]

One more point, which is we have launched these 2 new products, alloy wheels, which we have kind of trade-in and of course, the sunroof where we have [indiscernible] so want to know on the group company's point of view. My thoughts are like -- new product development that we as a company, Gabriel do and out of fear as an investor which I have, is cannibalizing those products in the group companies or [indiscernible] however the new product launches happened in the other group companies over the last 3 -- 2, 3 years. Anything on that in the recent past or maybe the future direction -- new product development.

[Manoj Kolhatkar, executive]

No. So Sunil, you can see that there is actually absolutely no cannibalization that has happened in the past as well, other than one small part of the portfolio of Mando shock absorbers, which is mainly for taking to [indiscernible]. So we have never had any conflict, which is what we ensured, similarly, from the other side also Gabriel also -- we also ensure that there's no conflict of a new product that we introduced with any of our partners.

So from both ways, we do this it -- but no, no fear on that front at all of cannibalization, it's one group and Gabriel -- if at all, Gabriel is the flagship company, will remain a flagship company and the only listed entity, so I think you can take confidence on that.

[Unknown Analyst]

Yes. So [indiscernible] the word cannibalization, my thought was the new product launches which have happened in the other group companies in the region. Has anything developed there -- any new products which they have come out absolutely just like [indiscernible]?

[Manoj Kolhatkar, executive]

So absolutely new products, as we have shared, we have the vertical called ANEVOLVE which we launched in the Auto Expo in 2023 where they're selling motors, 2-wheeler motors and both hub motors and center motors and chargers, again, 2-Wheeler chargers. So the -- and the battery controller module, BCM. I mean these are key products that they have introduced as far as EV 2-Wheeler is concerned.

So that's only on the EV side, especially EV products. Other than that, in terms of view -- I mean, at the group level through ANEVOLVE, we are looking at options in even hydrogen fuel cell, we're looking at developing our own control modules for charging. So those are things that are happening as far as new products are concerned.

But there is no -- just to repeat, there is no product that will eat into or cannibalize our conflict with shock absorbers or dampers or sunroofs for sure.

[Operator]

Ladies and gentlemen, due to time constraint that was the last question for today's conference call. I would like to hand the conference over to Mr. Manoj for the closing comments.

[Manoj Kolhatkar, executive]

So thank you. Thanks, everybody, for your comments as always and inputs as always. I know there's a lot of, what you call, interest in what is the development [ cost ], so we had to share this as a movement as it came from the DPIIT, from the Government of India. And as me and Rishi have continuously reiterated, we continue to remain in a strong cooperation between us and Inalfa as far as sunroof is concerned.

And we will work on finding ways to find some [indiscernible] solution to this. Nevertheless, our plans as far as growth, technology, new products, customer acquisition any other development will continue as strongly or even more going forward, which you will see, hopefully, by the next con call as well. As regards the core business of suspension, there are some interesting new products which are shared. And yes, we all remain hopeful of a very good festive season to take -- to bring back the little moderation that has happened to the market overall, particularly in commercial vehicle and passengers cars.

2-Wheeler is strong which is the best part. So which is 63% of our portfolio. So yes, I mean, our balanced portfolio always holds us in good stead. And as I see, we will continue to -- continue the journey of constant EBITDA improvement and of course, overall growth. So thank you once again, thanks for all the cooperation and we wish you all a very, very happy festive season. And [indiscernible] yes, the team -- we have a very, very strong team, which will take it to the next level for sure. Thank you so much.

[Operator]

On behalf of Gabriel India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

[Manoj Kolhatkar, executive]

Thank you.