Kirloskar Oil Engines Ltd
NSE:KIRLOSENG
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Kirloskar Oil Engines Ltd
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Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Kirloskar Oil Engines Limited, hosted by an Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhirendra Tiwari from Antique Stock Broking. Thank you, and over to you, sir.
Thank you very much. Good evening, ladies and gentleman. On behalf of Antique Stock Broking, I welcome you to 1Q FY '24 Post [ Earnings ] conference call of Kirloskar Oil Engines Limited. We are pleased to have with us today Ms. Gauri Kirloskar, Managing Director; Mr. Anurag Bhagania, CFO; and the senior management team of KOEL. We congratulate management team of KOEL for yet another strong performance during this quarter. Now, I invite Ms. Gauri Kirloskar for initial remarks, following which we will open the floor for Q&A session. Thank you, and over to you, Ms. Gauri.
Thank you very much. Good evening to all of you. This is Gauri Kirloskar, Managing Director of Kirloskar Oil Engines. Thank you for joining the call today. I have with me Anurag Bhagania, CFO; Rahul Sahai, B2B, CEO; Aseem Srivastava, B2C, CEO; Smita Raichurkar, Company Secretary; and Amit Gupta CFO of Arka.I will start with an overall business update, and then Anurag will update you about the financial performance.We have had a strong quarter. Revenue from operations for the quarter is at INR 1,265 crores, gaining a 10% sequential and 33% year-on-year expansion on the top line. This quarter has marked a milestone with the highest sales ever recorded for both B2B and B2C segments, achieving the best Q1 performance for international and as well as distribution and aftermarket.EBITDA at INR 153 crores was up by 54% quarter-on-quarter and 48% year-on-year. EBITDA margin at 12.1% improved 350 basis points quarter-on-quarter and 125 basis points year-on-year. This performance is supported by robust pre-buying activity within the power generation sector.When we exclude the impact of pre-buy volumes for comparison, the revenue exhibited a 20% annual increase and nearly reached the levels observed in Q4 FY '22. I am confident that the [ sales ] figure remains commendable, given the historical trend of Q1 traditionally being lower than the preceding Q4 of each year.Our industrial business also [ saw ] robust demand. The order book for our industrial division stands strong at the end of the quarter, primarily driven by substantial orders from the Indian Railways and defense. The operation and business development aspects have seen significant activity during this quarter as well. I will give you an update on some of the key events.First, the update on CPCB. There was a delay in the CPCB transition time line 2 weeks before the early announced due date. This led to a lot of industry-wide scrambling at the end of the quarter to first understand and then respond to the situation.We are confident that we are in a strong position as we are able to deal with the complexity of running both CPCB 2 and CPCB 4 manufacturing lines and managing the supply chain as well. We are also the first company in India to get our full range of 23 platforms of engines certified by ARAI for the CPCB 4 emission standard.At KOEL, we imagine a future in which internal combustion engines maintain their significance in providing power for various uses. The journey towards reducing carbon emissions and creating environmentally friendly engines will entail internal combustion engines utilizing cleaner and more eco-friendly fuels compared to conventional diesel engine, all moving towards stricter emission norms within diesel.With our in-house R&D efforts for designing our engines to be fuel agnostic, these platforms are not limited to single fuel [ stores ], but can operate efficiently and effectively on a diverse range of fuels. Here is the round up of the recent developments in alternate fuel engines and our efforts to expand our product range this quarter.We now have a robust gas genset range as well as nodes that can run on ethanol as well as methanol. We also introduced Retrofit Emission Control Devices for diesel generators ranging from 125 KVA to 1,000 KVA. Our RECD device stands out as an innovative technology capable of significantly reducing exhaust emissions. It achieved an impressive 70% to 90% reduction in diesel particulate matter emissions and a minimum of a 70% reduction in other harmful pollutants like hydrocarbons and carbon monoxide.As state regulations become stricter, these RECD devices will be required to be installed on our already installed base of CPCB 2 gensets. We have also introduced dual fuel kits that we are distributing through our aftermarket channel.From the product range point of view, I am very pleased to announce the OptiPrime series. This product is a twin engine power packed within the same canopy. The OptiPrime range will address applications that have variable power needs. It helps reduce fuel consumption and carbon emission by almost 40%.This platform is available across our entire power gen range with both twin pack and hybrid options. We are excited with this launch as it also helped us mark our entry in the higher horsepower range, with options up to 2,000 KVA.I will now talk about the stand-alone revenue breakup. The B2B segment with a top line of INR 1,095 crores booked 11% growth quarter-on-quarter and 36% year-on-year. Of the total B2B revenue, power gen revenue was INR 603 crores, industrial was INR 232 crores, distribution and aftermarket was INR 175 crores, and international business was INR 86 crores.Our international business marked a growth of 29% year-on-year. The B2C segment with a top line of INR 160 crores registered 5% quarter-on-quarter and 15% year-on-year growth. Within B2C, the KOEL water management solutions business recorded revenue of INR 134 crores and Farm Mechanization recorded revenue of INR 26 crores.Coming to the consolidated performance, the revenue for this quarter was INR 1,543 crores, registering 30% growth year-on-year. We booked profit before tax of INR 170 crores, which was 54% higher year-on-year.Regarding Arka, we are progressing as per the plan. The loan book for the quarter was at INR 3,656 crores. The net profit for the quarter was INR 16 crores, registering 4% growth year-on-year.In summary, it's a great start to the year for KOEL with a strong Q1 performance. We believe we are progressing well on our strategic growth path.I will now take a stop and hand it over to Anurag.
Good evening, everyone. Thank you, Gauri, for the update on the business side. I will now run you through the financial performance for stand-alone and consolidated businesses. As you will see from the numbers, Q1 was a very strong quarter for KOEL. Though these numbers were on the back of strong onetime pre-buy volumes of CPCB, I would like to reiterate that even without this pre-buy, the top line was 20% higher year-on-year. This is now 4 quarters in a row that we have crossed INR 1,000 crores in revenue. During the quarter, we were also able to take price actions due to increased demand, resulting in improved margin rate for the quarter.Coming to the financial performance, I will start with the stand-alone performance first. Review of Q1 FY '23 financial performance stand-alone, revenue from operations was INR 1,264.7 crores in the current quarter as against INR 953 crores for the same quarter last year, which is a 33% increase.EBITDA at INR 153 crores in the current quarter versus INR 103 crores for the same quarter last year, which is a 48% increase year-on-year. EBITDA margin stood at 12.1% for the [ current ] quarter [ versus ] 10.8% for the same quarter last year.Net profit was at INR 103.2 crores in the current [ quarter ] versus INR 64.6 crores for the same quarter last year, registering a 60% increase on net profit. We ended with a strong cash position as well net cash and cash equivalents at the end of the quarter stood at INR 300.4 crores versus INR 210.4 crores in the end of the previous quarter.Our working capital, which was trending [ upwards ] for the last few quarters, has started to show signs of softening. In the quarter, we were able to reduce our net working capital to about INR 99 crores versus INR 133 crores at the end of the previous quarter.Let me now look at the consolidated financials, the performance for the quarter. Revenue from operations was INR 1,543.4 crores for the current quarter versus INR 1,191.4 crores for the same quarter last year, registering a 30% increase year-on-year. Net profit at INR 125.5 crores versus INR 82.1 crores for the same quarter last year, generating a 53% increase year-over-year.Looking at the consolidated segment performance now. Please note that the last year's numbers have been restated to align with the changes in the segment reporting. The B2B segment revenue for the quarter was at INR 1,105 crores at a consolidated level, which is 35% growth year-on-year. The segment PBIT stood at INR 132.4 crores, reflecting approximately a 75% increase year-on-year.Please note that the B2B performance has an effect of a pre-buy for CPCB 4+ transition. If we take that effect out, the top line was INR 982.9 crores, which is still a 20% increase year-over-year.B2C segment revenue for the quarter was at INR 309.5 crores, which is a 4% growth year-on-year. But the highlight is the segment PBIT was at INR 17.4 crores, up almost 15% year-on-year. Financial Services segment revenue for the quarter stood at INR 128.2 crores, reflecting a 65% increase year-over-year and segment PBIT at INR 21.5 crores, that is a 4% increase year-over-year.We have provided additional details of our segment and business-wise performance to the presentation that we uploaded on our website. If you read through them, the stand-alone sales has business unit breakdown, and it is in line with the way we are structured [ internally ] [Technical Difficulty].Exports are mostly managed in the international business group within the B2B segment. However, please note that exports also happen directly in other business units and are recorded in the respective business units. Therefore, when you look at the total stand-alone sales, we have also broken down the sales into domestic and exports to provide additional clarity. Similarly, our segment-wise consolidated performance slides also show domestic and export breakup at each segment level.To conclude, I would say, this quarter, we continued to deliver a very strong performance. Our outlook for the quarter is cautious as well as optimistic as the strong pre-buy demand is not expected to continue. However, we remain positive about the growth outlook due to our ability to expand our product portfolio and offerings to serve the customer needs across new geographies. These elements are pivotal to our 2X-3Y strategy. And as a team, we are continuously working towards realizing these market opportunities.With that, I hand it back to you, Ander.
[Operator Instructions] The first question is from the line of Renu Baid from IIFL Securities.
Congratulations for the strong performance. My first question -- a set of questions related to the core power gen business. Can you highlight what has been the order book built up in the railway segment for Vande Bharat trains? And what is the pipeline for telecom orders which we should be expecting for the old CPCB 2 range of engines in the current fiscal year?
So we won't give out those specific details in this call.
No issue. Secondly, if we see in the last quarter, while the CPCB 4 has also been postponed or [indiscernible] for 1 year, many states have been served with notices -- show cause notices for CPCB 2 engines to Retrofit them. So can you share inputs in terms of how has been the demand for the RECD kits? And for a customer, as in, are you seeing the transition or migration to CPCB 4 engines for the existing installed base? Or [ they ] going in for the Retrofit kits? So how is the demand panning out on the installed base for this segment of the market?
So Renu, we are definitely seeing demand uptick for the emission controlled kits. And especially when the gensets are relatively newer, we are seeing that demand kicking in. Otherwise, based on the territory in India -- For example, if you look at Delhi-NCR, the notification that had come out -- we're talking about pretty much closure of CPCB 2 gensets September onwards, unless and until they are already fitted with emission control devices and dual fuel kits. So those specific territories will see demand uptick of CPCB 4+ much faster than others. But overall, at a Pan India level what we're expecting is a slower ramp down of CPCB 2 and a ramp up of CPCB 4+.
If you look on the export segment or within the domestic B2B, last 3 quarters, we have seen a sequential decline picking as in right from 2Q of INR 133 crores to now some INR 100 crores. So how has been the demand in the export market been for our portfolio? And are we seeing any headwinds from global slowdown? And to what extent can this be offset by the new product introductions that we are targeting in the region?
So, Renu, a lot of it is because we've been on allocation, because we were trying to manage the pre-buy and things like that. But it no way indicates the demand that was out there. So we have an all-time high order board, both in the international business as well as the industrial side, as Gauri had mentioned.
And last question, if I can. For CPCB 4, this will still take about 12 more months. What is the road map to introduce hybrid solutions in the LHP segment? Because when we look at peers, whether it's Cummins, Perkins and other related companies, there are many hybrid solutions, battery backup solutions being introduced for the LHP segment of the market. So what is our road map to [ bring ] in greener solutions in this segment?
So Renu, I can't give something which is extremely forward-looking, but what I can definitely tell you is that -- Gauri had spoken about OptiPrime as well as OptiPrime hybrid series. These are both the combination of different fuel types as well as different technologies, including plug-in hybrid along with gensets. So, I mean, those products are already there. Those have been built. We're also looking at commercializing it within the next 12 months. And just so that you are aware, we also hold the patent for hybridization and gensets and battery and solar in India.
The next question is from the line of Khadija Mantri from Sharekhan.
Congratulations on good set of numbers. So my question was regarding introduction of this OptiPrime range in HHP. So have we partnered with any company for the technological capability or we've done it on our own?
So if you look at development of our gas portfolio, development of CPCB 4+ or it is coming out with new products or fuel agnostic platform, we've done it all in-house. We have a extremely competent R&D department that works on each of these products, and we're quite proud of that.
And specifically for the OptiPrime range that you mentioned, it has been developed in-house as well.
So, now we do not have any gaps in our HHP range?
So, the way I would look at it is, [ we have ] new products coming in. And because -- when we talk about HHP, high horsepower can actually go to really, like much higher KVA nodes, including 5,000 and 6,000. But what we are focusing on is to plug in the gaps up to 3,000 KVA, which is what we are fairly confident about that we should be able to do.
And what would be your capacity utilization at this point of time?
So if you look at the last quarter, our plant capacity utilization -- and I'm comparing this with basically the machining capacity, it's at about 73%.
So we are fully booked for the next 1 year as far as the pre-buying is concerned for CPCB 2?
Yes.
It now has been extended by 6 months, I understand.
So that's correct. So we have our CPCB 2 order board already with us.
But -- so in the commentary, you mentioned that the pre-buying may not be as good as in Q1. So what you meant by it is that it would taper off in the coming quarters?
Yes. So what we will see is that there will be some transition in this current quarter. But if you look at CPCB 2, the demand will taper out eventually. And especially as we move into the April to June quarter of next year, that is where the CPCB 2 product demand will clearly decline. And what we are expecting is that September onwards, the demand for CPCB 4+ products will start -- will get on the rise. So we're already seeing there's enough demand for CPCB 4+ even now. We have an order board in place, but we are expecting the demand to start increasing after September.
The next question is from the line of Rushabh Shah from o3 Securities.
So, as we have seen your power generation business has done very well as compared to the previous quarter last year, so how do you see the future of gensets growing in the coming years? And any steps you are taking to gain more market share in that segment?
Sure. So Rushabh, the way we look at it is the power generation business will continue to grow for us. There are different technologies that we're working with, and there are different ranges of products that we are entering now. So, actually, power generation is another business that we are extremely bullish upon. We have the appropriate technology in place. We also have the right kind of structure from an organization point of view in place. So we are fairly bullish about the power gen business.
And then, next question is on the aftermarket side. Is there a big opportunity opening across -- and what are we doing here?
Yes. So Rushabh, I would say that aftermarket and -- so our distribution business basically has a significant opportunity for us. Especially as you look at the complexity of products increasing, the kind of service solutions contracts that we can now penetrate with and offer value to our customers is significantly more than what it has ever been before. So the increased electronics and the complexity, obviously, which creates value both from an environment standpoint as well as for the customer is a welcome change, and we should see an uptick in the aftermarket business.
And sir, could you help me about -- could you tell me about the alternative fuel shifting to CNG? How will that impact our business?
Yes. So we are developing -- I mean, we have actually already developed our gas portfolio, which is -- which will be largely very similar in terms of platform to what we have on the diesel side. And we are gearing up for the CNG or the natural gas fuel as the infrastructure becomes available. And -- so we are quite bullish on that, especially when it comes to our power generation business, because that is where the biggest opportunity will be. Taking a step back, we are very clear that we are in the internal combustion and energy business. We will follow the fuel that becomes available. So right now, natural gas is a great transition fuel, and we have developed products for it, which are CPCB 4+ compliant, by the way, and we will continue to do in line with the fuel type that becomes available.
The next question is from the line of Nikhil Oswal from Finterest Capital.
Congratulations on good set of numbers. My only question is on number front. In the previous presentation, you have mentioned about clocking the 2x revenue of our previous year. So are we early on those lines? Any guidance on that? Because the current numbers are depicting something that we might be early on that.
So Nikhil, just to clarify, I think you're talking about the strategy that we announced last year around August, which is 2X-3Y. So that commitment is to double our top line in 3 years.
Right. So are we early on that?
So the way I would look at it, Nikhil, is that we are fully committed to that strategy. And, I mean, I wouldn't [ really ] say we're early on the 2x, but what I would definitely say is we are taping out our execution in line with the 2X-3Y.
The next question is from the line of Charanjit from DSP Mutual Fund.
So first of all, congratulations on good set of numbers and great execution during the quarter. My first question is pertaining to the domestic power gen business. So in that segment, in terms of our market share currently, what level it is at? And with multiple ranges which we are bringing in and with all these changes coming in, do we expect a significant change in the market share for us? That's my first question.
See, by volume, we are the largest player, and we typically have about 30% to [ 33% ] of the power gen market. Having said that, there are fluctuations that happen depending on specific orders that at times we intentionally don't want to take, given there are profitability or there are other challenges. So there are minor fluctuations, but we don't see too much of a change as far as market shares are concerned. We hover between 30% to 32% of the diesel genset market.
And from overall realization perspective, how has been the movement in the pricing in the market for CPCB 4 compliant engines?
So, because of the new notification that came out, especially if you look at the notification that came out on the 14th of June, there has been a slight delay in -- especially as far as the demand uptick is concerned. But when -- if there are customers that want cleaner products and that clearly seems to be a base of customers that want to adopt to CPCB 4+, we are seeing demand there, and customers are willing to offer the appropriate realization for CPCB 4+ as well, in line with the scope enhancement that we're offering.
So there's a good bit of demand even for CPCB 4 compliant engines?
Yes, because what's actually happening is there are -- every state slowly is coming out with their own, I would call from an economic standpoint, externalities, where there are notifications coming out. For example, in Delhi-NCR, we spoke a little earlier that they don't want to run CPCB 2 gensets without Retrofit Emission Control Devices and dual fuel kits. And September onwards, there is a clear-cut mandate to either switch over to [ cleaner ] products or move to the emission control devices. So every state is coming out with these notifications. So when customers evaluate, they see that CPCB 4+ is a cleaner product, and it is a product that they will be able to run hassle-free.
Sir, the other question is on the exports market. You talked about that we have a very high order book. So one is on the ground level in terms of the distribution reach, in terms of the service center reach, all those aspects, can you touch upon like what are the initiatives which you are doing? Because exports is also a very critical part of our -- the strategy of doubling our top line in 3 years.
Correct. So exports -- if you look at being able to sell gensets or even industrial products, industrial engines, in export markets, you require an adequate service infrastructure for it. Now there is a certain amount of business we can do without detailing all of that [ how ] to be in level, but now we're at a point where we are looking at each of these aspects, and we are looking to develop not just our export sales channels, but also service operations in those regions. So there are a few regions of particular interest. We're starting out with the GCC countries and the Middle East. So that is the first region that we are looking to expand in at the moment, and we are restructuring our approach accordingly as well. So there are changes we are making, and we'll talk more about that in times to come.
Sir, just coming from a little longer perspective for domestic power gen itself, when we look at the power data, there's also increasing talk about peak power deficits occurring in the market. So when that kind of a phenomenon kicks in, does it mean a significantly higher growth than the normal growth that we would have seen in the past couple of years when deficits are low for the domestic power gen market?
Yes. I mean, I would agree with that because peak power deficit is one indicator. What is equally important are the transmission and distribution losses that are occurring because combined is what they would generate demand for gensets, because ultimately, people buy gensets more like an insurance policy. They want uninterrupted power. So when you look at some of these metrics, along with the GDP growth, it gives you a good sense of where the market is headed.
Sir, if I can just -- over last question. In terms of the industrial business, you have also talked about that we have booked some strong orders from -- large orders in the railways and the defense segment. So one is, if you can give a brief understanding about the industrial business, how it is shaping up and how do you expect it to shape up in the future? And railways and defense, how large these opportunities could be for us going forward?
So we created the industrial business to focus on deep account management that's required and application understanding that's required to be able to successfully execute program on the industrial side because it's very different from our power gen business. So one of the segments that we created was railways. So similarly, apart from railways, there is construction, there is agri, there is mining, oil and gas. So there are a whole bunch of -- defense and marine. So there are a whole bunch of different segments that have been created. Now in this specific case, when you look at railways, largely, right now the focus is on power cars.But having said that, we're also looking at different applications going forward. So there is a product road map for that as well. But the order right now in conversation is for power cars. Similarly, we are experiencing encouraging signs as far as defense and marine segment is concerned. I think the way we have gone about setting up the structure and developing application competence within the segment structure is working for us.
But is there an opportunity size or a pipeline what we could highlight?
If you look at it combined, it will be very difficult to answer that question because, a lot of times, the opportunities are very unique and different. But a good proxy to understand some of this is the kind of budget allocations that are happening by the government, especially in the applications we are talking about. So for instance, if we look at railways, what kind of budget allocation or demand is Indian railways looking at in areas which require engines. So I think those would be good [ proxies ].
And sir, on the pumps market, firstly, from the La-Gajjar and the engine-based pump sets which we classify in the B2C segment, how is that part of the market operating? And what's the kind of growth outlook which you can have for the pumps as a segment?
Yes. So if you see on the pump side, which includes KOEL Electric and also LGM, last year, we were working on basically increasing the profitability or bringing it to profit. So part of that is done last year and the same story continues. We have a very small market share in agri and domestic, and we are confident with the strategy of deepening and widening. We will continue to grow in a very healthy way. Just to give you an example, KOEL Electric and diesel in this quarter has grown by around 30%.
The next question is from the line of Manish Goel from Thinqwise Wealth Managers.
Yes. Few questions are related to -- on export. I believe that on the strategy to double revenues, we were ideally aiming that exports should contribute 25% to 30% of the revenue. We did see a strong momentum last year in the early part of the year, but it seems to be like stagnating now. So I just want to know, like from our existing portfolio like gensets, firefighting and other segments, what is the outlook going forward? And number two, on -- like with delay CPCB 4 launch in domestic market, do we see a challenge -- like we probably -- that was one of the strategy to enter into global markets where the emission levels are probably at par, and now with delay in domestic launch, would it be challenging in terms of cost competitiveness to launch in the international market?And the third thing is that, in last call you did mention that we probably will not do white labeling. So are we probably looking to sell directly with our own distribution network? Or -- maybe if you can just provide some insights on these 3 aspects?
So first of all, I just want to kind of play out there that we didn't say that we will do white labeling, and we're pretty clear that's something that we won't be looking at. So just wanted to make sure that I clarify that. The other thing is, if you look at our -- even the last quarter that has gone by, it is our highest ever quarter for our international business. So if you look at quarter 1 for our International business, sequentially, there are a lot of things that play out. But if you look at same time last year, there is significant growth on the international side.The other part of this is that every geography is very unique. So -- and with its own product requirement, emission requirements as well as service requirements. So we are looking at all of that. And, I mean, what I can assure you is we executed our highest ever quarter 1 for exports and the focus on exports will be significantly higher going forward.What we've seen in the last quarter is, because of the immense demand that we have seen from our domestic power generation business, we have been working on allocation. So the revenues are in no way representative of the kind of demand that exists on the international side, and we are actively working on it.
So just to clarify, you said we will not do white labeling, right?
We will not do white labeling.
Across the product range, like from lower HP to even HHP segment, right?
Yes. I mean, we won't be doing white labeling.
And maybe if you can a bit give insight on the CPCB 4 launches in the international market? That -- because that was one growth area which we were looking for in the export market. And maybe now delay with in domestic, do you think that you will have enough cost leverage here or you will not have enough cost leverage because the production base will be much lower than what would you have anticipated earlier?
So if you look at the product and -- which is -- I was talking about different markets, we cannot sell CPCB 4+ products directly in international markets. I mean, there are [ tweaks ] that need to be made. And I'll give you an example of that. If you look at say the U.S. market, the U.S. market is a [ steeper ] market. And there are different kind of emissions, including Tier 3, Tier 4 final largely based on the EPA regulations. Now what we do have is the capability to develop those products because CPCB 4+ is by and large equivalent to the EPA Tier 4 final norms in the U.S. But there is [ tweaks ] that need to be made.So there aren't direct leverages there. But having said that, that's a critical part of our strategy. Similarly, if you look at the Middle East, Middle East is largely an unemissionized market. So what I can tell you is, from a technology standpoint, we are at par with -- amongst the best in the world. We are looking at product strategies for [ each ] of the markets because the requirements are very unique.
And last one question on the financial services. Like sequentially, we are seeing a decline in the EU and even the debt level. So maybe is it something to do with seasonality, or just maybe if you can [ clarify that ]?
I take this question, [indiscernible]. So Manish, you have rightly pointed out that during the quarter, that is Q1 FY 2024, the loan book has marginally gone down, which is roughly around 10% approximately. It is mainly because of a certain [indiscernible] what we have encountered in our corporate lending division only. Otherwise, under other business segments, which is power developer, financing and the retail segment, which includes the MSME and all, the loan book has been increasing. So as you only suggested that it is one of a seasonality kind of thing, they are generally in Q1, being into financial services business, the loan book [Technical Difficulty], but we are expecting that to come back to its normal level and as per our business plan in the coming quarters as well.
So what kind of growth for the entire year we are looking on [ reimbursement ] on the AUM side -- on the AUM book side?
I'm not sure whether I'll be able to answer this question because it's like a forward-looking.[ Because ] on a year-on-year basis we are expecting a recent growth, which will be in line in terms with this [indiscernible].
The next question is from the line of Chetan Dhruva from -- investor.
I just had one question with respect to the margin outlook. So this quarter we've already done 17%. Is this -- EBITDA -- I'm talking about the EBITDA margins at the consolidated level. Is this sustainable for this year? And do we expect to see any improvement the rest of the quarters and next year?
So, first of all, I want to just clarify that it's 12.1%, not 17%. And…
Consolidated level, I think we've done INR 264 crores.
You're looking at adding the segment PBITs and -- that is the number you are looking at?
EBITDA, not the EBIT. So a consolidated level.
Yes. It may not be appropriate to look at it that way because you see there are financial service business without interest, which is also [Technical Difficulty] -- portion of the financial services business. So the best way to look at it is a few separate financial services out of the equation and look at the nonfinancial services business independently. And I think a good measure right now to look at is about 12.1% is what is our EBITDA today.
And is this sustainable, sir?
Yes. So what our target is, is that over the 3 years if we do move into better double-digit margins, we have made an improvement in the last year, and we hope to sustain and improve that.
And I -- can I assume that the financial services business also will proportionately grow along with the rest of the business -- the core business?
Sorry, I couldn't hear the second part of what you said.
I was asking whether the financial services part of the business will also grow proportionately to the rest of the core business -- for the main business actually? Because you would be probably funding the purchases, right, to the financial services?
No, that's not how our financial services subsidiary works. So they are pretty different businesses, the core business and the growth rate of the core business -- B2B, B2C and Financial Services segments would be very different.
So you are saying that there will be probably a specific subset of customers who will opt for the financial services aspect of...?
There are completely different set of customers in the financial services business that we lend to. We're in 3 segments in the financial services business, specifically corporate lending, real estate lending and SME and MSME lending. And any business that has happened with any of our group companies or group company channels, distributors or dealers is less than 10%.
Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Amit Shah from Antique Stock Broking for closing comments.
Yes. I'd like to thank all the participants for taking time out and joining us on the call. And we would also like to thank the management for giving us the opportunity to host the call. I'll hand over the call to the management for the closing remarks, post which we can conclude the call. Over to you, [ ma'am ].
Yes. Thank you. Thank you very much for your participation and time on a Friday evening. Thank you for your support, and have a good weekend.
Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.