Olectra Greentech Ltd

NSE:OLECTRA

Q3-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to Olectra Greentech Limited Q3 FY '26 Earnings Conference Call hosted by Nomura. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddhartha Bera from Nomura. Thank you, and over to you, sir.

[Siddhartha Bera, executive]

Yes. Thanks. Good afternoon, everybody. And thanks for joining the call. We have with us Olectra Greentech's management, Mr. Mahesh Babu, the Managing Director; Mr. B. Sharat Chandra, CFO; and Mr. Hanuman Prasad, Company Secretary and Legal, with us to address your queries. So I'll pass on to the management for some initial opening remarks, and then we can open the floor for question-and-answer. Over to you, sir.

[Mahesh Subramanian, executive]

Okay. Good morning. My name is Mahesh Babu, I'm the Managing Director of Olectra Greentech. Good afternoon to everybody. I would like to give you a global brief of what is happening on the EV industry, both globally as well as in India, and particularly what's happening in commercial EV segment and before I give my views on the Olectra Greentech performance.

So globally EV fleet is projected to be about 115 million vehicles by 2026. It's growing at 30% CAGR year-on-year. The global commercial EV CV market is also growing at about 20% CAGR in the past few years and expected to keep up that pace in the future as well. The EV adoption is expected to displace about 5 million barrels of oil demand per day globally by 2030. That's overall a positive news of electric adoption, both in all the segments as well as commercial vehicle segment globally.

In India landscape, Indian EV industry is expected to grow at a 45% CAGR, much higher than global average up to 2030. In India, the EV volumes are expected to reach about 5 million units by 2026 and about 15 million units by 2030. EV adoption will reduce about USD 14 billion of import, it will offset, if we continue to grow at this rate by 2030.

The commercial EV segment have been clearly growing spot in India, fast-growing segment, particularly EV buses are fast-growing. Today, we have about 16,000 electric buses already deployed in India. And the electric commercial vehicle segment has grown about 120% year-on-year. The policy support from government of India like PM-eBus Sewa and also PM E-DRIVE schemes launched by the central government have given multiple tenders on electric buses to be bought by state transport undertaking. And that is one of the business where we are in, and that plays an important role.

Where we stand as Olectra? Olectra has so far, from inception, deployed about 3,600-plus buses on roads and 116 tippers. We still have a very high order book in hand. We have run about 500-plus million green kilometers, reinforcing our sustainable leadership in this segment. We have been #1 in the market last financial year. Recently, CESL released a tender, and we have become L1 in 1,785 vehicles. We are working with the authorities to convert this into order in the coming months.

And if you look at Olectra's performance, we have been -- in the last 2 quarters have been consistently delivering quantity. Our numbers have gone up by 37% from Q3 previous year to this year Q3 from 282 to 385 vehicles. Our revenues have gone up by 30%. Our EBITDA has gone up by 17%, and our PBT is about 5% and so on.

So I would say that we have a strong delivery performance as well as financial performance in Q3. The key is consistent quarter-on-quarter delivery profitably. If you look at the market share of our products, in the electric bus segment, in Q3, we have about 29% market share, with the #1 question of 399 vehicles registered in the market.

And year-to-date, we have about 912 vehicles registered in the market with a market share of 24%-plus. So we continue to be #1 in the electric bus segment. And we are -- if you look at our EBITDA margins are around to the tune of 14.1%, which is the best in the EV industry so far and we continue to grow consistently quarter-on-quarter, and we look forward to improve going forward as well.

So with this, I hand over the financial performance to Mr. Sharat Chandra, our CFO.

[B. Chandra, executive]

Good evening, everyone, and thank you for joining us. We are pleased to report that the company has continued to deliver steady growth in consolidated revenue and profitability for the Q3 and the 9 months ended December 2025 as compared to the previous fiscal year.

Before I take you through the financial performance, let me briefly highlight a few key developments. As indicated in our earlier earnings call, we began to see strong traction from Q2 with a meaningful ramp-up in Q3 and this momentum has continued into Q4. The company has delivered healthy operating margins across both business segments.

The EV segment, the ramp-up in deliveries, has driven year-on-year top line growth of approximately 23%. Margins in this segment have seen some compression primarily due to product mix changes. As we had highlighted earlier, with increasing volume, historical margin percentages are not sustainable, though we continue to maintain healthy absolute margins.

Fixed cost, particularly employee costs have increased in line with the scale up of operations. The financial highlights for Q3: Electric vehicle deliveries stood at 385 units compared to 282 units in Q3 of last year, representing a growth of 37%. Revenue for the quarter stood at INR 663.6 crore registering 29% year-on-year growth driven by strong performance across both segments. EBITDA is at INR 97.1 crore, reflecting a growth of 19% year-on-year. PBT was INR 64.1 crore, up by 3% compared to INR 62 crores in the corresponding quarter last year. PAT at INR 46.7 crores is broadly flat year-on-year.

Earnings per share for the quarter was 5.65 compared to 5.64, last year it's flat. For the financial highlights for 9 months, revenues stood at INR 1,667.5 crore, reflecting 23% year-on-year growth. EBITDA increased to INR 246.1 crore, up by 13% compared to the same period last year. PBT was INR 166.3 crore, a growth of 5% year-on-year. PAT stood at INR 122.1 crore, registering 3% increase over the previous year.

Overall, our performance reflects strong execution, improving scale and sustained demand, particularly in the EV segment even as we consciously invest in people and capacity to support future growth.

Thank you for your time. I will now hand over the call to Nomura team for the Q&A session.

[Operator]

[Operator Instructions] Our first question comes from the line of [ Aniket ] from CR Kothari Sons & Stockbroking.

[Unknown Analyst]

My question is regarding to working capital cycle and how we can expect it going ahead into Q4 and for FY '26?

[B. Chandra, executive]

Yes. The working capital cycle, we have been working consciously and it is improving quarter-on-quarter. The net working capital days is around 42 days, with a good improvement compared to the previous quarter of the corresponding year. And we are working to reduce inventory levels, optimizing the stock levels. We are -- the receivable position is improving as our associate companies have got financial sanctions for the major projects. So we are working on all aspects of working capital, and we keep improving on the working capital cycle. And consistently, we are looking at about around 2 months is what the cycle we are looking at overall in the midterm.

[Unknown Analyst]

Okay. And my second question is regarding to the delivery of the buses. We are on track to deliver 2,000 buses for FY '26, whereas currently, the 9 months number is only around 881. So any suggestions regarding to the 2,000-mark delivery? Any changes to that number, sir?

[Mahesh Subramanian, executive]

See, we -- this is Mahesh Babu here. So we have taken a very ambitious target of 2,000 vehicles. As I told you, we are already #1 in the market. The delivery of vehicle depends on market absorption, our capacity and also other ecosystem development. So we continue to aspire to deliver so much vehicle looking forward. But as you know, already I have given an interview in the media telling that we are looking at between 1,500 to 2,000 vehicles. That would be the reality in the last quarter.

[Unknown Analyst]

And if I may ask one last question, is that okay?

[Mahesh Subramanian, executive]

Yes, please go ahead.

[Unknown Analyst]

So it is regarding to the supply chain issues. Are we facing any -- currently any supply chain issues rather than the ecosystem issues which were already highlighted in the previous quarter?

[Mahesh Subramanian, executive]

At least in the last quarter, we have not had any supply chain issues and we don't expect that to happen in the coming quarter as well.

[Operator]

Our next question comes from the line of Preet from InCred AMC.

[Preet Pitani, analyst]

Sir, first, I would just like to understand more about the business. I just want to understand how does SPV actually works? What would be the unit economics for the SPV? And there are different percentage ownership in the different SPV, so what determines exactly how much percentage will you keep in that particular SPV?

[B. Chandra, executive]

See, as far as SPV is concerned, generally, our philosophy is to manufacture, supply and take care of the maintenance of buses. But in certain tenders, the conditions are that where OEMs are also required to have a stake, so accordingly, in such scenario, we invest. So we have about 8 associates were about we are having a 26% stake and one subsidiary where we have 51% stake and one JV where we have 100% stake.

Other than this, our -- we continue to work on this model. Unless there's a necessity in the tender where Olectra is required to participate in the SPV.

[Preet Pitani, analyst]

And about unit economics? Are SPV profitable or how is the difficult unit economics for the same?

[B. Chandra, executive]

Generally, as a group, we -- unless it is profitable, we don't enter into any new tenders. With a minimum IRR of more than 15% is what we look at the SPV level.

[Preet Pitani, analyst]

And next question is on the numbers. I'm seeing that your Insulator business is growing rapidly and margins of the same, EBIT margins which you report, it was earlier 26%, which has increased to 32%, 33%, so just wanted to have what kind of growth do you expect coming forward and are this 32%, 33% sustainable?

[B. Chandra, executive]

See, basically, insulated division, again, the margins we have concentrated on exports. So exports are giving healthy margins. So due to product mix in this quarter, the margins have improved, but we continue to strive to improve margins. Consistently, we are seeing growth. And I think it will stabilize around these levels margins. Again, it depends on the mix between domestic and export.

[Preet Pitani, analyst]

What is the difference between domestic and export in insulator business?

[B. Chandra, executive]

So about -- currently about 40% is exports now in the turnover what we have done, about INR 280 crores is the top line insulator division. So I don't have a breakup of -- I'm not able to dwell into the details. So I've given...

[Mahesh Subramanian, executive]

Generally, what CFO is saying is, the margins on this quarter has helped due to some export-specific, because it comes under tender and we win with competition. So it goes by competition-to-competition. So between last quarter and this quarter, our margins will remain between the 2 quarters. It's not expected that it will go further and will not be retained the same margins on insulator quarter-on-quarter.

So we are very happy this quarter, we are able to realize good EBITDA margins due to some -- few export margins. So we will strive towards it, but the expectation would -- that we will -- the market is -- give margin between the 25% to 30% range.

[Preet Pitani, analyst]

Got it. And what would be your order book in the insulator business? And what kind of growth do you expect in the next 2 years?

[B. Chandra, executive]

Yes, about INR 300 crore-plus is the order book as of now. And we are -- continue to grow in this business. Compared to last year, we did about INR 180 crore top line. This year, we are expecting about INR 300 crore top line. So with a 15%, 20% growth year-on-year is what we are targeting.

[Operator]

Your next question comes from the line of Aniket Madhwani from Steptrade Capital.

[Aniket Madhwani, analyst]

Yes. So firstly, I just want a clarification on the financials. So here, I can see, despite growing 28%, 29% top line year-on-year, if we compare to the last quarter of the -- sorry, same quarter last year. And coming down to the bottom line, we can see here the numbers are flat. So what are the reasons behind [Technical Difficulty] are you facing any challenges to maintain the margins?

[Mahesh Subramanian, executive]

See, I think -- this is Mahesh here. I'll explain the business strategy perspective. So last year, if you look at it, we are primarily being in the 12-meter bus segment. And if you look at this year, we are entering into 9-meter, we have delivered about trucks. So this quarter, we have about 24 trucks delivery, 50-plus 9-meter delivery and remaining is a 12-meter bus. Well, the primary product last FY '24 was related to -- '25 was related to -- Q3 was related to 12-meter bus. So basically, what happens is in a stabilized segment, while you look at bus segment, bus or the division has 12-meter, 9-meter and you have now trucks on pilot basis we have deployed.

So each one will have different margins. So some of the products are for the future. It is just entering into the new segment of EV. So the margins will be less. When it destabilized like the 12-meter bus product, then we'll get a reasonable margin. So that's why I would say that we are still growing at 30% revenues.

EBITDA is good, 17% for us growth in EBITDA while -- yes, so that's what 19%, almost 20% growth in EBITDA is there, while the bottom is, we have to work on new products, then hence, depreciation will come into picture. And we borrow for the plant what we have to do and then interest rate into it, okay.

[Aniket Madhwani, analyst]

Okay. Sir, can you just give me the bifurcation of 282 buses delivered? I mean I just wanted to know how many 9-meter buses are delivered, how many 12-meter buses are delivered and the margins that you have maintained in each of your products?

[Mahesh Subramanian, executive]

So very specifically, I will not have in hand. But generally, I'll tell you, out of 282 last quarter, 272 was 12-meter bus, only 9 meter was 10. Whereas, this quarter out of 385, 24 trucks and about 51 9-meter was delivered apart from 300 12-meter. So that makes the proportions differently. Just to give you a reasonable term numbers right in front of you.

[Aniket Madhwani, analyst]

Okay. Got it. And one just last question. Previously, you have mentioned that you have around 10,900 bus tender. So is there any update on regarding that?

[Mahesh Subramanian, executive]

So the 10,900 bus tender were already concluded and we have become L1 in 1,785 buses, that's what I have told in the brief. And this -- we'll have to work with the authorities to convert into orders. It is expected another 3 months this process will continue, and we're hopeful that we'll get that order going forward.

[Aniket Madhwani, analyst]

And what is your current capacity?

[Mahesh Subramanian, executive]

See, we have declared the DCCO for our Phase I of the plant, it is for 2,500 vehicles per shift per year capacity, and we can do double shift to achieve about 5,000 per annum. If needed, we can in fact increase the capacity as we need to higher numbers depending upon the market absorption, we can do that.

[Operator]

Your next question comes from the line of [ Akash Shrivastawa ], an Individual Investor.

[Unknown Attendee]

I just want to understand, is there any specific reason why deliveries in Jan was only 55 numbers as is what shown in the VAHAN portal app?

[Mahesh Subramanian, executive]

See, the VAHAN portal alone is not the number we are delivering because Telangana is not part of the VAHAN portal. January, we delivered -- we built around 115 vehicles. Many of them are Telangana. So you have to look at VAHAN plus Telangana that is available in a separate site. That depends on where the other competitors deliver the vehicle.

[Unknown Attendee]

That is okay. But still, if you are saying that we are having a capacity of 200-plus numbers, none of the months that I've seen you've been able to reach even 150. So is there any specific reason why -- I mean, you may say that, yes, the market is not absorbing and all those things, but any other reason, I mean, that you want to share with us except this?

[Mahesh Subramanian, executive]

See, I just want to give you -- first, we'll have to understand that we are #1 month-on-month, quarter-on-quarter, year-on-year for the last 2 years. So that means it's very clearly market can absorb. If you look at the market size of electric vehicles, buses, last year was about 3,800 vehicles, right? So market can absorb only that much depending upon electricity, finance availability, depot readiness, STU route finalization plus our manufacturing capacity.

So what I can tell you is we are #1 in terms of delivery of electric buses in the market. If market can absorb more, we are also driving like you, we are also driving the market to absorb more. And when we drive it, we are #1. And we wish that they will be able to deliver more. So while the capacity is for the future coming, when the market is ready to absorb, our efficiency still remains at optimum that we are able to deliver when we want it because our pipeline is less than 15 days in terms of vehicle finishing to the deployment into the depots and to the operations. That's where we are still at #1 in terms of delivery, operations and optimization of the operations, which market can absorb.

[Unknown Attendee]

Sure, sir. But frankly, I mean, with respect to what the markets have told today, you might have understood how the investors are feeling about the results that we have, right? Nonetheless, my second question is with respect to Q2, I suppose we delivered around 330, 340-odd buses, right? In Q3, we have delivered around 385 numbers, that's what we have been told. But in terms of top line growth, I can see just maybe INR 6 crores or INR 7 crores difference. So is it because of the product mix between Q2 and Q3? 50 numbers difference, but the top line is only maybe INR 6 crores?

[B. Chandra, executive]

The Q3, we have delivered 375 vehicles and Q4 -- Q2, we have delivered 375 vehicles. And Q3, we have delivered 385 vehicles. So it's only a 10 vehicles difference...

[Unknown Attendee]

Okay. Okay. Okay. I mean, then my mistake. Sorry. Yes. That's it from side.

[B. Chandra, executive]

Thank you.

[Operator]

Your next question comes from the line of Shubham Tamrakar from Alturas.

[Shubham Tamrakar, analyst]

Sir, I have a question regarding operational cost. So given that we are making investment and we are expecting revenue growth over the period of time, how operational costs will change? Will it increase the same as revenue will increase will have a cost advantage?

[Mahesh Subramanian, executive]

See, till now, we have been investing in the plant, and our operational cost is to make this monthly production of -- we are optimizing manpower and other services to the tune of what we are making. Going forward, capital investment will not be very intensive till we achieve 5,000 vehicle per annum. It's only variable costs which will increase, we have to increase manpower in 2 shifts and deliver the products and other things will be there.

Capital will not be exponentially required or proportionately required, we need only to maintain that and deliver. And then CapEx investment will be not needed much till we achieve 5,000 products, but variable cost of manpower increase and others will be like electricity, manpower, water consumption will be proportionate to the number we are making.

[Shubham Tamrakar, analyst]

Okay. That was helpful. And do we have any CapEx plan regarding -- for CapEx in the next 1, 2 years?

[Mahesh Subramanian, executive]

Yes. Of course, auto industry is capital intensive, you all know that. We are developing products. As you know, we are developing a new platform, 12-meter. We are developing new platform, 9-meter. And we are entering into the truck segment. So we have done a pilot with 116 vehicles now. But the market is going to grow. So we have to get prepared with multiple products -- in products. So the CapEx would be for developing new products for increasing the new markets and entering into new segments and increasing our volume.

Because if we continue to sell in the same segment, we will not have much growth, and you all want exponential growth, so that will come from new products, and we continue to invest on our new products technology in the coming next 2 years.

[Shubham Tamrakar, analyst]

Yes. Do you have any numbers, sir, regarding CapEx, like this?

[Mahesh Subramanian, executive]

See, we are working on it. So what I can tell you is, we will be investing about INR 300 crores to INR 350 crores in terms of CapEx for new product development in the coming year.

[Shubham Tamrakar, analyst]

Okay. And how will capitalize this over the period of time?

[Mahesh Subramanian, executive]

It will be over a period of 2 years.

[Shubham Tamrakar, analyst]

Okay. Okay. And sir, regarding the -- I just request you one thing that it could be great if you share in the presentation also regarding the quarter mix between 9-meter, 12-meter ramp-up, which we deliver every quarter. That would be very helpful for us to understand.

[Mahesh Subramanian, executive]

Okay. We'll try to add that in the future.

[Shubham Tamrakar, analyst]

Do you have any visibility right now like in the next -- like next year, how the mix will change?

[Mahesh Subramanian, executive]

See, depending upon which STUs, which depot getting ready. But I can tell you that in the Q4, we will have a reasonable mix of coach on 12-meter that's what we are expecting as per our plan. But if any -- if STU suddenly ask 9-meter, we can't say no. So we'll have to get prepared for that as well.

[Operator]

Your next question comes from the line of [ Sunil Parvathanil ], an individual investor.

[Unknown Attendee]

So actually, like we have a plan of deploying the robotics, right? So by when we can complete the robotic deployment for production?

[Mahesh Subramanian, executive]

See, we have decided to do a semi-robotic line. The semi-robotic line will be ready by end of this calendar year and which will be last quarter of the coming financial year. The Phase 1, whatever we have declared capacity is without the semi-robotic line. The semi-robotic line will come as part of our new products, which are coming to handle the 12-meter, 9-meter, truck everything together, we need that for that, and that will be ready by last quarter of the coming financial year.

[Unknown Attendee]

So any new product launches like trucks and cars, anything?

[Mahesh Subramanian, executive]

See, we will come back to you. It will be too premature to tell what it is now. So as per guidelines, we'll come back to the market whenever we are ready with the products in the future.

[Operator]

Your next question comes from the line of Gaurang from Utility Unified.

[Unknown Analyst]

So with reference to the Indian Express article, which is dated on October 30, 2025, Mumbai BEST is exploring legal route for nondelivery of electric buses. So can the management on record confirm that it's BEST, which is not handing over the depot or is there some other issue with respect to the 2 orders, the first order which is of 2,100 buses and the second order, which is of 2,400 buses?

And why I'm asking this question is because as far as I know that in the last 6 months, we've hardly done any deliveries to BEST, approximately, say, 200 or 300 buses in the last 6 months, which is a little bit disappointing and concerning as well. So I just want to hear from the management about this issue.

[Mahesh Subramanian, executive]

Okay. Firstly, we have not got any legal notice from BEST. BEST, we have engaged on 2, 3 fronts. It's not about depot readiness or something. On the BEST front, there is a request from us to BEST that the electricity consumption and the loading pattern of the vehicle is much, much higher than the tender requirements. Assume tender is asking for 58 people, we are seeing 100-plus people coming into the one because of which there is a substantial electricity consumption, which we have represented to them to compensate by which we'll be able to improve our delivery.

So that discussion is going on with BEST. I hope they will resolve that quickly because as an entity, as an investor to you also, we will not be able to do any order which is not as per tender and which is loss to the company. So we are continuously engaging with BEST to highlight this issue and they recognized and accepted, yes, the consumption is higher due to utilization of the bus with higher capacity than the tender requirement, they are only finding it how to resolve it within the legal framework. Once they resolve it, our number -- delivery will be faster than expected because we don't want to lose money without this resolution.

[Unknown Attendee]

And my only other question is, so there's an upcoming CESL tender of 3,000-plus buses for various cities like Mumbai, Pune, Hyderabad. So is Olectra going to participate in that tender as well?

[Mahesh Subramanian, executive]

Yes. We are right now planning to participate in the coming CESL tender.

[Unknown Attendee]

Okay. Wish all the best for the final quarter and the years coming.

[Mahesh Subramanian, executive]

Thank you.

[Operator]

Your next question comes from the line of [ Sandeep, ] an individual investor.

[Unknown Attendee]

Sir, considering our long order book, how is our capacity utilization planned in future because still we have not achieved this 2,500 completely?

[Mahesh Subramanian, executive]

Thanks for the question. Right now, we said we have a capacity about 2,500 per shift. While the investment and civil and the equipments are prepared for 2,500, we have manned only to the requirement of the capacity which we are producing. So we will utilize the full capacity of 2,500 per shift according to me, when the market can absorb in the coming financial year, in FY '27, that's what we are expecting.

And as you know, any auto industry capacity, gross capacity is normally industry work round 80% to 85% of the net capacity because there will be day-to-day supply chains and matching and things like that. So normally, auto industry works on the gross capacity to the tune of about 85% of net capacity.

[Operator]

Your next question comes from the line of Preet from InCred AMC.

[Preet Pitani, analyst]

Sir, you have mentioned in the annual report of around INR 750 crores of CapEx, which we were planning, out of which how much has been done and how much we are planning in next 2 years? And is this -- apart from the INR 350 crore CapEx, which we have mentioned to the previous participant?

[Mahesh Subramanian, executive]

Okay. Just to clarify, the INR 750 crore was the intent to invest for a complete capacity to achieve 10,000 volume in the production capacity. However, as I said, we have decided to optimize the investment, and we have already achieved Phase 1, so we have decided to do in Phase 1, Phase 2. Phase 1 of 2,500 into 2 which is 5,000 is achieved now and it's getting into production.

We will only kick off the next phase of investment -- of the remaining investment only when we achieve this 5,000 in the market net gross. And then -- because we need only -- the land is available, we can build our additional line within a period of 12 months. So we'll kick off that once we see the market in the future.

[Preet Pitani, analyst]

Okay. Got it. And how much CapEx you have done till now, till first 9 months in FY '26?

[B. Chandra, executive]

It's about closely about INR 400 crores.

[Preet Pitani, analyst]

How much? Sorry, I missed.

[B. Chandra, executive]

About INR 400 crores.

[Preet Pitani, analyst]

And my next question is on the line of quarter 3 numbers. We have seen that the employee cost has been reduced drastically from INR 25 crores, INR 30 crores to INR 20 crores. What was the reason behind the same?

[Mahesh Subramanian, executive]

The manpower cost you're asking?

[Preet Pitani, analyst]

Yes, yes.

[Mahesh Subramanian, executive]

See, what we have done is, see, earlier we used to pay for the service manpower, which used to be available in the market. Now we find that there are technicians available in the depot. And by directly our customer paying for such technicians, we are able to save some GST. So we have asked the customer to directly pay such technicians in the depot.

[Preet Pitani, analyst]

So are we giving that money or they are bearing -- customer is bearing that money?

[Mahesh Subramanian, executive]

No, whatever they were supposed to -- customer is supposed to pay us for these employees, now they are paying directly for this technician so that we will get -- we'll not have any GST impact on that. So it will go from our -- one, it will go to customers' payout there, and they will pay the remaining to us. So net-net, there is no impact to us. It is a payment method directly by our customers to technicians in the respective depots.

[Preet Pitani, analyst]

Got it, sir. My other question is on the line of debt. Despite having lower debt on the balance sheet, we have a higher finance cost of around INR 20 crores, INR 25 crores per quarter -- INR 15 crores, INR 20 crores per quarter. Can you explain the nature of this payment?

[B. Chandra, executive]

Basically, we have availed term loan. So those interest costs are now coming in. So pre-capitalization interest has been capitalized. Now post capitalization, the interest cost is coming to the P&L, that is one aspect. And then one of the primary interest cost is all the LC discounting and BFS discounting. So we are working on it to reduce those costs.

In the near future, we are trying to optimize the mechanisms, and we are expecting at least some improvement in the interest cost in terms of rate.

[Preet Pitani, analyst]

What is the average rate on which we get a term loan?

[B. Chandra, executive]

It's about 9-plus.

[Operator]

Your next question comes from the line of [ Aniket ] from [ CR Kotari Sons & Stockbroking ].

[Unknown Analyst]

My last question would be regarding to the facility coming online. What would be the expected increase tentatively regarding the depreciation in the next few quarters?

[B. Chandra, executive]

Tentatively, it is likely to be -- this quarter, we have done -- we have a depreciation of about -- on a standalone basis of INR 9.2 crores, so it will be slightly 10% growth, the depreciation, once we complete all the capitalization.

[Operator]

Your next question comes from the line of [ Rushabh Sanghvi from Oaklane. ]

[Unknown Analyst]

I had a question on the private sector participating in the electric bus movement. So far more sales we're seeing is with the public sector. Can you comment on why the private sector has been a little slow to adopt electric buses so far despite favorable TCO?

[Mahesh Subramanian, executive]

Yes. So that's a very good question because right now, the PM E-DRIVE, PM E-Sewa, everything is favored towards -- subsidy towards state government undertaking. There is no subsidy from -- for the private sector. However, TCO for private sector, which is intercity, is very favorable. Intracity is not privatized so much in many cities. Intercity is privatized. Intercity, there are customers in private, for example, the fresh buses running our vehicle in Hyderabad to Bangalore, the route, and they are successfully running.

They have run about 8 lakh kilometers already with our vehicles. They are profitable. And one of the challenges, what I understand from them is private players who are in the operations of the buses are not worth enough to take bank loans to -- for a large number to fund the EV buses. So we are also working with the government as well as some private entities who will fund them.

For example, there are players who are NBFCs, who are non-NBFCs like Macquarie Capital have given about some line of credit for EVs. So we are working with them. Surely, the shoot is coming. We have delivered about 8 buses to Microsoft for employee transport for a private player in this quarter. There are some minor shoots, I'm seeing. It will take about a year or so, as for me to, for this finance sector to gain confidence on the private players. And hence, it will become adoption kickoff.

[Unknown Analyst]

And one last question from my side. In the recently announced budget, it seems like only 1,500 buses are accounted for in PM E-Sewa in FY '27, given that naturally more than that has been -- more than that number of buses have been tendered in the last year, can you comment on why this budget allocation is so low?

[Mahesh Subramanian, executive]

See, the budget allocation is for 1,400 buses which they have tendered in PM E-Sewa. PM E-DRIVE is different. That 10,900 is a PM E-DRIVE. PM E-DRIVE will get a direct subsidy of INR 35 lakhs or INR 25 lakhs depending upon the vehicle when STUs deploy the buses. PM E-Sewa, they will get about INR 24 per kilometer approximately, I think so, every month, every year for 12 years. So it's 2 different schemes.

[Unknown Analyst]

Got it. And even in PM E-Sewa, there's also a PM Payment Security Mechanism, right? So is there a separate budget allocations for this, for payment security mechanism?

[Mahesh Subramanian, executive]

No, there is no need for a separate budget allotment because the payment security mechanism is, if the state government doesn't pay central government has the authority to intervene through RBI from the central government allotment to the state and direct the fund and pay it to the operator. That's the security mechanism.

It's mainly a mechanism for giving confidence to the financiers who are financing this -- financing these projects for our operators. I don't think I have any case where STUs have never paid any operators. They only delay it. But default, I have not hear in my lifetime, [ government ] defaulting anybody any payout.

[Operator]

Your next question comes from the line of [ Rahil S. ] from Sapphire Capital.

[Unknown Analyst]

So firstly -- Sir I'm not able to understand, so you say you have a order book in hand of 9,400-plus buses, correct?

[Mahesh Subramanian, executive]

Yes, please.

[Unknown Analyst]

So these -- if these are confirmed orders, I'm just trying to understand then why is there no -- why are we're not selling as much in each quarter to complete a target of like 2,000 units in FY '26, which you had given? And if you're still guiding for the same like around 1,500 to 2,000 vehicles in the year, then are you very confident that you will be able to cover up in quarter 4? I'm just trying to understand how it works, deliveries.

[Mahesh Subramanian, executive]

Yes. So I've answered this earlier. I will, again, answer it because I would request all of us to hear as well. See, the order book gives you that if the depots and the ecosystem is ready then we will be able to deliver to that extent. So if you say 9,000 order book, that means we have 2, 2.5 years order pipeline available, point 1.

Second, you can't deliver 9,000 immediately. There are cases where our competitors had 600 buses waiting for 6 months in Delhi for deployment. 600 buses is close to INR 750 crores, INR 800 crores. We can't afford as Olectra Greentech to keep INR 800 crore wait for 6 months and then our working capital and all this will become a headache. So the reality is we have to make the vehicle what market can absorb. And if market can absorb more, we will make more.

So we are prepared from a plant perspective that we can serve the market to the need what they want. And we are also prepared from front end that we have enough orders. So we don't struggle for next 1 or 2 years to get more orders to deliver what plant capacity needs to be there. So again, that's why I said we are #1 in bus registrations in India year-to-date, that means we are delivering more buses than any competition in the e-buses, electric buses, than any competition in India.

So that clearly says that we are efficient, better and working -- managing working capital well and also serving the market well. So this is how you should take not just go by the order book number.

It's like airline industry, Boeing has a 7,000 orders, they will deliver for next 15 years. They can't deliver. They can't increase the capacity and deliver Boeing in 15 in 1 year. So that's how we have to look at it.

[Unknown Analyst]

Okay. So for quarter 4, you are saying you'll be able to complete the yearly target, is that because of the market acceptance of deliveries or is this just your -- it's still just your view that if the market gets better and is able to absorb then only we deliver? Or is that a surety?

[Mahesh Subramanian, executive]

So our view is, right now, we'll be able to finish about between 1,500 to 2,000 buses in a year that is the target, which market will absorb in this quarter. But still, our aim is always we want to be #1 in the country.

[Unknown Analyst]

Okay. And with regards to the insulator business, you said this year, you plan to achieve or you expect to achieve INR 300 crores top line, correct?

[B. Chandra, executive]

Yes, that is the expectation, yes.

[Unknown Analyst]

Expectation. And what about -- like so the yearly growth, how much did you say which you can do year-on-year in that business?

[B. Chandra, executive]

See, about 10% to 15% is what the growth we are expecting in this because there's still a government push on electrification, so we see good potential.

[Unknown Analyst]

Okay. And overall consolidated margins, any range you would like to give, steady-state?

[B. Chandra, executive]

I think we have mentioned in the past, we are basically working on healthy operating margins. We continue to deliver healthy operating margins. Over a long-term, we expect it to stabilize around 10% to 12%. Currently, we are at 14-plus percentage.

[Operator]

Your next question comes from the line of [ Gaurang ] from [ Utility Unified ].

[Unknown Analyst]

Sir, my question is with respect to the evolving electric vehicle technology, sir. So there are largely 4 things which I can think of. Firstly, there are solid-state batteries which are coming. Second is sodium batteries which are coming. Then third is megawatt charging, which is already established in China. And then there is battery swap, which is now getting quite trendy in China. So my question is, sir, how is Olectra foreseeing this 4 things, especially in the commercial EV segment?

[Mahesh Subramanian, executive]

Yes. Thank you for the question out of investments and financials. Actually, you are right, the EV industry has a lot of innovations going on parallelly while the production of existing technologies continue. So we are closely monitoring 3, 4 technologies, as you said, solid-state battery, sodium ion battery you know that CATL has productionized sodium ion battery for commercial applications.

But most of them are in a pilot stage, and most of them are in a stage where it is at primary production stage. It has not reached the mass production stage. So we are closely monitoring this technology. We have now [Technical Difficulty].

[Operator]

Sorry to interrupt, [ Gaurang ], sir, the line for the management has been dropped. [Operator Instructions].

[Mahesh Subramanian, executive]

This is Mahesh here, again. Sorry, I don't know what happened technically, the line got cut. So I was talking about sodium ion, I'm talking about this solid-state battery. We have a very clear technology evaluation process where we evaluate technology, at what stage they are in, whether it's in primary state, pilot state, pre-production stage and the mass production stage.

So right now, lithium-ion batteries are in mass production stage. Most of the other technology you said are in pre-production stage or at pilot stage. So we will constantly monitor and we can plug-in and change them as we want. And clearly, we will have a plan to de-risk our business in case of any change in technologies or change in systems. We are well prepared to handle it.

[Operator]

The line for the current participant Mr. [ Gaurang ] is dropped from the queue. We'll move on to the next question. Our next question comes from the line of Shubham Tamrakar from Alturas.

[Shubham Tamrakar, analyst]

Sir, I just wanted to I understand again on CapEx. I just have a little bit -- I want some little bit clarity more on that. So you said INR 300 crores, INR 350 crores in CapEx in the next 2 years, right?

[Mahesh Subramanian, executive]

Yes, please, on the new products alone.

[Shubham Tamrakar, analyst]

On the new products, okay. Are capitalization plan for the same?

[Mahesh Subramanian, executive]

Yes, yes, we'll capitalize it year-on-year.

[Shubham Tamrakar, analyst]

Okay. Okay. And sir, one more thing. Given that our product mix is changing, like we are changing our product mix. So how this will affect our EBITDA margins in the next 2, 3 years?

[Mahesh Subramanian, executive]

See, as -- CFO has already said, the auto industry is at a 10% EBITDA level. And most of the EV, our players are much lower than that. We are very happy because of our product. We are able to maintain about 14%. In long-term, we are looking between 10% to 12% as margin as a business. When we grow, we can't expect high volumes and high-margin business. There is no such business available. So we'll be more and more closer to the industry or better than industry.

All that I can tell you is we'll always be better than the industry. But going forward, when the volumes grow up, when we become main players like diesel vehicles, if you are a diesel vehicle it's selling about 100,000 vehicles, we will inch towards it as industry. When we go towards it, the margins will shrink, but absolute numbers will be very high.

[Operator]

Your next question comes from the line of Preet from InCred AMC.

[Preet Pitani, analyst]

My last question -- one more question will be on the line of buses guidance for the delivery in next year what we are expecting. For example, now management has guided of around 1,500 to 2,000 buses delivery by the end of -- by FY '26. And in 10 months, we have done around 1,000, 1,100 buses. So are we expecting more than 200 buses delivery per quarter -- per month in next 2 months?

[Mahesh Subramanian, executive]

So that is our aim. So we are looking at something like that, what you are speaking for next year.

[Preet Pitani, analyst]

And what are we guiding for the next 2 years, '26 and '27, what are our estimates?

[Mahesh Subramanian, executive]

See, I told you the EV industry is at a CAGR of 30%-plus, and we will be better than that. As Olectra, in the last 3 years, we have been outperforming the EV industry in terms of the segment where we are in. We'll -- our aim is to continue to do that. Exact number, I don't want to put some number on the table because there are a lot of research work goes on market adoption and how we are going to push them. We'll continue -- our aim is to continue to be #1 and outperform market in terms of CAGR growth.

[Operator]

Your next question comes from [ Gaurang ] from [ Utility Unified ].

[Unknown Analyst]

Yes, sir, in the recently conducted Telangana Rising Summit, we've seen like the Olectra -- the MEIL Group showcasing a car, and that car was very much similar to a Chinese car called as Skywell ET5. So my -- just my request is that if Olectra or MEIL group is venturing into EV, we can explore more key -- important key OEMs like Xaiomi, then there is NIO, then there is XPENG and then there is BYD. These are like top 4 of the Chinese OEMs.

So my request you to, sir, is that we can explore partnership with these 4 companies. So sir, any comments on that?

[Mahesh Subramanian, executive]

Thanks for your suggestion. There is no comment on it. I only thank you for giving such suggestion.

[Operator]

Your next question comes from the line of [ Aniket ] from [ CR Kotari Sons and Stockbroking ].

[Unknown Analyst]

My final question would be regarding to the current 9 months order book. What are the numbers which are -- where are we standing right now in terms of order book?

[B. Chandra, executive]

In terms of order book, we have 9,000-plus orders, pending orders. We have delivered till now more than 3,600 numbers. So -- and as already clearly given a message by our MD, so the deliveries will be in line with the adoption, in line with the readiness, in line with the depot infrastructure, everything ready. So we are capable of delivering as per the market adoption.

[Operator]

As there are no further questions from the participants, I now hand the conference over to the Olectra management for closing comments.

[B. Chandra, executive]

Yes. In conclusion, we would like to thank all our shareholders and stakeholders for their continued support, patience and confidence in the company's growth journey. As we move into quarter 4, we continue to see early demand momentum, particularly in the EV segment supported by the ongoing ramp-up in deliveries and stable order visibility.

We expect this momentum to translate into strong sequential performance in revenues, while margins are likely to remain broadly stable, factoring in product mix dynamics and operating leverage from higher volumes. Overall, for financial year '25, '26 we remain cautiously optimistic and expect to deliver healthy growth in consolidated revenue and profitability driven by execution discipline, improving scale and sustained demand across our key segments.

Before we close, I would like to highlight that some of the statements made today are forward-looking in nature and are based on our current expectations and assumptions. Actual results may differ materially due to various risks and uncertainties including market conditions, supply chain dynamics, regulatory changes, other factors beyond the company's control.

Thank you once again for your continued support.

[Mahesh Subramanian, executive]

Thank you investors, thank you for your continued support to the company and the management.

[Operator]

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