Rolex Rings Ltd
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Q3-2026 Earnings Call
AI Summary
Earnings Call on Feb 10, 2026
Mixed Markets: Strong growth continued in Europe and India, but US sales remained significantly down due to tariffs, with management expecting recovery in FY '27.
Revenue & Margins: Q3 FY '26 revenue reached INR 275 crores, up 6–7% YoY; EBITDA margin improved to 25.7%, up from 24.2% in Q2.
US Tariff Update: US import duties reduced from 53% to 25%, and potentially to 18%, but management awaits final notification and expects full impact from Q1 FY '27.
Order Book & Outlook: Order book for Q1 FY '27 stands at INR 325–330 crores, with management guiding for 15–18% revenue growth in FY '27.
Strong Cash Flow: Company reported healthy free cash flow and remains net debt-free.
Capacity Utilization: Utilization at 62–63% in the first nine months, expected to rise to 72–75% in FY '27 as demand recovers.
Segment Mix: Auto components outpaced bearings; domestic bearing rings saw robust growth while export bearing rings lagged.
The company faced ongoing challenges from high US tariffs on auto components and bearing rings, with duties having ranged from 53% to 25%. A recent US-India tariff bill is expected to reduce duties further to 18% on certain products, but management is awaiting detailed notification and clarity on implementation. They expect little benefit in the current quarter but anticipate normalization and revived US demand beginning in Q1 FY '27.
European and domestic markets showed strong performance, with exports to Europe up 10% over the last quarter and 25% compared to the prior year. Domestic sales rose 5–6% sequentially and 15% YoY. In contrast, US sales fell 10% QoQ and 30% YoY due to trade headwinds, but management expects a strong recovery once tariffs stabilize.
Auto components led growth, with segment revenue rising 14% over Q2, while bearing rings saw a 7.5% sequential drop. The domestic bearing ring business performed well, driven by expanding customers and market share, but export bearing rings remained weak. Several new customers were onboarded, mainly in auto components, with some expected to scale up from Q1 FY '27.
EBITDA margin improved to 25.7% in Q3 FY '26, up from 24.2% in the prior quarter, driven by cost management. Net operating EBITDA margin (excluding other income) was about 21%, with potential to reach 22–22.5% if utilization rises. Auto components command higher margins than bearing rings due to value-added processes and complexity.
Current production capacity stands at 105,000–115,000 metric tons per annum. Capacity utilization was around 62–63% for the first nine months, with management targeting 72–75% in the coming year as order book visibility and market recovery improve.
Order book for Q1 FY '27 is INR 325–330 crores, reflecting improved demand visibility. Management expects FY '26 revenue to remain flat but guides for 15–18% growth in FY '27, citing new orders from both Europe and the US, and ongoing ramp-up of recently added customers. Over a 3–5 year horizon, they forecast 12–14% CAGR, aiming to double revenue by 2030.
The company remains net debt-free with strong operating cash flow and generated free cash flow of INR 87 crores in H1, despite undertaking INR 112 crores of capex. Surplus funds are invested and contribute to other income.
Recent promoter share buying and selling were attributed to urgent funding needs and are not expected to recur. The promoter pledge is minimal—less than 5% of promoter holdings—used to raise temporary funds, and is planned to be released in the near future.
Good afternoon, everyone. On behalf of Equirus Securities, I welcome you all to the Q3 FY '26 Post Earnings Conference Call of Rolex Rings. From the management side, we have Mr. Manesh Madeka, Chairman and Managing Director; Mr. Mihir Madeka; and Mr. Hiren Doshi.
So, without further ado, I would like to hand over the call for opening remarks, post which we can have a Q&A session. Over to you, Hiren bhai.
Thank you, Mihir. We at Rolex acknowledge the efforts of Team Equirus for arranging this call for the earnings updates for the quarter ended and period ended on 31st December 2025. Warm good afternoon to all the participants. Thank you very much for spending your valuable time. I welcome you all.
Before taking you through the numbers, I would like to apprise the overall business outlook management perception for the approximate future. As you all are aware that recently, the U.S. has came out or rather declared the U.S.-India tariff bill and announced that they have reduced the import duties to 18%, where it was 50% in the cases.
I would like to update over here that particularly what they have -- the notification, what it has been issued by the U.S. Gazette and Custom and Boarders from the President's office that they have removed this Russian oil penalty, which was levied in the -- somewhere in August 2025 by particular reclamation. And that particular notification is being withdrawn.
Now effectively, today is the first -- rather you can say, a working day at U.S. post announcement of this tariff structure. We are yet to get the final inputs or final outcome that how it would be 18% or what would be the rate on our products at U.S. because in November '25, the reciprocal -- this Russian oil penalty has already been moved off from the -- particularly the products used for medium and heavy-duty vehicles, parts for the medium and heavy-duty vehicles. So, till now or rather from 1st November onwards, we have been charged 25% duty apart from the regular base structure of 3%.
Now it's yet to see how this 25% would come down to 18% or how it would be effective. Again, almost 40%, 43% of the days of the current or last quarter of this fiscal has already been passed when these announcements were made. So, there would be a hardly positive or rather pushing moment for this particular last quarter of this fiscal.
But we are very much positive from the first quarter of FY '27 that now the things would be on a very streamline and U.S. would be on track because till now for last 6 to 8 months, customers are very much in the state of the wait and watch kind of situation. They have hold on the entire or rather more than 50% of their imports and they were not able to -- rather their customers are also not giving that feedback and entire chain has already been disturbed. So, we expect that hurdle to be overcome in the -- from the first quarter of next fiscal, that is FY '26 onwards. And we hope that we will be on track or rather U.S. would be on a moving positively from the next fiscal.
Coming to the quarterly numbers for the quarter ended December or rather Q3 of FY '26. I would like to tell you that there is a quite positive movement in auto components in both the front, the domestic as well as export. I would like to tell that over quarter 2, we had a growth of almost 14% on the auto component revenue in this Q3. Saying in case of bearing rings, we had a degrowth of 7.5% over quarter 2.
Further to drill down this improvement, there is almost 10% incremental revenue in Europe exports over quarter 2 and which is, you can say, almost 25% compared to my FY '25 full numbers with the 9-month number -- I'm talking in terms of percentage. So there, there is a good movement and momentum at European market where we were struggling till last fiscal.
In the domestic front also, it is almost 5% to 6% upward trend compared to Q2 of this fiscal and vis-a-vis 15% improvement over the entire fiscal '25. The only worry or rather where we got a hit is in the U.S. market, wherein 10% downfall in the Q3 compared to Q2. And if we annualize it, it is almost 30% down compared to fiscal '25, what we had. So, U.S. is still under the shadow of direct deal. And now we expect some kind of U-turn of this downfall from the Q1 of FY '27.
On the other hand, as I told that domestic and European markets have been the positive curve and expect it to be continue, to be improved from the first quarter onwards. On the basis of the program, on the basis of the orders what we have received forecast we have been given by the customer, we are very much positive as far as fiscal '27 is concerned.
And in this last quarter, a couple of new customers have already been enrolled or rather it has -- SOP has been started, though at a marginal level. But down the line from the Q1 of fiscal '27, it will be ramped up and further it will be increased.
Now taking you to the numbers for the Q3 as well as 9 months for this current fiscal.
[Audio Gap]
Revenue from the operations for the Q3 of this current fiscal, it has touched almost INR 275 crores, which was INR 271 crores in the last quarter vis-a-vis INR 260 crores of the same quarter in the corresponding previous year, that is December '24. Here, we had a growth of almost 10% in the -- 6% to 7% on Q3 of FY '25 versus Q3 of FY '26. Compared to the previous quarter, we had a marginal growth of a couple of percentage only.
In terms of EBITDA, we are maintaining or rather we are trying to improvise on the basis of the scale of this cost measurement and cost reduction area. In Q2, we had an EBITDA in terms of almost INR 69 crores, which was 24.2% of my overall gross EBITDA. And in this last quarter ended December '26 --'25, we recorded INR 75 crores of EBITDA, which is coming to 25.7% of my gross revenue.
If we talk about the EBITDA, net of the other income, it is almost 21% in Q3, that is December '25, which was 20.2% in the previous quarter, and it was somewhere about 20.80% for the last fiscal, that is FY '25. For the corresponding 9-month period, if I tell you, we had this net EBITDA, netting of other income. It is 21.6% in the fiscal '24 and almost again, on the same line, 20.77 percentage for the 9 months ended on December '25.
Coming to operating PBT and PAT, in this Q3 FY '26, we have recorded INR 65.5 crores as a profit before tax, which was INR 59 crores in the previous quarter, that is second quarter of fiscal '26. And the same, it was INR 45 crores in the Q3 of FY '25, that is December '24 quarter. So, there is a sharp increase on a quarterly basis as well as on comparing to the previous year's quarter.
Here I would like to tell there is a significant improvement because of the overall other income, what it has been increased in this particular quarter compared to previous quarter as well as the quarter which was there in December '24. Profit after tax in Q3 fiscal '26, it is almost INR 48 crores, which was INR 44 crores in the previous quarter. And again, in December '24, it was INR 20 crores only because we had an exceptional item of ROR interest provided in that December '24 quarter.
Here, in this quarter also, PAT is being reduced by almost INR 2.5 crores, that is by way of exceptional item, which is for the impact of the new labor code, which has been implemented from 21st November '25, bearing the potential gratuity liability, it is supposed to be disclosed and valued and to be accounted in this December '25 quarter only. So that has been valued at INR 2.5-odd crores, which has been net of in this profit after tax figures.
Revenue bifurcation, bearing range, it is almost 52% of my overall revenue of components, 48% consists of auto component business. In terms of exports, it is 47% and domestic 53% in this 9 months period. Certain business development, as I mentioned, that 10% improvement on overall exports to Europe over Q2, 25% compared to fiscal '25. And again, 10% downfall in exports to U.S. over Q2, which is almost 30% down over fiscal '25, as I have informed.
As I said that tariff hangover is expected to be normal from Q1 FY '27, and we expect a sharp recovery in the U.S. market. The downfall what we had 30% of the revenue in this fiscal would definitely move further in a positive way. We do have a bit more visibility as far as the auto component business or growth in the auto component business on the basis of the orders or forecast given by the new customers, particularly from the Europe. We have also added 1 customer from Mexico and from USA That would be starting somewhere about mid of fiscal '27 and 1 customer in quarter 3 of fiscal '27.
On the bifurcation of my revenue split, rather it is 53% of overall revenue, it goes to the passenger vehicle, then it's 19%, which is there for the industrial segment, and 21% for the commercial vehicle and heavy commercial vehicle and EV almost 7.5%, 7.6% of my overall revenue. Here I would like to tell that 53% of this passenger vehicle share is because of good reduction in my CV and HCV portion.
The U.S., one of the main customers who is a vital or rather who is procuring good amount of auto components for the CV and HCV is under pressure because of this tariff. So, actually it's not like that we have reduced or rather we got the incremental share in passenger vehicle, though it is almost on the same line, but the downfall in the commercial vehicle has moved up by percentage of my passenger vehicles.
Total revenue in terms of operations for the 9-month figure it is INR 838 crores almost without considering other income. Other income is almost INR 47 crores, both put together INR 85-odd crores gross revenue has been recorded in this 9 months of the current fiscal, which consists almost INR 365 crore revenue from the overseas business, which is my exports as well as my export incentives and almost INR 473 crores in the domestic market, which is including my product sales as well as scrap revenue, which was in last year fiscal '24, it is total, it is almost INR 1,155 crores, wherein INR 553 crores consists of exports, yes, and INR 601 crores in domestic market.
I would like to tell here, we are almost on the same line or as I have already informed that we would be having the same kind of numbers for the fiscal '26, what we had in fiscal '25. But let me tell you the EBITDA what we had in fiscal '25, which is 22.7% has almost 24.9% in these 9 months period, amounting to INR 221 crores, which was INR 269 crores for the full year.
As I was mentioning earlier, PBT and PAT for these entire 9 months profit before tax is almost INR 192 crores, which was INR 226 crores for the full fiscal of FY '25. Again, PAT is INR 141 crores, which was INR 174 crores in the full fiscal of FY '25. Here, we do have -- as I told you that here, the PAT is a bit improved compared to the fiscal '25 numbers. And as well as PBT also, it has increased by a bit compared to the overall fiscal of FY '25.
Operating cash flow, we had for the first half, it is almost INR 87-odd crores of free cash flow what we have generated, again, with a CapEx of INR 112 crores in terms of a couple of furnaces and a small forging line. As we are very much aware that company is having net negative debt for the last couple of years. Company is having surpluses, which has been parked for [indiscernible] and other income. So overall, there is a negative or rather debt equity ratio.
Coming to the ROCE return on equity, it is 17% for fiscal '24. It is 16% for fiscal '25, and I expect to be in the range of 15% to 16% for the fiscal '26. These are the detailed numbers, what has already been shared with you people.
Now I would like to request team Equirus to take it further and we can initiate Q&A session.
[Operator Instructions] So, the first question is from the line of Jason Soans.
Am I audible?
Yes, Jason.
Yes. Sure. So first, I just wanted to know, sir, the numbers in terms of the segments, export bearing rings, export. So firstly, the numbers for Q3 FY '26 and then Q3 FY '25.
See, for the Q3, the domestic bearing, we have recorded -- I'll tell you in terms of million, it is INR 953.69. Export bearing ring, it is INR 380.5. Domestic auto component, it is INR 397.80, export auto components it's INR 839.87. Scrap revenue it is INR 149.11, And export incentives, it is INR 27.35. This all puts together INR 274.37 for the Q3 of December '25.
Okay. And now Q3 FY '25, sir, which is the last year corresponding?
You want the full year or for the 9 months?
No, no, only the Q3, sir.
Okay, Q3. Domestic bearing ring...
The last one ending in December.
Domestic bearing ring, it is INR 730.39. Export bearing ring it is INR 283.33. Domestic auto component it is INR 386. Export auto components, it's INR 995.38.
INR 995 you said, sir?
Yes.
INR 995.38. Okay.
Yes, yes.
And sir, scrap and export incentive?
Scrap was INR 167.38. Export incentives, it is INR 36.42.
INR 36.42?
Yes.
Okay. Sure, sir.
Now it's come to INR 598.82.
Sure, sir. Now next, just wanted to ask, sir, so I mean, even in the previous con call last quarter, you had mentioned that you are expecting the tariff from the 53% to be reduced to 18% to 20% on auto components. Now just wanted to know that has -- you did speak in the opening remarks that although that is 18% has come, but fine print has still not come.
So just wanted some clarity, sir, what exactly -- and also, I wanted to know 18% on the MHCV parts, basically the auto component parts and bearing rings as well, right? So both will be reduced to 18%, the tariffs.
See, as I told you initially, for this auto components, till 31st of October, it was in totality 53% import duties were there. From 1st of November, they have given certain relaxations that is from Section 232, which has reduced 25% duty from 53%. And as of now or rather till 7th of February, we have been charged at 25% with the duty plus basic customs duty, what it was 2.97% along with merchandise fees and this thing.
So now looking to the notification or rather the issued by the U.S. government, we are not sure whether this 25% what it is applicable to us as of now, because we also got a feedback that it would be a 0 also in certain auto components, it would be an 18% also on certain kind of this thing, or it may continue with the 25% also, but that is subject to the clarification and detailed notification along with the respective adjacent, then only we'll be able to know.
And once we'll have some kind of clearance at U.S. customs, then we'll be able to know maybe in the next couple of days that how this would be implemented and what has been interpreted at their level, because broadly, they have simply told that -- on the one side, they told that Russian import duty has been moved off, which was 25%. On the other side, it is telling that duty would be 18%. So, we are not aware unless and until, or even not would like to comment unless and until we have something authenticated on paper.
Sure, sir. So just to summarize, till 31st October, you had 53% tariffs. Then from that 1st November to this point in time, you had around 28% tariff. You said 25% plus some surcharge, et cetera, which was coming up to 28%. And now you will wait for the fine print with the HSN, et cetera, as to what exactly that will give us the clear picture. Correct, sir?
Yes, very true.
Correct, sir. Okay. And sir, this -- so again, so auto components definitely must be going by a large number to the U.S. How about bearing rings exports, sir? What is that proportion? Is that also a significant proportion?
Bearing ring, as I told you, if you see bearing ring in terms of exports, it is, we can say, 15% to 16% of my overall revenue, which is there. And there we got a hit from majority from the European market. And yet, it has not been fully recovered.
If you see my last 3 quarters or rather all the 3 quarters for this current fiscal, my bearing ring export of overall revenue it ranges in between 13% to 15%. But let me tell you, say, in fiscal '24, the same number was almost 23%. And in fiscal '25, it went down to 15%. And in this last 3 quarters, we are having average of 13% to 14% of overall export bearing ring.
Okay. No, sir, what I wanted to know is -- so see, the tariff is basically emanating from the U.S. Now what I understand is the bearing rings is basically 55% domestic and 45% is exports. So from that export component, how much goes to the U.S.? I'm only talking about bearing rings.
Okay. That portion of bearing ring to U.S., let me tell you, in terms of number, say, for example, for this 9 months, I told you that export bearing ring was INR 113 crores. Out of that, export to U.S. is INR 32 crores.
Okay. It's INR 32 crores. Sure.
So you can say 1/3 of overall bearing ring business, rather export bearing ring business that comes from the U.S. and remaining is from Europe and Canada, Mexico.
Okay. And sir, on this, the tariff is -- that also will be clarified. That's what you're saying.
There we expect because we didn't have any kind of duty paid structure for the bearing ring business. But there we expect it would be coming down to -- because it was 53% and now it would be coming down to 25%.
Okay. Now you're expecting it to come to 25%.
Yes.
Okay. And sir, revenue guidance, '26, I think you alluded that it will be flat in terms of revenue. And for '27, you still stick to the mid high teen growth for '27 revenue-wise?
Yes, yes. As of now, we still expect and on the basis of forecast on the same, we expect in between maybe 16% to -- or rather 15% to 18% of overall growth.
See, because in U.S., like 25% has been [indiscernible] reduced to 25%. So, our customers in U.S., they are happy with this 25% also. But now definitely, it is going to be 18%. But when, we are waiting for the announcement from U.S. government. So, it has already been declared. So definitely it is going to be there within a week or 2-week or something. So, once it is there, then there are more chance of getting more business from U.S.
Sure. And sir, just lastly, one thing. Just wanted to know the revenue breakup between U.S., India and Europe and others for 9 months.
Total revenue?
Yes, total revenue, U.S., India, Europe and others.
I'll tell you a broad percentage of that. Say, 54% is domestic. 22% is U.S. Same percentage it is there for the Europe. And the remaining in between Mexico, Canada, Thailand, et cetera, might be a couple of more points, 2.5%, 3% something.
Our next question is from the line of Amar.
Am I audible, sir?
Yes.
Sir, I just wanted to ask you that what are the current capacities you have right now?
See, in terms of metric tons, the achievable production capacity is somewhere about in the range of 105,000 metric tons to 115,000 metric tons per annum.
Okay. And what's your order book, including the additions in Q3?
Order book as of now on a monthly basis, it is ranging somewhere about INR 95 crores to INR 105 crores for the next 3 months.
Okay. For the -- for one quarter, right, this is for?
Yes, last quarter, yes.
Okay. And what is the total order book, sir?
Total order book, you know what happened, sometimes my overseas customer gives us the forecast for 6 months or something like that, whereas domestic might be a couple of months. But if you ask me Q1, what I'm looking for or rather on the basis of the forecast, what we are targeting is somewhere about INR 325 crores or something like that for the first quarter.
Okay. So for the first quarter of FY '27, your order book will stand at close to INR 325 crores. Is that what you're saying?
INR 325 crores to INR 330 crores.
Okay. That will be your total order book as of Q1, right?
Yes.
We take the next question from the line of Manish.
Am I audible?
Yes, now you are audible.
Congratulations for the good set of numbers. So, I have 2 queries. Now first query is, what we have seen is promoters buying some shares and selling some shares in December quarter within a couple of days. So normally, we don't see that happening. So, can we know the reason behind it?
Let me tell you, definitely, you have not seen frequently in the past. And again, you will not be seeing the same in future. There is some kind of, I would say, miscalculation or something, some kind of -- initially promoters has acquired to increase his stake only, but there were some kind of urgency wherein the funds was supposed to be deployed in a day or 2 only. So that was the temporary option available to a particular promoter. And that is why it has.
On the contrary, promoters had a loss in setting up this, tax implication was quite negative. But that was by way of some compulsion it has been done. But now onwards, it would not be there.
Okay. No, I just asked because it's a little weird promoter buying some share at INR 118 and selling at INR 129. So that's the reason I asked this question. My second thing is we have seen the pledging for promoter first time. Do you know any reason for the pledge?
Pledge, again, they have given or rather raise certain fund towards that security and which they have committed to invest somewhere. But if you see overall quantum of the pledge against their holding is -- promoter holding, you can say it's hardly 4% to 5% of overall promoter stakes, less than 5%. And in terms of total equity, it is somewhere about 2.5%, 2.7% something.
That's what, the pledge is so small. That's the reason, what was the necessity of doing that.
Yes. [indiscernible] they've committed and maybe down the line 3% to 6% would be spend up also.
We have our next question from the line of Saurabh Jain.
Am I audible, sir?
Yes.
I have a couple of questions to begin with, sir, at the beginning of the year, we had SOPs of INR 175-odd crores, which were supposed to get into schedule during the second half. So how much of that INR 175-odd crores got registered in Q4?
And do you still think that -- last time on the call, you had mentioned that SOPs of around INR 225 crores to INR 235 crores would go into FY '27 because we had some new orders of INR 40 crores, INR 50-odd crores. So, if you can just throw some light on that?
See, your first part of your question, say, out of that INR 175 crores revenue what we have projected and for the new program, new customers, out of that almost 60% of that volume, it has been started.
Why 60%? It's not like that order canceled or rather order has not started. It has started with a low offtake. And certain orders, it has been postponed because of this -- let me tell you 2 big customers based at U.S. it was completely rather they have -- what you say temporarily just closed down that particular plant where the import duty was 3%. And there after phase-wise, it has went to 53%. So it is something what you say, a very unviable factor for the customer of my customer. So those couple of programs have completely been hold or rather you can see a 0 supply as on date, which was significant amount.
And here, again, as I told you initial part or maybe in the earlier commentary also that we had a loss of existing business maybe of 20% to 30% of bearing rings as well as particularly from the U.S., as I've just told that 30% of my U.S. revenue compared to previous fiscal, it has reduced in this current fiscal. Now these numbers, whatever the reduction is there, in spite of that, we are having the same kind of flat top line.
So how I'll be able to maintain that top line, that is because of the new orders, new customers. So it's not that it has not moved. It has moved. A couple of reasons. As I told you, that volume has been reduced. A few orders have been deferred to 3 to 6 months, a few orders have deferred by almost a year or so.
Coming to the second part of your question, where you were mentioning that INR 225 crores, INR 230-odd crores something for the fiscal '27. We expect, as I told you that maybe we would be closing somewhere about INR 1,150-odd something top line in this year, wherein I expect almost INR 200-odd crores, somewhere about INR 180 crores to INR 200 crores additional revenue from these new programs because something it has already been started.
Yes, that's helpful, sir. Just a follow-up to the previous question. You mentioned that we have a monthly order book of INR 95 crores to INR 105 crores for the coming 3 months. So if you can just bifurcate that for us in terms of bearing rings and auto components?
Sir, bearing rings ranges or near to 45% to 48%. Auto components, again, 50% to 55%.
Okay. And sir, another thing is, of course, you have mentioned about the tariffs and more clarity is required. But post the recent announcements of Europe FDA and recent developments with respect to U.S. tariffs, how has been the communication with our overseas clients, like in terms of what kind of volume offtake can we see in the coming fiscal if at all it comes to 18% and 25%?
See, I told you this 18% number as they have announced somewhere on 4th of Feb or something, and they again came out that from 7th Feb, it would be implemented 7th Feb, it was Saturday. And today, we are on the 10th afternoon, which is -- you can say the first working day, it was 9th over there. So, we are yet to know how it is.
But as far as overall, we communicated and Mr. Mihir also conveyed that my customer, as of now, they are okay or rather they have already absorbed 25% of import duty. And we think once the momentum start or once the overall activity would be on back to track, we would be -- do not expect any negative impact on this thing that can be managed because the kind of quality of the components and the range of the components what we are supplying, it would be difficult to get it from some other part, other countries on a very recent way or even in other countries, as you must have seen, the duty structure might be on a higher side compared to India.
Coming to the other part, Europe, as you did, definitely, it is welcome and our customers have again starting reviving or rather revising their certain calculations. And they are -- they have already indicated that they would like to source more from India. Now they are exploring what kind of components and how the value-added full components they can be import from the India and particularly from the Rolex. That is what the feedback we got from the European customers.
Okay. If I can ask this from other perspective, what has been our capacity utilization in first 9 months? And how do you think it is going to play out in FY '27 and '28?
We are almost 62%, 63% utilization of my overall this thing. And I hope 0r rather we expect it would be somewhere about crossing 72% -- in between 72% to 75% of utilization in next year.
Great, sir. And lastly, if you can comment on profitability, how do you see with tariffs moving and volumes going up, as you mentioned that utilization is expected to increase from 62%, 63% to 72%, 75%. So how do you see profitability, vis-a-vis if you can just throw some light in respect to both the segments, bearings and auto components.
See, I would like to comment on the net operating margin because I'm not considering the other income margin. It might be temporary because it consists of certain my investment income and foreign currency gain, et cetera.
But coming to the net operating revenue, all you can say our net EBITDA, which is somewhere about -- it ranges of 20% and in between 22% to -- that is 20% to 21%. And once I'll be having utilization up to 68%, 70% or something like that, definitely, this operating margin would touch maybe 22% or 22.5% even we can achieve once we have that kind of scale of economy.
Again, bifurcating into the bearing and auto components, definitely auto components, we have better margin compared to the bearing rings because of the critical operations as well as multi operations and high depreciation level. But broadly, we can say bearing rings would be in the...
[Audio Gap]
Hiren sir, you were talking about segmental profitability, auto and bearing rings.
Yes. As I was mentioning, auto components will always be having better margin because of critical operations and depreciation level. And even the application of the auto components for the EV hybrid vehicles obviously will carry a good amount of value-added processes. So obviously, the margins are on a higher side compared to bearing ring.
Traditionally or rather bearing ring, if I figure it out, it would be somewhere about 18% to 22% some kind of net operating EBITDA, whereas auto components, it ranges in between 20% to 25% of net EBITDA margin.
Okay. And any update on ROR, sir?
ROR, as you are aware that recently, I have updated that the bankers -- we met bankers, and we tried to convince them. And initially, they got convinced that there is some kind of error, some kind of calculation they need to revise it. So that's why they have reversed the -- rather they have called off the demand, what they have issued. And maybe in this week only, we are again planning to meet Executive Director of the lead bank to take up this matter as quick as possible. And we are going to submit that we would like to close this matter maybe before March '26.
So sir, 1 question from my side. Now with the Europe FTA also and in the opening remarks, we had mentioned that we are seeing some auto contracts from the Europe side of business also. So, what do we see here, how the things can move? Because like what I want to understand is what are the current duties which we are paying right now? And under FTA, how would it impact us? Some color on that.
I'm sorry, I'm not getting your question because in between your voice was cracking.
Is it okay now? Is my voice audible now?
It's too low. Tell me, yes.
Yes. So, I was saying that due to this Europe FTA thing, now what are the current margin structure, what we are exporting there? And with the FTA, what is something which we expect on our product portfolio. And with our interactions with a few auto clients there, auto component guys there, are we seeing some kind of positive traction that we may see some order flowing here?
Yes, definitely. I told you that a couple of customers, our existing customers, they are in dialogues post this deal with the Europe, they are a bit more hopeful and expecting some more products because the -- you better know the conversion cost and the production cost at Europe has significantly increased. So, we would be having that leverage over there. And whether it is Europe or U.S., we are having more or less same kind of profitability unless and until if it is a bearing ring and auto components.
Okay. Secondly, sir, in terms of the revenue numbers, the segment numbers which you had given, so if we dissect that, the bearing segment on a year-on-year basis has seen a decent 30% kind of a growth. So, can you throw some color on how -- what kind of traction will it continue going ahead as well in terms of the growth levels which we are seeing on a Y-o-Y basis here?
See the percentage of auto has increased, that is why the percentage of bearing has gone down. Compared to my overall growth in last 2 years, wherein we were a bit having tough phase for the industrial application bearing rings and even the commercial vehicle application bearing rings, there we had a good amount of dip and even the particular 1 customer group where we were catering somewhere about 22%, 23% of our overall revenue, of total revenue I'm telling that has gone down to even 10%, 11%. So, there is a significant reduction of that particular customer who is mainly into non-automotive bearing ring segment.
But now I think it's high time, and we are expecting some turnaround from there also. But bearing ring, apart from that, in the auto sector, we are getting good response. A couple of other domestic customers who were on a lower side, they have increased the existing volume as well as they have added new products also. The couple of main bearing manufacturers in the domestic market, they have increased their wallet share and they are contributing somewhere about 12%, 13%, 14% of my overall revenue, which was earlier 9%, 10%.
But again, as I told initially also that my bearing ring export before 1.5 years was 22% of my overall revenue, whereas it has reduced to 13%, 13.5% in this 9 months. So, export is a huge dip as far as overall bearing ring is concerned. But no doubt, it would not come up as quickly as auto components because the new order book, what we have received, the new customers, what we have enrolled, their majority 60%, 65% are from -- for the different kind of auto components.
Right. Sir, but export is another story. But when I see your domestic bearing ring numbers, here basically for the last 5 quarters, you have been growing at a decent kind of a growth rate like this year -- this quarter also year-on-year, it was up around 30%. So, is it that because we are seeing some traction from the new capacities of these domestic bearing ring players?
That's what I told that another -- except that 1 customer, other 3, 4 main players who have increased their number of components, who have increased the volume of that particular this thing and adding the new facilities also.
One of the customer who has yet not initiated one of its production capacity settled in Gujarat, now they have started to the extent of 30%, 40% utilization and where we got some chance over there. So those players are showing traction, and it is on their expansion mode. And down the line, 6 months, further, we are expecting the same kind of growth in the domestic bearing market.
The next question is from Kush Nahar.
Am I audible now?
Yes.
So, a couple of questions. So, first is these new customers that we have added, as you mentioned in Q3 FY '26. So, this would be in which segment bearing rings or auto components and if it's domestic or exports? And just wanted to understand what was our right to win for these customers. So, like you mentioned that there is an increase in wallet share. So, are we cost competitive or like just some elaboration on how are we replacing the existing supplier? So that is one.
Second, I think that many of our bearing ring customers are expanding in India. So, like previously, we have mentioned that we have around 30% to 35% market share in the domestic bearing rings. So, going ahead in these new brands, do we see it increasing directionally towards 50%, 55%? Like are we benefiting from that expansion since they all want to make India as an exporting hub also?
And lastly, considering the volume normalization that we are expecting because of the trade deals, so more from a 3- to 5-year perspective, any sense on the CAGR growth that we can do in terms of top line, considering the order book and the commentary of our customers?
Coming to -- rather taking up your portion of the question, last portion that for next 3 to 5 years or something. See, let me tell you, it's very difficult to tell you the CAGR for the next -- rather beyond 3 years from now. But definitely, the order book and the program tenure, what we have received, we expect somewhere about in between 12% to 14% CAGR growth on -- for the next 3 to 5 years. And down the line, if I'll tell you today, we are there in March '26, maybe March 2030, we would be touching or rather in turn, we have a plan to almost double the revenue, what we have. That is the last portion.
Prior to that, I think I already told that domestic players who are in the expansion mode, particularly the bearing manufacturers who are utilizing or who are adding new products, who are adding products which they were initially or rather earlier they were importing. So, we got that good chunk of that order or rather good chunk from that particular segment and even the existing one. That is why the 3, 4 players for the bearing ring, the percentage or contribution to the revenue has increased. And overall, my domestic bearing ring business has increased. I don't know, can you just repeat the first part of your question.
[indiscernible]
I think the new customer, what I was mentioning, what we have added in this quarter that both these customers are for auto components. And maybe in this month, before end of February, one of the bearing ring customer would be started.
And sir, just some elaboration on the right to win, like because you must be replacing the existing supplier. So is it the cost or is it the sourcing strategy which the companies are changing, that they are preferring more Indian players.
Generally, it is difficult to source the or rather to intervene into the existing program. But one of my customer who is sourcing these components from the other country. And now because of restrictions of his customer, he is required to move to the preferred countries where India would be. So in that case, they have given us this order and in which they want immediate supply, maybe down the line 6 to 8 months only.
Otherwise, there would be a new program, new product development, new OEMs who are designing or rather who are developing a new kind of vehicles, that will attract the new vendor. And these companies already, if they are into certain program, they are in touch with the -- for the forthcoming programs to a potential forging player, having a wide range of capacity-wide and able to offer most valuable or rather the most value-added processes. So that's why we got a preference somewhere over to the other countries.
Due to limitations of the time, that would be the last question. So over to you, Hiren bhai, for the closing remarks, and we can end the call.
Yes. Thank you very much to Team Equirus as well as the -- our investor analysts from that team. As usual, I would like to tell -- I would like to reiterate that management is very much concerned and dedicated for the development of this thing, though we had a couple of hurdles as far as the overall performance that is execution of that thing because of certain geopolitical reasons or somehow some other factors which have restricted our this thing.
But I would like to clarify that the challenges what we are facing, it is not only to the Rolex Rings or something. This is the overall economy or rather even the other players in the other segments, they are also facing the same kind of challenges. But here, we would -- I'm pleased to say that we try to manage the momentum. We didn't try to lose the overall utilization as well as overall top line. And at the same time, we tried to maintain the net operating EBITDA, net operating margin, and it would be on a positive side.
And on the basis of the older program, no doubt, it was there supposed to be executed in the fiscal '26 only. But as you all are aware that these are the situations where the complete calculations or rather the customers, the buying feasibility is being disturbed. So now we think it would be on a track or maybe from the next quarter onwards, as I was mentioning, we would be having that incremental momentum and along with the same kind of profitability.
And maybe in next year or so, again, we are going to honor the expectations of our stakeholders in all way. That is what we are expecting, and that is what we would like to convey to our respectable stakeholders.
Thank you very much for investing. Thank you very much for trusting. On behalf of Rolex Rings, again, I would like to acknowledge all the investors and the participation along with the Equirus team. Thank you.
Thank you.