Batliboi — Q1 FY26 earnings call

Basically, we have a total land of 45 acres, of which 4 acres has been earmarked for land for sale. The money for that will be used to repay the non-interest bearing loan of the promoters. We expect that this land of roughly 4 acres would fetch us roughly about INR40 crores. We also have another 8 acres of land, which we will look at opportunities in the future for converting that into a regular source of income.

Management provided specific details on land monetization plans, including expected proceeds and future development strategy for other parcels, which impacts debt repayment and future income streams.

Asked by Majid Ahamed

See, right now the margin is subdued, but the capex that is now happening in our Machine Tool division will give us product efficiency and a production base to grow. Our Engineering division with the merger is also going to add to the bottom line and the top line. So, we expect that all this and the future of textile looking good for the coming quarters. We look at a range of 10%-12% in the fiscal '26.

Analyst questioned the low EBITDA margin, and management linked future margin improvement to capex benefits, merger synergies, and positive outlook for the textile sector.

Asked by Majid Ahamed

Yes, at the current our debt level comprises of basically a cash credit of about INR11 crores from the banks. And we have a small term loan of about INR1.5 crores or INR1.7 crores roughly... So primarily, we have a very limited exposure, both in terms of short term and long term debt, which is adequately covered by roughly about INR15 crores, which we have cash on hand, which we've invested in safe securities... currently we are at the moment more or less at zero debt, zero interest bearing level.

Analyst inquired about debt levels post-merger, and management clarified the low debt exposure, significant cash reserves, and near net-zero debt position, indicating strong financial health.

Asked by Shreya

Basically understand we are in the CNC machine tool business where we are manufacturing turning centers and vertical machining centers. These are basically machines which are used abundantly, not only auto sector, but in the agricultural sector, in the job shop, even in the diamond world. We are very strong in the diamond business. And looking at the number that we are manufacturing today, the headroom for growth is huge. We have hardly a market share of not less than 4% to 5%.

Analyst probed on diversification beyond automotive, and management highlighted broad application across various industries and low market share, indicating significant growth potential.

Asked by Amresh Kumar

One rationale is, of course, the fact that the Environmental Engineering business is a high growth business for us... The second is that while the Environmental Engineering business is relatively not dependent too much on borrowed funds, but it requires huge non-fund-based limits like bank guarantees, NCs, etcetera... So, it made sense to leverage on the land bank of Batliboi and the fixed asset base of Batliboi, which will give enough security for the banks to give these non-fund-based limits to the Environmental Engineering business.

Analyst questioned the merger rationale and ROE impact, and management explained the strategic benefit of using Batliboi's asset base to support the high-growth Environmental Engineering business's non-fund-based limit requirements, expecting ROE improvement.

Asked by Dipesh

See, what we are looking at acquisition in the area that we go. So, it will have to be in the related industry of capital goods that we are involved with. And we are we are continuously being approached with possible acquisitions and we evaluate those. So, as we go forward, we will look at it even closer... Basically, I don't think we would look at anything which is a kind of a turnaround, which would require a turnaround situation. We would look at companies which are reasonably profitable.

Analyst inquired about M&A strategy, and management clarified their focus on related capital goods industries and profitable companies, avoiding turnaround situations.

Asked by Abhinit Kulkarni

Basically, as I told you earlier, in the earlier question and answer, that the headroom to grow for us is huge. So, it is not only a specific target segment of industry. It can be agriculture. It can be automotive. It can be defense. It can be general light engineering. It can be a huge opportunity for us in die-and-mold kind of a business.

Analyst asked about specific target industries for the doubled Machine Tools capacity, and management emphasized broad-based demand across agriculture, automotive, defense, and general engineering, indicating diversified growth opportunities.

Asked by Naitik Mohata

So, I think the thing is that I explained it earlier to another question that when we are talking about doubling our machine tool production, the capex that we have done. Now, there'll be no further addition to any variable cost on that, on doubling the production other than the consequent increase in raw materials. So, basically, we would see most of the gross margin that we earn going into the bottom line. That would significantly improve our margins, not only in the Machine Tool division, but for the company as a whole.

Analyst questioned the translation of gross margins to EBITDA given capacity expansion, and management explained that the capex is already done, implying significant operating leverage and margin improvement with increased production without much variable cost increase.

Asked by Siddharth Bhattacharya