Raymond's December-quarter aerospace business performance was hit by low demand from a large aircraft manufacturer as it was going through labour challenges, while its automobile business was impacted by extended shutdown of European plants, according to Group CFO Amit Agarwal.
However, in an interaction with NDTV Profit, Agarwal said the issues were temporary and would be resolved soon. He said he expected an uptick from Q4 onward.
In an exchange filing, the company had said its engineering segment's sales stood at Rs 433 crore in Q3FY25, compared to Rs 217 crore in the same quarter last year.
"The auto components and the engineering consumable category were impacted due to sluggishness in export markets on account of weak demand and geopolitical issues," it said.
Agarwal said its auto component business was impacted as most European companies had taken an extended shutdown or had reduced deliveries from the plant.
During the quarter, the business reported the EBITDA margin at 12.0%, lower as compared to 13.8% in Q3FY24, mainly due to changes in the product mix. "The aerospace business is expected to grow post resolution of production issues faced by one of the largest aircraft manufacturers leading to delays in order," the filing said.
Aerospace components is a very high margin business for Raymond, said the CFO, adding they have only a few customers. Hence, Raymond's margins have taken a hit. "They (the manufacturer) were not able to take supplies from us in the last quarter," he said, adding as a result, volumes and sales are low, and the ability to get margins on that business is low.
However, Agarwal noted Q4 is different as the company is seeing a little uptick with Europe resuming and raising demand. In aerospace, he said, "We all know that the aircraft manufacturer has resolved labour issues and is coming back to life in terms of production and the supply chain is back."
"We expect margins to recover, and we don't foresee Q3 pressures to continue," he said, adding its outlook for engineering business at Rs 2,000-3000 crore revenue in the next 3-4 years, and Ebitda of Rs 500 crore, still holds very strong.
On margins from its real estate business, Agarwal said a bounce-back was seen in the last quarter. He explained they had launched their first project outside Thane, in Bandra, which required extra marketing and efforts. "Therefore, we are not looking at just one quarter impact, but rather long-term impact," he said, and added that business was on track for 20-25% margins.
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