Is it fair to assume that export gross margin is 700-800 basis points higher than domestic?
If you look on a sequential basis, there are two important factors here. One is higher export mix. Apart from that, we also had material cost optimization. Basically, what we are doing is we are continuously working for improving our localization and other cost optimization efforts. So, that also helped us with better gross margins during this quarter.
On export guidance, last call you gave 6-7% outlook for this year. Are you changing guidance or will growth slow sharply?
We are seeing very good demand for our products across different geographies. Even if you look at this quarter, for example, markets like Africa, we had seen a growth of 28%, Mexico we had seen a growth of 14%. We expect that the momentum should continue in the near future. But one thing we need to understand here is that there is also a seasonality factor, because normally what happens is, export for us, generally it is better in first half of the financial year as compared to the second half. Having said that, we will be continuously looking for opportunities to maximize our export volumes wherever possible.
On demand conditions, region-wise color, rural versus urban? Also on EV adoption and CNG response to Creta EV?
Kapil, clearly the rural contribution continues to go up. In quarter one, we had a rural contribution of 22.6%. And for your reference, last year, same quarter, it was 19.9%. And for the last full financial year, it was 20.9%. So, very clearly, you can see that, there is a clear shift in demand towards rural markets.
On rural demand trends and what is being discovered as going more into rural network in terms of consumers' purchase behavior?
Very, very clearly, to answer your question, rural SUV penetration today stands at 68.8% for me. So, very clearly, I think the key buying factor for rural has changed. I never expected that rural will come out of small cars. But that said, if you see 2015, frankly speaking, SUVs used to contribute 13% to the overall sale. So, actually, there's a paradigm shift across and rural has really caught up very, very fast. And today, rural customers have also become aspirational.
On a sequential basis, excluding other operating income, ASPs have gone up by almost 4.4%. Can you give drivers of this?
Yes, our ASP has improved on a sequential basis. In fact, there are different contributing factors here. If you look at the domestic especially, we have done the price increase in the month of January. Plus, we have also moderated our discount levels in domestic on a sequential basis. Apart from that, we also had a favorable product m ix. Even on the export market, the product mix was quite positive this quarter. So, all these factors have actually supported us for the improvement in ASP. In fact, our ASP has improved by more than 5% on a sequential basis.
On material cost reduction - areas of reduction and potential over the next 1-2 years?
If you look on the material side, first of all, last quarter, the commodity for us was more or less stable. Apart from that, there are two things here. One is, we are continuously improving our localization level. If you look at the number, a year back in financial year '24, the localization level was somewhere around 78%. Within a matter of a year, we have significantly improved this number to nearly 82% now. So, clearly, we are reaping the benefits of our localization efforts in the current period. Apart from that, at the plant level, we also do some value engineering activities.
What is the margin guidance for FY26? With the Pune plant coming in, how do you think about margins going forward?
Our aspiration is to maintain healthy double-digit EBITDA margins. With the commencement of Pune plant from Q3 financial year'26, additional depreciation amid low-capacity utilization in the initial period, may weigh on near-term profitability. However, with our continued focus on optimized operations and our quality of growth strategy, we remain confident of securing healthy margins going forward.
On the dividend policy and shareholder returns going forward?
The Board has recommended a dividend of ₹21 per share for the financial year 2025 which translates to a payout ratio of 30%. We are also in the process of formulating a dividend payout policy aimed at enhancing transparency and delivering consistent value to our shareholders. We look forward to sharing the details in the near future.