This article first appeared on GuruFocus .
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Revenue:INR5.9 billion for Q1 FY27, up 27% year-over-year, but down 1% quarter-over-quarter.
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Sales:INR5.5 billion for Q1 FY27, up 22% year-over-year, with a marginal 0.7% drop quarter-over-quarter.
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Volume Growth:22% higher year-over-year; 6.3% higher quarter-over-quarter.
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Price Mix:Positively impacted sales by 5.6% quarter-over-quarter.
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Gross Margin:1% lower year-over-year, but 6.5% higher quarter-over-quarter.
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EBITDA:Improved by 7 basis points year-over-year and 540 basis points quarter-over-quarter.
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Profit Before Tax:14.3% for the quarter, up 61 basis points year-over-year and 527 basis points quarter-over-quarter (excluding exceptional items).
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Sales Mix:Owings accounted for 62% of sales, distribution/vehicle aftermarket 20%, exports 8%, and SKF Industrials 10%.
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Release Date: August 17, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Strong year-on-year revenue growth of 27% to INR5.9 billion, driven by 22% higher volumes.
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EBITDA improved by 540 basis points quarter-on-quarter, returning to normalized levels after one-off demerger impacts.
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Won a significant wheel-end business from a large passenger vehicle manufacturer, marking the first engagement with this customer and supporting localization.
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All three plants achieved over 98% renewable energy sourcing and received decarbonized plant certificates, with Bangalore and Haridwar sites achieving water positivity.
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Received prestigious customer awards from Suzuki Motorcycle and Degree Torque Transfer Solution, reflecting strong delivery and technical partnership.
Negative Points
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Gross margin declined 1% year-on-year due to commodity inflation and inventory revaluation impacts.
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Vehicle aftermarket business saw a plateau or slight decline in revenue, with discounts offered in the last two months.
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Passenger and commercial vehicle production declined marginally during the quarter, impacting OEM demand.
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Exports remain a small part of the business (8% of sales) and are not a strategic focus, limiting growth potential in this area.
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New capacity additions, including the Haridwar plant, will only start ramping up in Q4 FY27, with revenue impact expected only next financial year.
Q & A Highlights
Q: What is the expected revenue growth for FY27, and how does the strong Q1 performance of 27% Y-o-Y growth factor into this outlook? A: CFO Mayank Holani stated that while Q1's 27% growth was very strong, the company expects full-year revenue growth to be in the range of close to 20%, which is a significant upgrade from the earlier guidance of 12%. This is supported by capacity-building initiatives, including technological upgrades that have unlocked about 5 million pieces and new capacity coming online in Haridwar.
Q: Can you explain the factors driving the sequential gross margin movement from 42.5% in Q4 to 51% in Q1, and what is the impact of commodity inflation and price hikes? A: CFO Mayank Holani explained that the gross margin improvement was driven by a favorable product mix and inventory revaluation impacts due to the FIFO method. Regarding commodity inflation, he noted that OEM contracts have index-linked clauses, and discussions for the recent round of inflation are a work in progress. The realization of price hikes typically lags by one to two quarters, which can cause quarterly fluctuations, but the current 51% margin is within the normal historical range.
Q: What is the breakdown of the OEM segment by vehicle type, and how does this compare to the previous year? A: MD Shailesh Sharma provided the current quarter's OEM mix: two-wheelers account for 54%, passenger vehicles for 31%, and commercial vehicles for 15%. Head of Strategy Prahlada Girishkumar added that the historical range for two-wheelers is 48%-52%, passenger vehicles 28%-30%, and commercial vehicles 11%-12%, indicating a shift towards two-wheelers in the current quarter.
Q: What is the outlook for the export business, which saw a sequential jump from 6% to 8% of sales? A: MD Shailesh Sharma clarified that exports are not a primary strategic focus, as the company prioritizes domestic demand. The export share is expected to remain in the current range, with fluctuations driven by specific solutions where SKF is stronger or by capacity shortages in other regions that require support from India.
Q: When will the new business wins in the electric mobility segment begin to ramp up and contribute to revenue? A: Head of Strategy Prahlada Girishkumar stated that the developmental platforms and businesses won in the EV space are expected to come on stream during 2028, more precisely towards the last quarter of the calendar year 2028. Currently, these are in the development phase with samples and other preparatory work, so there is no material revenue contribution yet.
Q: Can you provide details on the INR500 crore CapEx plan, specifically the allocation for EV bearings and the timeline for completion? A: Head of Strategy Prahlada Girishkumar indicated that much of the investment in Haridwar is primarily for two-wheeler traction motors, with some allocation for driveline solutions. CFO Mayank Holani added that the company expects to spend INR170-180 crores in the current financial year, and the overall INR500 crore plan is largely expected to be completed by FY28, with a small portion potentially spilling into FY29.
Q: What is the strategy regarding the traded goods business with SKF Industrial, and how will it impact margins? A: CFO Mayank Holani explained that the trading relationship with SKF Industrial involves both sales and purchases, and related-party transactions require a certain markup. As the company's own capacity builds up and production increases, this will be positive for margins. MD Shailesh Sharma added that supplying to SKF Industrial is not a growth segment; the focus is on serving automotive customers, and this trading volume is expected to decrease over time.
Q: What is the current status and outlook for the vehicle aftermarket (distribution) business? A: MD Shailesh Sharma acknowledged that the vehicle aftermarket has faced challenges, with revenue plateauing or slightly declining. The company has a strategy for the next five months to recover volume. He noted that some discounts were given in the last two months but will not continue, so there will be no further decline in price mix. CFO Mayank Holani emphasized the focus is on protecting profit margins while improving volume share in a competitive market with fake products.
Q: What does the "portfolio rationalization" mentioned in the AGM presentation entail, and what will be its impact on FY27? A: MD Shailesh Sharma clarified that portfolio rationalization has two parts: optimizing the product portfolio across the three factories to leverage economies of scale and synergies, and addressing unprofitable or loss-making sales mix segments. Head of Strategy Prahlada Girishkumar confirmed there will be no major revenue or volume impact in FY27 from this initiative.
Q: Is the current EBITDA margin of 17% a normalized level to expect going forward? A: MD Shailesh Sharma confirmed that the 17% margin is what the company expects as a normalized level. CFO Mayank Holani added that Q4 FY26 profitability was impacted by one-off factors related to the demerger, and the current quarter has returned to a normal level, with PBT up 60 bps Y-o-Y to 14.3%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
