This article first appeared on GuruFocus .
Release Date: October 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Wheels India Ltd ( BOM:590073 ) reported a 26.69% increase in net profit for Q2 FY26, reaching INR 28 crores compared to INR 22 crores in the same quarter last year.
-
The company achieved an 8.63% rise in revenues for Q2 FY26, amounting to INR 1,179 crores compared to INR 1,085 crores in the previous year.
-
Export revenues grew by 15.6% over the same quarter last year, with strong demand in the US market.
-
The company has entered a strategic alliance with SHPAC, a South Korean hydraulic cylinder manufacturer, to expand its business and provide a de-risking location for SHPAC's customers.
-
Wheels India Ltd ( BOM:590073 ) is maintaining its planned CapEx of INR 250 crores for the year, focusing on growth in the industrial segment, particularly in the windmill sector.
Negative Points
-
The commercial vehicle segment has underperformed in the first half of the year, with muted demand affecting growth.
-
Despite the depreciation of INR against EUR and USD, the company has not seen a significant upside in margins due to phased pass-on to customers and import costs.
-
The company's debt level remains high at around INR 710 crores, with plans to maintain this level through internal accruals.
-
Employee costs and operating expenses have increased as a percentage of sales, impacting overall profitability.
-
The company faces challenges in scaling its cast aluminum wheels business, with current production not yet reaching the volume needed for double-digit margins.
Q & A Highlights
-
Warning! GuruFocus has detected 8 Warning Sign with BOM:590073.
-
Is BOM:590073 fairly valued? Test your thesis with our free DCF calculator.
Q: When will the current CapEx be completed, and what will the debt level be at the end of the current year? Also, what is the expected automobile versus non-automobile mix in the coming years? A: The CapEx plan of 250 crores will be completed by the end of the year, with commissioning expected in H2 of next year. The debt level is expected to remain around 710 crores by March 2026. The mix between auto and non-auto segments will depend on the relative growth of these areas, with the non-auto segment potentially growing faster due to global demand.
Q: How do you see exports going forward given the global uncertainty? A: Exports for the half year were about 622 crores, and we expect similar performance in the second half. We are positive about export growth unless the global situation worsens significantly. The domestic market is stable, and we anticipate continued export growth driven by demand in the US and other regions.
Q: What is the opportunity in the hydraulic cylinder market, and how do you see it growing? A: The domestic market was muted in the first half due to seasonal factors, but we expect improvement in the second half. The export market, particularly with the SHPAC agreement, is expected to grow significantly next year as we ramp up operations and explore opportunities with other OEMs.
Q: Can you provide an update on the performance of the car wheels subsidiary? A: The car wheels subsidiary has performed exceedingly well, with half-year profits exceeding the full-year profit of last year. The largest customer is Maruti Suzuki, and we expect continued strong performance in the upcoming quarters.
Q: What are the current gross margins in the hydraulics business, and how will they change with the Korea deal? A: The current operating margins in the hydraulics business are just under 10%. As exports increase, we expect margins to reach double digits. The SHPAC deal is projected to bring in $15 million worth of business within 24 months, which should positively impact margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
