Financial Performance Highlights

Q2 FY27 Results (Unaudited):

  • Revenue growth: 47% year-on-year and 19% sequentially
  • EBITDA growth: 34% year-on-year and 45% sequentially
  • Profit after tax growth: 35% year-on-year and 54% sequentially
  • EBITDA margin: 9.2% (improved from 7.6% in Q1 FY27)
  • EV revenue contribution: 10% of total revenue for the quarter

First Half FY27 Performance:

  • EV revenue contribution: 9.3% of total revenue

Operational Highlights

Growth Drivers:

  • Passenger vehicle industry growth of 25% year-on-year and 14% sequentially
  • Vehicle premiumization driving higher content per vehicle
  • New model launches across both EV and ICE platforms
  • Three Greenfield plants contributing meaningfully to growth with optimal utilization levels achieved
  • Company grew ahead of industry performance

Challenges and Headwinds:

  • Copper prices increased approximately 6% sequentially and 54% year-on-year
  • Minimum wage revisions and other inflationary pressures
  • Copper price recovery typically has a 3-month time lag from majority of customers
  • Continuous engagement with customers to recover incremental costs

Management Commentary and Outlook

Industry Context:

  • Passenger vehicle demand remained strong during the quarter
  • Second half of FY27 will be compared against a higher base following GST reduction implemented last year
  • Based on current visibility, expectation of continued healthy industry growth

Company Strategy:

  • Continued focus on operational efficiencies
  • Investments in new capacities supporting increased customer demand
  • Focus on managing quality-related headwinds and improving operations performance
  • Confidence in long-term prospects of automotive industry in India
  • Continued investment in capabilities and capacity alignment with customer requirements

Capital Expenditure and Capacity

Capex Guidance:

  • FY27 capex: Approximately ₹200 crores (in line with previous year)
  • FY28 capex: Not quantified yet, depends on customer requirements and expansion plans

Capacity Utilization:

  • Company policy to expand capacity when utilization hits around 80%
  • Greenfield plants have progressed well with ramp-ups and now operating at optimal utilization levels
  • Expansion mode maintained to support customer growth requirements

Q&A Session Key Points

Growth Outlook:

  • Third quarter typically strong due to festive period
  • Momentum expected to continue despite higher base comparison
  • Continuous new program launches from carmakers

Margin Dynamics:

  • Raw material costs at 70% of revenue (near all-time high)
  • Copper impact recovery expected with typical quarter lag
  • Minimum wage impact negotiations ongoing with customers
  • Company seeking full recovery of cost increases
  • Localization efforts ongoing for imported components

Technical Questions:

  • Discussion on zonal architecture transition in EVs and content per vehicle impact
  • Clarification that innovations by carmakers continue to drive content increase despite architectural changes
  • Company maintains comprehensive wiring harness capabilities with Sumitomo collaboration

Historical Context:

  • Company focuses on return on capital employed rather than margin guidance
  • Historical margin comparisons complicated by business structure changes

Participants

Company Representatives:

  • Mr. Vivek Chaand Sehgal - Chairman
  • Mr. Laksh Vaaman Sehgal - Director
  • Mr. Anurag Gahlot - Chief Operating Officer and Whole Time Director
  • Mr. Gulshan Pahuja - Chief Financial Officer
  • Mr. Pankaj Mital - Whole-time Director and President, Samvardhana Motherson International Limited

Analysts:

  • Kapil Singh (Nomura)
  • Raghunandhan NL (Nuvama Research)
  • Joseph George (IIFL Capital)
  • Kaustav Bubna (Kamana Holdings)
  • Shubham Bhadra (Ambit Asset Management)
  • Ankur Poddar (Swan Investments)
  • Andrey Purushottam (Cogito Advisors)

Forward-Looking Statements Disclaimer

The discussion contains forward-looking statements based on currently held beliefs and assumptions of management, involving known and unknown risks, contingencies, uncertainties, and market conditions that may cause actual results to differ materially from expressed or implied statements.