Financial Performance Highlights

Quarterly Performance (Q4 FY26)

  • Achieved highest quarterly sales of ₹5.55 billion for FY26
  • Quarter-on-quarter sales growth: 3%
  • Year-on-year sales growth: 14.8%
  • Profit before tax (PBT) margin: 9% (770 basis points drop QoQ)
  • Sales mix: OEM 66%, Distribution 20%, Exports 8%, SKF Industrial 6%
  • Growth primarily driven by volumes in cars, 2-wheelers and powertrains
  • PBT decline attributed to one-off gains in Q3 FY26 including gain on forex transaction, higher income from fixed deposits, and reversal of employee cost provisions

Full Year Performance (FY26)

  • Sales growth: 12.7% to ₹20.3 billion
  • PBT margin: 12.3% (694 basis points drop YoY)
  • Cash flow: ₹4.05 billion with cash conversion ratio of 85%
  • OEM sales grew 20% while exports and distribution declined
  • Profitability impacted by demerger-related costs, mix impact, and comparability issues mentioned in introductory statements

Working Capital

  • Net working capital increased 4.6% in Q4 due to one-off factors, expected to normalize
  • Full year net working capital improved 3.7% year-on-year

Macro Economic Context

  • IIP growth stable at 4.1% for Q4 FY26
  • Manufacturing PMI: 53.9 for March 2026
  • Automotive production showed upward trend across passenger vehicles, commercial vehicles, and 2/3-wheelers
  • Iron and steel production highest in Q4 FY26 with 9.7% YoY growth

Strategic Priorities (RACE Strategy)

  • Products: Focus on efficient vehicles, new energy vehicles, and vehicles designed for new environmental/emission standards
  • Accelerate Growth: Commercial excellence to sharpen efficiencies across value chain
  • Capability Development: Capacity development across full value chain
  • Execution: Strategy implementation with speed, agility and attentiveness

Business Wins and Customer Recognition

  • Strong order portfolio extending to 2030
  • Wins include electric motors and wheel hub bearings for launches in FY26-27
  • Awards received: Clean Energy Champion from TVS Motors, Environmental Initiative recognition from Honda Motorcycles, Business Performance award from Suzuki Motorcycles
  • EV adoption: 2-wheeler EV penetration ~6%, passenger vehicle EV penetration ~4%
  • EV content: Number of bearings lower than ICE but higher-value products (motor bearings, electric insulation, high-speed bearings) offset revenue impact

Capital Expenditure and Investments

  • ₹500 crore investment planned from FY26 to FY28
  • FY26-27 capex: ~₹200 crore (spilling over to Q1 FY27)
  • Investments focused on reducing trading from industrial and adding automotive capacity
  • Expected revenue CAGR: 6-8%

Margin Guidance and Outlook

  • Sustainable PBT margin guidance: 11-12% in near term
  • Long-term focus on margin improvement
  • Different margin profiles across segments: OEM, aftermarket, exports
  • Current FY26 EBITDA margin: 15.3%

Operational Details

  • Automotive business localization: >90%
  • Top 5 customers represent ~50% of sales
  • Top 10 customers represent ~70% of sales
  • Key customers: Bajaj (2-wheeler), Mahindra, Tata (passenger/commercial vehicles), Royal Enfield, Honda
  • White spaces: Unitized bearings for SCV/LCV segments, new generation transmissions for CAFE-3 norms

Demerger Impact

  • No change in royalty or trademark fees post-demerger
  • Demerger-related costs impacted FY26 profitability (mostly in earlier quarters)
  • Q4 had minimal demerger-related costs
  • Transition period expected to normalize in coming quarters

Raw Material and Pricing

  • Raw material prices increasing
  • Pass-through mechanisms initiated with aftermarket and OEM customers
  • Some price hikes already implemented with select customers
  • Near-term gross margin pressure expected due to lag in pass-through

Management Participants

  • Mr. Shailesh Sharma – Managing Director
  • Mr. Mayank Holani – Chief Financial Officer
  • Mr. Girish Kumar – Head, Strategy and Business Development
  • Ms. Aashi Arora – Interim Chief Financial Officer
  • Ms. Mayuri Kulkarni – Company Secretary
  • Ms. Cilvina Pereira – Head, Marketing and Communication, Automotive Business