Macroeconomic and Industry Context

The Indian economy demonstrated resilience with GDP expanding by 7.8% in Q4 FY25-26 and full-year growth of 7.7%. Industrial activity remained healthy with output growing by 5.1% in May. Inflation increased to 4.4% in June primarily due to higher food and energy prices.

The Commercial Vehicle (>6T) industry production grew by 8.4% in Q1 FY26-27, supported by healthy freight activity and robust infrastructure-led demand. EV bus sales reached 1,417 units, reflecting momentum in public transport electrification. The trailer segment witnessed a decline due to slower mining activity and monsoon-related disruptions.

Financial Performance for Q1 FY27 (Quarter ended June 30, 2026)

  • Total Income: ₹1,101.8 crores, representing 5.7% growth compared to Q1 FY26
  • Revenue from Operations: Grew by 9.3% year-on-year
  • Profit Before Tax (PBT): ₹140.1 crores
  • Profit After Tax (PAT): ₹104.5 crores, representing a decline of -14.7% year-on-year

Adjusted Performance (excluding FX gains/losses and one-time items):

  • Income increased from ₹1,001.5 crores in Q1 FY26 to ₹1,100.6 crores in Q1 FY27
  • Profit before tax stood at ₹140.8 crores, representing 16.9% growth compared to Q1 FY26

The year-on-year difference is primarily attributable to:

  • Q1 FY26 included significant FX gain of ₹39 crores and higher one-time income of ₹4.7 crores
  • Q1 FY27 was affected by FX loss of ₹1.98 crores and lower one-time income of ₹1.2 crores

Operational and Business Highlights

Market Performance:

  • Sales in CV >6T segment grew by 8.6%, marginally ahead of industry's 8.4% growth
  • Growth impacted by 9% decline in trailer market demand and industry-wide shortage of blue-collar manpower during April-May
  • Improved realizations from new product introductions including Exhaust Brake Valve and ECAS variants

Aftermarket Business:

  • Sales of ₹158.4 crores, representing 15.6% year-on-year growth
  • Achieved highest-ever monthly aftermarket sale in June 2026 with revenue of ₹63.06 crores
  • Driven by improved fleet utilization, healthy replacement demand, and focus on preventive maintenance
  • New products launched including Disc Brake Rotors, TRW products, and Clutch Master Cylinders under SPARK program

Export Performance:

  • Export revenues of ₹271.4 crores, registering 9.7% year-on-year growth
  • Growth driven by improving market demand and higher volumes of Double Diaphragm Spring Brake actuator, Uni-Stop Disc and CAM Brake Chambers, and Air Compressors
  • Successful launch and ramp-up of Uni-Stop Disc Brake Chamber for North American customers
  • Exports of services recorded strong growth of 12.5% year-on-year

Strategic Initiatives and Product Development:

  • Secured Electronic Stability Control (ESC) business nominations from three major OEMs
  • Progressing discussions with other key customers for ESC solutions ahead of upcoming truck safety regulations
  • Accelerating introduction of new technologies including upgraded compressor platforms, clutch servo with wear sensors, ECAS, EBS, and e-compressors for EV applications
  • Engineering teams developed Next-Generation Electronically Controlled Air Suspension (ECAS) and Type 24/24 High-Force Spring Brake Actuator
  • Launched CV Brake Pads, Hydraulic Steering Systems, and Quick Fittings for trailer segment
  • Conducted multiple Technology Day events showcasing EBS, ESC, ADAS, m-BSP, EPH, and Electric Door Systems
  • ESC homologation testing commenced for multiple customers at ZF Proving Ground
  • Hemi Anechoic Chamber Testing Laboratory received NABL accreditation

Manufacturing and Operational Excellence:

  • Multi-divisional Oragadam facility successfully productionized new assembly lines for ASP cartridges and vacuum pumps
  • Scaled up production of e-compressors and brake signal transmitters
  • Commissioned new assembly lines for brake actuators and valves across manufacturing network
  • Strategic investments at Jamshedpur, Lucknow, and Pantnagar improved production flexibility
  • Completed Overall Maturity Assessment (OMA) at Ambattur plant with encouraging results
  • Continued deployment of ZF Production System (ZF PS) including Shop Floor Management and Resource Qualification
  • Received 3 National Awards and 5 Regional Awards from industry bodies including CII, ACMA and QCFI

Sustainability Initiatives:

  • Commissioned 2,100 kilo-litre rainwater harvesting system at Lucknow plant
  • Transitioned from LPG-based cooking systems to electrical induction vessels at Ambattur plant, reducing LPG consumption by approximately 16 tons annually
  • Rolled out Electric Vehicle (EV) Policy for employees across locations
  • Ambattur Plant received CII Gold Award (highest ranking among 350+ automotive sector participants with score of 95%)
  • Ambattur Plant honored with Spotlight Award for Decarbonization and Climate Action

Management Changes

  • Ms. Sweta Agarwal stepped down as Chief Financial Officer
  • Mr. Rakesh Mishra appointed as Chief Financial Officer effective September 1, 2026 (over three decades of experience in finance, governance, compliance, and business transformation)
  • Ms. C.V. Kavviya appointed as Whole-Time Company Secretary and Compliance Officer effective July 25, 2026

Challenges and Mitigation Strategies

Headwinds Faced:

  • Volatility in Forex, key commodity, energy and consumable prices driven by geopolitical developments
  • Industry-wide shortage of blue-collar manpower during April and May
  • Aluminum prices increased from approximately ₹260 per kg to more than ₹360 per kg
  • Increases in oil prices, consumable grease, rubber, and plastic

Mitigation Measures:

  • Intensified focus on Aftermarket business
  • Implemented selective price increases effective July 2026
  • Proactive engagement with OEM customers on commodity and foreign exchange cost recovery measures (portion already realized, balance under active discussion)
  • PERFORM26 initiative focused on continuous improvement measures, productivity enhancement, value engineering, material cost optimization and manufacturing efficiency improvements

Q&A Session Highlights

Electronic Stability Control (ESC):

  • ESC wins are across pneumatic ESC domain
  • 12-volt segment focused on intermediate commercial vehicle segment
  • Content per vehicle remains consistent across systems
  • Localization currently at 40-50%, expected to exceed 75% by start of production
  • Manufacturing to begin next year (Q3)

Market Outlook:

  • Domestic CV production in July at 40,000-42,000 vehicles, approximately 10,000 higher than typical July
  • August and September expected to be at par levels
  • US and Europe markets saw approximately 10% degrowth year-on-year
  • Export outlook positive with strong rebound expected, though geopolitical uncertainties remain

Financial Clarifications:

  • Employee cost increase includes annual increments and ₹8.4 crores recovery in export services
  • Gross margin pressure due to commodity inflation and West Asia crisis impact
  • Pass-through discussions with OEMs ongoing, typically with 2-quarter lag
  • Other expenses increased due to FX loss (₹2 crores), higher CSR expenses, consultancy and IT costs, directors' commission, and rental expenses