# 1. Financial Performance ## A. Key Figures * **Consolidated Revenue:** **₹4,026 Cr** (Q2FY26, +10% YoY) · **Record quarterly revenue** * **Consolidated EBITDA:** **₹536 Cr** (Q2FY26, +21% YoY, +26% QoQ) · **Margin: 13.3%** (+240 bps QoQ) * **JK Tornel Revenue & EBITDA:** **₹639 Cr** (+26% QoQ) · **₹49 Cr EBITDA** (~5x QoQ) · **Margin: 7.7%** (6% reported, up 560 bps QoQ) * PAT & EPS: ₹223 Cr (+54% YoY) · EPS: ₹8.08 (Q2) * Net Debt: ₹4,201 Cr (+₹339 Cr QoQ) · Net Debt/EBITDA: 2.5x · Net Debt/Equity: 0.75x ## B. Revenue Growth * **Record Top-Line Performance:** Consolidated revenue reached an all-time high, driven by **strong volume growth in 2/3-wheelers and tractors**, favorable raw material trends, and operational leverage. * **India Operations Rebound:** Net revenue in India grew 10% YoY, reversing prior underperformance, with **OEM revenue up 2% YoY** despite mixed segmental demand. * **JK Tornel Recovery:** Sales rebounded sharply QoQ on improved execution and currency-adjusted growth, though **margin expansion was sequential, not YoY**, due to higher trading mix. * **Structural Integration Ahead:** Standalone revenue decline offset by India ops growth; **merger with Cavendish India Ltd imminent** to unify India business and streamline reporting. ## C. EBITDA & Margins * **Significant Margin Expansion:** EBITDA margin improved by 240 bps QoQ to 13.3%, reflecting **operational efficiencies and lower input costs**, despite flat YoY margin at JK Tornel. * **Tornel Profitability Surge:** EBITDA margin expanded 560 bps QoQ to 6%, with **PBT and PAT rising to ₹25 Cr and ₹15 Cr**, respectively, indicating strong turnaround momentum. ## D. Profit & EPS * **Robust Bottom-Line Growth:** PAT surged 54% YoY on operating leverage and lower taxes, with **cash profits up 38% QoQ to ₹428 Cr**, underscoring earnings quality. ## E. Balance Sheet * **Leverage Increased Moderately:** Net debt rose by ₹339 Cr due to **higher working capital from inventory build-up**, while gross debt increased for project funding; leverage ratios remain within manageable levels. * **Healthy Capital Structure:** Balance sheet remains resilient with **ROCE and ROE showing continuous improvement**, supporting future capex and integration plans. --- # 2. Volume & Market Demand ## A. Key Figures * **Domestic Market Volumes:** **15%** YoY growth * TBR Replacement Volumes: 22% YoY growth; 16% QoQ growth in passenger car segment * **OEM Volumes:** **43%** YoY growth (including 2/3-wheelers) · **4–5%** YoY growth (excluding 2/3-wheelers) * **Market Mix (India):** **63%** replacement, **24%** OE, **13%** exports ## B. Domestic Replacement * **Robust Replacement Demand:** Domestic replacement market expanded **22% YoY**, led by TBR and passenger car radial segments, supported by inventory drawdown and post-GST 0 demand surge. * **Favorable Macro Backdrop:** Strong TBR replacement momentum driven by improved monsoon, government infrastructure spending, and rising rural demand. * **Market Share Gains Implied:** Volume growth significantly outpaced market averages in key categories, signaling clear share gains despite absence of disclosed market share data. ## C. OEM Volume Trends * **OEM Growth Skewed by 2/3-Wheeler Segment:** Exceptional **43% YoY OEM volume growth** largely attributable to 2/3-wheeler segment; underlying growth in other segments is modest at **4–5% YoY**. * **Segment Heterogeneity:** OEM trends are divergent across vehicle types, necessitating granular analysis to assess true demand dynamics. --- # 3. Product & Segment Mix ## A. Key Figures * **TBR Mix:** **40–45%** of product mix · **TBB Mix:** **10–13%** * **Value-wise Segment Mix:** **57% truck (TBB & TBR)**, **30% PCR**, **4% 2/3 wheelers**, **10% non-truck bias** * **Farm Tyre OEM Volumes:** **+78% YoY** · **Replacement Volumes:** **+12% YoY** * **2/3 Wheeler OE Volumes:** **+155% YoY** ## B. TBR & TBB Mix * **Truck Dominance:** Over half of revenue derived from truck segment, reflecting entrenched position in TBR and TBB despite structural shift toward radialization. * **Bias Tyre Resilience:** LCV/SCV bias tyre demand recovering after prior softness, supporting near-term TBB stability. ## C. PCR & Farm Tyres * **OEM Momentum:** UX Royale selected as exclusive fitment for Hyundai Creta Knight Edition, reinforcing premium OEM partnerships. * **Farm & Entry-Level Strength:** Farm tyre segment shows robust double-digit OEM growth; passenger car demand shifting toward entry-level and PLT segments. * **Premiumization Trend:** Rising adoption of **16-inch and larger rim sizes** in both OE and replacement channels indicates favorable mix shift. * **International Outperformance:** JK Tornel posts record Q2 sales in six quarters, driven by expanded distribution and strong PCR/TBR demand in Brazil and LATAM. ## D. CV & LCV Contribution * **CV-Led Recovery:** Significant pickup in CV OEM production in Q2, a core exposure area, underpins improved segment performance. * **LCV/SCV Contribution:** Though contributing only mid-single digits to India revenues, recent demand recovery adds incremental tailwind. --- # 4. Capacity & Capex ## A. Key Figures * **Consolidated Utilization:** **88%** (current quarter) · **Radial Utilization:** **>90%** (expansion categories) * **JK Tornel Installed Capacity:** **59 lakh tyres** · **Utilization:** **~80%** overall, **~88%** radial * Capex Allocation: ₹1,400 Cr total (India) · $21 Mn (Mexico) * **Capacity Expansion:** **12–13%** increase across PCR, TBR, ASTR · **~15%** in PCR (India-specific) ## B. Utilization & Operational Performance * **High Utilization Signals Strength:** Consolidated and radial-specific capacity usage remains elevated, reflecting **robust demand and efficient operations** in core segments. * **No Sales Impact from Constraints:** Management affirms **capacity is not a constraint**, with early production starts ensuring no lost sales during ramp-up phases. ## C. India Expansion * **Strategic Capex Deployment:** Growth investments focused on **PCR, TBR, and ASTR segments**, with **majority allocation to Banmore PCR expansion** (₹1,025 Cr). * **Phased Ramp-Up Timeline:** New Indian capacities set to **commence in Q3FY26**, with **full production expected within 6 months**, aligning with demand growth. ## D. Mexico Capacity * **Separate Mexico Investment:** **$1 Mn capex** planned independently of Indian projects, with **production start expected in Q1FY27**. --- # 5. Export & Geography Mix ## A. Key Figures * **Mexico Revenue Growth:** **26%** QoQ (INR) · **20%** QoQ (MXN) * **YoY Mexico Growth:** **8%** (current quarter) * **Export Volume Growth:** **13%** QoQ · **10%** value-wise QoQ * **Vehicle Exports Growth:** **>20%** in Q2FY26 QoQ * **Exports to USA:** **~3%** of total revenue (previously) ## B. Mexico Performance * **Market Leadership in Sustainability:** JK Tyre becomes first Indian tyre maker to publish EPD on International EPD System for PCR and TBR products, enhancing ESG credibility and customer transparency. * **Strong Economic Tailwinds:** Mexico’s economy gains momentum, becoming top U.S. trading partner in H1 2025, supported by World Bank’s upgraded GDP forecast (5% in 2025) and monetary easing (rate cut to **7.5%**). * **Robust Business Momentum:** Mexican subsidiaries Cavendish and JK Tornel deliver strong financial contributions, with revenue growth reflecting both volume gains and favorable macro conditions. ## C. LATAM & Brazil * **Regional Expansion Underway:** Company is scaling presence in LATAM and Brazil via new channel partners and localized product offerings, leveraging Mexico as export hub. ## D. US & New Markets * **Export Resilience Amid Tariff Uncertainty:** Exports grew **14% QoQ** despite U.S. tariff concerns, with volumes and value rising sequentially across key regions. * **Strategic Market Reallocation:** Successfully redirected former U.S.-bound exports (~3% of revenue) to Mexico, LATAM, Middle East, and Southeast Asia; **no margin compression expected**, with potential for margin improvement. * **New Market Diversification:** Actively exploring EU, UK, and Africa as new export destinations; monitoring proposed U.S. trade deal for future re-entry opportunities. * **USMCA Watch:** Upcoming 2026 USMCA review being closely tracked due to strategic importance for North American trade dynamics. --- # 6. Input Cost & Pricing Risks ## A. Key Figures * **Raw Material Prices:** **3% QoQ decline** in basket cost * **Natural Rubber Price:** **₹185/kg** (from ₹205/kg) * **GST Rates:** **Tyres: 28% → 18%** · **Farm Tyres: 18% → 5%** ## B. Raw Material Trends * **Input Cost Relief:** Raw material basket declined 3% QoQ, with natural rubber down significantly, supporting near-term **margin expansion** despite **no price revisions in replacement markets**. * **Revenue-Mix Dislocation:** Lower revenue growth versus volume in India due to **product mix shifts**, particularly in PCRs where prices are tied to raw material fluctuations. ## C. GST Impact * **Full Benefit Pass-Through:** JK Tyre passed on 100% of the GST reduction, lowering customer costs and stimulating demand in high-activity sectors like **e-commerce and FMCG**. * **OEM Share Gains:** GST cuts boosted OEM demand, enabling the company to achieve its **highest-ever market share in the CV segment**. ## D. Currency Fluctuations * **Favorable FX Tailwinds:** Recent rupee depreciation against the Mexican peso has lifted average realizations, with further gains expected if current trends persist. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue:** ₹4,026 Cr reported (H1 FY26) * **Revenue Growth Guidance (FY26):** **10%** maintained * **EBITDA Margin Guidance:** **13–15%** for next 2–3 quarters * **Capex (FY26):** ₹1,200 Cr projected (₹610 Cr H1, ₹600 Cr expected H2) ## B. Revenue Forecast * **Demand Tailwinds:** GST reduction expected to lift auto demand by **8–9%**, with **commercial and passenger vehicles** in mid-single-digit growth and **farm equipment & 2/3-wheelers** in high single-digit expansion on strong rural fundamentals. * **EV Momentum:** EV growth accelerating in tandem with ICE, led by two-wheelers and passenger cars, driven by new models, incentives, and sustainability trends. * **Growth Confidence:** Management affirms **double-digit revenue growth trajectory** ahead, despite maintaining conservative FY26 guidance at 10%. ## C. Margin Projection * **Margin Outlook:** EBITDA margin guided at **13–15%** over the near term, reflecting stable cost dynamics and operating leverage. ## D. Capex Plan * **Execution on Track:** Full-year capex of ₹1,200 Cr progressing as planned, with bulk of project-related spending tied to machinery delivery in H2. * **Capacity Timeline:** Expanded capacity at JK Tornel now expected online in **Q4 FY26**, delaying prior expectations for December completion.