# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹2,600 Cr** FY26 (+11.5%) · **₹300 Cr** Incremental Growth * ROCE: 10% FY26 (vs. 16% FY24) · >11% Adjusted for CWIP of ₹411 Cr * Fixed Asset Turnover: 2.2x FY26 (vs. 4+ in FY24) ## B. Revenue & Growth * **Market Outperformance:** The company achieved double-digit sales growth, outpacing the broader passenger vehicle market's single-digit expansion of **9%**. * **Model-Specific Tailwinds:** Growth was significantly bolstered by the Start of Production (SOP) for Maruti Suzuki’s **e Vitara and Victoris** models. * **Capacity-Led Expansion:** Top-line gains were primarily driven by new production capacities, specifically the **CVJ line** and **Line 5 at Dharuhera**. ## C. Margin & Profitability * **H2 Recovery:** Performance rebounded in the second half following a weak H1 (where market growth was just **1.6%**), aided by a **GST rate reduction** in September 2026. * **Transitory Headwinds:** Reported margins were suppressed by a **0.56%** combined hit from unfavorable product mix and a **₹6.2 Cr** forex accounting impact; management views these as non-recurring. * **Cost Pressures:** Slight annual margin compression was attributed to incremental increases in material, manufacturing, and selling costs. * **Profitability Outlook:** Management anticipates ROCE returning to historical levels of **16% to 17%** as capacity utilization improves and the capital base stabilizes. ## D. Capital Structure & Asset Turnover * **Successful De-leveraging/Funding:** The maiden rights issue saw strong backing from JTEKT Japan and Maruti Suzuki, with public interest exceeding the offer by **2x**. * **Asset Base Inflation:** Current turnover ratios are temporarily depressed by **₹411 Cr** in Capital Work-in-Progress (CWIP), which is expected to impact ratios for the next **1 to 2 years**. * **Segment Efficiency:** Asset turnover varies by line, with Column Electric Power Steering (CPS) leading at **2.5x to 3x**, while the capital-intensive CVJ segment currently lags at **1.5x**. * **Utilization Targets:** CVJ sales reached **₹130 Cr** at roughly two-thirds capacity; the company targets a consolidated fixed asset turnover **above 3x** at full utilization. --- # 2. Manufacturing & Capacity ## A. Key Figures * **CVJ Capacity (Line 2):** **7.54 Lakh units** p.a. (3.8L vehicles) · **₹250 Cr** Sales Value * **MS Gear Capacity (Line 6 & Chennai):** **3.5 - 4 Lakh units** (Dharuhera) · **4 Lakh units** (Chennai) * **CPS Capacity (Line 3):** **5 Lakh units** * **Historical Capex:** **₹800 Cr** (Last 3 years) * Gujarat Plant Investment: ₹250 Cr Total · ₹112 Cr Spent to date from rights issue ## B. Facility Utilization & Outlook * **Utilization Bifurcation:** Operations show a stark contrast between legacy lines running at full tilt (Gear Line 5 at **106%**) and newer installations currently underutilized (Gear Line 6 at **21-30%**) pending model SOPs. * **EV-Driven Scaling:** Management anticipates reaching near-full utilization on existing CVJ lines by **October 2026**, catalyzed by the Maruti Suzuki MPV EV launch. * **Operational Efficiency:** Stabilization of new production lines contributed a **0.23%** margin uplift by optimizing testing charges and settling provisions. * **Capacity Exhaustion:** Current CVJ infrastructure is expected to be fully utilized within **1.5 years**, prompting the commencement of work on a third production line. ## C. Production Expansion & Localization * **Strategic Footprint:** Expanding into Western India with a new Gujarat facility to service Suzuki and positioning for Toyota’s anticipated expansion in Maharashtra. * **Full Localization:** The CVJ vertical has achieved **100%** domestic sourcing; profitability is expected to scale as depreciation front-loading eases. * **Vertical Integration:** Following a two-year development cycle for CVJ, the company is exploring backward integration into **forging** to de-risk the supply chain. ## D. Capital Expenditure * **Capex Moderation:** Following a heavy investment cycle, future spending is projected to trend lower, primarily focused on the remaining **₹100 Cr** for the Gujarat site and routine maintenance. * **Funding Mix:** Recent expansion has been supported by a rights issue, with **₹112 Cr** already deployed toward the Gujarat greenfield project. --- # 3. Product & Segment Performance ## A. Key Figures * **CVJ Revenue Target:** **₹250 Cr** at full two-line capacity · **₹130 Cr** current year * **Market Share Target:** **15%** CVJ initial target · **40%–45%** long-term driveline aspiration * **EV Market Dominance:** **100%** share of Maruti Suzuki’s current EV business ## B. Steering Systems * **Volume vs. Margin Trade-off:** Robust demand for Maruti Suzuki models (Alto, Jimny, Brezza) drove volumes but pressured overall margins due to a less favorable mix compared to Toyota and Honda contracts. * **EV Integration:** Secured "complete supplier" status for Maruti’s upcoming Gujarat-built EV MPV, providing a full suite of MS Gears, CPS, and CVJs. ## C. Driveline & CVJ Strategy * **Portfolio Transformation:** Pivoting from a pure steering supplier to a broader driveline provider, leveraging **100% localization** and innovative design to achieve superior EBITDA margins over manual gears. * **Capacity & Scaling:** Production is scaling to support four existing models (including Grand Vitara and Hyryder) with a **fifth model** set to join the portfolio shortly. * **Technical Evolution:** Ongoing development of diverse specifications, including **long stem technology**, to address a wider range of vehicle formats from small cars to large SUVs. ## D. New Product Pipeline & Outlook * **Stabilization Phase:** Management is prioritizing CVJ market stabilization for the next **1 to 1.5 years** before aggressively launching additional JTEKT Corporation global products. * **Future Catalog Expansion:** Exploring the introduction of high-value components including **hub unit bearings, driveshafts, and clutch plates** to deepen the India product basket. * **Strategic Launch Timeline:** Revenue tailwinds expected from the **October 2026** launch of the new EV MPV, further consolidating the company's position in the high-growth EV segment. --- # 4. Customer & Geography Mix ## A. Key Figures * **Customer Concentration (Sales %):** **60%** Maruti Suzuki (up from 56%) · **10%** Toyota (down from 12%) · **6%** Honda (down from 8%) * **Export Revenue:** **₹66.4 Cr** (+20% YoY) · **₹86.7 Cr** (FY24 Benchmark) * **Brazil Export Projections:** **70,000 units** FY25 · **100,000–150,000 units** FY26 · **5 lakh units** Long-term target ## B. OEM Concentration & Dynamics * **Maruti Suzuki Dominance:** Market share with the anchor client reached a record high, bolstered by **₹174 Cr** in new business from the e Vitara and Victoris models across multiple product lines. * **Strategic Toyota Alignment:** Leverages a strong group connection via JTEKT Japan’s **20% equity stake** in Toyota to maintain status as the exclusive steering supplier for Indian manufacturing. * **Mix Headwinds:** Profitability was dampened by a slight contraction in the product mix, specifically due to double-digit sales declines at Honda and Renault Nissan (export models). * **Growth Diversification:** Realized significant double-digit growth from Mahindra & Mahindra and Tata Motors, while specific Maruti SUV models saw increased demand following tax reforms. ## C. Domestic Market Share * **CVJ Segment Entry:** Targeting an initial **15% market share** in Constant Velocity Joints, directly challenging the incumbent leader, GKN. * **Product Expansion:** Growth is increasingly driven by a diversified portfolio including manual gears, Column Electric Power Steering (CPS), and CVJ components. ## D. Export Expansion & Global Strategy * **Brazil Growth Engine:** Commencing May 2026, exports to Stellantis in Brazil are expected to scale significantly, eventually reaching **₹50–60 Cr** in annual value. * **Global Hub Designation:** JTEKT Japan has officially designated India as a "Global Site," utilizing the **new Chennai production line** to supply forged parts and components to the U.S. and Europe. * **Margin Contribution:** While current export volumes remain below the FY24 benchmark, the recent recovery has already contributed a **0.15%** improvement to overall margins. --- # 5. Operational & External Factors ## A. Key Figures * **Fixed Cost Reduction:** **0.28%** of sales (driven by **0.18%** lower employee & **0.1%** lower admin costs) * Tariff Impact: **INR63 million** negative impact from U.S. reciprocal and penalty tariffs * **Warranty Cost Improvement:** **0.15%** reduction (50% lower YoY following prior-year recall) ## B. Fixed Cost Control & Manufacturing * **Operational Efficiency:** Fixed costs as a percentage of sales declined despite absorbing **₹0.82 Cr** in rights issue expenses. * **Transitory Power Costs:** Manufacturing costs rose slightly due to higher tariffs and energy-intensive trials for new production lines; these are viewed as one-time factors that will normalize post-SOP. * **Margin Outlook:** Profitability is expected to trend upward as testing costs for new models subside and fixed cost discipline continues. ## C. Supply Chain & Raw Materials * **Logistical Stabilization:** Previous headwinds, including Red Sea-related inward freight surges and high development costs for models like the **e Vitara** and **Victoris**, are beginning to stabilize. * **Margin Protection:** Raw material price volatility is mitigated by back-to-back customer settlements, leaving gross margins primarily sensitive to product mix and freight. ## D. External & Regulatory Drivers * **Affordability Tailwinds:** Market demand was bolstered by significant GST reductions, falling from **28% to 18%** for small vehicles and **50% to 40%** for larger segments. * **Net Selling Cost Impact:** A marginal negative impact on selling costs occurred as substantial warranty savings were offset by the **0.24%** drag from U.S. trade penalties. --- # 6. Risks & Industry Cyclicality ## A. Key Figures * **Customer Concentration Impact:** **30% decline** in Honda business (100% share of wallet) * **New Model Contribution:** **₹200 Cr** sales turnover from delayed Maruti SOPs * U.S. Tariff Adjustment: **10%** expected rate (from 50%) **B. S. Tariff Adjustment:** **10%** revised rate (from 50%) ## B. Customer & Project Risks * **Concentration Headwinds:** Significant volume contraction from a key OEM partner acted as a major drag on performance; management estimates growth would have reached **12% to 13%** absent this specific decline. * **Execution Resilience:** Despite multi-month delays in Start of Production (SOP) for new Maruti export and domestic models, the company successfully converted initial volumes into substantial turnover. ## C. Export Outlook * **Regulatory Tailwinds:** Anticipated surge in export volumes and margin profile following a favorable U.S. judicial ruling that drastically reduced import duties. --- # 7. Guidance & Outlook ## A. Key Figures * PV Market Sales: **5.54 Mn units** FY26 (+9%) · **16.7% growth** H2 FY26 * **Segment Targets:** **>₹250 Cr** CVJ sales · **₹100 Cr** Honda EV SUV potential * **Capacity Utilization:** **90%** CVJ target · **100%** overall target in 1–1.5 years ## B. Revenue Targets * **Multi-Year Growth Roadmap:** Top-line expansion is anchored by new capacities commissioned in the last **6 to 9 months**, with a clear path to significant incremental revenue by FY27. * **Strategic Model Wins:** Growth is underpinned by the commencement of supplies for a **third Maruti Suzuki model** and the upcoming **Maruti EV project in Gujarat**. * **Segment Recovery:** Anticipated rebound in the Honda segment driven by a **new EV SUV** launch (target **40,000 units**) expected around **December 2026**. * **Export & Domestic Mix:** Incremental gains include a projected **₹75 Cr to ₹100 Cr** from expanded exports and a **10%** domestic market growth capture. ## C. Capacity Ramp-up * **Asset Sweating:** Underutilized assets are slated for full utilization within **18 months** as production for the **e Vitara and Victoris** scales to full-year operations. * **Infrastructure Readiness:** Existing facilities in Chennai, Dharuhera, and Bawal possess the headroom to support substantial additional sales next year without immediate further expansion. * **Long-term Expansion:** Toyota’s new Maharashtra facility is scheduled for **H1 2029**, adding **100,000 vehicles** in annual capacity to the ecosystem. ## D. Market Forecasts & Strategy * **Market Outperformance:** Following a sharp recovery in the second half of the fiscal year, management aims to consistently exceed general PV segment growth rates. * **Margin Dynamics:** Recent margins were impacted by a **0.33%** drag due to product mix shifts, though this is viewed as transitory pending new model launches. * **Near-term Momentum:** Management maintains a bullish outlook based on strong sales velocity observed in **April** and favorable forecasts for **May**.