# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹427 Cr** H1 FY'26 · **₹217 Cr** Q2 FY'26 * **EBITDA:** **₹36 Cr** Q2 FY'26 * EBITDA Margin: 16.5% H1 FY'26 · 16.4% Q2 FY'26 * **PAT:** **₹45 Cr** H1 FY'26 (+3%) · **₹23 Cr** Q2 FY'26 (flat YoY) ## B. Revenue Growth * **Demand & Disruption:** Revenue performance weighed by weak automotive sector trends and a cyber-attack at a key European customer, limiting growth momentum. * **Sequential Recovery:** Q2 revenue reflects a recovery from Q1, indicating resilience despite macro and client-specific headwinds. ## C. EBITDA Margin * **Margin Resilience:** Robust cost discipline and product mix optimization supported a 5% H1 EBITDA margin despite rising employee costs from mid-year increments. * **Forward Outlook:** Management expects EBITDA margin to stabilize around **5%** as export contribution increases and operational efficiencies persist. ## D. Profit After Tax * **Earnings Stability:** Flat Q2 PAT YoY and modest H1 growth reflect margin pressure offsetting volume recovery, with tax and other items broadly neutral. ## E. Segment EBITDA * **Strategic Focus:** Priorities include diversification, OEM relationship strengthening, and sustained margin expansion through mix optimization and cost reduction initiatives. --- # 2. Order Book & Demand ## A. Key Figures * Automobile Industry Volume: 8.8 million units (+9.5%) * **2-Wheeler Volume:** **6.8 million units** (+10.3%) * **3-Wheeler Volume:** **3.5 Lakh units** (+21%) * Passenger Vehicle Volume: 1.3 million units (+2.4%) * Commercial Vehicle Volume: 2.6 lakh units (+9.4%) ## B. OEM Order Recovery * **Broad-Based Volume Growth:** Indian auto sector shows healthy expansion across segments, led by strong 3-wheeler performance and steady gains in 2-wheelers, passenger vehicles, and commercial vehicles. * **Demand Recovery in CV Segment:** After a weak start, commercial vehicle demand rebounded sharply in October–November, supported by infrastructure momentum and improved OEM schedules. * **Catalysts Driving Demand:** GST reductions, favorable monsoon, stable supply chains, and rural demand are key tailwinds across tractors, 2-wheelers, and passenger vehicles. ## C. New Customer Wins * **Strategic Wins with Major OEMs:** Secured high-potential contracts with Kia, Cummins, and Tata Motors, with production ramping from Jan–Feb 2026, adding **~INR35 Cr** in annual revenue. * **Pipeline Expansion with Global Players:** Active production trials with Daimler, JCB, and DANA signal growing international traction and technology validation. * **Large-Scale Order Momentum:** Two major orders (~**INR500 Cr** each) won last year; management expects new significant wins to be announced by **March**. ## D. Export Order Pipeline * **Russia Re-Entry Materializing:** Kamaz project cleared after delays, with production set for Jan–Feb 2026, adding **INR10 Cr** in annual export revenue. * **Growing Export Diversification:** Multiple small export orders nearing production, enhancing geographic and customer mix resilience. --- # 3. Product & Segment Performance ## A. Key Figures * **Gasket Division Sales:** **₹143 Cr** Q2 FY'26 · **₹278 Cr** H1 FY'26 * **Gasket EBITDA:** **₹24 Cr** Q2 · **₹46 Cr** H1 FY'26 * **Forging Division Revenue:** **₹76 Cr** Q2 · **₹151 Cr** H1 FY'26 * **Forging EBITDA:** **₹13 Cr** Q2 · **₹26 Cr** H1 FY'26 * **Marelli Chassis Revenue:** **₹79 Cr** Q2 (+18% YoY) · **₹152 Cr** H1 (+12% YoY) * **Marelli Chassis EBITDA:** **₹15 Cr** Q2 (+44% YoY) · **₹28 Cr** H1 (+37% YoY) * **Marugo Rubber Revenue:** **₹35 Cr** Q2 · **₹65 Cr** H1 FY'26 ## B. Gasket Division * **Flat Performance:** Revenue and EBITDA remained stable YoY, reflecting balanced exposure across OEMs, aftermarket, and exports, as well as full vehicle segment diversification. ## C. Forging Division * **Recovery Momentum:** Despite flat top-line and EBITDA, operational recovery is accelerating, with **20% rebound in October**, projected to reach **100% by December 2025**. * **Export Headwinds Temporary:** Export revenues dipped **3–4%** due to short-term disruptions, but revival is expected from January, supporting near-term normalization. ## D. Marelli Chassis * **Strong Growth Trajectory:** Revenue and EBITDA expanded at a robust double-digit pace, with EBITDA growth significantly outpacing sales, indicating **meaningful margin leverage**. ## E. Marugo Rubber * **Profitability Pressure:** Revenue held steady, but EBITDA declined **8%**, signaling margin challenges despite stable operational volumes. --- # 4. Joint Venture & Innovation ## A. Key Figures * **JV Capex (2 years):** **₹70 Cr** (40% equity, 60% debt) * **Target EBITDA Margin:** **15–18%** (driven by low raw material costs) * **Market Opportunity:** **$27 Bn** virgin carbon black · **$3.5 Bn** devulcanized rubber ## B. Lohum JV Progress * **Strategic Expansion:** New JV with Lohum establishes Talbros’ entry into high-growth sustainable tech, combining OEM access and manufacturing scale with advanced recycling innovation. * **High-Growth Potential:** JV positioned to become a value-accretive pillar, with meaningful profitability expected within a few years. * **Global Growth Pipeline:** Management confirms active pursuit of additional JVs and technical collaborations in **Japan and Korea** for 3–4 year horizon. ## C. Carbon Black Quality * **Premium Product Advantage:** Recovered carbon black offers **~5% ash content**—far superior to industry’s 18–20%—enabling near-virgin quality and strong OEM appeal. * **Cost Leadership:** Target pricing **25–30% below virgin carbon black**, creating compelling value proposition amid rising sustainability mandates. * **Regulatory Tailwinds:** Devulcanized rubber demand driven by **EPR regulations**, with JV addressing critical gap in clean, scalable recycling tech. ## D. R&D Capabilities * **Deep Innovation Foundation:** Lohum brings robust R&D engine with **over 100 engineers**, including **8–10 PhDs**, and **300 IP filings** (10 granted), ensuring technological differentiation. --- # 5. Capacity & Manufacturing ## A. Key Figures * **Capex Allocation:** **₹50 Cr** Gasket & Forging · **₹8 Cr** Marugo · **₹60 Cr** Marelli ## B. Germany Machine Test * **Strategic Technology Validation:** Successfully tested a German-manufactured machine yielding output **as good as new rubber**, with a very clean process and high substitution rate, unlocking EPR credit potential. ## C. Production Ramp-Up * **Operational Scaling:** Actively ramping up production capacity and remains open to strategic partnerships to accelerate future expansion. ## D. Capex Allocation * **Growth-Oriented Investment:** Substantial capex directed toward new technologies, capacity, product diversification, and customer expansion, targeting long-term leverage in the automotive sector. --- # 6. Export & Geography Mix ## A. Key Figures * **Export Revenue Mix:** **26%** of total revenue (H1) · **UK:** **54%** of exports · **Europe (ex-UK):** **26%** · **US:** **14%** * **Export Target:** **₹1,750–1,800 Cr** expected next year (~90% of target) * **New Order Value:** **₹100–150 Cr** (Stellantis, starting Jan) ## B. UK & Europe Exposure * **Europe Recovery Underway:** Export volumes rebounding from JLR disruptions, with backlog clearance and production ramp-up supporting a return to **28–29% export mix** in the near term. * **Near-Term Headwinds, Medium-Term Recovery:** Despite muted European demand and softer BMW volumes, management expects full recovery in regional operations within **six months** via diversification across other OEMs. * **UK Remains Core Export Market:** Continues to dominate export geography, underpinning stability in international revenue streams. ## C. US & Russia Entry * **US Demand Resilient:** Positive market reception persists despite pending tariff clarity, which is anticipated to be resolved imminently. ## D. Export Pricing Outlook * **Pricing Inflection Ahead:** Export pricing power expected to strengthen from next calendar year, supporting an ambitious **35% export growth target by FY '27**. * **Near-Term Revenue Catalyst:** Major Stellantis order launch in January to provide meaningful uplift, contributing to revised export guidance. --- # 7. Risks & Operational Disruptions ## A. Key Figures * **Business Loss:** **INR10 Cr** one-time impact in Q2 (partial recovery in Q3, full recovery expected FY'26) * **Revenue Impact (Forging):** **INR5–7 Cr** loss due to JLR cyberattack-related disruption ## B. Cyberattack Impact * **Severe Forging Disruption:** Operations and sales in the Forging business halted in September and early October following a cyberattack on JLR, with **zero sales** recorded during the outage period. * **Phased Client Recovery:** Supply to major European client resumed gradually—**25% capacity in October**, rising to **60% in November**, with **full restoration expected from December**. ## C. Client Production Delays * **Demand Volatility:** Quarter started weak due to pre-GST 2.0 consumer deferrals, but **festive-season demand surged during Navratri** despite adverse weather. * **Unrelated Production Hit:** Ford program volumes declined sharply due to the **Mustang recall**, which stemmed from non-supplier-related issues. --- # 8. Guidance & Outlook ## A. Key Figures * **H1 Revenue:** **₹646 Cr** (FY26) (+2%) · **₹632 Cr** (prior year) * **Full-Year FY26 Revenue Guidance:** **₹1,750–1,800 Cr** (+10% expected) * **5-Year Revenue Target:** **₹500–600 Cr** from new business · **>15% EBITDA margin** target ## B. FY26 Revenue Forecast * **Modest H1 Start, Strong Full-Year Outlook:** Despite only 2% H1 growth, full-year revenue is guided to robust double-digit expansion, implying significant second-half acceleration. * **Strategic Business Target:** New business line targeted to generate **₹500–600 Cr** over five years with **>15% EBITDA margins**, signaling high-margin growth potential. ## C. H2 Growth Momentum * **H2 Acceleration Expected:** Q3 and Q4 projected to be markedly stronger than H1, driven by stabilization of GST norms and a government-mandated GST cut. * **Catalysts in Play:** Positive momentum attributed to regulatory clarity, new joint venture ramp-up, and dual support from export and domestic demand.