# 1. Financial Performance ## A. Key Figures * **Revenue:** **₹220 Cr** Q3 FY'26 (+8%) · **₹648 Cr** 9M FY'26 (+2%) * **EBITDA:** **₹40 Cr** Q3 FY'26 (+11%) · **₹110 Cr** 9M FY'26 (+2%) · Margin: **18%** Q3 (+60 bps) * **PAT:** **₹27 Cr** Q3 FY'26 (+13%) · **₹73 Cr** 9M FY'26 (+7%) * **Gasket Revenue:** **₹430 Cr** 9M FY'26 · FY'26E: **₹590–600 Cr** * Gasket EBITDA: **₹5.6 Cr** Q3 FY'26 (+48% YoY) · **₹13 Cr** 9M FY'26 ## B. Profit Margins & Drivers * **Margin Strength:** Record EBITDA margin of 18% in Q3 driven by **operational efficiencies, cost discipline, and favorable product mix**. * **Divisional Outperformance:** Gaskets division delivered **48% YoY EBITDA growth** in Q3, signaling strong profitability leverage within core business. * **Guidance Caution:** Full-year EBITDA margin guidance maintained at **17% to 5%**, with near-term volatility expected due to **currency fluctuations**. * **Gross Margin Outlook:** Next-year gross margin projected at **8% to 5%**, reflecting cautious input cost and mix assumptions. ## C. Cash Flow & Sustainability * **Sustainable Income Growth:** **80–85% of other income increase** is structural and recurring, with only a minor portion tied to volatile forex revaluation. ## D. Balance Sheet & Funding * **Pension Liability Cushion:** Labor law changes resulted in negligible impact; actuarial shortfall of **₹60 Cr** is well-covered by existing provisions, leaving a buffer. * **Near-Term Leverage:** Plans to raise **₹25–30 Cr debt** for short-term funding, marking a shift from prior self-funded expansion. --- # 2. Order Book & Demand ## A. Key Figures * Automobile Sales: 9.2 million units India Q3 FY26 (+19% YoY) * **New Orders:** **₹1,000 Cr** total (5-year execution) · **₹700 Cr** export · **₹100 Cr** EV components * **EV Market Growth:** **20% YoY** India Q3 FY26 * **Gasket & Heat Shields Orders:** **₹250 Cr** (5-year, ₹50 Cr/year avg) * **Forging Division Order:** **₹500 Cr** (European customers) ## B. New Orders * **Strong Order Visibility:** Robust new order inflow across segments, with multi-year execution timelines enhancing revenue predictability and capacity planning. * **Export Momentum:** Export segment remains a key growth driver, with **70% of new orders** sourced internationally, particularly from European OEMs. * **EV & Diversification Push:** Strategic foothold established in EV components; recycling business launched as adjacent play, leveraging rubber-based industrial demand. * **Domestic Strength, Selective Export Headwinds:** Domestic growth remains resilient at **15–18%**, though U.S. aftermarket softness caused a minor revenue impact of **₹6–7 Cr** in the quarter. * **Normalization of Inventory Cycles:** Customer inventory depletion pressures have eased, supporting improved demand visibility and volume ramp-up. --- # 3. Segment Performance ## A. Key Figures * **Gaskets Division Sales:** ₹153 Cr Q3 (+12%) · ₹431 Cr 9M (+4%) * **Gaskets Division EBITDA:** ₹28 Cr Q3 (+21%) · ₹74 Cr 9M (+6%) * **Forging Division Revenue:** ₹68 Cr Q3 (+74%) · ₹219 Cr 9M (-1%) * **Marelli Talbros Chassis Systems Revenue:** ₹90 Cr Q3 (+25%) · ₹243 Cr 9M (+16%) * **Talbros Marugo Rubber Revenue:** ₹39 Cr Q3 (+25%) ## B. Gaskets & Heat Shields * **Resilient Core Business:** Gaskets & Heat Shields delivered double-digit growth despite export headwinds, with structural demand stability in commercial vehicles and no near-term decline in ICE engine demand. * **Growth Diversification:** Gaskets remain the largest revenue contributor (52% of turnover), but their share is expected to decline to **40–42% over five years** as other segments scale faster. * **Import Substitution Momentum:** Active pipeline for localized gasket production with **2–3 OEMs** in testing phase, targeting cost-efficient replacement of imported components. * **FY27 Growth Pathway:** Gasket business on track for ₹700 Cr target in FY27, driven by **new orders from Kia**, full-year order ramp-up, and export commercialization. * **Forward-Looking Guidance:** Q4 expected to see **15% growth in Gasket business**, supported by strong agri-commercial vehicle demand and key OEM relationships (Cummins, Tata Motors, Volvo). ## C. Forging * **Strong CV-Led Recovery:** Forging division rebounded sharply in Q3 with robust 21% YoY commercial vehicle market growth, particularly in medium commercial vehicles. * **Export Headwinds Easing:** Temporary European export challenges caused near-term volatility, but recovery signals are emerging ahead of expected Q4 improvement. * **Profitability Leverage:** Despite flat nine-month revenue, EBITDA surged **36% YoY**, reflecting operational efficiencies and favorable product mix. ## D. Chassis & Rubber * **Joint Venture Outperformance:** Both **Marelli Talbros Chassis Systems** and **Talbros Marugo Rubber** delivered **25% Q3 revenue growth**, driven by deeper OEM penetration and strong 2-wheeler market fundamentals. * **2-Wheeler Market Tailwinds:** Segment sales grew 2% YoY to 71 crore units, supported by rural demand recovery, stable fuel prices, festive momentum, and **GST Reforms Act** benefits. --- # 4. Capacity & Capex ## A. Key Figures * **Utilization Rate:** **80–85%** current across divisions * **Capacity Timeline:** Full capacity expected by **FY27–28**; new capacity commercialization begins **2027** ## B. Utilization Rates * **Near-Term Readiness:** Company is operationally ready to meet strong domestic auto demand, leveraging existing idle capacity from machines in the **700–2,500 ton** range. * **Capacity Phasing:** Majority of new orders to be commercialized in the next fiscal, with full ramp-up aligned to FY27–28 capacity limits. ## C. Capex Plan * **Growth-Funded Expansion:** Capex fully funded through internal accruals, with execution underway and targeted completion by **December of current year**, superseding prior ₹70 Cr guidance. * **Strategic Allocation:** ₹85 Cr specifically allocated, including ₹50 Cr for key machinery (e.g., **2,500-ton press**, VMC, CNC) to fulfill a **₹100 Cr/year Forging order**. * **Forging-Centric Investment:** Major focus on Forging business, with ₹115 Cr directed to forging and stand-alone operations despite near-term cash flow constraints. ## D. New Facilities * **Logistics & Localization:** New Gujarat facility supports **just-in-time delivery** for regional customers; capex also covers power, buildings, and Marelli capacity upgrades. --- # 5. Customer & OEM Exposure ## A. Key Customers * **Strategic OEM Partner:** Positioned as a trusted manufacturing and sourcing partner for European OEMs, leveraging engineering capabilities, cost competitiveness, and execution strength. * **Core Vehicle Segments:** Focus on agri commercial vehicles, LCVs, MCVs, and agri off-roaders shapes product mix and market exposure. ## B. OEM Disruptions * **Resolved Forging Downturn:** Forgings division rebounded after a Q3 FY'26 disruption caused by halted sales to **BMW and JLR** for over five months. * **Supply Chain Normalization:** Operations fully restored post-resolution of issues with **Dana restructuring** (new ownership) and temporary slowdowns at **GKN**. ## C. 2-Wheeler Share * **Concentrated 2-Wheeler Exposure:** Presence limited to **Bajaj (100% share)** and **Hero Motor (30% share)**, with no share in TVS or other players; Bajaj contributes marginally over **6–7%**. * **Chassis Demand Strength:** Robust domestic car demand supports near-term chassis business momentum, with export recovery expected ahead. --- # 6. Risks & Export Dependence ## A. Key Figures * **Exports:** **15%** of Gaskets revenue · **55% direct**, **~85–90% total** of Forgings revenue * **Export Revenue Contribution:** **25%** of total revenue (9M FY'26) · **80%** to U.K. and Europe * **Price Adjustment Lag:** **6–9 months** for currency or price pass-through ## B. OEM Volatility * **Export-Driven Volatility:** Performance pressures stem from export disruptions—not domestic demand or commodity costs—despite strong CV, 2W, and PV industry growth. * **Commodity Stability:** Steel and CRC sheet prices remain stable with **no hedging policy**, posing no near-term cost risk. ## C. Validation Delays * **High Export Dependence:** Forgings division is heavily exposed to global markets, with **indirect exports** (e.g., BMW, European OEMs) significantly amplifying export linkage. * **Localization Headwinds:** Growth in overseas markets constrained by extended **engine testing and validation timelines**, delaying localization benefits. ## D. Currency Impact * **Pricing Power Preserved:** Customers provide full pass-through on price and FX moves, though realization lags by several quarters. * **EU Trade Tailwinds:** India-EU free trade agreement offers strategic upside for **exports, tech partnerships, and investment inflows**. --- # 7. Guidance & Outlook ## A. Key Figures * **Revenue Target:** **₹1,100 Cr** by 2027 · **₹1,400 Cr** projected by 2028 * **Long-Term Orders:** **₹2,000 Cr** expected over 5 years (2027–28 onward) ## B. Revenue Targets * **Clear Path to Scale:** Management affirms **reasonable expectation of ₹2,000 Cr company-level revenue by 2028**, implying sustained ramp-up beyond initial targets. * **Near-Term Momentum:** FY26 revenue growth guided at **double-digit levels**, with precise figure to follow post-budget finalization in May. ## C. Growth Phasing * **Recovery Trajectory:** Confidence in returning to **growth at or above industry pace**, driven by export demand recovery and stabilized OEM relationships. * **Phased Revenue Ramp:** Major order inflows to begin in 2027 with **20% commencement**, staged across July, October, and January cycles. * **Seasonal Strength Ahead:** Q4 expected to outperform Q3 on **robust domestic demand and significantly stronger export performance**.