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    Alicon Cast.

    ALICON
    Automobile and Auto Components·7 Nov 2025
    Management Summary

    Alicon Castalloy Limited reported a mixed Q2 FY26, with strong sequential growth and margin expansion driven by product mix and operational efficiencies, despite a YoY revenue decline. The company's order book remains robust at ₹9,100 crores, with new wins in structural and non-auto segments. However, global headwinds such as US tariffs, rare earth material restrictions, and customer-specific disruptions continue to pose challenges, leading to caution regarding forward-looking statements.

    Highlights

    5

    • Revenue for Q2 FY26 was ₹429 crores, marking the third consecutive quarter of sequential growth (up 2.38% QoQ from ₹419 crores in Q1 FY26).

    • Gross margin improved to 48.9% in Q2 FY26, an expansion of 300 basis points QoQ and 130 basis points YoY, driven by product mix and operational efficiencies.

    • EBITDA margin for Q2 FY26 stood at 12.9% (₹55.5 crores), increasing by 100 basis points QoQ from 11.9% in Q1 FY26.

    • Profit before tax pre-exceptional rose significantly by 51% QoQ to ₹19 crores in Q2 FY26.

    • The company secured new orders for 7 parts from 6 customers, with a total potential revenue of ₹257 crores over 5 years, focusing on structural and non-auto segments.

    Concerns

    4

    • Revenues degrew by 7.7% YoY in Q2 FY26 compared to ₹464.5 crores in Q2 FY25, primarily due to one-time projects in the base period and specific customer issues.

    • US trade policy introduced a 50% tariff on Indian exports in August, dampening demand from US-based customers and impacting export volumes.

    • Global supply chain visibility remains challenged by China's restrictions on rare earth materials and ongoing semiconductor shortages.

    • A UK-based OEM customer experienced a cyber-attack, leading to paused supplies for up to 5 weeks, and US CV customers saw volumes dip by 25-26%.

    What Changed1

    vs Q3 FY26

    Guidance items8 → 3 (-5)
    Key financials

    Metrics

    8

    Periods

    2

    Q2 FY26

    4
    • Revenue
      ₹429 Cr
      YoY-7.6%QoQ+2.4%
    • Gross Margin
      48.9%
    • EBITDA
      ₹55.5 Cr
    • EBITDA Margin
      12.9%

    H1 FY26

    4
    • Revenue
      ₹848 Cr
    • EBITDA
      ₹105.3 Cr
    • EBITDA Margin
      12.4%
    • PAT
      ₹23 Cr

    Segment breakdown

    2-Wheeler Segment
    18% QoQ Growth8% YoY Growth44% Revenue Share (Q2 FY26)
    Passenger Vehicle (PV) Segment
    7.0% QoQ Growth16% YoY Growth41% Revenue Share (Q2 FY26)
    Commercial Vehicle (CV) Segment
    10% Revenue Share (Q2 FY26)
    Non-Auto Segment
    5% Revenue Share (Q2 FY26)
    List

    Order Book

    high confidence

    Total Value

    ₹ 9,100 crores

    as of 2025-09-30

    quantified

    Inflow this qtr

    ₹ 257 crores

    Execution

    FY24 to FY29

    Composition

    Carbon Neutral(product)
    Structural Business(product)
    Non-Auto(business type)
    Global(geography)
    Domestic(geography)

    "The order book of Rs. 9,100 crore is the updated one with the addition of new orders from Q2, and Rs. 8,400 crore of this is expected to be executed until FY29."

    Source:
    Prepared remarks

    Capital allocation

    1
    high confidence
    CategoryHeadline
    Capex

    ₹32 crores this quarter · ₹125 crores (FY26) planned

    Guidance & targets

    2
    CategoryTargetPriority
    Capex
    Full Year Capex
    ₹125-130 crores
    		High
    Profitability
    EBITDA Margin
    continue to improve
    		Medium

    Revenue Growth Guidance for Next Year

    Q4 FY26
    CurrentExpected double-digit growth
    TargetClear picture and specific numbers for FY27

    Why it matters

    Management deferred specific FY27 guidance due to global uncertainties; Q4 update will provide clarity on growth trajectory.

    But definitely, there will be an improvement, maybe double digit, we can expect growth in the next year in the top line. But maybe I think in quarter 4, we will be able to give a clear picture.

    How to verify

    guidance_and_targets

    Risks & concerns

    5
    RiskSeverity

    US Trade Tariffs on Indian Exports

    50% tariff introduced in August impacting export volumes, particularly from US-based customers, and creating uncertainty for future revenue. — Management acknowledged

    high

    China's Restrictions on Rare Earth Materials

    Ongoing restrictions coupled with semiconductor shortages weigh on global supply chain visibility and impact demand patterns. — Management acknowledged

    medium

    Customer-Specific Production Disruptions (Cyber-attack)

    A UK-based OEM customer's production was impacted by a cyber-attack for up to 5 weeks, leading to paused supplies from Alicon. — Management acknowledged

    medium

    Decline in US Commercial Vehicle Volumes

    CV customers in the USA reported a 25-26% dip in volumes, impacting Alicon's revenue from this segment. — Management acknowledged

    medium

    Rare Earth Magnet Supply Issues

    Demand side issues for OEMs/Tier 1 in procuring magnets from China, persisting for 2 quarters with no immediate resolution in sight, affecting the commercial vehicle segment. — Management acknowledged

    medium

    Q&A highlights

    7

    “this is the result of the product mix, what we are focusing as a part of the long-term strategy, which we are following over the year. So, we are focusing more on the 4-wheeler business. So, if you see in this quarter, the PV industry growth is 4.2%, while other growth in the PV is 16%. So there, we are focusing more on the PV business, which fetches more high VA part. ... Secondly, as explained by Mr. Kapoor, we are working a lot on the operational efficiencies. ... That is not the part of this improvement in our gross margins [price increases].”

    Clarifies that margin expansion is due to strategic product mix shift towards higher value-added PV parts and operational efficiencies, rather than price increases, indicating a sustainable improvement.

    asked by Umesh Matkar

    2 min read5 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Performance Overview

    Alicon Castalloy reported Q2 FY26 revenues of ₹429 crores, marking a 2.38% sequential growth from Q1 FY26 (₹419 crores) and the third consecutive quarter of sequential improvement. However, revenues degrew by 7.7% YoY compared to ₹464.5 crores in Q2 FY25. Gross margin for the quarter stood at 48.9%, an improvement of 300 basis points QoQ and 130 basis points YoY. EBITDA was ₹55.5 crores, translating to an EBITDA margin of 12.9%, up 100 basis points QoQ. Profit before tax pre-exceptional rose 51% QoQ to ₹19 crores.

    02

    Global and Domestic Market Dynamics

    The global business environment remained volatile, with US trade policy introducing a 50% tariff on Indian exports in August, impacting demand from US-based customers. China's restrictions on rare earth materials and semiconductor shortages continued to affect global supply chains. Domestically, the auto industry saw improved performance, with 2-wheeler volumes growing 10.6% YoY and commercial vehicles by 10.9% YoY. The passenger vehicle segment grew 4.2% YoY, aided by GST rate rationalization.

    03

    Operational Efficiency and Technology Initiatives

    The company is actively working on enhancing operational efficiencies through increased robotization, automation, and the expertise of German foundry specialists. Digital process controls are now active across most lines, yielding gains in cycle time efficiency, scrap reduction, and machine uptime. Alicon is also progressing on its automation roadmap with new robotic cells commissioned at Pune facilities. Sustainability initiatives continue to deliver, with 50-55% of total electricity requirements met through solar energy.

    04

    Order Wins and New Business Development

    Alicon secured new orders for 7 parts from 6 customers in Q2 FY26, with a potential revenue of ₹257 crores over 5 years. These wins include 1 part for carbon neutral, 1 for structural business, and 4 for non-auto segments, with 1 global and 6 domestic orders. The company has started production and ramp-up for eAxle programs for European customers and structural parts. The newly established Defense, Aerospace, and Railways (DAR) vertical is showing promise, with pilot discussions initiated for lightweight aluminum and hybrid casting applications.

    05

    Leadership Transition and Future Outlook

    Mr. Rajeev Sikand will conclude his tenure, and Mr. Sumit Bhatnagar will assume the role of CEO from April 1, 2026. Management expressed confidence in Mr. Bhatnagar's leadership to drive future growth. While specific FY27 guidance is deferred to Q4 FY26 due to global uncertainties, the company anticipates double-digit top-line growth next year and continued EBITDA margin improvement in the coming quarters, driven by strategic product mix and operational excellence.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.