Alicon Castalloy Limited — Q2 FY26 earnings call

Call held 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

  • 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

  • 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%.

Key financials

2 periods

Q2 FY26

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

H1 FY26

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

What they filed

Q1 FY27: revenue up 38.3%, net profit up 22.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue464 392 425 418 428 −8%430 +10%495 +16%578 +38%
EBITDA56 34 47 49 55 −2%44 +29%46 −2%54 +10%
Net profit17 1 9 9 14 −18%3 +200%8 −11%11 +22%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • 2-Wheeler Segment
    0.18 decimal_fraction QoQ Growth0.08 decimal_fraction YoY Growth44% Revenue Share (Q2 FY26)
  • Passenger Vehicle (PV) Segment
    0.07 decimal_fraction QoQ Growth0.16 decimal_fraction YoY Growth41% Revenue Share (Q2 FY26)
  • Commercial Vehicle (CV) Segment
    10% Revenue Share (Q2 FY26)
  • Non-Auto Segment
    5% Revenue Share (Q2 FY26)

Order book

high confidence

Total value

₹9,100 Cr

as of 2025-09-30 quantified

Inflow this quarter

₹257 Cr

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

high confidence
  • Capex ₹32 Cr this quarter · ₹125 Cr (FY26) planned
    • Maintenance capex ₹25 Cr
    • Upgradations (technology, robots, automation) ₹20 Cr
    • Capacity expansion
    Capex for the quarter was Rs. 32 crore, taking total spending for the half year to Rs. 63 crore. We anticipate full year capex of Rs. 125 crore to Rs. 130 crore. ... And generally, out of this, we see Rs. 25 crore, Rs. 30 crore goes for the maintenance capex. And maybe I think Rs. 20 crore or Rs. 25 crore will go for upgradations like technology, maybe robots or such type of things, automations. And balance, we have to focus on our capacity expansion.

Guidance & targets

Capex

  • Full Year Capex Capex · FY26 · High confidence ₹125-130 crores
    We anticipate full year capex of Rs. 125 crore to Rs. 130 crore.

    — Vimal Gupta, Group CFO

Profitability

  • EBITDA Margin Profitability · coming two quarters as well as you will see in the coming year also · Medium confidence continue to improve
    But now you can see there is an improvement quarter-on-quarter in the margins. And definitely, it will continue in coming two quarters as well as you will see in the coming year also.

    — Vimal Gupta, Group CFO

Market context

  • Top Line Growth Revenue · next year · Medium confidence double digit
    But definitely, there will be an improvement, maybe double digit, we can expect growth in the next year in the top line.

    — Vimal Gupta, Group CFO

What to watch in Q3 FY26

Revenue Growth Guidance for Next Year

Q4 FY26
Current Expected double-digit growth
Target Clear 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.

Risks & concerns

  • US Trade Tariffs on Indian Exports

    high

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

    Management acknowledged

  • China's Restrictions on Rare Earth Materials

    medium

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

    Management acknowledged

  • Customer-Specific Production Disruptions (Cyber-attack)

    medium

    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

  • Decline in US Commercial Vehicle Volumes

    medium

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

    Management acknowledged

  • Rare Earth Magnet Supply Issues

    medium

    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

Q&A highlights

4 direct, 1 evasive
Gross margin improvement drivers and sustainability Direct
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

Details of Q2 order wins and new production/technology developments Direct
we have got the 7 parts order from the 6 customer and the sale over 5 years will fetch Rs. 257 crore. So, that is the new order which we have got in the quarter 2. And here, more focus what we are giving on the structural part, what I mentioned in my speech. And second, also on the non-auto, where we have got 3 parts, and it also gives us risk mitigation because our 4% revenues comes from the non-auto, and we are focusing more on the non-auto so that we meet the risk mitigation plan.

Provides specific quantification of new order wins and highlights the strategic shift towards structural and non-auto parts for risk mitigation and higher value.

Asked by Umesh Matkar

Status of SOPs for eAxle and European structural components and expected margin impact Partial
for the eAxle program for the European customers, so we have already started the production. They are now in the ramp-up phase. So, we are continuously ramping up the volume for these programs. And also, for the structural part for the European customer. So, as I said, initially, we got a few orders, which we have updated in the last con call. And in this quarter, again, we have got one order. So those orders are already in place. Particular order value, generally, we do not disclose in the con call, Umesh. ... But definitely, what in every concall we are explaining now, maybe we had a bad quarter like the quarter 3 of the last year. But now you can see there is an improvement quarter-on-quarter in the margins. And definitely, it will continue in coming two quarters as well as you will see in the coming year also.

Confirms production ramp-up for key new programs but avoids quantifying specific revenue contribution, while reiterating positive margin trajectory.

Asked by Umesh Matkar

Medium-term outlook for FY27 (revenue, capacity, margin) Evasive
I think it is too early in giving these forward-looking statements, because many factors are there that we have to incorporate because we are seeing that the domestic market will do well. But still, we are not clear about the tariff issue with the U.S. because we have a big exposure in the U.S. market also. And maybe dependency on U.S. market through some other countries exports. So, 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.

Management defers specific FY27 guidance due to global uncertainties (US tariffs), indicating a cautious outlook despite expecting double-digit growth.

Asked by Umesh Matkar

Order book execution timeline and revenue contribution Partial
The timeline for this order book is from FY24 to FY29. So, this is the execution time frame. But for the revenue generation, as Mr. Vimal has explained, that is a forward-looking statement, and we are seeing lots of uncertainty in the global market. So, it will be better if we give you some numbers in quarter 4.

Management provides the overall order book timeline but defers specific revenue contribution guidance to a later quarter, reinforcing the cautious stance on forward projections.

Asked by Rahul Kumar

Revenue share from US and tariff applicability Direct
Roughly around 7% to 8% revenue yes comes from North America. ... As far as we are aware, you are right. On the passenger vehicle, the tariff is 25%, while on the commercial vehicle it is 50%, but I have not heard that it is reduced to 25%.

Quantifies US revenue exposure and confirms the higher 50% tariff on commercial vehicle parts, highlighting a significant headwind for that segment.

Asked by Rahul Kumar

Impact of 2-wheeler share increase on gross margins Direct
one aspect you have touched, like commercial vehicle has gone down from 15% to 10%. But here, you see the passenger vehicle contribution. That has increased from 39% to 41%. So that is contributing to the highway business. Secondly, what we have explained, like we are working on the operational front also. So, we are going for the more robotization, more use of AI and also the level up in our foundry. So that also we are working up. So, we work on the product mix side also and also on the operational front. So, the profitability improve is the outcome of both the efforts what we are doing.

Explains that despite a higher 2-wheeler share (typically lower margin), the increase in higher-margin PV contribution and ongoing operational efficiency improvements offset this, leading to overall margin expansion.

Asked by Naysar

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.
View original transcript

More Automobile and Auto Components earnings calls