Automotive Axles

Automotive Axles reported a Q4 FY25 total income of INR 568 crores, marking a 5.97% increase from INR 536 crores in Q4 FY24. The EBITDA margin for the quarter expanded to 12.7% from 12.1% in the prior year. For the full fiscal year FY25, the company achieved an overall revenue of INR 2,104 crores, a 6.2% reduction from FY24, yet managed to improve its EBITDA margin marginally to 11.9% from 11.8% in FY24, demonstrating resilience through cost optimization.

Management anticipates a soft MHCV market in FY26, expecting production volumes to be around 400,000 units, representing a 3% degrowth. Despite this, the company targets a 'single-digit high' top-line growth for FY26, driven by new product introductions and an improved product mix. The long-term vision includes a 5-year program to double revenue, aiming for INR 5,000 crores, supported by strategic investments and market expansion.

The company has successfully introduced and ramped up products like the MS185 Axle and is in the final stages of development and validation for the 109 upgrade, targeting the high horsepower engine and ICV/bus segments. This focus on higher-value, high-tonnage products has significantly improved per-axle realization by 13% to 25% in some cases, helping to offset overall volume degrowth and align with Western market trends.

Automotive Axles plans to spend INR 120 crores in FY26 on capital expenditure, primarily for modernizing its housing and gear manufacturing lines. This investment is aimed at improving manufacturing throughput, introducing Industry 4.0 automations, and enhancing overall productivity and capacity. The company also targets an annual profitability improvement of 0.8% to 1% through continuous cost reduction and operational performance initiatives.

A new technical and service agreement with Meritor HVS India commenced on April 1, 2025, following the expiration of the previous related party transaction on March 31, 2025. The exact financial terms of this agreement, including the service fee, are still being finalized and are expected to be quantified within 'a month or so'. This agreement aims to leverage Meritor's expertise in product development, engineering, and market intelligence to accelerate Automotive Axles' product presence.

While the current export market is soft, the company is exploring potential export opportunities, particularly as European and North American markets revive. They are also prepared for the electrification trend; existing mechanical axles are already fine-tuned for EV requirements, especially for remote-bound electric vehicles. However, significant e-Axle specific R&D capex has not been incurred yet, as the company awaits clearer market evolution and technology integration strategies.