CIE Automotive India Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

CIE Automotive delivered a resilient performance in Q2 CY25, driven by steady growth in India despite sluggishness in the light vehicle and 2-wheeler segments. The European business remains in a 'valley,' facing significant market weakness and restructuring costs, though volume declines are moderating. Management is optimistic about India's H2 prospects due to the festive season and a healthy order book, while maintaining a cautious, 'protection mode' stance in Europe.

Highlights

  • Consolidated Revenue reached ₹2,300 crores, representing a 4% YoY growth.

  • India business sales grew 7% YoY to ₹1,450 crores, outperforming weighted average market growth.

  • Consolidated EBITDA margin stood at 15.7% for the quarter.

  • Europe sales were ₹830 crores, down 1% YoY, impacted by an 8% real drop offset by a 7% positive exchange rate effect.

  • New order inflows for H1 CY25 reached ₹600 crores (₹6 billion), with ₹350 crores added in Q1 alone.

  • India EBITDA margin was 17.5%, while Europe EBITDA margin was 12.5% (impacted by restructuring costs).

  • Dividend payout of ₹7 per share resulted in a cash outflow of ₹260 crores.

Concerns

  • US Tariffs and Trade Restrictions

  • European Market Weakness

Key financials

2 periods

Headline

  • Revenue
    ₹2,300 Cr
    YoY +4%
  • EBITDA
    ₹360 Cr
  • EBITDA Margin
    15.7%
  • EBIT
    ₹270 Cr

H1

  • PAT Margin
    9.1%

What they filed

Q1 FY27: revenue up 10.0%, net profit up 17.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,136 1,119 1,163 1,204 1,254 +10%1,274 +14%1,332 +15%1,325 +10%
EBITDA185 170 186 183 199 +8%195 +15%219 +18%213 +16%
Net profit124 116 219 127 138 +11%134 +16%234 +7%149 +17%
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

Share of Revenue
₹2,280 Cr Total
  • India Operations ₹1,450 Cr 63.6%
  • Europe Operations ₹830 Cr 36.4%

Guidance & targets

Capex

  • Capex as % of Revenue Capex · CY25 · Medium confidence 5-6%
    So we will be close to this 5% in the complete year.

    — Ander Arenaza Alvarez, CEO

Margin

  • Europe Recurrent EBITDA Margin Margin · Medium Term · Medium confidence 14-15%
    We consider that we can be in a recurrent margins in Europe, around 14% to 15%.

    — Ander Arenaza Alvarez, CEO

  • India EBITDA Margin Margin · H2 CY25 · Medium confidence 17.5-18%
    And I think JP did mention that we expect India to be around that 17.5% to 18% kind of margin that we are talking about.

    — Vikas Sinha, Senior VP Strategy

Volume

  • Casting Program Ramp-up Volume · End of 2026 · High confidence Full rate
    we expect the ramp-up to start in the first quarter on 2026... and we expect to be at probably full rate at the end of 2026

    — Ander Arenaza Alvarez, CEO

Risks & concerns

  • US Tariffs and Trade Restrictions

    high

    Management is closely watching potential US tariffs and China's restrictions on rare-earth magnets, which could impact export growth.

    Management acknowledged

  • European Market Weakness

    high

    The European market is described as being in a 'valley' with high bankruptcy rates among suppliers and idled EV programs.

    Both acknowledged

  • Rare Earth Magnet Competition

    medium

    Facing strong competition from China in the magnet segment; company is focusing on non-rare earth magnets to improve competitiveness.

    Management acknowledged

Areas of evasion (1)

  • Specific contribution of new product development to the top line was not readily available.

Q&A highlights

3 direct
Europe EV Program Status Direct
In Metalcastello, we made a big bet for electrification... And unfortunately, this electric vehicle program is idled. I mean, it's delayed. And we expect that in the next 2, 3 years, nothing will happen on that.

Reveals a significant strategic setback in the European electrification strategy, impacting growth expectations for the next 2-3 years.

Asked by Priya Ranjan

India Order Book Delays Direct
CIE Hosur, which is getting in place... They're all getting sorted out, and we are basically on track now. So that is the main area that will help us get back on the trend.

Confirms that previous delays in the India order book (specifically 2W crankshafts and common rail) are resolving, supporting H2 growth.

Asked by Pratik Kothari

Working Capital and Cash Flow Direct
we did in December discounting with Mahindra, the big customer. We did not do in June, and that's the impact there. It will reverse if we do it again in December '25.

Explains the ₹590 crore working capital outflow as a timing issue related to bill discounting rather than a structural deterioration.

Asked by Basudeb Banerjee

2 min read 5 chapters

Detailed narrative

India Business Outperforms Sluggish Market

India operations grew 7% YoY to ₹1,450 crores, significantly higher than the weighted average market growth which saw sluggishness in light vehicles and 2-wheelers (<5%). Growth was supported by healthy demand in tractors and trucks. Management expects H2 to be stronger than H1 due to the festive season and the resolution of previous order book delays at the Hosur plant.

European Operations Navigate the 'Valley'

Europe sales of ₹830 crores reflect a difficult environment, with a real volume drop of 8% partially masked by a 7% positive currency effect. While the 4% volume drop in Q2 is an improvement over previous double-digit declines, management warns that H2 is seasonally weaker due to extended holidays in August and December. Recurrent margins are expected to stabilize at 14-15% once restructuring costs subside.

Strategic Restructuring at Metalcastello

To align with weak market conditions in the off-highway and commercial vehicle segments, CIE implemented a voluntary dismissal scheme at Metalcastello. This resulted in 30 employees (out of 200) leaving the company in June. This restructuring cost depressed Q2 margins to 12.5%, but is expected to help recover margins to historical levels in the future.

EV Strategy Setback in Europe

Management candidly admitted that a major 'big bet' on an electric vehicle program in Europe has been idled and delayed. They do not expect any progress on this specific program for the next 2-3 years. This has forced a pivot toward seeking other customers to fill the expanded capacity originally intended for this electrification project.

Order Book and New Product Momentum

The company added ₹600 crores in new orders during H1 CY25, tracking toward its typical annual target of ₹1,000 crores. Key new developments include 2-wheeler crankshafts for Royal Enfield and complex inner races for large OEMs. These new products, particularly at CIE Hosur, are expected to drive growth independent of underlying market trends.

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