CIE Automotive India Q1 FY27 earnings call

CIE Automotive India Limited reported consolidated sales of INR25.4 billion in Q2 CY26, an 11% increase year-on-year, and INR50.8 billion for H1 CY26, up 13% YoY. Consolidated EBITDA for Q2 CY26 stood at INR4.2 billion, growing 17% YoY, while H1 CY26 EBITDA margin was 16.7%. The company achieved a consolidated PAT of INR4.9 billion in H1 CY26, marking an 18% increase over H1 CY25, demonstrating a robust bottom-line performance despite market challenges^🌐.

India operations recorded sales of INR16.5 billion in Q2 CY26, a 13% increase YoY, and INR32.7 billion in H1 CY26, up 14% YoY. However, the EBITDA margin in Q2 CY26 contracted to 16.7% from 17.5% in Q2 CY25, primarily due to price inflation in energy, consumables, and raw materials stemming from the West Asia conflict. Management noted that the 13% growth was below the weighted average market growth of 16.5-16.7%, attributing it to business portfolio restructuring, underperforming exports, and specific OEM performance. Countervailing measures are being implemented to recoup the 80 bps margin drop over the next two quarters.

European operations reported sales of INR8.9 billion in Q2 CY26, a 7% increase YoY, but a 6% decline in Euro terms, reflecting a weak underlying market. Despite this, the EBITDA margin significantly improved to 15.9% in Q2 CY26 from 12.5% in Q2 CY25, driven by successful restructuring activities from the previous year. Management expects the European automotive market to remain weak, projecting a 2-3% drop this year and similar next year. The half-yearly PAT for European operations crossed INR1.5 billion, a 51% increase YoY, providing a silver lining amidst the gloomy market conditions.

The company secured a new order book of approximately INR5 billion per year, aligning with its internal targets. Capital expenditure during H1 CY26 was INR2.1 billion, with H2 CY26 capex expected to be significantly higher. Growth capex is concentrated in India, supporting projects in machine casting, gears, composites, stampings, and forgings. The company is also evaluating brownfield expansions for casting molding capacity and additional greenfield projects across various verticals, emphasizing a focus on profitability and return on investment for all expansions.

CIE Automotive India maintains a strong financial position, with consolidated net financial debt at negative INR14.2 billion at the end of H1 CY26, indicating healthy liquid cash availability. The company is actively evaluating both organic and inorganic growth opportunities. While inorganic growth is being pursued, high price expectations in the Indian market have made business cases challenging. The management reiterated its commitment to disciplined capital allocation, prioritizing return on investment and sustainable growth.

Management aims to maintain India growth in the 12-15% range, close to or above the weighted average market. The company emphasizes a strategy of solid, sustainable growth, balancing growth with profitability and return on investment. They are actively engaging with Chinese carmakers to develop supply chains in Europe as these OEMs localize production. The company believes its diversified portfolio and professional management will enable continued growth despite market complexities and inflationary pressures.