CIE Automotive India Limited

CIE Automotive India's India business achieved its highest-ever quarterly sales at INR15,232 million in Q3 CY25, representing a 9% year-on-year growth. This performance significantly outpaced the weighted average market growth and marked an improving trajectory from 3% in Q1 and 7% in Q2. The growth was supported by new orders coming back online and generally good market conditions, with light vehicle production growing 5.6%, two-wheelers 10-10.5%, and tractors 14%.

European sales for Q3 CY25 reached INR7,866 million, an 18% increase over Q3 CY24, though 11% of this growth was attributable to positive exchange rate effects. Despite this, the underlying European market remains structurally stagnant. Light vehicle production grew only 0.3% in Q3 CY25 and de-grew 2% for the 9M CY25 period. The market continues to be complex due to stagnant EV penetration, environmental penalties for ICE vehicles, and increasing competition from Chinese imports, with light vehicle production expected to remain flat at 16-17 million units for the next 3-5 years.

Consolidated sales for Q3 CY25 stood at INR23.1 billion, reflecting a 12% growth over Q3 CY24. The consolidated EBITDA was INR3.75 billion, resulting in a margin of 16.2%. However, the India EBITDA margin was 17.3%, lower both year-on-year and sequentially, primarily due to a 0-0.5% impact from energy tariff increases in Maharashtra. The European EBITDA margin was 14.1%, lower year-on-year but higher sequentially, indicating ongoing efforts to defend margins in a challenging market.

CIE Automotive India maintains a philosophy of achieving similar EBITDA margins across all segments, regardless of whether they are EV or ICE components, or aluminum versus ferrous. The company's aluminum division has seen its margins improve from 10% in 2019 to approximately 15% currently, with further improvements expected through efficiency gains and the acquisition of higher added-value components. The company is actively involved in EV components, including aluminum, gears, forgings, and stampings for four-wheelers, and races for two-wheelers, serving market leaders.

Management believes the recent GST reforms in India will structurally improve the 3-year growth CAGR for the passenger vehicle market from 2-3% to 5-6%, and for two-wheelers by 2-3 percentage points. However, the immediate impact is being observed cautiously due to its overlap with the festive season and ongoing inventory corrections. Separately, US tariffs, at 25% for light vehicle components and 50% for heavy vehicles, pose a dampener, though only about 1% of CIE India's revenue is categorized as high-risk from these tariffs.

The Mexican business currently generates a turnover of approximately 3-3.5 million euros per month and is stable. A significant EV program awarded by an American OEM in Mexico is now expected to grow 'a little bit below expected' over the next 2-3 years due to the elimination of US subsidies for battery electric vehicles. Despite this, the company maintains a strong relationship with key customers like Caterpillar for exports from Metalcastello, and expects recovery in the mid-term for off-highway vehicle business.