JTEKT India — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

JTEKT India reported robust sales growth for H1 FY26, surpassing the PV market, and saw an improvement in Q2 EBITDA margins. The company is aggressively expanding capacity across key product lines and investing in a new Gujarat facility. Despite facing margin pressures from increased fixed costs, unfavorable product mix, and lower U.S. exports, management remains optimistic about future profitability driven by new product launches, strategic export growth, and ongoing cost reduction initiatives.

Highlights

  • H1 FY26 sales grew by 5.6%, outperforming the Passenger Vehicle market growth of 1.6%.

  • EBITDA margins improved to 7.2% in Q2 FY26 from 5.3% in Q1 FY26.

  • H1 FY26 EBITDA margins stood at 6.3%, down from 7.6% in the last Financial Year '24-'25.

  • Capital expenditure for H1 FY26 was approximately INR 118 crores, with cash generation of INR 72 crores.

  • Manual gear production capacity increased from 28 lakh units to 32 lakh units with the operationalization of the sixth line in August '25.

  • CPS capacity increased from 10 lakh to 15 lakh units with the third line becoming operational in July-August 2025.

  • CVJ capacity is projected to increase from 3.7-4 lakh units to 7.5-8 lakh units within 1-2 months with a new line.

  • New Gujarat manufacturing facility construction is expected to start in December 2025, with building completion by early 2028, backed by INR 250 crores committed funds.

  • Exports to JTEKT Brazil are expected to start next year (FY27) at 1 lakh units, with potential to grow to 5 lakh units and contribute up to INR 150 crores in revenue within 2-3 years.

Key financials

5 periods

Headline

  • Sales Growth
    5.6%
  • PV Market Growth
    1.6%
  • Export Sales (Last Year)
    512 Mn

Q1 FY26

  • EBITDA Margin
    5.3%

Q2 FY26

  • EBITDA Margin
    7.2%

H1 FY26

  • EBITDA Margin
    6.3%
  • Capital Expenditure
    ₹118 Cr
  • Cash Generation
    ₹72 Cr
  • Bank Borrowings Increase
    ₹76 Cr
  • Debt Equity
    0.23
  • Export Sales
    298 Mn

FY25

  • EBITDA Margin
    7.6%

What they filed

Q1 FY27: revenue up 26.8%, net profit down 42.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue605 592 649 566 639 +6%680 +15%780 +20%718 +27%
EBITDA47 44 57 31 46 −2%52 +20%71 +26%38 +24%
Net profit19 16 25 11 18 −6%20 +25%27 +12%6 −43%
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

  • Customer Sales Breakup (H1 FY26)
    56% Maruti Suzuki Sales12% Toyota Sales5% Honda Sales8% Mahindra & Mahindra Sales2% Tata Sales3% Renault Nissan Sales2% Exports Sales

Guidance & targets

Capacity

  • CVJ Capacity Capacity · within a month or two · High confidence 7.5 lakh to 8 lakh units

    Previously 3.7 lakh to 4 lakh units → 7.5 lakh to 8 lakh units

    And this will increase our CVJ capacity from around 3.7 lakhs to 4 lakhs to around 7.5 lakh to 8 lakhs.

    — Rajiv Chanana, Whole-Time Director

  • CVJ Forging Capacity Capacity · High confidence around 4 lakh to 5 lakh units
    the capacity will be around 4 lakh to 5 lakhs.

    — Rajiv Chanana, Whole-Time Director

Capex

  • Gujarat Facility Construction Start Capex · December 2025 · High confidence December 2025
    we expect full-fledged construction to start from December 2025.

    — Rajiv Chanana, Whole-Time Director

  • Gujarat Facility Building Completion Capex · early 2028 · High confidence early 2028
    We expect completion of building early 2028.

    — Rajiv Chanana, Whole-Time Director

  • Gujarat Facility Committed Funds Capex · High confidence INR 250 crores
    At this point of time, we have committed funds of INR 250 crores for this project

    — Rajiv Chanana, Whole-Time Director

Export Volume

  • JTEKT Brazil Supply Start Volume Export Volume · start point · High confidence 1 lakh units
    JTEKT Brazil is a group entity and start point will be around 1 lakh units

    — Rajiv Chanana, Whole-Time Director

  • JTEKT Brazil Overall Export Potential Export Volume · Medium confidence up to 5 lakh units
    overall exports will go up to 5 lakh units.

    — Rajiv Chanana, Whole-Time Director

Export Contribution

  • Export Contribution to Overall Sales Export Contribution · Medium confidence between 8% to 10%

    Previously 4% → between 8% to 10%

    our export contribution in overall sales can go up between 8% to 10%.

    — Rajiv Chanana, Whole-Time Director

  • Export Contribution from Brazil Export Contribution · Medium confidence up to 6%
    It improves our contribution of export by to 6%.

    — Rajiv Chanana, Whole-Time Director

Export Start

  • JTEKT Brazil Production and Sales Start Export Start · next year · High confidence June or July onwards
    we expect JTEKT Brazil will start next year. And we hope that from June or July onwards, our production and sales will start.

    — Rajiv Chanana, Whole-Time Director

Product Launch

  • New Maruti Suzuki Variant Launch Product Launch · August '26 · Medium confidence August '26
    maybe August '26, and we will be supplying for that product.

    — Rajiv Chanana, Whole-Time Director

Profitability

  • EBITDA Level Profitability · Medium confidence between around, say, 9% to 10%
    between EBITDA level of between around, say, 9% to 10%.

    — Rajiv Chanana, Whole-Time Director

Export Revenue

  • Brazil Exports Revenue Potential Export Revenue · within 2 to 3 years' time · Medium confidence up to INR 150 crores
    this business has got a potential to go up to, say, INR 150 crores, and that will be a significant portion of our overall sales.

    — Rajiv Chanana, Whole-Time Director

Risks & concerns

  • Lower than target sales growth and non-absorption of fixed costs

    medium

    H1 FY26 sales growth of 4% was lower than the business plan, leading to an inability to absorb increased fixed costs, particularly employee costs (up 0.8% of sales).

    Management acknowledged

  • Unfavorable product mix and delays in new vehicle launches

    medium

    Expected higher sales from new vehicle launches did not materialize due to delays and lower-than-expected volumes, resulting in an unfavorable product mix and no improvement in gross margins.

    Management acknowledged

  • Lower exports to the U.S. due to reciprocal tariffs

    medium

    Reciprocal tariffs imposed by the U.S. government negatively impacted profitability by 0.56% and contributed to lower export sales (INR 298 million in H1 FY26 vs. INR 512 million last year).

    Management acknowledged

  • Impact of new product development costs

    medium

    New product development costs continued to be high, impacting profitability by 0.6%, partly due to delays in the start of production for certain models.

    Management acknowledged

  • Contradictory statement regarding Debt-Equity ratio

    low

    Management stated the debt-equity ratio was at 0.23, 'slightly up from 0.7 level', which is a mathematical contradiction as 0.23 is lower than 0.7.

    Management acknowledged

Areas of evasion (1)

  • Specific payback period and cost savings for CVJ forging backward integration

Q&A highlights

2 direct
CVJ forging backward integration status, cost savings, and payback period. Partial
So, in order to maintain competitiveness of CVJ, our company intends to start in-house production of these forging parts... We are working on it, and we expect that this will result into an installed capacity between 4 lakh to 5 lakh units... I will not be able to tell you at this point of time, but give me time. This is in the process of being setting up, and we will be sharing this information with you next time.

Analyst probed for critical financial details (cost savings, payback period) of a strategic investment, but management deferred on providing specific numbers.

Asked by Shravan Vohra

Global President's vision for India as a global supply chain hub, export plans beyond Brazil, and Vision 2030. Direct
There are 2 things. One is that there is a positive sentiment about growth within India... Coming to overseas, like the growth strategy whereby we get involved... this exports, we already reported at the last conference call that we received the purchase order from JTEKT Brazil, we will be starting the supply of steering manual gears... There can be other opportunities coming up from other regions as well.

This question elicited a comprehensive overview of the company's long-term strategy, emphasizing India's growth potential, export expansion, and global integration within the JTEKT group.

Asked by Shravan Vohra

Reasons for the decline in gross margins over the last 6 quarters and strategies for improvement. Direct
So, while we have seen EBITDA margins improving from 5.3% in Quarter 1 to 7.2% in Quarter 2... the margin for the first half at 6.3% are down from 7.6%... One of the main negative factor was export sales to U.S... Another factor... is about 0.6% impact of new product development cost... As a result, there was a product mix change... all these factors, all these 3 factors, in our opinion, are temporary, and we expect that these factors will improve in the next 6 months' time or the next 2 to 3 quarters, and we expect to come back to our original profit levels.

Management provided a detailed breakdown of factors contributing to margin pressure and outlined a clear strategy and timeline for expected recovery, addressing a key investor concern.

Asked by Shravan Vohra

3 min read 6 chapters

Detailed narrative

Q2 FY26 Financial Performance and Margin Dynamics

JTEKT India reported a sales growth of 5.6% for the first half of FY26, significantly outperforming the Passenger Vehicle market growth of 1.6% during the same period. EBITDA margins showed an improvement in Q2 FY26, reaching 7.2% compared to 5.3% in Q1 FY26. However, the H1 FY26 EBITDA margins stood at 6.3%, a decline from 7.6% in the previous financial year (FY25). This margin compression was attributed to a 0.8% increase in employee costs, a 0.2% rise in manufacturing costs due to higher power tariffs and new production lines, and a 0.2% increase in material costs due to an unfavorable product mix.

Capacity Expansion and Capital Expenditure Initiatives

The company is actively pursuing significant capacity expansion. The sixth manual gear line at the Dharuhera facility became operational in August '25, boosting production capacity from 28 lakh to 32 lakh units. Additionally, the third CPS line commenced operations in July-August 2025, increasing capacity from 10 lakh to 15 lakh units. A second CVJ line at Dharuhera is expected to be operational within 1-2 months, which will expand CVJ capacity from 3.7-4 lakh units to 7.5-8 lakh units. Total capital expenditure for H1 FY26 was approximately INR 118 crores, against a cash generation of INR 72 crores, leading to an increase in bank borrowings by INR 76 crores.

Strategic Export Growth and Global Integration

JTEKT India is focusing on enhancing its role in the global supply chain. The company secured a purchase order from JTEKT Brazil for steering manual gears, with supplies expected to commence from June or July next year. This initiative is projected to start with 1 lakh units and has the potential to grow to 5 lakh units, contributing up to INR 150 crores in revenue within 2-3 years and increasing export contribution to overall sales to 6%. Management aims to increase the overall export contribution to total sales from the current 4% to between 8% and 10%. The company is also working to overcome challenges like reciprocal tariffs that impacted U.S. exports, which were INR 298 million in H1 FY26 compared to INR 512 million last year.

New Product Launches and Market Outlook

The company anticipates improved market conditions in the second half of the financial year, driven by the Indian wedding season, positive agriculture cash flows, and new product launches. New business from Maruti Suzuki (e-Vitara, Victoris) contributed INR 260 million in H1 FY26, supporting a 5% growth in the Maruti Suzuki and Toyota segments. A new Maruti Suzuki variant, similar to e-Vitara, is expected to launch around August '26. JTEKT India is also supplying for Tata Coral (an EV vehicle) and expects new EV models from Honda next year.

Backward Integration for CVJ Forging

To enhance competitiveness and secure cost advantages for Constant Velocity Joints (CVJ), JTEKT India is undertaking backward integration for forging critical CVJ parts like JF outer and JPL. Approximately INR 55 crores from the rights issue proceeds have been allocated for this project, primarily for importing machines. This facility is expected to have an installed capacity of 4 lakh to 5 lakh units, covering the company's total requirement for these parts. Management expects this project to be completed soon, contributing to both domestic market growth and overseas supply.

Development of Gujarat Manufacturing Facility

JTEKT India is establishing a new manufacturing facility in Gujarat, announced in October 2024, to cater to the expansion of OEMs in the Western region. A major portion of the rights issue proceeds, INR 114 crores out of INR 249 crores, has been allocated for the construction of the building and utilities. Factory designing has been completed, with full-fledged construction expected to commence in December 2025 and building completion by early 2028. The company has committed INR 250 crores for this project, which is deemed crucial for future growth.

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