JTEKT India — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

JTEKT India reported a robust 7% sales growth for FY25, surpassing market trends, despite a notable decline in EBITDA margins to 7.6% due to various external and one-off factors like reduced export sales and quality recalls. The company is aggressively investing in capacity expansion with a Rs. 760 crore CAPEX plan over three years, targeting 100% utilization by March 2027. Strategic moves include becoming a 100% supplier for Maruti's new EV model and aiming for significant CVJ market share growth, positioning India as a global manufacturing hub.

Highlights

  • JTEKT India achieved a sales growth of 7% for FY25, outperforming the passenger vehicle market growth of 3.7%.

  • EBITDA margins declined from 9.5% in FY24 to 7.6% in FY25, primarily due to external uncontrollable factors.

  • The company incurred a total CAPEX of Rs. 287 crores in FY25, with Rs. 191 crore allocated to new capacity expansion.

  • Export sales share in overall sales reduced from 4% to 2.4% in FY25, impacting margins by 0.6%.

  • Management outlined a 3-year CAPEX plan totaling Rs. 760 crores, with Rs. 430 crores dedicated to capacity expansion.

  • JTEKT India is a 100% supplier for Maruti's upcoming EV model, providing manual gear, CPS, and CVJ.

  • Current capacity utilization for CPS is ~110% and MS gear is ~92%, with a target to reach 100% utilization across facilities by March 2027.

  • The company aims to increase its CVJ market share from ~5% to 7.5-10% within a year or so.

Concerns

  • External uncontrollable factors impacting margins

Key financials

  1. Sales Growth 7%
  2. EBITDA Margin 7.6% -20%YoY
  3. CAPEX ₹287 Cr +66.9%YoY
  4. Employee Cost % of Sales 10.4% +3%YoY
  5. Administration Cost 455 Mn -7.9%YoY
  6. Export Sales Share 2.4% -40%YoY

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.

Guidance & targets

Capex

  • Total CAPEX Capex · next 3 years · High confidence Rs. 760 crores
    Assuming Rs. 300 crores of capital expenditure for next year, we will end up with about Rs. 760 crores of CAPEX over the 3 years period.

    — Rajiv Chanana, Director and CFO

  • Capacity Expansion CAPEX Capex · next 3 years · High confidence Rs. 430 crores
    out of this Rs. 760 crore, Rs. 430 crore will be utilized for our capacity expansion.

    — Rajiv Chanana, Director and CFO

  • Gujarat Facility Total Project Cost Capex · by '27-'28 · High confidence Rs. 650 crores

    Previously Rs. 250 crore → Rs. 650 crores

    when we look at the overall plan for this project by expanding including the production capacity, which we are planning to set up there, the total project cost will be around Rs. 650 crores.

    — Rajiv Chanana, Director and CFO

Capacity

  • CPS Production Capacity Capacity · ongoing · High confidence 15 lakh units

    From 10 lakh units today

    this will help us to increase our production capacity from 10 lakhs to 15 lakhs units.

    — Rajiv Chanana, Director and CFO

  • Dharuhera Manual Gear Production Capacity Capacity · ongoing · High confidence 29 lakh units

    From 24 lakh units today

    this will increase the setting of the fifth line will increase our capacity from 24 lakhs to 29 lakhs units.

    — Rajiv Chanana, Director and CFO

  • Total Manual Gear Production Capacity Capacity · ongoing · High confidence 36 lakh units

    From 29 lakh units today

    All these when once completed will increase our production capacity from 29 lakh units to 36 lakh units.

    — Rajiv Chanana, Director and CFO

  • CVJ Line CAPEX Capacity · July '25 · High confidence Rs. 90 to Rs. 100 crores
    this will involve a CAPEX of about Rs. 90 to Rs. 100 crores and this will be happening during July '25 period.

    — Rajiv Chanana, Director and CFO

  • Overall Capacity Utilization Capacity · by March '27 · High confidence 100%
    we expect that by March 27, as we keep on adding more and more product, the capacity utilization will again touch to about 100%.

    — Rajiv Chanana, Director and CFO

Market Share

  • CVJ Market Share Market Share · within a year or so · Medium confidence 7.5-10%

    From 5% today

    So currently we are at around 5% market share. I think we should be expanding to within a year or so. We expect that we may touch 7.5, 10 kind of a number.

    — Rajiv Chanana, Director and CFO

Volume

  • India Auto Market Sales Volume · by 2030 · Medium confidence 5 million
    India will be, within India the sale of will be 5 million by 2030 and that will be the largest in the world.

    — Rajiv Chanana, Director and CFO

Exports

  • Export Share in Overall Sales Exports · future · Low confidence 4-6%

    From 2% today

    it will impact our share of export in the overall sales volume from around 2% currently to about 4%. So around 4% currently to 6%.

    — Rajiv Chanana, Director and CFO

Profitability

  • Margins Profitability · future · Medium confidence improve
    We expect these to be better sir. Despite competition being there, we expect that the margins will improve.

    — Rajiv Chanana, Director and CFO

Headcount

  • Employee Costs Headcount · next year · Medium confidence reduce
    We expect that our employee costs will reduce next year.

    — Rajiv Chanana, Director and CFO

Risks & concerns

  • External uncontrollable factors impacting margins

    high

    Factors like reduced export sales (0.6% margin impact), quality defects/product recall (0.3% margin impact), and increased process costs/vendor price increases (0.4% margin impact) significantly pressured EBITDA margins.

    Management acknowledged

  • Delays in new model launches and export orders

    medium

    The launch of a new Maruti Suzuki model was delayed by almost 6 months, and an export order from Brazil was also slightly delayed, impacting initial capacity utilization.

    Management acknowledged

  • Initial capacity underutilization for new lines

    medium

    While new capacity is being added, initial utilization for lines like CVJ is 65-70%, with full utilization expected to ramp up over time, reaching 100% by March 2027.

    Management acknowledged

  • Impact of actuarial valuation changes

    low

    A reduction in the discount rate for actuarial valuation from 7% to 6.5% increased future liability, impacting employee costs.

    Management acknowledged

Areas of evasion (1)

  • Specific long-term export percentage targets beyond the near-term directional guidance.

Q&A highlights

3 direct
CAPEX plans, asset turnover, and JTEKT Corp's India investment strategy Direct
So for '24-'25, the company incurred a total CAPEX of Rs. 287 crores, primarily towards expanding production capacity... Assuming Rs. 300 crores of capital expenditure for next year, we will end up with about Rs. 760 crores of CAPEX over the 3 years period.

Management provided a detailed breakdown of current and future CAPEX, explaining the allocation for capacity expansion and linking it to the parent company's broader investment plans for India, offering clarity on growth drivers.

Asked by Aman Vora

Margin trajectory, impact of one-off factors, and CVJ product profitability Direct
almost 80%-90% of these factors are external like these were uncontrollable on the part of the management... We expect that the margins will improve. Two ways, not only through the customer negotiation but also that we are able to do our own cost reduction activities.

This question addressed the significant decline in EBITDA margins, prompting management to detail the various one-off impacts and outline clear strategies for future margin recovery and improvement, including cost optimization and better product mix.

Asked by Aman Vora

India's role as a global manufacturing hub, export strategy, and readiness for new EV models Direct
JTEKT Brazil is a group entity of our group and they will be sourcing manual gear... we are 100% supplier for this model. So whatever exports and domestic production will happen, we will be supplying for that... Our lines are ready.

The response clarified JTEKT India's strategic positioning for exports, including a significant order from Brazil, and confirmed its crucial role as a 100% supplier for Maruti Suzuki's upcoming EV model, highlighting readiness for the EV transition and future growth avenues.

Asked by Tushar Khurana

3 min read 5 chapters

Detailed narrative

Q4 FY25 Financial Performance and Margin Pressures

JTEKT India reported a 7% sales growth for FY25, outperforming the passenger vehicle market's 3.7% growth. However, EBITDA margins saw a significant decline from 9.5% in FY24 to 7.6% in FY25. This compression was attributed to several external and one-off factors, including a 0.6% margin reduction from decreased export sales, a 0.3% impact from product recalls affecting 2,500 units, and a 0.4% impact from increased process costs and vendor price adjustments. Employee costs as a percentage of sales also rose slightly to 10.4% from 10.1% in the prior year, while administration costs were contained at Rs. 455 million, down from Rs. 494 million.

Strategic CAPEX and Capacity Expansion Plans

The company incurred a CAPEX of Rs. 287 crores in FY25, with Rs. 191 crore dedicated to new capacity. Looking ahead, JTEKT India plans a total CAPEX of Rs. 760 crores over the next three years (FY25-FY27), of which Rs. 430 crores will be for capacity expansion. This includes increasing CPS production capacity from 10 lakh to 15 lakh units and manual gear capacity from 24 lakh to 29 lakh units at Dharuhera, ultimately targeting 36 lakh units total. A new CVJ line, requiring Rs. 90-100 crores, is expected to be operational by July 2025. The Gujarat facility, near the Suzuki plant, is projected to cost around Rs. 650 crores and will start operations by FY27-28.

CVJ Business Growth and Market Share Aspirations

JTEKT India is actively expanding its Constant Velocity Joint (CVJ) business, currently holding about 5% market share. The company aims to increase this to 7.5-10% within the next year or so. Current CVJ capacity utilization stands at 65-70%, with 2.7 lakh units sold and 1.35 lakh sets of CVJ in FY25. Management expects utilization to improve significantly with new model integrations and export orders. The company is a 100% supplier for Maruti Suzuki's upcoming EV model, providing manual gear, CPS, and CVJ components, with lines ready for production expected to commence exports by July.

India as a Global Hub and Export Strategy

JTEKT Corp's global restructuring emphasizes strengthening Indian sites, positioning India as a global manufacturing hub. JTEKT India secured an export order for manual gear from JTEKT Brazil, a group entity. While export sales share declined to 2.4% in FY25, management aims to increase this to 4-6% in the future, driven by strong supply chain management and demand for global models manufactured in India. The new Gujarat facility is also expected to support this export-oriented strategy, particularly for the western region.

Cost Optimization and Profitability Improvement Initiatives

Despite the margin pressures in FY25, management is confident in improving profitability. They highlighted containing administration costs at Rs. 455 million and expect employee costs to reduce next year through optimization plans. Initiatives include localization of components like the drive shaft XL for CVJ, production rationalization by shifting jacket assembly to the Bawal plant, and continuous cost optimization involving vendors. The company also noted that new CVJ products for bigger vehicles are expected to have better margins due to different technology and pricing.

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