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    JTEKT India Q4 FY26 earnings call

    JTEKTINDIA
    Automobile and Auto Components·20 May 2026
    Management Summary

    JTEKT India reported an 11% sales growth for FY26, outperforming the passenger vehicle market, driven by new model launches and increased sales to key OEMs. While H2 EBITDA margin saw an improvement to 8.48%, the full-year margin slightly declined to 7.5% due to product mix changes and temporary accounting factors. The company is focused on utilizing new capacities, particularly in the CVJ segment, and expects ROCE to recover as utilization improves, with specific revenue growth targets for FY27.

    Highlights

    5

    • JTEKT India achieved 11% sales growth in FY26, outperforming the passenger vehicle market's 9% growth.

    • H2 FY26 EBITDA margin improved to 8.48% from 7.71% in H2 FY25.

    • Fixed costs (employee and administration) reduced by 0.28% as a percentage of sales in FY26.

    • Exports increased by 20% to INR664 million in FY26 from INR551 million in FY25.

    • Successful rights issue with public participation exceeding twice the shares offered.

    Concerns

    3

    • Full year FY26 EBITDA margin declined slightly to 7.5% from 7.6% in FY25.

    • Gross margins continuously declined from 29% to 27% over the last two years.

    • Fixed asset turnover ratio declined from 4+ to 2.2 due to INR800 crores capex in the last 3 years, contributing to ROCE decline from 16% to 10%.

    Key financials

    Single quarter

    06 metrics
    1. 01Sales Growth11%
    2. 02EBITDA Margin7.5%
    3. 03ROCE10%
    4. 04Fixed Asset Turnover Ratio2.2 x
    5. 05Exports664 Mn+20%YoY

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    Capex

    ₹400 crores

    Debt

    Debt disclosed

    Guidance & targets

    8
    CategoryTargetPriority
    Sales
    Additional Sales from Market Growth
    INR400 crores
    		Medium
    Sales
    Additional Sales from Exports
    INR100 crores
    		Medium
    Sales
    Total Additional Sales (FY27)
    INR500 crores
    		Medium
    Sales
    Total Additional Business from Existing Setup (FY26 + FY27)
    INR800 crores
    		Medium
    Capacity Utilization
    CVJ Line 2 Utilization
    90%
    		High
    Capacity Utilization
    Overall Capacity Utilization (new lines)
    100%
    		High
    Market Share
    CVJ Market Share
    15%
    		Medium
    ROCE
    ROCE
    16-17%
    		Medium

    What to watch in Q1 FY27

    5

    Overall Capacity Utilization of New Lines

    Next 1-1.5 years
    CurrentNot fully utilized (CVJ Line 2 at 27%, MS Gear Line 6 at 30%, CPS at 50%)
    Target100% utilization

    Why it matters

    Full utilization of recently installed capacities is crucial for improving ROCE and overall profitability, which has been impacted by underutilization.

    we expect that whatever capacities we have set up will be 100% utilized over the next 1 year or maybe 1.5 years, depending upon the market.

    Risks & concerns

    4
    RiskSeverity

    Adverse Product Mix Change

    Major decline in sales to Honda (33%), Renault Nissan (16%), and Toyota (4%) impacted margins by INR88 million (0.33%) due to these models having better profitability. — Management acknowledged

    medium

    Foreign Exchange Rate Volatility (Accounting Impact)

    A foreign exchange gain of INR26-62 million on imports led to material costs being booked higher by INR62 million (0.23%) due to differences between booking and payment rates, temporarily impacting profitability. — Management acknowledged

    low

    Increased Manufacturing Costs (Power & New Lines)

    Manufacturing costs increased by 0.1% due to power tariff changes and higher power utilization for new production lines under trial and implementation, which is considered a one-time factor. — Management acknowledged

    low

    US Tariff Impact on Exports

    Reciprocal tariffs and penalties imposed by the U.S. on exports costed INR63 million (0.24%), though these tariffs have since been withdrawn (reduced from 50% to 10%). — Management acknowledged

    low

    Q&A highlights

    8

    “So, you are aware that 2025, '26, it started with a weak note. We saw passenger vehicle market growth just 1.6% in the first half. Now this is lower-than-expected sales and EBITDA margin for the first half of '25-'26 declined to 6.3% compared to 7.6%, which we achieved first half of the previous year... Now as the sales improved due to reduction in GST rates in September 2026, the margins also started improving and the second half was 8.48% compared to 7.71%.”

    Management provided a detailed breakdown of factors impacting gross margins, including product mix, temporary accounting issues, and power costs, while outlining expected recovery drivers like US tariff withdrawal and new model launches.

    asked by Tushar

    3 min read6 chapters

    Detailed Narrative

    01

    FY26 Performance Overview and Market Outperformance

    JTEKT India reported an 11% sales growth for FY26, outperforming the passenger vehicle (PV) market's 9% growth. This was driven by strong performance in H2 FY26, where the PV segment grew 16.7% following GST rate reductions, compared to a modest 1.6% in H1. The company's sales were bolstered by new model launches like Maruti Suzuki's e Vitara and Victoris, and increased demand for models like Alto, Jimny, and Baleno, to which JTEKT supplies components.

    02

    Margin Dynamics: Challenges and Recovery Drivers

    While H2 FY26 EBITDA margin improved to 8.48% from 7.71% in H2 FY25, the full-year EBITDA margin slightly declined to 7.5% from 7.6% in FY25. This was attributed to a negative product mix (INR88 million impact from lower sales to Honda, Renault Nissan, and Toyota), temporary accounting for foreign exchange gains (INR62 million impact), and increased manufacturing costs due to power tariff changes and new production line trials. Management expects these factors to be temporary, with future improvements from US tariff reductions and new model contributions.

    03

    Strategic Focus on CVJ Segment and Capacity Expansion

    JTEKT India is strategically expanding its Constant Velocity Joint (CVJ) segment, aiming for a 15% market share. The second CVJ line, operational since November '25, increased capacity by 7.54 lakh units/annum, with current utilization at 27%. The upcoming third Maruti Suzuki EV MPV, expected in October '26, is projected to boost CVJ utilization to 90% and contribute INR250 crores in sales. The company expects 100% utilization of its new capacities within the next 1-1.5 years, which is critical for improving its ROCE.

    04

    OEM Performance and New Model Contributions

    Maruti Suzuki's sales share for JTEKT increased from 56% to 60% in FY26, while Toyota's share declined from 12% to 10%, and Honda's from 8% to 5%. New business from Maruti Suzuki's e Vitara and Victoris contributed INR173-174 crores. The upcoming Honda SUV EV, expected around December '26, is anticipated to generate INR100 crores in business for JTEKT. The company is a 100% supplier to Honda and the sole supplier for Toyota's steering requirements, highlighting its critical OEM relationships.

    05

    Capital Allocation and ROCE Recovery Path

    The company's Return on Capital Employed (ROCE) declined from 16% in FY24 to 10% in FY26, with the fixed asset turnover ratio falling from 4+ to 2.2. This is primarily due to approximately INR800 crores in capex over the last three years, resulting in INR411 crores of Capital Work-in-Progress (CWIP) that is not yet operational. Management expects ROCE to recover to 16-17% once full capacity utilization is achieved, driven by improved profitability from utilized assets. FY26 capex was over INR400 crores, with an additional INR130 crores planned for the Gujarat plant in FY27.

    06

    Export Growth and Global Ambitions

    JTEKT India's exports grew 20% to INR664 million in FY26, though still below the INR867 million benchmark from two years prior. The company is commencing dispatches for a new Brazil export order in May '26, starting with 70,000 units this year and projected to grow to 5 lakh units/annum. This initiative, coupled with the withdrawal of US tariffs (reduced from 50% to 10%), is expected to boost future export volumes and profitability, aligning with JTEKT Corporation Japan's intent to strengthen India as a global manufacturing site.

    This is an AI-generated summary of a publicly available earnings call transcript.