Menon Bearings

Menon Bearings delivered a strong Q3 FY26, with consolidated revenue reaching ₹76.9 crores, marking a 32% year-on-year growth. Profit before tax (PBT) saw a significant increase of 69% to ₹12.4 crores, and profit after tax (PAT) also grew by 69% to ₹9.3 crores. Earnings per share (EPS) for the quarter rose to ₹1.65 from ₹0.98 in the prior year. For the nine-month period, consolidated revenue stood at ₹206.6 crores, an 18% increase year-on-year, with PAT growing 34% to ₹24.5 crores, reflecting sustained operating leverage and improved efficiency.

The business mix for Q3 FY26 showed OEM as the largest segment, contributing 48% of revenues. Exports demonstrated strong performance, accounting for over 36% of revenues, highlighting the company's robust international customer base. The replacement market contributed around 8% and continues to show steady improvement. The company has successfully secured new business from Allison Transmission in the USA, adding over ₹2.5 crores per month, and is also working with Federal-Mogul DRiV, further strengthening its export portfolio.

Menon Bearings is proactively addressing cost pressures, particularly raw material price volatility, through contractual partial pass-through mechanisms and a strategic shift towards monthly price revisions with customers. Process improvements and enhanced yield are expected to reduce raw material costs by ₹60-70 lakhs per month, projected to increase to ₹75-80 lakhs per month from the next month. Additionally, the installation of 3.8 megawatts of rooftop solar capacity across all plants is anticipated to save ₹2.25 crores annually in electricity expenses.

The company projects a robust order book, expecting to reach ₹295 crores for the current fiscal year (FY26). This is anticipated to grow to approximately ₹350 crores for FY27 and further to ₹425 crores for FY28. Management is confident in adding ₹50-60 crores in incremental revenue over the next two years through a combination of increased wallet share with existing customers and new customer acquisitions, particularly with the ramp-up of SUV-related orders.

For the current fiscal year, Menon Bearings has completed CapEx totaling around ₹15 crores. Looking ahead, an additional ₹20 crores is planned for the next two years, primarily focused on technology upgrades, new machinery, and value-added product development. This future CapEx is strategically allocated, with ₹7 crores each for the Alkop and Bearing divisions, and ₹6 crores for the Brakes division, aimed at enhancing capabilities and supporting growth.

The current revenue mix is dominated by Bimetal at 74%, followed by Alkop at 22%, and the nascent Braking System at 3%. For the next year, the mix is projected to shift to 65-68% Bimetal, 25-28% Alkop, with the remainder from Brakes. Overall consolidated EBITDA margins are guided at 20% for FY26, 21% for FY27, and 22% by FY28. The Brakes segment, currently operating at 12-13% margins, is expected to improve significantly to 18% next year as volumes increase and capacity utilization, currently at 60%, improves.

The company is focused on sweating its assets and improving return ratios. The Brakes segment is nearing ₹1 crore in monthly revenue, with positive discussions underway with two OEMs and expansion into the two-wheeler market. The delayed dynamometer for the railway business is now expected to be completed within four months, which is crucial for unlocking significant growth in this area. Menon Alkop plans to double its capacity from 1,440 to 2,880 in the next two years, driven by expanding business with John Deere across its global operations and continuous efforts to acquire new clients. The strategic shift to ex-works for exports is also underway to enhance cash conversion and reduce exposure to external risks.