Menon Bearings

Menon Bearings reported a consolidated total revenue of ₹244 crores for the financial year 2025, marking a 14% increase compared to ₹214 crores in the previous year. Profit After Tax (PAT) grew by 10% to ₹25.28 crores, up from ₹24.35 crores last year, while Profit Before Tax (PBT) saw a 14% increase to ₹34 crores. Management noted that despite the growth, profitability was somewhat constrained by input price increases that could not be fully passed on to customers due to existing pricing formulas.

For FY25, the Bearing division demonstrated robust performance with EBITDA margins exceeding 20%. The Aluminium division, operating under Alkop Limited, achieved an EBITDA margin of approximately 21%. The Brakes segment, a relatively newer venture initiated 1.5 to 2 years ago, recorded a lower EBITDA margin of 3%. Management anticipates that the Brakes segment's margins will improve and align with the other divisions as capacity utilization increases and new business, particularly from railways, materializes.

The company undertook significant capital expenditure, investing approximately ₹20 crores in the bi-metal division for infrastructure development, a new lead-free plant, and an increase in washer capacity by 7 lakh pieces per month, bringing the total to 5.28 crore pieces annually. An additional ₹12.5 crores was allocated to the Alkop division for a new 65,000 square feet shed and foundry machinery. Management indicated an ongoing annual CapEx of ₹3-4 crores for further machinery investments as new orders are secured, with a dynamometer for the Brakes segment costing ₹4-10 crores also on order.

Menon Bearings has secured a confirmed order book totaling ₹90 crores for its bi-metal and Alkop divisions, which is slated for execution over the next two financial years. Beyond confirmed orders, the company boasts a strong Request for Quotation (RFQ) pipeline, with ₹45 crores in the bi-metal bearing division and ₹60 crores in the aluminium division. This robust pipeline provides good visibility for future revenue generation and sustained growth.

The company is making notable strides in the EV sector. It currently supplies components to Tesla Motors indirectly through Concentric pumps. For Porsche E-mobility, four specific parts have been developed, with production expected to commence next month. Additionally, Menon Bearings has developed two EV parts for electric batteries for Tata Motors (via TACO Prestolite), with commercial production anticipated within the current financial year. The company views its EV engagements as crucial for technological advancement and future growth.

Exports account for 35% of Menon Bearings' total business. While acknowledging uncertainties surrounding new US tariffs, management expressed confidence that the burden can largely be passed on to customers, particularly large MNCs. The company is also strategically positioned to benefit from the 'China Plus One' global sourcing trend, which is leading to an increase in RFQs from European and US markets, driving export growth.

Management articulated a clear strategy prioritizing profitability and value addition over aggressive top-line growth. They are content with maintaining EBITDA margins above 20% and PAT margins above 10%, preferring to achieve similar profit levels with a ₹250 crore turnover rather than pursuing a ₹500 crore turnover with significantly lower margins. This approach is underpinned by their focus on high-quality, technologically sensitive products and achieving zero PPM certificates from customers.

The development of the Brakes segment, especially for railway applications, is a key focus. The company has ordered a dynamometer, an essential testing equipment costing between ₹4-10 crores, which is expected to arrive by September. Following its installation, a 6-8 month period will be required for testing and approvals from both Railways and OEMs. Management anticipates that commercial business from the Railways and OEMs will commence thereafter, significantly boosting the segment's performance and margins.