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    Sharda Motor

    SHARDAMOTRNeutral
    Automobile and Auto Components·11 Aug 2025
    Management Summary

    Sharda Motor reported a robust Q1 FY26, driven by strong performance in the Indian automotive sector, particularly tractors and 3-wheelers. While revenue grew 10% YoY, gross profit saw a 5% increase, attributed to product mix. The company is actively pursuing growth through light-weighting, exports, and domestic emission adjacencies, supported by new customer wins and an enhanced leadership team, despite geopolitical uncertainties impacting specific guidance.

    Highlights

    8

    • Consolidated revenue stood at ₹756.2 crores, reflecting a 10% YoY growth.

    • Gross Profit for the quarter was ₹189.5 crores, marking a 5% growth over Q1 FY25.

    • EBITDA reached ₹98.4 crores, a 3% increase YoY, with an EBITDA margin of 13%.

    • Profit Before Tax (PBT) was ₹130.1 crores, including an exceptional gain of ₹22.4 crores from a land sale, up 27.05% YoY.

    • Profit After Tax (PAT) increased by 30.07% YoY to ₹99.9 crores.

    • The company has filed 15 patents to date, up from 13 previously, strengthening its innovation pipeline.

    • Sharda Motor holds a cash surplus of approximately ₹800 crores, earmarked for light-weighting verticals and M&A.

    • New export orders secured from a Japanese construction equipment company and a large heavy industry machinery company, with SOP expected in 12-18 months.

    What Changed3

    vs Q2 FY26

    Tone shiftGood → NeutralGuidance items20 → 9 (-11)Risks discussed4 → 3 (-1)

    Key financials

    Single quarter

    07 metrics
    1. 01Revenue₹756.2 Cr+10%YoY
    2. 02Gross Profit₹189.5 Cr+5%YoY
    3. 03EBITDA₹98.4 Cr+3%YoY
    4. 04EBITDA Margin13%
    5. 05PBT₹130.1 Cr+27.1%YoY

    Segment breakdown

    Emission Control (FY25 Contribution)
    88% Revenue Contribution
    Suspension (FY25 Contribution)
    9% Revenue Contribution
    Supply Chain Management (FY25 Contribution)
    2% Revenue Contribution
    Other Miscellaneous (FY25 Contribution)
    100% Revenue Contribution
    List

    Guidance & targets

    9
    CategoryTargetPriority
    Regulatory Impact
    TREM V Content per Vehicle
    ₹5,000-15,000
    		Medium
    Product Development
    Light Weighting Content (Control Arm)
    ₹2,000-8,000
    		Medium
    Product Development
    CEV Temperature-Controlled Pipes SOP
    Q3
    		High
    Export
    SOP for New Export Orders
    12-18 months
    		Medium
    Export
    SOP for US-based Genset Order
    Early calendar year
    		Medium
    Revenue Mix
    Non-PV Segment Revenue Contribution
    80%
    		Medium
    JV Contribution
    TBAS JV Contribution to Consolidated PAT
    1-2% (approx. 1.5%)
    		Medium
    JV Contribution
    New Program in TBAS JV
    Q4
    		High
    Capacity
    Overall Capacity Utilization
    Around 80%
    		High

    Risks & concerns

    5
    RiskSeverity

    Global Economic and Geopolitical Uncertainties

    The sector remains exposed to global economic and geopolitical uncertainties, impacting export momentum and new order SOPs, making it difficult to provide firm guidance. — Management acknowledged

    medium

    TREM V Regulatory Deadline Uncertainty

    While the formal deadline for TREM V implementation for tractors is April 2026, management anticipates a likely change based on customer feedback, though no formal communication has been received. — Management acknowledged

    medium

    EV Penetration Risk in PV Segment

    The company's goal to increase non-PV segment contribution to 80% of revenue is primarily to de-risk from potential EV penetration into the passenger vehicle segment. — Management acknowledged

    low

    Areas of Evasion(2)

    • Annual revenue/margin guidance (explicitly declined as per company philosophy)
    • Specific quarterly segment-wise revenue breakdown (explicitly stated not provided)

    Q&A highlights

    3

    “Our top line was higher by 10%, whereas our gross margin was -- gross profit was higher by 5%. This is the right way of looking at our growth is the gross profit, which is the better indicator. And there is an impact of product mix of higher sales with brick and therefore, top line is higher, whereas gross profit margin in absolute terms are 5%.”

    Clarified that while revenue grew 10%, gross profit grew 5% due to product mix, indicating a shift towards lower-margin products or higher sales of 'brick' (potentially a lower-margin component).

    asked by Preet from InCred AMC

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 FY26 Financial Performance Overview

    Sharda Motor reported consolidated revenues of ₹756.2 crores for Q1 FY26, marking a 10% year-on-year growth. Gross Profit increased by 5% to ₹189.5 crores, while EBITDA grew 3% to ₹98.4 crores, maintaining a 13% margin. Profit Before Tax (PBT) saw a significant jump of 27.05% to ₹130.1 crores, aided by an exceptional gain📎 of ₹22.4 crores from a land parcel sale. Consequently, Profit After Tax (PAT) rose 30.07% to ₹99.9 crores.

    02

    Strategic Growth Levers: Exports, Light-weighting, and CEV

    The company is actively pursuing growth through exports, light-weighting, and domestic emission adjacencies. Two new export customers, including a leading Japanese construction equipment company, were secured, with SOPs anticipated in 12-18 months. The light-weighting vertical, currently focused on control arms, has added a new customer and started SOP for leading EV and ICE models. Additionally, the SOP for temperature-controlled pipes for the CEV segment is expected in Q3 FY26.

    03

    TREM V Regulatory Opportunity and Uncertainty

    Management highlighted the TREM V implementation for tractors, with a formal deadline of April 2026, as a significant opportunity, potentially adding ₹5,000-15,000 per vehicle. However, they indicated that a change in the deadline is likely based on customer feedback, though no formal communication has been received. The company is prepared for the transition but awaits clearer government guidance.

    04

    Capital Allocation and Cash Surplus Strategy

    Sharda Motor maintains a substantial cash surplus of approximately ₹800 crores. The primary allocation preference is to augment light-weighting verticals, which are seen as a huge opportunity. The company is also exploring M&A, focusing on technical agreements, joint ventures, and acquisitions that are 'powertrain agnostic', without a fixed timeline for such deals.

    05

    Non-PV Segment Diversification to Mitigate EV Risk

    A key strategic goal is to increase the non-PV segment's contribution to 80% of the revenue mix to de-risk from potential EV penetration in the passenger vehicle (PV) segment. Currently, approximately 40% of revenue comes from emissions (CV), 5% from off-highway tractors and exports, and 9-10% from light-weighting. While no fixed timeline is set, the company is continuously working towards this diversification.

    06

    Leadership Strengthening and Innovation Pipeline

    The leadership team has been strengthened with the onboarding of Mr. Ashwani Maheshwari as Deputy Managing Director, aimed at executing various growth levers. The company's innovation efforts are evident with 15 patents filed to date, an increase from 13 previously. This focus on R&D and leadership is intended to support growth in new areas and enhance market share.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.