Sharda Motor Industries Limited

Sharda Motor Industries reported a consolidated revenue of INR 787.2 crores for Q2 FY26, marking an 11% year-on-year growth. Gross profit increased by 4% YoY to INR 194.9 crores, aligning with industry growth. However, EBITDA experienced a 4% degrowth, settling at INR 101 crore, resulting in an EBITDA margin of 12.8%. Profit after tax for the quarter was INR 74.7 crores. For the first half of FY26, total revenue stood at INR 1,543.5 crores, an 11% increase, with PAT at INR 174.6 crores compared to INR 155.5 crores in the prior year.

The Indian automotive industry demonstrated healthy growth in Q2 FY26, supported by steady demand, GST relaxation, easing supply chain constraints, and festive season tailwinds. Passenger vehicle production rose by 4.2% YoY to 13.26 lakh units, light commercial vehicles grew by 12.9% to 1.71 lakh units, and three-wheelers saw an 18.3% increase to 3.58 lakh units. Two-wheeler production expanded by 10.6% to 69.26 lakh units, while tractor production registered a robust 14.6% growth to 3.24 lakh units, reflecting broad-based performance across segments.

The company is actively scaling up its lightweighting vertical, which currently contributes approximately 10% of total revenues. Sharda Motor announced securing two new orders in this vertical for control arms and links, with a combined annual value of US$14 million and a lifetime value of US$70 million. The Start of Production (SOP) for these orders is anticipated in Q1 FY28, marking a significant milestone in the company's growth strategy for this segment.

The global business vertical, established last year, continues to gain traction. Sharda Motor secured another order from a customer in Q1 FY26, valued at US$4.8 million annually and US$24 million over its lifetime. The SOP for this order is expected in Q4 FY27, with a gradual ramp-up over two years. The company's export focus includes the U.S., Europe, and increasingly the Middle East markets, targeting CV emission components, temperature-controlled tubes, heat shields, and tractor/genset emission components, with a total addressable market of approximately US$2 billion from the US and European markets.

In October 2025, Sharda Motor entered into a technology license agreement (TLA) with Donghee Industrial Company Limited of South Korea. This partnership will strengthen Sharda Motor's advanced suspension portfolio by enabling local manufacturing of critical chassis and suspension components like control arms, subframes, and torsion beams using Donghee's proven technologies. The kit value for these newer products is estimated at INR 4,000-10,000 per vehicle, with the total content per vehicle (including existing products) ranging from INR 6,000-18,000 for the PV market.

EBITDA margin for Q2 FY26 stood at 12.8%, a slight contraction from the previous year. Management attributed this primarily to higher input costs, particularly for catalysts due to increased prices of underlying noble metals, and product mix. While catalyst costs are pass-through, they impact the margin percentage due to a higher revenue denominator. Additionally, increased employee costs from augmenting global business development and lightweighting teams, along with investments in M&A and strategy teams, contributed to the compression in margins.

The company's current capex guidance is INR 70-75 crores, excluding any future new order wins. This capex will be linked to new order acquisitions. For Q2 FY26, the capacity utilization stood at approximately 80%. Management indicated that they would update capex figures as new orders are secured, suggesting a flexible approach to capital expenditure aligned with business growth.