Sharda Motor Industries Q4 FY26 earnings call

The Indian automobile industry experienced broad-based growth across all major vehicle categories in Q4 FY26, supported by GST rate reductions, income tax relief, and lower financing costs. Passenger vehicle production grew 11.3% YoY to 15.71 lakh units in Q4 FY26, reaching 55.39 lakh units for FY26 (9.4% growth). Light commercial vehicle production increased 15.8% in Q4 and 11.2% for FY26, while 3-wheeler production saw a 32.4% rise in Q4 and 23.9% for FY26, totaling 13 lakh units. Despite strong domestic momentum, uncertainties from the West Asia conflict, commodity prices, and exchange rates pose risks for FY27.

For Q4 FY26, Sharda Motor reported consolidated revenues of INR 971.8 crores, a 30% YoY increase. Gross profit grew 13% YoY to INR 216.1 crores, and EBITDA increased 12% YoY to INR 112.9 crores, with an EBITDA margin of 11.6%. Profit before tax (PBT) stood at INR 119.6 crores, and profit after tax (PAT) was INR 89.4 crores. For the full year FY26, total revenues were INR 3,396.8 crores, up 20% YoY. Gross profit rose 8% YoY to INR 802.8 crores, and EBITDA increased 6% YoY to INR 419.1 crores. FY26 PBT was INR 459 crores, including an exceptional gain^📎 of INR 22.41 crores and an exceptional loss of INR 4.26 crores, leading to a PAT of INR 345.4 crores, up from INR 314.9 crores last year.

Sharda Motor remains resilient due to its India-centric manufacturing and backward integration. The company is actively diversifying its powertrain products and geography. Regulatory developments like BS7 readiness, BS6.3/WLTP, and CAFE III norms are supporting the company's strategy. CAFE III, in particular, is expected to drive demand for lightweighting and multi-fuel technologies, leading to an estimated INR 4,000 to INR 10,000 increase in content per vehicle. The lightweighting vertical's market share grew to 14% in FY26 and is projected to grow almost 3x by FY28 based on booked orders, with good margins.

Exports are a strategic growth priority, with a focus on North America and Europe. The company secured a new order from a global agricultural equipment OEM for Europe, valued at USD 10 million lifetime, with SOP in Q1 FY28. This marks a significant entry into the agri equipment segment. Another test order was received from a large U.S.-based heavy industry emission company, providing entry into a new U.S. CV OEM. The previously announced export order with a North American engine and genset manufacturer is now expected to commence SOP in Q3 FY27, following a couple of quarters of delay due to OEM inventory buildup.

The Uttarakhand facility is progressing as planned, aiming to improve logistics and responsiveness, with modular and scalable capacity. The Chakan 3 lightweighting plant has started SOP and is ramping up. The company continues to invest in R&D, filing 2 new patents in Q4 FY26, bringing the total to 22 filed and 4 awarded. R&D efforts focus on emission, thermal management, lightweighting, and suspension. Sharda Motor maintains a disciplined but active M&A approach, seeking strategic fit and technology relevance, leveraging its strong balance sheet. Technology partnerships, like the Donghee association for lightweighting, are also being pursued to expand product offerings like subframes and torsion beams.

The company anticipates steady demand in FY27, driven by earlier lightweighting suspension orders, partial revenue from FY26 lightweighting orders, CV adjacency impact, and North American export ramp-up. The broad capex guidance for FY27 is INR 90-110 crores, primarily for R&D, new emission norms readiness, and new program SOPs. Additional capex will be deployed for new facilities and lightweighting growth, linked to customer schedules and order visibility. The company aims for disciplined execution, timely SOPs, and continued diversification to become a globally relevant Sharda Motor.