Subros Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

Subros delivered a strong Q1 FY26 performance, driven by robust growth in the CV segment and improved internal efficiencies. The company reported significant year-on-year growth across all key financial metrics, with margins expanding. Strategic investments in green mobility and capacity expansion, particularly the Kharkhoda plant, are underway to capitalize on future market opportunities and regulatory changes in the automotive sector, while exports also showed strong growth.

Highlights

  • Revenue from operations grew 8.45% YoY to INR 878 crores.

  • EBITDA increased by 9.05% YoY to INR 87.7 crores, with EBITDA margin at 10.02%.

  • Profit Before Tax (PBT) rose 15.43% YoY to INR 54.44 crores, with PBT margin at 6.22%.

  • Profit After Tax (PAT) grew 16.48% YoY to INR 40.66 crores, with PAT margin at 4.65%.

  • Commercial Vehicle (CV) segment trucks grew 34% and CV bus segment grew 21% YoY.

  • Passenger Vehicle AC market share is 42%, Truck AC market share improved to 44%, and Bus AC segment to 16%.

  • Exports for passenger vehicles grew 13% and two-wheelers grew 23% YoY, reaching a record high.

  • Kharkhoda plant, with 0.5 million capacity (scalable to 1 million), is expected to be operational between April-June quarter '26.

Key financials

  1. Revenue ₹878 Cr +8.5%YoY
  2. EBITDA ₹87.7 Cr +9%YoY
  3. EBITDA Margin 10%
  4. PBT ₹54.44 Cr +15.4%YoY
  5. PAT ₹40.66 Cr +16.5%YoY
  6. PAT Margin 4.7%

What they filed

Q1 FY27: revenue up 17.5%, net profit up 2.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue828 821 908 878 880 +6%948 +15%1,050 +16%1,032 +18%
EBITDA76 76 93 82 68 −11%81 +7%92 −1%81 −1%
Net profit36 33 46 41 41 +14%35 +6%49 +7%42 +2%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
₹872 Cr Total
  • Passenger Vehicle ₹700 Cr 80.3%
  • Engine Cooling Module ₹106 Cr 12.2%
  • Truck ₹45 Cr 5.2%
  • Bus ₹12 Cr 1.4%
  • Railway ₹9 Cr 1.0%

Guidance & targets

Capacity

  • Kharkhoda plant capacity Capacity · April to June quarter '26 · High confidence 0.5 million, scalable to 1 million
    This project will start with 0.5 million of capacity, which will be scalable to 1 million as per the customer requirement. This project will be operational between April to June quarter '26.

    — Parmod Kumar Duggal

  • Kharkhoda plant operational start Capacity · Q1 FY27 · High confidence next quarter 1 of FY '27
    our new plant, Kharkhoda will be ready by next quarter 1 of FY '27. So we'll start ship production to that location.

    — Parmod Kumar Duggal

  • Additional capacity expansion Capacity · next 3-5 years · High confidence next 3 to 5 years
    the plant size are enough to take care of the additional capacity expansion in the next 3 to 5 years.

    — Parmod Kumar Duggal

Market Share

  • CV Truck AC market share (N2, N3) Market Share · High confidence 44% & 45%
    So in N2 truck segment, N2, N3 and also in some cases, N1, which is having a tonnage of 3.5 also require aircon. So our market share would be in the range of 44% & 45%.

    — Parmod Kumar Duggal

Profitability

  • EBITDA Margin Profitability · within next 2 years · Medium confidence 12%
    And our aim for 12% within next 2 years is still intact, provided any disruption is not negative for us. But so far, our plans are aligned to that target.

    — Parmod Kumar Duggal

Capex

  • Regular capex (new product development & maintenance) Capex · this year · High confidence INR120 crores, INR130 crores
    So our regular capex for new product development and maintenance would be in the range of INR120 crores, INR130 crores.

    — Parmod Kumar Duggal

  • Kharkhoda greenfield project capex Capex · partially in this year, partially go to the first quarter of next year · High confidence INR150 crores
    for that INR150 crores is allocated done for greenfield projects... So it would be partially in this year, partially go to the first quarter of next year.

    — Parmod Kumar Duggal

Revenue

  • Bus segment revenue Revenue · this year · Medium confidence crossing around INR50 crores plus

    From around INR 44 crores today

    So last year, we did around INR 44 crores. This year, we will be very hopefully crossing around INR50 crores plus.

    — Parmod Kumar Duggal

  • Truck segment revenue Revenue · this year · Medium confidence INR150 crores to INR165 crores

    From around INR125 crores today

    On the truck side, last year, we did around INR125 crores. And with the regulation starting from 8th June or the middle of June, we are hopeful that we will be crossing I'm just giving a guesswork of INR150 crores to INR165 crores or so.

    — Parmod Kumar Duggal

Capacity Utilization

  • Capacity utilization Capacity Utilization · High confidence around 85%, and it has now reached to 90% also
    So capacity utilization, of course, is around 85%, and it has now reached to 90% also.

    — Parmod Kumar Duggal

Risks & concerns

  • Mixed performance in Indian auto industry / Market slowdown

    medium

    Some segments seeing growth, others facing slowdown; passenger vehicle domestic sales slightly down, two-wheeler sales dipped.

    Management acknowledged

  • Geopolitical and supply chain disruptions

    medium

    Disruptions, including rare earth availability, make market trends crucial to observe for production plans.

    Management acknowledged

  • Commodity price volatility

    medium

    Inflationary rates for commodities (e.g., refrigerant gases) are compensated by customers with a quarter lag, but continuous increase impacts the bottom line.

    Management acknowledged

  • Highly competitive scenario in EV space

    medium

    Management noted it's a 'highly competitive scenario' when discussing Hyundai/Kia EV supply chain, making business decisions challenging.

    Management acknowledged

Q&A highlights

3 direct
Segmental Revenue Share and Future Outlook Direct
So passenger vehicle segment has contributed around INR700 crores out of INR875 crores. Engine cooling module has contributed around INR106 crores. Bus segment in quarter is INR12 crores and truck is around INR45 crores. Railway is INR9 crores and the rest is contributed by other segments. ... So this quarter would be very crucial now to observe the market trend. And based on that, we will align our production plans also.

Provides a clear breakdown of the company's revenue mix and management's cautious but adaptive stance on future planning amidst market uncertainties.

Asked by Vijay from Nuvama

Market Share in N2, N3 AC Cabins post-regulation Direct
So in N2 truck segment, N2, N3 and also in some cases, N1, which is having a tonnage of 3.5 also require aircon. So our market share would be in the range of 44% & 45%.

Addresses the impact of a new regulatory mandate, detailing the company's strong market position and key customers in a growing segment.

Asked by Arjun Khanna from Kotak Mutual Fund

EBITDA Margin Trajectory and 12% Target Direct
But overall, if you see, as compared to the previous quarter, our EBITDA margin has improved, not previous but corresponding quarter. ... Our hopes has to be always positive. So we are still maintaining that, and we have to strive for that because these disruptions sometimes will become a new normal. So we have to deal with that.

Clarifies the current margin performance in context of seasonality and reaffirms the company's commitment to its 12% EBITDA margin target despite ongoing market disruptions.

Asked by Arjun Khanna from Kotak Mutual Fund

3 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Performance Driven by CV Segment and Exports

Subros reported a robust Q1 FY26, with revenue from operations growing 8.45% YoY to INR 878 crores. Profitability also saw significant improvement, with EBITDA up 9.05% to INR 87.7 crores (10.02% margin), PBT up 15.43% to INR 54.44 crores (6.22% margin), and PAT increasing 16.48% to INR 40.66 crores (4.65% margin). This growth was primarily fueled by the Commercial Vehicle (CV) segment, where trucks grew 34% and buses grew 21% YoY. Additionally, exports for passenger vehicles grew 13% and two-wheelers grew 23% YoY, reaching a record high.

Strategic Focus on Green Mobility and EV Space

The company is actively aligning with customer SOPs in the EV space, having completed SOPs for Maruti Suzuki EV model and Mahindra & Mahindra, with both projects now in ramp-up. Green mobility (CNG, hybrid, EV) currently contributes around 20% to total sales, with expectations for further growth. Subros is also participating in large tenders for railway projects and is strengthening its engagement with OEMs like Mahindra for new business in hybrid and EV segments, aiming to increase its Mahindra ICE share beyond 20% from the current 22-23%.

Kharkhoda Plant and Capacity Expansion Plans

Subros is progressing well with its new Kharkhoda project, which will have an initial capacity of 0.5 million units, scalable to 1 million. This plant is expected to be operational between April-June quarter of FY26 and will involve a substantial investment of INR 150 crores, deployed partially this year and in Q1 FY27. The company's current capacity utilization is around 90%, up from 85%, and debottlenecking efforts, along with the new Kharkhoda plant, are expected to meet customer demand for the next 3-5 years.

Impact of AC Mandate on Commercial Vehicles

The Government of India's mandate for air conditioning cabins in all trucks, effective from June, is a significant growth driver. Subros has secured a strong market share of 44-45% in the N2 and N3 truck segments. While the Q1 impact was limited to 15 days, the company anticipates a large impact in Q2 FY26, projecting truck segment revenue to increase from INR 125 crores last year to INR 150-165 crores this year. The bus segment revenue is also expected to cross INR 50 crores+ this year, up from INR 44 crores last year.

Commitment to Margin Improvement and Capex

Despite market disruptions and commodity price volatility, Subros remains committed to achieving a 12% EBITDA margin within the next two years, leveraging internal efficiencies and localization efforts. The company's regular annual capex for new product development and maintenance is projected to be in the range of INR 120-130 crores, in addition to the Kharkhoda greenfield investment. Management noted that inflationary rates for commodities are typically compensated by customers with a quarter lag, mitigating direct margin pressure.

Segmental Revenue Breakdown and Market Outlook

In Q1 FY26, passenger vehicles contributed approximately INR 700 crores, engine cooling modules INR 106 crores, buses INR 12 crores, trucks INR 45 crores, and railways INR 9 crores. While the overall Indian auto industry is experiencing mixed performance with some segments facing slowdowns, Subros is watchful of market trends, geopolitical, and supply chain disruptions. The company aims to align its production plans based on market observations, maintaining a moderate progress outlook for the automotive sector this year.

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