Sundram Fasteners Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Sundram Fasteners delivered a resilient Q1 FY26 performance, characterized by record-high profitability despite a muted export environment. Domestic growth outperformed the industry across CV, PV, and tractor segments, driven by a shift toward higher-tonnage vehicles and premium product mixes. While North American exports face uncertainty due to regulatory and tariff concerns, management remains optimistic about a second-half recovery and long-term growth in non-auto segments like aerospace and wind energy.

Highlights

  • Revenue reported at ₹1,367 crores for the quarter, reflecting a 4% growth in the domestic market.

  • EBITDA margin expanded to 17.5%, up from 17% YoY and 15.6% in Q4 FY25.

  • Reported PBT of ₹186 crores and PAT of ₹138 crores, both marking record highs for the company.

  • Aftermarket business contributes 12% to 13% of total revenue, with significant headroom for industrial growth.

  • Renewable energy mix reached 52%, contributing to cost competitiveness and margin support.

  • Export market remains 'hazy' with North American demand impacted by emission norm confusion and tariffs.

  • General Motors EV program is on track, expected to contribute upwards of ₹250 crores this year.

  • Full-year revenue growth guidance set at 8% to 9%, contingent on export recovery.

Concerns

  • Export Market Uncertainty

Key financials

  1. Revenue ₹1,367 Cr +4%YoY
  2. EBITDA ₹238 Cr
  3. EBITDA Margin 17.5%
  4. PBT ₹186 Cr
  5. PAT ₹138 Cr

What they filed

Q1 FY27: revenue up 19.6%, net profit up 9.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,289 1,257 1,354 1,350 1,338 +4%1,351 +7%1,502 +11%1,615 +20%
EBITDA214 203 204 222 226 +6%216 +6%234 +15%256 +15%
Net profit131 120 134 138 140 +7%122 +2%180 +34%151 +9%
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

  • Aftermarket
    12.5% Revenue Mix
  • Exports
    15% Europe Mix5% UK Mix

Guidance & targets

Revenue

  • Full Year Revenue Growth Revenue · FY26 · Medium confidence 8% to 9%
    We have reported 4% growth in Q1... but should the exports also revise and conditions improve, and then definitely, 8% to 9% is the direction.

    — Management

  • General Motors EV Revenue Revenue · FY26 · High confidence ₹250 crores plus
    It will be upwards of INR250 crores for General Motors as an individual customer.

    — Management

  • Aerospace Segment Revenue Revenue · next 2 to 3 years · Medium confidence ₹100 crores plus
    we should see that growing to INR100 crores plus in the next 2 to 3 years.

    — Management

Capex

  • Annual Capital Expenditure Capex · FY26 · High confidence ₹300 crores
    we expect the capital expenditure to be around INR300 crores this year.

    — Dilip Kumar, CFO

Other

  • Renewable Energy Mix Other · FY26 · High confidence 55% plus

    From 51% today

    Renewable energy, it's about 51%, 52%, and we are aiming for the year at 55% plus.

    — Management

Capacity

  • Wind Energy Expansion Investment Capacity · FY26 · High confidence ₹75 crores plus
    we are in for the third phase of expansion where already we have committed INR75 crores plus with respect to the expansion.

    — Management

Risks & concerns

  • Export Market Uncertainty

    high

    North American market is 'hazy' due to confusion over EPA 27 emission norms and potential tariff issues causing a demand slump.

    Management acknowledged

  • EV Transition Timing

    medium

    Major customer Stellantis has delayed EV production schedules by another quarter to the end of the year.

    Both acknowledged

  • Raw Material Price Floor

    medium

    Steel prices have stabilized at ₹70,000, significantly higher than the ₹45,000-₹50,000 levels seen two years ago, limiting further margin expansion.

    Management acknowledged

Areas of evasion (1)

  • Specific quantification of the impact of tariffs on margins was avoided, though they noted customers have been 'supportive'.

Q&A highlights

2 direct
EV Production Schedules and Delays Direct
on the EV orders, I think there has been a further shift in terms of Stellantis... getting shifted to over by one more quarter. And earlier, it was supposed to be from July, but then it's going to the end of the year.

Reveals a specific delay in a major EV contract (Stellantis), which impacts near-term export growth expectations.

Asked by Sahil Rohit Sanghvi

Margin Sustainability and Targets Partial
getting back to 19%, 19.5% may be a challenge, but definitely, there is room for another 1%-odd.

Management tempers expectations regarding a return to historical peak margins, citing structural changes in raw material costs (steel prices).

Asked by Sahil Rohit Sanghvi

Cost Structure and EBITDA Drag Direct
the contribution for which you are not able to see probably in the financial results have improved by 2%. And that is the improvement we are seeing in EBITDA compared to Q4.

Addresses analyst concerns about why gross margin improvements aren't fully flowing to EBITDA, pointing to fixed costs and comparison bases.

Asked by Nihaar Shah

2 min read 5 chapters

Detailed narrative

Domestic Market Outperformance

Sundram Fasteners reported outperforming the domestic industry across all key segments, including commercial vehicles, passenger vehicles, and tractors. This growth is driven by a strategic shift toward higher-tonnage vehicles and multi-axle vehicles, which increases the 'pack value' per vehicle. In the passenger car segment, the company's participation in SUVs, which now comprise 66% of the market, has significantly aided its domestic share.

Export Headwinds and Regulatory Uncertainty

The export outlook remains cautious, particularly in North America, where management described the scene as 'hazy.' Confusion surrounding the upcoming EPA 27 emission norms and ongoing tariff-related issues have led to a demand slump among major customers. However, the European market shows signs of improvement, now accounting for approximately 20% of total exports when combined with the UK.

EV Strategy and Customer Timelines

The company's EV strategy is anchored by a major program with General Motors, which is expected to generate over ₹250 crores in revenue this year. While the GM program is steady, other major orders like Stellantis have faced delays, with production schedules pushed back by another quarter to the end of 2025. Management remains flexible, positioning itself to supply ICE, hybrid, or EV components based on evolving consumer preferences in the U.S.

Margin Levers and Structural Costs

EBITDA margins reached 17.5% in Q1, supported by favorable raw material prices and a higher mix of renewable energy (52%). Management noted that while steel prices have stabilized around ₹70,000 per ton, they remain significantly higher than historical levels of ₹45,000, creating a structural floor for margins. Further expansion is expected to come from operational efficiencies and yield improvements rather than significant RM price rollbacks.

Diversification into Non-Auto Segments

Sundram is aggressively pursuing growth in non-automotive sectors to diversify its revenue base. The wind energy segment is entering a third phase of expansion with a ₹75 crore commitment, aiming to build on its current ₹350 crore annual revenue. Additionally, the aerospace segment, currently at $6-7 million, is targeted to exceed ₹100 crores in the next 2-3 years, supported by NADCAP accreditation.

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