Sundram Fasteners Limited — Q2 FY26 earnings call

Call held 30 Oct 2025

Management summary

Sundram Fasteners delivered a resilient Q2 FY26 performance, achieving record quarterly profits despite a double-digit decline in exports. The company's domestic business remains the primary growth engine, significantly outperforming the broader industry through new customer acquisitions and increased share of business. Management is navigating global uncertainties in the EV and US truck markets by focusing on high-margin segments like wind energy and maintaining a lean balance sheet.

Highlights

  • Standalone Revenue for Q2 reached ₹1,356 crores, representing a 4.3% YoY growth despite export headwinds.

  • Profit After Tax (PAT) for Q2 hit a record high of ₹140 crores; Consolidated H1 PAT crossed ₹300 crores for the first time.

  • EBITDA margin for the quarter stood at 18.0%, supported by softening raw material prices and better product mix.

  • Domestic segment outperformed the industry with 12% growth, driven by market share gains in PV and Tractor segments.

  • Export revenue declined 13% YoY to ₹338 crores due to demand contraction in the US truck market and tariff uncertainties.

  • Wind energy segment showed robust momentum with 30-35% H1 growth; company announced a further ₹80 crore expansion.

  • EV revenue contribution currently stands at 5-6%, with management noting a temporary pause in North American EV programs.

  • Net borrowing significantly reduced from ₹600 crores to a net cash position of ₹40 crores as of H1 FY26.

Concerns

  • US Truck Market Softening

Key financials

  1. Revenue ₹1,356 Cr +4.3%YoY
  2. EBITDA Margin 18%
  3. PAT (Standalone) ₹140 Cr
  4. Domestic Revenue Growth 12% +12%YoY
  5. Gross Margin 60%

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

  • Domestic OE Mix
    37.5% CV and Engines40% Passenger Cars11% Tractors5% Two-Wheelers
  • Product Group Mix
    37.5% Fasteners26.5% Functioned Assemblies15% Cold Extruded & Sintered11% Hot Forging

Guidance & targets

Capex

  • Wind Energy Expansion Investment Capex · FY27 · High confidence ₹80 crores
    we have also taken a further expansion of close to about, investment of about Rs. 80 crores, which should see revenues for Wind Energy business kicking in additional volume from next financial year.

    — Management

Volume

  • New Product Revenue Contribution Volume · Ongoing · High confidence 20% plus
    generally as a measure of performance, we use new product revenue kicking in based on product developed in the last 3 years. That as a measure, we are hovering about 20% plus.

    — Management

Margin

  • Aftermarket Revenue Mix Margin · Medium Term · Medium confidence 15-21%
    As you say that it will be in the range of 10%-15%... OE Spares... should also be considered as an aftermarket because it goes to service the aftermarket in the home. So that will push up the aftermarket content by another 5%-6% points.

    — Management

Market context

  • Revenue CAGR Revenue · Next 3 years · Medium confidence Double digit
    I think our internal estimate is, we are working on a double digit CAGR year-on-year.

    — Management

Risks & concerns

  • US Truck Market Softening

    high

    Underperformance in heavy-duty and classic trucks in the US, exacerbated by EPA27 emission norm ambiguity.

    Both acknowledged

  • EV Program Deferrals

    medium

    Major EV programs in North America are being deferred to next year due to market conditions.

    Management acknowledged

  • Tariff and Geopolitical Ambiguity

    medium

    Management describes the approach as 'business as usual' with friendly negotiations, despite analyst concerns over noise around tariffs.

    Analyst downplayed

Areas of evasion (1)

  • Specific details on which OEMs are pushing back EV platforms were not disclosed for confidentiality.

Q&A highlights

2 direct
EV vs ICE Value Capture Direct
As a company, it would be about 80 on a scale of 100 for ICE versus EV, it would be 80.

Quantifies the potential revenue risk/opportunity in the transition to electric vehicles, showing a 20% lower value capture per vehicle.

Asked by Lakshminarayanan KG

Export Decline and Tariff Impact Partial
I won't say it is entirely on account of tariff... it is the market by itself especially in America for heavy-duty trucks... which are, I think, underperformed.

Clarifies that the 13% export decline is more a function of US truck market cycles and emission norm ambiguity (EPA27) than just geopolitical tariffs.

Asked by Sahil Sanghvi

Domestic Outperformance Drivers Direct
One, wherever we are already there, there have been some increase in our share of businesses with some key customers... The second is we have also got some new businesses in the passenger car segment and the tractor segments where we were not present earlier.

Explains how the company is growing at 12% in a domestic market that is growing much slower, highlighting competitive gains.

Asked by Nihaar Shah

2 min read 5 chapters

Detailed narrative

Domestic Resilience Offsets Export Volatility

Sundram Fasteners achieved a 12% growth in the domestic segment, significantly outperforming industry benchmarks. This was driven by increasing share of business with existing key customers and successful entry into new passenger car and tractor platforms. Despite a 13% decline in standalone exports to ₹338 crores, the domestic strength allowed the company to report its highest-ever quarterly PAT of ₹140 crores.

Wind Energy Emerges as a Key Growth Pillar

The wind energy segment has become a significant non-auto driver, growing 30-35% YoY in H1 FY26. It now accounts for 4% of domestic sales. Following the execution of a ₹100 crore expansion, management announced an additional ₹80 crore investment to capture further volumes starting next financial year, citing high credibility and scaling capabilities as competitive advantages.

Navigating the EV 'Pause' and Value Capture

Management noted a temporary 'pause' in EV order execution as major North American customers defer programs to 2026. Currently, EV revenue contributes 5-6% of the total pie. Crucially, management quantified that the value capture in an EV platform is approximately 80% of a traditional ICE platform, providing a clear benchmark for long-term revenue modeling as the transition progresses.

Margin Expansion Through Cost Control and FX

EBITDA margins improved to 18% in Q2, aided by softening raw material prices for boron and alloy steel, which pushed gross margins back above 60%. The company also benefited from the depreciation of the Rupee from ₹85.4 to ₹88.4 against the USD, which aided export realizations and receivable restatements. Management expects this softening trend in raw materials to continue, supporting sustained profitability.

Strategic De-leveraging and Balance Sheet Strength

A standout highlight of the quarter was the aggressive reduction in debt. The company moved from a borrowing level of nearly ₹600 crores to a net cash position (minus ₹40 crores borrowing) as of H1 FY26. This financial flexibility, combined with record H1 consolidated PAT of over ₹300 crores, positions the company well for its planned double-digit CAGR growth strategy.

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