Detailed Narrative
Q2 FY26 Financial Performance Overview
Standalone revenue for Q2 FY26 was ₹2,119 Crores, a 2.61% increase from ₹2,065 Crores in Q2 FY25. Standalone PBT grew 11.11% to ₹250 Crores from ₹225 Crores year-on-year. Consolidated revenue reached ₹5,523 Crores, up 12.14% from ₹4,925 Crores, with consolidated PBT at ₹459 Crores, a 7.74% increase from ₹426 Crores in the prior year. Standalone ROIC saw a slight dip from 45% to 44%, while free cash flow for the quarter stood at ₹183 Crores.
Segmental Business Performance
The Engineering division reported revenue of ₹1,382 Crores (vs ₹1,323 Crores YoY) and PBIT of ₹164 Crores (vs ₹162 Crores YoY). Metal Formed Products had revenues of ₹408 Crores (vs ₹404 Crores YoY) and PBIT of ₹44 Crores (vs ₹46 Crores YoY). The Mobility business (cycles) showed strong growth, with revenue at ₹194 Crores (vs ₹168 Crores YoY) and PBIT turning positive at ₹4 Crores (vs a loss of ₹0.36 Crores YoY). The 'Others' category revenue was ₹227 Crores (vs ₹243 Crores YoY), but PBIT improved significantly to ₹18 Crores (vs ₹9 Crores YoY).
Subsidiary Performance: CG Power and Shanthi Gears
CG Power delivered robust performance, with revenue growing 21.13% to ₹2,923 Crores from ₹2,413 Crores in the corresponding quarter, and profit increasing 31.97% to ₹388 Crores from ₹294 Crores. In contrast, Shanthi Gears experienced a decline, with revenue down 14.84% to ₹132 Crores from ₹155 Crores, and PBT falling 14.70% to ₹29 Crores from ₹34 Crores year-on-year.
EV Business Update and Outlook
TI Clean Mobility (TICM) reported a strong quarter, with revenue up 21% YoY and 31% QoQ. Q2 volumes included 2,082 three-wheelers, 44 HCVs, 167 small commercial vehicles, and 100 e-tractors. Management acknowledged a minor impact from GST cuts making ICE vehicles cheaper, particularly for three-wheelers, but expects uptake in 3-wheeler volumes from Q4 FY26 following product improvements and new variants. The company maintains a 50% plus market share in the heavy commercial vehicle segment despite increasing competition.
Capital Allocation and Investment Plans
The company has completely repaid its debt. For the next fiscal year, TI plans to invest ₹300-400 Crores in its standalone core business. Additionally, ₹300-400 Crores is earmarked for growth initiatives in TI Medical and 3xper, with another ₹200-300 Crores potentially allocated for M&A in new business lines. For 3xper, out of an initial ₹300 Crores planned investment, ₹200 Crores was invested by last year, with ₹25 Crores in Q1 and ₹25 Crores in Q2, leaving ₹50 Crores to be invested this year.
Market Dynamics and Demand Outlook
Post-GST rate changes in September, the company observed a significant uptick in demand, which was further boosted by the festival season in October and November. Management noted that these months have been 'very very strong' compared to earlier festival periods and will monitor the sustainability of this demand going forward⏳. US exports, which constitute 4-5% of total TI revenue, saw a 10% slowdown in Q2 due to tariffs, particularly affecting the distributor market.
Future Growth Initiatives and Challenges
The railway business, previously expected to commence in Q4 FY26, is now delayed by one quarter to Q1 FY27 due to readiness issues in other suppliers' supply chains. The medical division, which saw flat revenue YoY due to GST impact in September, is targeting 15% plus growth for its surgical business and a 25% CAGR for TI Medical overall by exploring a new vertical. The engineering division is operating at 80-85% capacity utilization, with new plants in Nasik and Phaltan recently starting commercial production.