Wheels India Limited — Q2 FY26 earnings call

Call held 31 Oct 2025

Management summary

Wheels India reported a strong Q2 FY26 with net profit up 26.69% to INR28 crores and revenues growing 8.63% to INR1,179 crores, driven by domestic tractor wheel demand and air suspension systems, alongside robust export growth of 15.6%. The company is proceeding with its INR250 crore capex plan, focusing on industrial and windmill segments, and has initiated supplies from its new Mambattu plant for tractor wheel exports. Despite global uncertainties and muted CV segment performance, management expects continued growth and margin improvement.

Highlights

  • Net profit for Q2 FY26 registered a 26.69% rise at INR28 crores compared to INR22 crores in Q2 FY25.

  • Revenues for Q2 FY26 went up 8.63% to INR1,179 crores compared to INR1,085 crores in Q2 FY25.

  • Export revenues were just under INR300 crores in Q2 FY26, registering a 15.6% growth over the same quarter of the previous year.

  • Domestic business saw strong demand for tractor wheels and air suspension systems, powering growth in domestic sales and exports.

  • The company maintained its full-year capex plan of INR250 crores, with INR108 crores already spent, despite global uncertainty.

Concerns

  • The global scenario remains uncertain, particularly regarding international business, though H1 FY26 exports grew almost 20%.

  • The CV segment in India has been 'very muted' in H1 FY26, with freight rates being 'fairly tight'.

  • Employee costs and other expenses increased substantially in H1 FY26, attributed to skilled manpower requirements and seasonality in some businesses like wind.

Key financials

  1. Revenue ₹1,179 Cr +8.6%YoY
  2. Net Profit ₹28 Cr +27.3%YoY
  3. EBITDA Growth 16.2%
  4. PAT Growth 26.7%
  5. ROCE 15.5%
  6. Return on Net Worth 13%

What they filed

Q1 FY27: revenue up 16.7%, net profit up 42.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,084 1,057 1,192 1,183 1,173 +8%1,280 +21%1,462 +23%1,380 +17%
EBITDA76 79 97 85 84 +11%91 +15%117 +21%102 +20%
Net profit22 23 36 26 28 +27%32 +39%52 +44%37 +42%
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

  • Industrial Components
    20% Share of Sales
  • Auto Components
    80% Share of Sales

Capital allocation

high confidence
  • Capex ₹250 Cr largely through accruals
    • Industrial segment, including windmill segment
    • Windmill segment capex ₹90 Cr
    • Machining facility for large castings for windmills
    • Fabricated and machine structural parts for windmill
    • Tractor wheel exports (Mambattu plant)
    • Cast aluminium business ₹80 Cr

    Previously planned ₹250 Cr

    But based on what demand pipeline we are seeing, we are actually not reducing our capex. We had planned roughly about INR250 crores as capex this year, same as the previous year and we expect this INR250 crores to go through as planned. (Page 2) And a large part of the capex is really towards the industrial segment with the windmill segment taking up almost like 40% of the capex for the current year. (Page 4) The aluminium business will have a 2:1 type of thing. That is, again, about INR80 crores. (Page 18) there is about INR90 crores, which is a 1:1, where actually, it is in the windmill machining business (Page 17)
  • Debt 0.8× EBITDA Cost 7%
    Our debt equity is 0.81. Debt-to-EBITDA has continuously declined. (Page 4) if you look at the debt, it is at around INR710 crores. (Page 5) Sir, our long-term debt is INR142 crores as on September. And the short-term debt basically, which is working capital is about INR303 crores. And we have a public deposits of about INR265 crores. Put together, this will be about INR710 crores as a book debt, sir. (Page 23) It is sub 7%. (Page 23) And in addition to this debt, we also have a discounting facility for about INR450 crores, so which we take it as a debt for all practical purposes. So if you take that, our total debt would be INR1,161 crores. (Page 23)
  • M&A SHPAC (South Korean hydraulic cylinder manufacturer) Strategic alliance · Announced

    Strategic assistance agreement and joint business development for hydraulic cylinder business, providing a de-risking location for supply to SHPAC's customers in Europe and U.S.

    Expected to generate about $15 million worth of business within 24 months.

    we entered into a strategic alliance with SHPAC, a South Korean hydraulic cylinder manufacturer. This alliance involves a strategic assistance agreement and also some business joint business development for the hydraulic cylinder business. (Page 2) SHPAC, I have mentioned that probably within 24 months, we should be looking at about $15 million worth of business. (Page 11)
  • M&A Axles India Acquisition · Closed

    Opportunity to increase stake in a business aligned with Wheels India's operations and customer base.

    Increased stake from 9.5% to 12.5% in July.

    The joint venture partner was initially Eton, who was then bought by Dana. And in the early part of the year, Dana actually sold its stake to Sundaram Finance Holdings. And when that stake sale happened, Sundaram Finance Holding also said, it's an opportunity for Wheels India. We looked at what we could afford and we ended up buying about 3%. So the stake in Axles India has gone up from 9.5% to 12.5%. This has happened actually in July. (Page 12)
  • Liquidity Liquidity disclosed Company is focused on working capital optimization and cash flow management to manage its growth and fundings have been largely through accruals holding the debt at the current level and we still have further scope to improve.
    Company is focused on working capital optimization and cash flow management to manage its growth and fundings have been largely through accruals holding the debt at the current level and we still have further scope to improve. (Page 4)

Guidance & targets

Revenue Growth

  • H2 FY26 Revenue Growth Revenue Growth · H2 FY26 · Medium confidence around 8%
    Yes. Please go ahead. Finish all your questions and then we'll answer it. (Page 4) ...we expect that pretty much the H1 at the very worst case, the H1 results will be duplicated in the second half of the year. (Page 5)

    — Srivats Ram, Managing Director

  • Overall Revenue Growth Revenue Growth · next 2 years · High confidence 8% to 10%
    Yes, that is the plan. There's so many variables out there. So assuming that there's no new surprises, Every day we read in paper something new is happening. So it's very difficult to forecast, but I would like to think that, yes, what you say is right because capex is pretty much played out and it should result in revenues in the next few years. That's what we're looking at. (Page 5)

    — Srivats Ram, Managing Director

Export Growth

  • Export Volume Growth Export Growth · ongoing · High confidence 8% to 10%
    we are quite confident that we will grow at this 8% to 10%, partly driven by domestic, but also driven by increased export volumes that we will see. (Page 6)

    — Srivats Ram, Managing Director

Business Development

  • SHPAC Hydraulic Cylinder Business Business Development · within 24 months · Medium confidence $15 million
    SHPAC, I have mentioned that probably within 24 months, we should be looking at about $15 million worth of business. (Page 11)

    — Srivats Ram, Managing Director

Capacity

  • Cast Aluminum Wheels Capacity Capacity · Q2 next year · High confidence 60,000+ wheels/month

    From 40,000 wheels/month today

    So, what we're doing right now is, currently our capacity is about 40,000 wheels a month and we're increasing it first to 60,000, which would happen in Q4 of this year. And we're increasing it to 80,000, which would happen by end of Q2 next year. (Page 11) Yes. Very much. Very much. So, I think that we should probably be at -- yes, we probably will reach 60,000 plus in the, hopefully by the second quarter of next year itself. (Page 11)

    — Srivats Ram, Managing Director

Revenue

  • Tractor/Construction Wheel Exports Additional Revenue Revenue · over a three-year to four-year period · Medium confidence INR400 crores
    I'll say over a three-year to four-year period, it can be maybe about INR400 crores of additional revenue can come from this. (Page 10)

    — Srivats Ram, Managing Director

Profitability

  • Return on Equity (ROE) Profitability · in two years · Medium confidence 15%

    From just short of 13% today

    Our ROE per se is about 13% now, just short of 13%. So we also... Yes. So, I think that 15% is a reasonable target, probably in two years. (Page 9)

    — Srivats Ram, Managing Director

  • Q3 Performance Profitability · Q3 FY26 · Medium confidence better
    Q3, I can comment and say it looks like it will be better. Q4, I still don't know. (Page 22)

    — Srivats Ram, Managing Director

Cost Management

  • Employee Cost as % of Sales Cost Management · Q3 and Q4 · Medium confidence lower
    For the third quarter, employee cost as a percentage of sales should be lower than the second quarter. Fourth quarter also hopefully should be lower than the third quarter. So we see this coming down. (Page 19)

    — Srivats Ram, Managing Director

Operational Efficiency

  • Windmill Machining Machines Commissioning Operational Efficiency · by end of November · High confidence 2 machines online
    So hopefully, by end of November, we should get two more machines online, but those two more machines capacity will also be taken. Third machine probably will come by end of December. So in January, we'll have the third machine. (Page 18)

    — Srivats Ram, Managing Director

  • Windmill Machining Machines Commissioning Operational Efficiency · by end of December / January · High confidence 3rd machine online

    — Srivats Ram, Managing Director

Market context

  • Overall Margin Profitability · future · Medium confidence double-digit
    Yes. We are very much looking at that. So we are very much targeting that. And we do believe that, as we play out our strategy, as I just mentioned, we have four, five areas of growth. And as we pan out those strategies, we believe that we will get closer to a double-digit margin. (Page 13)

    — Srivats Ram, Managing Director

What to watch in Q3 FY26

Capex Spend vs. Plan

by end of FY26
Current INR108 crores spent out of INR250 crores planned for FY26
Target Full INR250 crores spent by year-end

Why it matters

Verifies management's confidence in executing planned investments for future growth.

We had planned roughly about INR250 crores as capex this year, same as the previous year and we expect this INR250 crores to go through as planned. Another update, if I can mention is we started operations of our Mambattu plant, which is really focused on tractor wheel exports. And that plant has started supplies and first exports are going to happen in the next month or so. (Page 2) So far, we've spent INR108 crores. (Page 4)

Risks & concerns

  • Global uncertainty and its impact on international business

    medium

    Despite H1 export growth, management notes the uncertain global scenario and its potential impact on international business, stating 'many variables are there, we don't know exactly what will happen...overseas'.

    Management acknowledged

  • Muted performance and tight freight rates in the CV segment

    medium

    The commercial vehicle segment has been 'very muted' in the first half, with 'fairly tight' freight rates, impacting growth in this area.

    Management acknowledged

  • Impact of US tariffs and oil tariffs on exports and margins

    medium

    US tariffs are 'hanging over' exports, and oil tariffs are expected to hit in Q3/Q4. Management believes they can maintain margins through sharing the impact with customers and internal management.

    Management acknowledged

  • Rising material costs and lag in passing them on

    low

    Management notes that when material costs increase substantially, there can be a lag in passing them on, affecting margins, though they have been fortunate so far.

    Management acknowledged

  • Talent acquisition and retention in a competitive market

    low

    An analyst raised concerns about getting the right talent, especially with industry growth. Management stated they train existing people and compete in the marketplace, acknowledging limited skilled people in India.

    Analyst acknowledged

Q&A highlights

7 direct
Impact of current capex on future growth and debt levels Direct
The capex plan was INR250 crores, out of which INR108 crores has been done. So we are pretty confident... So INR250 crores capex will happen before the end of the year. And we expect all of this to be kind of in place probably by October. So in H2 of next year, the capex should be commissioned. (Page 5) ...if you look at the debt, it is at around INR710 crores. So even for Marr '25, it's around the same level. So our plan is to hold the debt around the same level. (Page 5)

Clarifies the timeline for capex commissioning and its expected impact on revenue growth (8-10% over 2 years), while reassuring that debt levels will remain stable.

Asked by Zaki Nasser

Opportunity in the new hydraulic cylinder market and export outlook Direct
Domestic market, first half has been fairly muted because there were rains... Now everything has been done. So with the rains monsoon over, we expect activity to pick up from this month onwards. (Page 6) On the export market, we are looking at one or two opportunities. The SHPAC one was -- of course, the one that we spoke about. That has already started, but will be a probably slow starter and actually pick up steam more next year as we've just signed up the agreement. (Page 6)

Provides a detailed outlook on the hydraulic cylinder business, distinguishing between domestic and export opportunities, and setting expectations for the SHPAC alliance.

Asked by Anukool Arora

Impact of rupee depreciation on margins and performance of WIL Car Wheels subsidiary Direct
There is some amount of 'pass on' that does take place. It happens in a phased manner over a period of time. So, that also does happen. But our margins on the export business are reasonably strong even without the depreciation. (Page 8) No. They've done exceedingly well. As a matter of fact, if you look at the performance for the half year of WIL Car Wheels, they've shown growth both in terms of top-line, as well as profit. The profit for the half year this year is more than the full year profit of last year. (Page 8)

Addresses concerns about currency impact on margins and highlights the strong performance of the WIL Car Wheels subsidiary, indicating its contribution to overall profitability.

Asked by Rajakumar Vaidyanathan

High inventory levels and impact of oil tariffs Direct
On the inventory, that we have got,, the exports have grown. So the exports grow, there's some of the export where we are delivering just in time to customers. So it stays on our books till we inward it. So that is one reason as exports grow, the inventory is also growing. (Page 17) The oil tariffs will start hitting us in terms of where there is a certain amount of sharing by us and start hitting us in Q3, mostly in Q3, a little bit in Q4. But we still believe that even with that, we can maintain our margins and we can manage the current situation. (Page 17)

Explains the reasons behind increased inventory (exports, seasonality) and clarifies the expected impact and management's strategy regarding oil tariffs, reassuring investors about margin stability.

Asked by Pawan Kothari

Machining capacity utilization and addressable market for air suspension Direct
Machining capacity utilization is, you know, we're making all this investment because they're pretty much 100% capacity utilized on machining. We're talking about the windmill related business... (Page 18) Air suspension, the market is we used to look at the market pretty much as a traditional OEM market. We have expanded our view and have now started supplying people like JBM, people like Switch Mobility, people like EKA Mobility and even Olectra. (Page 18)

Details the high utilization of machining capacity driving capex and outlines the expanded market strategy for air suspension systems, including new e-bus manufacturers.

Asked by Madhur Rathi

Employee costs and other expenses as a percentage of sales Direct
there is a certain amount of skilled manpower that we require and there is certain seasonality in some of the businesses like the wind business. So we can't we have to keep the people even when the season is down. But the season, as things stand, third quarter and fourth quarter is going to be quite strong. So with that, you'll find that the employee cost will come down. (Page 19)

Addresses concerns about rising employee costs by attributing them to skilled manpower needs and seasonality, with an expectation of reduction in upcoming quarters due to increased activity and automation.

Asked by Prashant Reddy

Debt position, credit ratings, and market share Direct
on commercial vehicles, we have about a 45% market share. On agriculture tractors, it's about 52%. And on passenger vehicles, as we are largely in steel, it's shared between steel and aluminium were about 35% of the market. (Page 23) Sir, our long-term debt is INR142 crores as on September. And the short-term debt basically, which is working capital is about INR303 crores. And we have a public deposits of about INR265 crores. Put together, this will be about INR710 crores as a book debt, sir. (Page 23)

Provides key market share data across segments and a comprehensive breakdown of the company's debt structure, including long-term, short-term, public deposits, and discounting facilities.

Asked by Rajiv Ravani

3 min read 7 chapters

Detailed narrative

Q2 FY26 Performance Highlights

Wheels India reported a robust Q2 FY26, with net profit rising 26.69% to INR28 crores compared to INR22 crores in the previous year. Revenues for the quarter increased 8.63% to INR1,179 crores from INR1,085 crores. This growth was supported by a 15.6% increase in export revenues, reaching just under INR300 crores, and strong domestic demand for tractor wheels and air suspension systems. The company also achieved a 16.2% EBITDA growth and 26.7% PAT growth for the quarter.

Strategic Initiatives and Capex Execution

The company is maintaining its planned capex of INR250 crores for FY26, with INR108 crores already spent. A significant portion, approximately 40%, is directed towards the industrial segment, particularly windmill components. Investments include INR90 crores for windmill machining and INR80 crores for the cast aluminum business. Wheels India also entered a strategic alliance with SHPAC, a South Korean hydraulic cylinder manufacturer, aiming for $15 million in business within 24 months. The new Mambattu plant, focused on tractor wheel exports, has commenced operations and is expected to make its first exports soon.

Export Growth and Global Market Outlook

Despite global uncertainties, Wheels India's exports grew almost 20% in the first half of FY26, with Q2 exports up 15.6%. Management remains positive about export growth, expecting an 8-10% increase in volumes. The company is actively pursuing opportunities in Europe and the U.S. for construction equipment and agriculture tractor wheels, and is also ramping up its machining facility for large castings for offshore windmills. The cast aluminum wheels capacity is planned to increase from 40,000 to 60,000 units per month by Q4 FY26, and further to 80,000 by Q2 FY27.

Capital Structure and Debt Management

Wheels India's debt-equity ratio stands at 0.81, and its debt-to-EBITDA has continuously declined. The total book debt is approximately INR710 crores, comprising INR142 crores long-term, INR303 crores short-term, and INR265 crores public deposits. Including a INR450 crore discounting facility, the total debt is around INR1,161 crores, which is consistent with the previous year-end. The average cost of debt is sub 7%, and management plans to hold debt at current levels, funding growth primarily through internal accruals.

Segmental Performance and Growth Drivers

Approximately 20% of the company's sales come from industrial components, with the remaining 80% from auto components. The domestic tractor wheel segment and air suspension systems were key growth drivers. The air suspension business, in particular, saw a 29% growth in Q2 FY26, driven by supplies to e-bus manufacturers. While the CV segment has been muted, management expects a pickup in the second half due to construction activities. The company also increased its stake in Axles India from 9.5% to 12.5% in July, viewing it as a business aligned with its operations.

Operational Efficiency and Cost Management

The company is focused on improving operational efficiency, including automation and productivity enhancements. Management expects employee costs, which increased in H1 due to skilled manpower needs and seasonality, to come down as a percentage of sales in Q3 and Q4. Investments in first-time quality improvements in fabrication are also expected to reduce manpower requirements. The windmill machining business is operating at 100% capacity, with two new machines expected by November and a third by December/January to meet demand.

Renewable Energy Initiatives

Wheels India has significantly increased its renewable energy usage, with 68% of its energy now sourced from renewables, up from 22-25% previously. The company aims to further reduce power consumption per ton and is exploring opportunities with PNG availability in Tamil Nadu. This focus on renewable energy contributes to both sustainability goals and cost management.

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