Wheels India

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.

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.

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.

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.

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.

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.

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.