Automotive Axles Limited Q3 FY26 Earnings Call Summary

Summary

Automotive Axles Limited - Q3 FY2026 Earnings Call Summary Friday, February 6, 2026, 10:00 AM IST

Event Participants

Executives 3 Kishan Kumar (Whole-time Director, Meritor HVS India), Nagaraja Gargeshwari (President and Whole Time Director), Raman K. (Interim CFO)

Analysts 8 Abhishek Kumar Jain, Aditya Bhoir, Akash Vora, Ankur Kumar, Krushi Parekh, Pritesh, Rakesh Sharma, Shikha Mehta

Financials & KPIs

Geographic & Segment Commentary

• M&HCV (Domestic): Represents approximately 80-90% of current revenue. Growth is mirroring the industry in core truck segments (multi-axle/tractor-trailers), though the high mix of bus volumes at certain OEMs creates a temporary drag as the company is currently less present in that niche.
• Exports & Non-M&HCV: Contribution fluctuated down to 10-20% recently due to global market softness. Export revenues specifically saw a drop of 5% to 15% YoY, impacting the overall top-line growth rate relative to domestic OE production.
• Defense & Off-Highway: Currently a limited portion of the portfolio (~10% of axle segment). Management views these as cyclical stabilizers that can shift the revenue mix to 70/30 (Domestic/Other) when global demand recovers.

Company-Specific & Strategic Commentary

• New Product Traction (MS185): The MS185 axle is seeing strong volume traction in the high-tonnage/tractor-trailer segment. This product was developed in anticipation of the shift toward higher horsepower and more efficient haulage.
• New Product Launches (Brakes & Tippers): Commenced production of the 394 brake in Dec-2025 to meet future technology trends. A new high-performance tipper axle is entering pilot production in Q4 FY26, aiming for technical clinical superiority in the company’s core strength area.
• Bus Segment Strategy: Currently evaluating a new bus axle launch following government mandates for low-floor (400mm) city buses for 9m+ vehicles effective Oct-2026. Management is re-evaluating global portfolio options to see if a completely different architecture is required.
• Capacity Expansion: Investing to increase capacity by Q3 FY27 to support an industry outlook of 500,000 M&HCV units. Capex is focused on ensuring “upturn conversion” capability for the next 3-5 years.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Market Share & Growth Divergence

• Question: Why is revenue growth (6% YoY) lagging behind OEM production growth (17% YoY)? (Pritesh, Abhishek Kumar Jain)
• Answer: There is no loss of wallet share with major OEMs like Ashok Leyland. The divergence is due to (1) a drop in exports/defense and (2) a higher mix of buses in the industry where the company is not yet fully present. In core high-tonnage truck segments, the company mirrors industry growth (Kishan Kumar).

Capacity & Capex

• Question: Are there capacity constraints for a 20-25% ramp-up? (Akash Vora)
• Answer: Current utilization is 80%. New capacity being added through FY27 will ensure the company can handle industry volumes of up to 500k units without losing orders (Nagaraja Gargeshwari).

Product Development

• Question: What is the roadmap for bus axles given the new low-floor mandate? (Krushi Parekh)
• Answer: The company is analyzing if the current design meets the 400mm definition. If not, they will leverage Meritor’s global low-floor portfolio. Expected penetration with the largest OEM is 3-5% of their total bus portfolio (Kishan Kumar).

Financial Impact of Wage Code

• Question: Please explain the ₹11.9 crore exceptional charge. (Raman K.)
• Answer: This is an actuarial impact assessment due to the new wage code definition effective Nov 2025. It impacted PBT margins by ~200 bps in the current quarter (Raman K.).

Key Takeaway

Automotive Axles delivered a steady Q3 FY26 with 6% YoY revenue growth and a 12.9% EBITDA margin, despite macro pressures on the export front. While top-line growth appeared to trail headline OEM production numbers, management clarified that this was due to external factors like declining export demand and a higher industry mix of buses, rather than a loss of market share in core truck segments. The company is strategically focusing on high-efficiency products like the MS185 and new braking systems to align with the industry shift toward higher horsepower (350-400 HP) and better fuel economy. With a clear roadmap to expand capacity by Q3 FY27 and a healthy Q4 volume outlook of 5-10% growth, the company remains positioned to capture cyclical upturns. However, the exact timing of a global export recovery and the technical adaptation to new bus regulations remain key watch points for investors.