Menon Bearings Limited Q3 FY26 Earnings Call Summary

Summary

Menon Bearings Limited - Q3 FY 2026 Earnings Call Summary Friday, January 16, 2026, 3:00 p.m. IST

Event Participants

Executives 2 Aditya Menon (Promoter Group), Arun Aradhye (Whole-Time Director & CFO)

Analysts 6 Arnav Sakhuja, Bhargav Buddhadev, Darshan Gala, Himanshu Upadhyay, Madhur Rathi, Raghav Maheshwari

Financials & KPIs

Geographic & Segment Commentary

• Bimetal (Bearings, Bushes, Washers): Contributed 74% of Q3 revenue. Management sees strong traction in HCV, LCV, and tractor segments, with capacity utilization currently at 90%. Strategic focus remains on high-value parts for U.S. and EU markets, with new global sourcing approvals from John Deere.
• Menon Alkop (Aluminium Casting): Accounted for 22% of revenue. Capacity utilization stands at 65%, with plans to double capacity from 1,440 to 2,880 MT over two years. The segment is restructuring to focus on higher-margin exports and critical parts for EV and transition-ready platforms like Tesla and Porsche E-Mobility.
• Menon Brakes: A nascent segment contributing 3% of revenue. Currently generating ₹1 crore monthly, management expects a ramp-up to 18% margins as volumes increase. Focus is on securing railway approvals via in-house dynamometer installation and expanding into the two-wheeler friction material market.

Company-Specific & Strategic Commentary

• Export Logistics Shift: Management is transitioning U.S. exports from DDP (Delivered Duty Paid) to Ex-Works India. This move is expected to reduce the cash conversion cycle from 180 days to 30 days and mitigate external risks like global tariffs or shipping disruptions.
• Cost Efficiency Initiatives: Completed 3.8 MW rooftop solar installation expected to save ₹2.25 crores in annual electricity costs. Process improvements and yield optimization are targeted to save an additional ₹8–9 crores per year.
• EV Portfolio Expansion: While primarily an off-highway/HCV player, the company is developing PTFE bushes for EV air conditioning and fridge applications. Through Alkop, it acts as a Tier-2 supplier for EV motor covers and transmission parts for global brands like Tesla.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Export Dynamics & Tariffs

• Question: How is the company managing strong export growth despite the U.S. tariff scenario? (Bhargav Buddhadev)
• Answer: New business from Allison Transmission contributes over ₹2.5 crores monthly. Tariffs on specific businesses have reduced from 50% to 25%, and long-standing customers frequently share the burden (Arun Aradhye/Aditya Menon).

Brakes & Railway Segment

• Question: What is the status of the Brakes business and railway approvals? (Bhargav Buddhadev/Shubham Jain)
• Answer: Currently doing ₹1 crore monthly; railway entry depends on an in-house dynamometer. The company is investing in a high-capacity unit to meet Railway specifications after a previous vendor failed to deliver (Aditya Menon).

Operational Shift to Ex-Works

• Question: What is the financial impact of shifting to Ex-Works revenue booking? (Raghav Maheshwari)
• Answer: It will drastically improve liquidity, dropping the cash cycle from 180 to 30 days. While top-line might see a 15% technical impact from removing freight/duty, net margins should remain stable or improve by ~5% due to lower interest costs (Arun Aradhye).

Alkop Restructuring

• Question: Why has domestic business in Alkop fallen? (Himanshu Upadhyay)
• Answer: The company made a conscious decision to exit low-value-addition parts (“donkey work”). Focus has shifted to higher-margin exports for John Deere’s global plants in Germany, USA, and Brazil (Arun Aradhye/Aditya Menon).

Key Takeaway

Menon Bearings delivered a strong Q3 FY26, characterized by a 32% jump in revenue and a 69% increase in PAT, largely fueled by robust OEM demand and a growing export footprint. The company is undergoing a strategic pivot toward higher-value products and leaner operations, notably through a shift to Ex-Works export terms to unlock working capital and the installation of 3.8 MW of solar power for cost curtailment. While the Bimetal segment remains the primary driver at 90% utilization, significant future growth is pinned on doubling Alkop capacity and securing high-margin railway business via new testing infrastructure. Management has guided for a conservative ₹350 crore revenue target for FY27 with margins expanding toward 22%. Monitoring raw material volatility and the successful commissioning of the in-house dynamometer for the Brakes segment remain critical for maintaining this growth trajectory.