Sharda Motor Industries Limited Q3 FY26 Earnings Call Summary

Summary

Sharda Motor Industries Limited - Q3 FY 2026 Earnings Call Summary Monday, February 09, 2026 05:00 P.M. IST

Event Participants

Executives 3 Aashim Relan, Ashwani Maheshwari, GD Takkar

Analysts 5 Anubhav, Dishant Jain, Manpreet Arora, Preet, Saurabh Jain, Viraj

Financials & KPIs

Geographic & Segment Commentary

• Emission Business: Contributed 88% of top line. Management noted steady growth in quality and delivery, with new SOP for CEV temperature control pipes starting in Q3 FY26 for a major off-highway manufacturer.
• Suspension & Lightweighting: Contributed 9% of revenue. Market share reached 12.5% in FY25 (up from 10% in FY24), with management targeting higher shares in FY27/28 following multiple significant order wins.
• Exports: Currently ~1% of revenue. Secured new North American orders worth $3.7 million annual value ($18.5 million lifetime); SOPs scheduled for Q3/Q4 FY27 to diversify beyond the domestic market.
• Commercial Vehicles: Contributed 40% of category-wise revenue. Growth is supported by infrastructure spending and potential future emission norm transitions (TREM V / BS7).

Company-Specific & Strategic Commentary

• Lightweighting Strategy: Bagged $3 million annual value order for control arms (SOP Q3 FY27) and two volume expansion orders worth $5 million combined. The focus is on high-tensile steel components and powertrain-agnostic products.
• Donghee Partnership: Technical Licensing Agreement (TLA) enables expansion into subframes and torsion beams. The partnership supports R&D for EVs, SUVs, and premium vehicles, with a potential kit value of ₹4,000 to ₹10,000.
• Global Trade Deals: The India-U.S. and India-EU trade deals are viewed as structural tailwinds for sourcing confidence, positioning the company as a manufacturing base for thermal and emission systems.
• R&D & Patents: Filed 20 patents to date with 4 awarded as of Q3 FY26. The company is augmenting capabilities in AI for internal process efficiency and evaluating AI infrastructure components.
• New Capacity: Investing ~₹20 crores in a new Uttarakhand facility to improve customer proximity and capture incremental North India market share; high utilization expected within FY27.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Emission & Regulation

• Question: What is the impact of the new WLTP emission change on content per vehicle? (Anubhav)
• Answer: WLTP requires recalibration of after-treatment and thermal systems due to real-world driving tests. This increases emphasis on catalyst efficiency and durability, likely leads to higher content in the sub-3.5 ton segment (Ashwani Maheshwari).

Suspension & Lightweighting Momentum

• Question: What is driving the high win rate in the suspension segment compared to previous years? (Viraj)
• Answer: Augmented R&D, local capabilities in high-tensile steel, and the Donghee partnership for global design benchmarks have increased OEM confidence. Sharda is one of the few Indian players with these specific local capabilities (Ashwani Maheshwari).

Joint Venture (JV) Performance

• Question: Why has the Eberspaecher JV profit remained range-bound at ₹1 crore? (Anubhav)
• Answer: The JV focuses on the >4-liter CV segment where opportunities are currently limited. However, it recently secured a new program with SOP starting this quarter, and future emission norms (BS7) provide potential for growth (GD Takkar/Aashim Relan).

Raw Materials & Reporting

• Question: Could you provide a split of gross margin contraction between RM costs and product mix? (Saurabh Jain)
• Answer: Catalyst costs are 100% pass-through (either FoC or indexed). Management is working on a new reporting methodology for FY27 to provide better segment-wise clarity and adjust for pass-through optics (GD Takkar).

Key Takeaway

Sharda Motor delivered a steady Q3 FY26 with a 28% YoY revenue increase to ₹881.6 crores and EBITDA margins of 12.1%. While 88% of revenue remains tied to the emission vertical, the company is successfully pivoting toward a “powertrain-agnostic” strategy through its lightweighting and suspension business, which now holds a 12.5% market share. Strategic technical partnerships with Donghee and recent wins in the export market (North America) and domestic PV segment (control arms) provide a clear roadmap for outperforming industry growth by 400-500 bps starting in FY27. Management maintains a debt-free balance sheet and is cautiously evaluating acquisitions while expanding its manufacturing footprint with a new ₹20 crore facility in Uttarakhand. Investors should watch for official TREM V notifications and the successful ramp-up of announced export orders in Q2 FY27.