Summary
Tube Investments of India Limited - Q3 FY2026 Earnings Call Summary Wednesday, February 4, 2026
Event Participants
Executives 10 A.N. Meyyappan, Jalaj Gupta, M. Sivakumar, M.A.M. Arunachalam, Mukesh Ahuja, N. Govindarajan, S. Gopalakrishnan, Shivdeep Singh Jammu, U. Rajagopal, Vellayan Subbiah
Analysts 7 Ajox Frederick, Anish Rankawat, Anupam Gupta, Jinesh Gupta, Joseph George, Salil Desai, Vipul Shah
Financials & KPIs (Standalone)
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹2,152 crores | +12.7% YoY; Driven by strong domestic growth in Engineering and Metal Formed segments. |
| PBT (Pre-Exceptional) | ₹268 crores | +26.4% YoY; Reflects improved operational efficiencies and product mix in core businesses. |
| ROIC (Annualized) | 49% | +600 bps YoY vs 43%; Strong capital allocation efficiency in TI1 (core) businesses. |
| Free Cash Flow | ₹248 crores | Solid cash generation despite ongoing investments in new platforms. |
| Engineering Revenue | ₹1,438 crores | +18.6% YoY; Domestic demand offset weak exports to Europe and US tariff barriers. |
| Metal Formed Revenue | ₹408 crores | +2% YoY; Growth tempered by weak European exports and railway segment delays. |
| Mobility (Cycles) Revenue | ₹183 crores | +28.8% YoY; Turnaround achieved via e-bikes and fitness focus (PBIT ₹4cr vs ₹0.8cr loss). |
| Cons. Revenue (TII) | ₹5,801 crores | +20.5% YoY; Boosted by strong performance from CG Power. |
| TICMPL (EV) Losses | ₹164.31 crores | Material loss for the quarter as the segment continues its heavy investment/seeding phase. |
Geographic & Segment Commentary
- Engineering & Metal Formed (TI1): Domestic growth remains robust following GST-related fillips and regional balancing (new plants in Nasik and Phaltan). Exports are currently challenged by a 50% effective duty in the US (Section 232) and weak demand in Europe.
- TI Clean Mobility (TICMPL): Total Q3 volumes reached 2,202 units (1,816 three-wheelers, 301 SCVs, 56 M&HCVs, 29 tractors). Strategy is shifting toward BOM cost reduction and deepening dealer penetration (117 dealers) in the L5M category.
- Mobility (Cycles): Success in turnaround driven by e-bikes and spares, mitigating the segment’s traditional cyclicity. Management views e-bikes as a bridging segment between manual cycles and motorbikes.
Company-Specific & Strategic Commentary
- EV Strategy (TI2): Management remains committed to the EV transition despite longer-than-expected breakeven timelines. Focus is on doubling down rather than retreating, with heavy and three-wheeler segments expected to lead the path to EBITDA breakeven.
- 3xper Innoventure (CDMO): Launch was delayed by 18 months due to facility permitting in Andhra Pradesh. Production is slated to begin within the next three months, followed by a lengthy certification cycle typical of the pharma industry.
- CG Power Synergies: TII is hiring a dedicated team (expected Q1 FY2027) to scale the services business at CG Power, aiming to move it beyond its current 1-2% revenue contribution.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EV Investment | ₹500 - ₹750 crores | Incremental commitment from TII parent balance sheet over the next two years. |
| EV Breakeven | 12 - 18 months | Targeted timeframe for heavy vehicles and three-wheelers to reach breakeven. |
| Core Growth | Double-digit | Management expects domestic organic growth in Engineering to sustain double-digit levels. |
| Railway Segment | FY2027 | Business commencement pushed back due to prototype submission delays (March/April). |
Risks & Constraints
| Risk | Context |
|---|---|
| Trade Barriers | The 50% US duty (Section 232) and European Non-Tariff Barriers (CBAM) continue to stifle the high-margin export business. |
| Competitive Intensity | In the EV three-wheeler space, incumbents have taken leads in specific L5M segments, forcing TII to focus on aggressive BOM cost reductions. |
| Execution Delay | New plant operationalization in the Engineering division is delayed by 6-9 months due to equipment supplier challenges. |
Q&A Highlights
EV Conviction & Investment
- Question: Is it time to consolidate and exit underperforming TI2 units? (Sujit Jain)
- Answer: Conviction remains high as IC products will inevitably be replaced by EV. Management is doubling down on TI Clean Mobility but will likely not add new significant TI2 plays (Vellayan Subbiah).
Export Barriers
- Question: Will US tariffs come down to 18% following recent changes? (Jinesh Gandhi)
- Answer: No, the 50% duty under Section 232 remains a separate track and has not been touched; Indian lobbying has yet to yield results (Vellayan Subbiah).
EV Competitive Landscape
- Question: How will you compete with aggressive incumbent EV launches? (Anupam Gupta)
- Answer: By focusing on specific L5M categories (10.6 kW) and reducing BOM costs to make product pricing more competitive (Vellayan Subbiah/Jalaj Gupta).
Shanthi Gears Slowdown
- Question: Why has revenue declined for several quarters? (Salil Desai)
- Answer: Management is prioritizing margins over volume in a competitive order book environment; this is viewed as temporary (Mukesh Ahuja).
Key Takeaway
Tube Investments delivered a resilient Q3 FY2026 performance, with standalone revenue growing 13% YoY and PBT increasing 26%, supported by double-digit volume growth in the core Engineering segment and a successful turnaround in the Cycles business. While the core TI1 businesses are generating strong free cash flow (₹248 crores) and high ROIC (49%), the TI2 (EV) segment remains a significant drag on consolidated profitability with a quarterly loss of ₹164 crores. Management has reaffirmed its strategic commitment to the EV transition, pledging an incremental ₹500-₹750 crores in capital despite delays in breakeven timelines and competitive pressures in the three-wheeler market. Future growth is tethered to the successful scale-up of the Heavy Vehicle and SCV platforms and the commencement of the 3xper CDMO facility, while export recovery remains contingent on the removal of punitive US and EU trade barriers. Management expects the heavy EV and three-wheeler segments to approach breakeven within the next 12 to 18 months.
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