CIE Automotive India Ltd (CIEINDIA) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (ICICI Securities Limited): Ladies and gentlemen, good day and welcome to CIE India's Q3 CY26 results conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Ronak Mehta from ICICI Securities Limited. Thank you, and over to you, sir.
Ronak Mehta (ICICI Securities Limited): Thank you, Rutuja. Good evening, everyone. On behalf of ICICI Securities, we would like to welcome you all to CIE Automotive India's Q3 CY26 earnings conference call. Today, we have with us from the management team, Mr. Ander Alvarez, Chief Executive Officer, Mr. K. Jayaprakash, Chief Financial Officer, Mr. Vikas Sinha, Senior Vice President Strategy, and Mr. Oriz Laurente, Global Business Controller. We will start the call with a brief opening remarks from the management team about the quarter gone by, and then will proceed to the Q&A session. Thank you, and over to you, sir.
Vikas Sinha (CIE Automotive India Ltd): Yeah. Thanks, Ronak, and thank you all for joining. Good evening. Sorry for the late hour.
Vikas Sinha (CIE Automotive India Ltd): on this call, as also Ander, our CEO. I will present CIE India results for Q3 and nine months CY '26, calendar year '26. The results of the India operations for Q3 C26, that is the July to September 2026 quarter, are on page six. Sales in India were at INR 18 billion, which were 18% higher year-on-year versus Q3 C25 and 9% higher sequentially versus Q2 C26. Market demand in Q3 C26 was robust across all segments, though tractors growth slowed down appreciably compared to earlier quarters. It must be noted that there is a wide discrepancy in growth reported for the heavy truck segment between different agencies, but even the lower estimate is very good. We expect a relative slowing down in market growth over the next few quarters as the effect of GST cuts diminish. The India operations achieved an EBITDA margin of 16.3%, the way we calculate, in Q3 C26 versus 17.3 in Q3 C25 and 16.7% in Q2 C26. The margin drop is due to price pressures generated by the conflict in West Asia, mainly in raw material, energy, and consumables. In Q3 C26, EBITDA grew 11% year-on-year, EBIT 12%, and EBIT 10% in the Indian operations. On page seven, we have the Q3 C26 results for our European operations. Sales of INR 7.6 billion in Q3 C26 were 4% lower year-on-year versus Q3 C26 and lower sequentially by 15% versus Q2 C26. A sequential drop of 15% in sales between Q2 and Q3 is the seasonal pattern that is normally observed every year with the annual holiday of 3 weeks in August reducing the number of working days in Q3. The sales performance is reflective of the underlying market trend. The European automarket is stagnant, and this is coupled with expanding numbers for Chinese imports along with increasing penetration of electric vehicles. On the other hand, margins were very healthy. The EBITDA margin in our European operations in Q3 C26 was 16.3% versus 14.1% in Q3 C25 and 15.9% in Q in Q2 C26. Margin recovery is because of last year's restructuring activities. In Q3 C26, EBITDA grew by 12% year-on-year, EBIT by 20%, and EBT by 26% in the European operations. The bottom line in Europe continues to be ro- robust in spite of a stagnant top line. On page eight, we have the consolidated CIE India Q3 C26 results. Consolidated sales were INR 25.6 billion, 11% higher versus Q3 C26 and 8% higher sequentially. EBITDA was INR 4.2 billion, EBIT INR 3.2 billion, and EBT INR 3.2 billion again, higher year-on-year by 11%, 14%, and 14%, respectively. This represents a good consolidated performance, especially of the bottom line, which is largely supported by the Indian business. The nine months C26 results for our Indian operations are on page 10. Sales increased by 16% versus nine months C25 to INR 50.7 billion. The double-digit growth was supported by favorable market by a favorable market in the period. It could have been higher. A key reason has been the streamlining of our business portfolio at our aluminum vertical. The EBITDA margin of our Indian operations in nine months C26 results was 16.9% versus 17.8% in 9 months C25. As explained earlier, the margin was depressed due to cost increases generated by energy and material inflation due to West Asia conflict. While sales in the Indian operations grew 16% in nine months C26, EBITDA grew 9%, EBIT 10%, EBT 9%, and PAT 8%. In the medium term, we do expect all the market segments in India to have good growth prospects despite the continuing geopolitical tensions. We are investing in new orders and projects across all the verticals. In CY '26, the overall CapEx in India will be almost double of last year. The Aluminum division is planning to diversify into four-wheeler HPDC parts, and this will require new lines. Our Stampings division is planning expansion at multiple locations to meet the expectation of its two main customers. Gears and composites have exciting orders in the EV space. Iron Castings is running close to full foundry capacity and looking to expand. Forgings
Vikas Sinha (CIE Automotive India Ltd): and the expansion both at its Pune and Hosur plants. On page 11, we have the nine months C26 results for our European operations. Sales increased by 7% versus nine months C25 to INR25.7 billion. There was a healthy increase in EBITDA margin to 16.0 in nine months C26 results versus 13.4% in nine months C25, thanks to restructuring actions taken in the previous year. Consequently, EBITDA in the European operations increased by 27% in nine months C26, EBIT by 35%, EBT by 41% and PAT by 44%. On page 12, we have the nine months C26 consolidated results of CIE India. Sales were INR76.4 billion which is 12% higher than nine months C25. The EBITDA margin was 16.6 versus 16.3% in the corresponding period last year, and PAT 9.5% versus 9.2%. The point to be noted is the consolidated PAT in nine months C26 is INR7.3 billion, which is 17% higher than in nine months C25. And now we proceed to Q&A.
Moderator (ICICI Securities Limited): Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Kishore Kumar from Unifi Capital. Please go ahead.
Kishore Kumar (Unifi Capital): Yeah. Thank you. Hi Vikas. Sir actually can you give some insight on the order inflow that we have got during the current quarter? And also, in the last call, you have indicated that we started execution of the foundry parts for the American customer. So, can you brief us on that as well, how much was executed in Q3 and revenue coming from that?
Ander Alvarez (CIE Automotive India Ltd): Order book in Q3, okay. The order book in Q3 was, let's say, quite healthy, and we got 9.7 billion total in, I mean, year to date in nine months, 9.7 billion rupees of new orders in all the verticals in India, and approximately 3 billion in Europe, okay? So that's the order book that we have already consolidated in this year, this calendar year '26. The new orders are spread between all the, along all the verticals. I mean, aluminum is one of the important businesses where we are growing, forgings we are also growing importantly, that's why we are adding additional presses in our Chakan plant, and we expect to also expand our machining plant, so we will be able to machine all these additional crankshafts that we have been awarded. So that's the, the evolution of the new orders. And regarding the, our foundry's new Ford project, in Q4, we have not had any, any sales to, to this, in this new project. The order and delivery started finally mid of October, so during this month we have already started the supply. So in the next months, we will see, in the next quarters, you will see the impact of this additional project that has finally started, okay? We had a delay in the SOP of approximately six months, mainly due to the customer-driven delay, not, not our responsibility. So finally we started the SOP and we expect to to have a better growth in our foundry division in the next quarters. And with this new project, we will have our foundry fully booked for next year, I mean, once the ramp-up is finished by mid of next year, we will be fully booked in in our Urse plant, so we are now planning also a new expansion for our casting division. Thank you.
Kishore Kumar (Unifi Capital): Understood. Just a couple of question on the, the Europe business. One, in last call actually you mentioned that
Kishore Kumar (Unifi Capital): and customer GKN has differed the contract and that is revaluation of the contract, so what is the what's happening there now and what is the plan for the excess capacity? And in in in general, actually is the underperformance in the Europe business is because of this or is there any other reasons actually for the underperformance compared to the industry?
Ander Alvarez (CIE Automotive India Ltd): Yeah. No. The this GKN contract that we renegotiated, we have already sign the the agreement and sign the the reviewed contract with GKN, so the volumes has been reduced, but we extended the the length of the the duration of the contract, so this has been already agreed. That means that our current turnover in BillForge Mexico will remain at the current level. We saw a drop of approximately 20% compared to the previous year, so but we will remain in this with this volumes in the next in the next quarters. And with the exceed capacity, I mean we we had four presses in that plant. Now one of the the presses is being transferred to India, so we will install this this press in our facility in Hosur in the next months. I mean the the press is already been dismantled and and we we will receive it in the Q1 of 2027. That means that this capacity that we had in Mexico will be transferred to to India?
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