MENONBE - Menon Bearings Ltd Share Price

In the earnings conference call for Q1 FY26 held on July 30, 2025, management provided a positive outlook for Menon Bearings Limited, reflecting strong financial performance and growth expectations. Key highlights include total revenues of Rs.67.90 crores, representing a 17% year-on-year growth. EBITDA stood at Rs.13.60 crores with a margin of 20%, and profit before tax increased by 34.42% to Rs.11.06 crores. Profit after tax rose by 36.91% to Rs.8.43 crores compared to the previous year.

The management highlighted robust demand from both the automotive and industrial sectors, particularly in their core segments: engine bearings, bushings, and thrust washers. They expect to continue capitalizing on this demand, especially in export markets.

Forward-looking statements include a target of reaching Rs.300 crores in revenue for FY26, with an anticipated 22% EBITDA margin. For the following fiscal year, FY27, they are optimistic about achieving Rs.350 crores in revenue, driven by key segments: Rs.120 crores from Alkop (aluminium die casting), Rs.100 crores from brakes, and approximately Rs.250 crores from the bi-metal segment.

Specific growth drivers mentioned include the successful commissioning of CapEx in the subsidiary Menon Alkop Limited, and an ongoing strong order book reflecting a healthy demand trajectory. They anticipate meeting an additional Rs.3 crores to Rs.4 crores per month from the brakes division once they secure necessary railway approvals, expected by the end of September 2025.

In terms of operational efficiency, they reported capacity utilization averaging around 78% for the quarter, with a focus on optimizing this through automation and cost management strategies.

Here are the key questions and answers from the Q&A section of the earnings transcript for Menon Bearings Limited:

1. Question: "In the Alkop business, you are looking at reaching about Rs.120-odd crores of revenue. What is the visibility for this growth?" Answer: "We are targeting Rs.120 crores for FY '27. We've developed around 63 new parts due to increased demand from our customers. Orders are starting to come in, which will drive growth, allowing us to reach Rs.120 crores by the end of 2026, with initial revenues expected to be around Rs.85-90 crores beforehand."

2. Question: "Is the Rs.100 crore target in the brakes division subject to railway approval?" Answer: "Yes, reaching this target is contingent on railway approval, which is currently in process. We expect to receive a vital testing equipment, a dynamometer, by September, after which the railway will inspect and approve us as a supplier."

3. Question: "Can you highlight the key drivers for the expected ramp-up in U.S. part of exports?" Answer: "Production will start next month, with signed orders of around Rs.30 crores per year from an approved customer. Our samples have been approved, and production ramp-up is set. Export growth is forming a critical component of our revenue."

4. Question: "Is the average selling price of Rs.750 sustainable for the products?" Answer: "Yes, we've maintained this realization rate for years. We focus on critical, high-value parts that competitors struggle to produce, ensuring our realization remains consistently high, expected to stay between Rs.700 and Rs.800."

5. Question: "Will you adjust your revenue guidance for FY '26 of Rs.300 crores and 22% EBITDA margin?" Answer: "We remain confident in achieving Rs.300 crores this fiscal year. Our order book, alongside growth in Alkop and railway business, supports this expectation. We're optimistic for Rs.350 crores in FY '27, with yearly growth forecasted at 18-20%."

6. Question: "Will the brakes segment reach the target after receiving the dynamometer?" Answer: "Yes, post-receipt, we anticipate ramping up to Rs.3-4 crores per month. The momentum is set to build quickly based on pending approvals from the railway and OEM customers."

7. Question: "What is the segment-wise EBITDA margin?" Answer: "The EBITDA margins are over 21% for bi-metal, 23% for Alkop, and over 12% for brakes. This reflects our focus on high-quality products and efficient operations."

8. Question: "Are there plans for future joint ventures or acquisitions?" Answer: "Currently, there are no solid plans for joint ventures due to diplomatic concerns with a Chinese company. We stay open to proposals that align with our strategic vision but are cautious about entering new business avenues."

These responses encapsulate the essential queries from the earnings call and the management's insights on business outlook, strategies, and expectations moving forward.