TALBROAUTO - Talbros Automotive Components Ltd. Share Price

In the Q1 FY'26 earnings call, management provided a cautiously optimistic outlook, anticipating improved performance in upcoming quarters. Anuj Talwar, Joint Managing Director, noted that the overall automotive industry faced challenges, with a 5.1% year-on-year decline in volumes, particularly in the two-wheeler and passenger vehicle segments. However, he expressed hope for a stronger Q2, driven by anticipated festive demand and better rural conditions due to above-normal monsoons.

Talbros achieved a modest income from operations of INR 211 crores, reflecting a 1% year-on-year increase, while EBITDA stood at INR 35 crores with a margin of 16.5%. The net profit grew 8% to INR 22 crores. The company secured orders worth INR 580 crores during the quarter, underscoring strong customer demand.

Management emphasized improved performance expectations, stating that Q2 and Q3 should surpass Q1 figures significantly, with Talwar indicating that "the quarter 3 will be far better than the previous quarters."

Navin Juneja, Group CFO, maintained a target of double-digit growth for FY'26, stating expectations range around 10-15%. They highlighted exports contributing 28% to revenue, supported by ongoing efforts to expand into new markets, with hopes to achieve 35% in the future.

Regarding specific divisions, although the Forging segment faced a decline due to delays in OEM projects, there is confidence this will recover with upcoming product launches. Overall, management is optimistic that improvements in execution and operational efficiency will support further margin stability and enhancement moving forward.

1. Question: "Are we still holding good on that guidance of seeing a better FY '26 than FY '25 because there was a delay of certain orders?"

Answer: Yes, we are still hopeful of achieving double-digit growth for FY '26. The ongoing challenges have not deterred our confidence in this target, despite market fluctuations.

2. Question: "Are we hopeful that we can improve our margins further?"

Answer: Absolutely, we believe margins will improve as our top line increases. The first quarter results don't define the year, and we are optimistic about delivering stronger results ahead.

3. Question: "Do we have an outlook on the commercial vehicle (CV) segment for us?"

Answer: Yes, while June and July were slow, we expect an uptick in CV sales with the festive season approaching, coupled with upcoming product launches that should enhance our growth.

4. Question: "What has caused the muted growth in the forging segment?"

Answer: The growth was affected by delayed orders, particularly from BMW, and some equipment breakdowns that led to losing INR 2-3 crores in orders. However, we anticipate recovery moving forward.

5. Question: "What revenue contribution from the export market do we expect?"

Answer: We are targeting to increase our export revenues from 28% toward 35% by the end of this financial year, especially as new business from Stellantis is expected to start in Q3.

6. Question: "Could you clarify the revenue potential from current capex plans?"

Answer: From our planned INR 50 crores capex, we expect to generate around INR 950 crores in peak revenues from our forging and gasket divisions, though we typically operate at about 85% of that capacity.

7. Question: "What is the timeline for the new clients like Mahindra & Mahindra?"

Answer: We are increasing our business with Mahindra & Mahindra, particularly in our sealing division. We expect significant growth in the next couple of years due to new programs coming in Q3.