Tube Investments of India Limited (TIINDIA.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Tube Investments Q2 FY '26 Earnings Call, hosted by IIFL Capital Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Joseph George from IIFL Capital. Thank you, and over to you, sir.

Thank you, Inba. On behalf of IIFL Capital, I welcome you all to the 2Q FY '26 Results Conference Call of Tube Investments of India Limited. From the management, we have with us Mr. M.A.M Arunachalam, Executive Chairman; Mr. Vellayan Subbiah, Vice Chairman; Mr. Mukesh Ahuja, Managing Director; Mr. A. N. Meyyappan, Chief Financial Officer; Mr. Shivdeep Singh Jammu, Division Head, TPI; Mr. M. Sivakumar, Division Head, MFPD; Mr. U. Rajagopal, Division Head, TI Cycles. We also have with us Mr. Jalaj Gupta, CEO, TI Clean Mobility; Mr. S. Gopalakrishnan, CFO, TI Clean Mobility; and Mr. N. Govindarajan, CEO, 3xper Innoventure. I will now hand over the call to the management for opening remarks, post which we will have Q&A.

Yes. Thanks, Joseph. The Board of TI met today and approved the financial results for the quarter ended 30th September 2025. Stand-alone results for the quarter, revenue in Q2 was at INR 2,119 crores compared with INR 2,065 crores in the same period previous year. PBT was at INR 250 crores compared with INR 225 crores in the same period previous year, which is a growth of 11.5%. ROIC was at 44% for the quarter compared with 45% in the same period previous year, and free cash flow for the quarter was at INR 183 crores. A quick review of the businesses. Engineering, revenue for the quarter was at INR 1,382 crores compared to INR 1,323 crores in the corresponding quarter. PBIT was INR 164 crores as against INR 162 crores in the corresponding quarter. Metal Formed Products was at INR 408 crores compared to INR 404 crores in the corresponding quarter previous year and PBIT was at INR 44 crores versus -- as compared to INR 46 crores in the corresponding quarter for the previous year. Mobility business, which is our bicycle business was INR 194 crores compared with INR 168 crores in the corresponding quarter in the previous year and PBIT was at INR 4 crores as against a loss of INR 0.36 crores in the corresponding quarter. And the others, revenue for the quarter was at INR 227 crores compared to INR 243 crores in the corresponding quarter and PBIT was at INR 18 crores compared to INR 9 in the previous corresponding quarter. At a consolidated level, consolidated revenue was at INR 5,523 crores as against INR 4,925 crores. And the profit before tax for the quarter was at INR 459 crores as against INR 426 crores in the corresponding quarter. CG Power had a consolidated revenue of INR 2,923 crores and a profit of INR 388 crores compared to a revenue of INR 2,413 crores and INR 294 crores in the corresponding quarter. And Shanti Gears had a revenue of INR 132 crores against revenue of INR 155 crores in the corresponding quarter, and PBT was INR 29 crores compared to INR 34 crores. So let me stop with that, Joseph and Inba, and be happy to turn it over to the audience for questions.

[Operator Instructions] We have the first question from Siddhant Dand of Goodwill.

My question was regarding our Metal Formed Products division. What is the industrial chain -- because we have not grown this quarter year-on-year. So what is the market size of the industrial chains and other businesses over here and even the 2-wheeler chains? And have we lost market share over there?

Let's say, like your question was one on the auto chain-side and another is on the industrial chain-side?

Yes.

So just to clarify, industrial chains falls in the others category and auto chains falls under Metal Formed Products, okay? So I think your question around auto chains -- he is asking for chains in general. So we can talk...

So chains, our market share is intact. Rather, it is a marginal, there is an improvement in that. And industrial chain also has done pretty well last quarter. So there also, maybe, let's say, market share is well maintained to answer your question.

What is the total market size in industrial chains?

Industrial market size is about INR 900 crores, and we do almost maybe, let's say, close to 50% share in that.

And how much would the export market be over here?

As a part of industrial chain?

Yes, export share of our revenue.

So we -- exports maybe we do as a total TI about 15%. And as of now, we don't share the breakup between Engineering division and the industrial chain, which basically does both. At a TI level, we do about 15%...

[Operator Instructions] Our next question is from Joseph George of IIFL.

I have a couple of big picture questions. One is when the government announced the GST cuts, the hope was that it will trigger consumption, it will boost the overall GDP growth, et cetera, et cetera. So from your company's perspective, compared to the growth that you were expecting for your businesses, I mean, you don't have to quote numbers, but compared to the growth that you are expecting for your businesses, say, 3 months back. And when you look at the situation today, again, when you look at the growth forecast for each of your segments for, say, FY '26 or FY '27, are you seeing a significant upgrade compared to what you were seeing, say, 3 months back without quoting any numbers, but just to get a feel?

So Joseph, thanks for your question. Like you are aware of, TI is mainly dependent on auto as well as non-auto. And if I discount the September first half where the 22nd September GST rates changed, after that, we see a really uptick in demand, but which can be coupled with the festival season also. October as well as November, both seems to be very, very strong months like earlier festival months used to be, but this time, it is much better. And let's see going forward, how it is going to sustain that we are seeing collectively. But as of now, there's a good uptick in demand.

The second question that I had was also in relation to GST. So after the GST cut on ICE vehicles, the relative attractiveness of EVs from a total cost of ownership perspective or the initial acquisition cost perspective would have relatively reduced. So are you seeing any impact on your EV sales because of ICE vehicles becoming cheaper?

Yes. So Joseph, there is definitely an impact of the ICE becoming slightly more attractive versus the EV vehicles post the GST reduction. However, the impact varies from businesses to businesses. So for example, in the E-truck business and the small commercial vehicle business, the impact is minimal and is recoverable in 2 months to 3 months from a total cost of ownership perspective. In case of 3-wheeler business, where we see the impact is the highest because the diesel that translates to almost INR 20,000 for an ICE vehicle from the customer price point perspective. So there, we are seeing the ICE industry growing much more as compared to, let's say, the last month as compared to, let's say, what the EV industry grew. When it comes to our bigger M & HCV business, which is the IPLTech business over there, it's not impacting simply because the customer takes the GST as the input credit. So it varies. So overall, we'll say is there an impact? We'll say from an electrification point of view, perhaps a minor impact for our 3-wheeler business. Otherwise, it's all well manageable.

I had 2 or 3 other questions in relation to the EV business. I'll just take them one by one. So in the past, for the EV segments, trucks, 3-wheeler, SUVs, et cetera, you used to share the volume number for the quarter. If you could do that for this quarter, it will be great.

Yes. So yes, you want for the quarter 2, the volumes for the businesses?

Yes. For the second quarter, if you can share the volumes for trucks, 3-wheelers, SUVs, tractors, et cetera, which you have done in the past as well.

Sure. So for 3-wheeler, it's 2,082. For HCVs, it's 44. For small commercial vehicles, it's 167. And for E-tractor it is 100...

Perfect. Great. Two more question sorry...

Yes. From a revenue perspective, Q2 was one of our -- perhaps one of our best quarter up till now for the business. And we were up vis-a-vis quarter 2 of last year by 21%, and we were up vis-a-vis quarter 1 of this year by 31%.

Just 2 more questions on EVs. One is, would it be possible for you to share the cash balance in TICM now, maybe at the end of 2Q...

No, we don't share specific data on that, Joseph. So, I think kind of -- we don't share it.

No problem. And the last question on EV was based on the current cost structure, what are the monthly volume levels for each of these segments where you can hit maybe EBITDA breakeven?

It's a bit early to tell, right? I mean, basically, so when we -- I mean, because honestly, I've given an estimate in the past and I've been wrong. So I'd rather kind of err on the side of caution here. So until we get to a stage where we're comfortable giving numbers when we're getting this thing, we don't want to share at this stage.

We take the next question from Vipul Kumar Shah of Sumangal Investments.

Can you share the volume growth for Engineering division, sir, it was growth, degrowth or growth of how much percentage?

On volume terms, it is around 10%.

10% as compared to same quarter last year, sir, right?

That's right.

And export volume growth?

Exports, maybe in particularly Q2 was a bit slower, particularly in U.S., but rest of the geography, it was okay.

Do you share tonnage in the Engineering division or you would not like to see?

Generally, we exports each share as a total TI, which is about 15% like we shared earlier.

No, no, I'm talking about entire Engineering division. Can you share the tonnage?

We don't share the tonnage generally.

[Operator Instructions] We take the next question from Joseph George of IIFL.

I had 2, 3 more questions in relation to the stand-alone business. One is we have seen strong growth in the mobility segment. So I wanted to understand what the strategy is playing out. Is it entirely driven by market share gains? Or are you seeing a revival in the end market? And if it's market share gains, what is the strategy behind it that is playing out?

So Joseph, in Mobility division, our focus was more towards the specialized bike, and we launched even the e-bike. And we are a bit focusing going forward on the fitness side of the business story. So this led to the margin improvement. And regarding your question, whether it is sustainable, yes, we feel it is sustainable.

And 2 more questions on the stand-alone side. One is, could you talk about the impact on exports to U.S.? I know exports to U.S. is a relatively small piece of your business, just about 4% of revenue. However, since the increase in tariffs to about 50% sometime in August, we understand that a lot of exporters are struggling with volume dips of 70%-80% year-on-year, et cetera. Could you give an update on the situation there?

So Joseph there, wherever we are supplying to the OEMs, which may be approval process is also quite longer. And that's how it gives you advantage in this kind of a time where the business is sticky for some time surely. And -- but wherever the distributor market is there, we see a bit of slowdown. So overall, maybe like you said that our U.S. impact is around 4% to 5%, which is in Q2, we see a bit of slowdown about 10%. And let's hope going forward, we'll be able to maintain that.

And the last question that I had on the stand-alone piece was on the railway business. I think that is a segment that you had mentioned that you've got a strong order book, and we were expecting the revenues and the growth to kick in starting fourth quarter. So if you can give an update on the railway business, that will be great.

So Joseph, like earlier, we maintained that business will start in Q4. We met our customers, maybe I met them even last week. So we see that there will be a delay of about 1 quarter because of other suppliers supply chain is not ready as of now. But from TI perspective, we are ready. So we see about a quarter here and there gap going as per our customer projections.

We take our next question from Salil Desai of Marcellus.

My question is for Jalaj. Volumes on the EV businesses that you gave, right? Now if we just look at individual segments, then 3-wheeler growth is just about 2-odd percent year-on-year. And in trucks, it is just about 5-odd percent for this quarter. So could you give us some color on how the market has been? And how are you looking at either market share or any strategies on how you could accelerate this volume growth because EV is in adoption mode, I'm assuming that the pace of growth should have been much, much faster.

Okay. So Salil, on the truck side of it, definitely, we are seeing competition coming in, in the big truck segment. As we speak, there are about 7 to 8 players who are now active in the market. So having said that, still for H1, we had a 50% upwards kind of a market share. We held on to market share of 50% plus. We have our plans in terms of introduction of -- so for the -- in the month of September, we introduced a 4x2 variant. We also introduced a Swap technology on our 4x2 as well as 6x4 in terms of our product. We have [indiscernible] as a product, which is lined up for introduction in the market in the quarter 4 of this year also. So we have our plans, including some of the other market interventions and some of the earlier wins, which we have gained from 300-plus trucks, which are already running on the road. When it comes to 3-wheeler business, yes, you are right. We would have wanted to scale up our volumes much more than what we have been able to. There have been -- there were some product concerns, which we have now put it together and the new variant with all the improvement we have put out in the market last month only. And hopefully, going forward in the L5M category of product, we will -- you will see the uptick in terms of the volume. We are also planning to enter into the cargo as well as the L3 segment towards the end of the year. So overall, 3-wheeler business, we will see the uptick, if not in quarter 3, definitely from quarter 4 onwards.

My second question is on the medical division. Right now here, revenue growth has again been flattish year-on-year. At least for the last 3, 4 quarters, we haven't really grown much. So how are we looking at this business? What is the potential? Is there any new product gains, any new markets that you think can take us from this -- almost endemic growth rates to something which is much better?

So your observation is right here. In particularly September month, we have seen a bit of slowdown because of the GST impact, all dealers and maybe hospitals slow down on the -- particularly offtake of the orders. We feel maybe it will get compensated in month of November and December going forward. And we are working on new product development also to enhance the revenue going forward in TI Medical.

Any qualitative targets that you can in mind, what would you be happy with?

Generally, we are targeting growth of 15% plus for the surgical business what we have. And also, we are working on exploring new vertical to launch under the TI Medical.

And lastly, I had one request. For Shanti Gears, the numbers haven't been really great this quarter, but it's very difficult to get access to the management. So it would be nice if you could have a representative from Shanti also on the call maybe from the next quarter.

If you have any specific question, maybe we can take it.

Yes, but we can do that also, Salil. We can get the Shanthi Gears.

We have our next question from Vipul Kumar Shah of Sumangal Investments.

Yes, sir, what was the capacity utilization for Engineering division?

Like we shared earlier, we may be, let's say, plan capacity utilization almost 2 to 3 years ahead. So as of now, we are running at 80% to 85% capacity utilization and our Nashik plant has just started in cold rolled strips as well as Phaltan plant also started doing commercial production just this month. So we are covered at least for next 1 to 2 years for having enough capacity to drive the growth.

Our next question is from Rushabh Shah from RBSA Investment Managers.

Yes. Just on the electric heavy commercial vehicle space, I understand that you mentioned about new product launches and battery swapping technology. So do we have what it takes to go all in now and capture the market given that you're seeing increasing competitive intensity or is pricing is still a dealer breaker. If you could just highlight some thoughts there.

Yes. So thanks for the question. I think in terms of product performance, what we have demonstrated to the customer, our existing customer satisfaction and the repeat orders which we are getting, we are very, very confident that we have enough to capture the market. And as I told you that despite so many number of players being there, our market share has been 50% upwards. So yes, it's going to be a competitive market. But I think from a product standing point of view, our customer feedback and product performance point of view, I think we are very, very bullish and confident about H2.

And just a clarification, [indiscernible] You have seen certain companies doing retrofits to ICE across the formats. So is this really a risk? [indiscernible] do you see success there or just initial success that they're seeing in terms of retrofits to ICE across formats?

So we have carefully and we have purposely chosen not to go this route because we are convinced that grounds-up EV is any day a better bet as compared to a retrofit on any of the vehicles. That's our understanding and our take on this.

And on the medical devices, you mentioned that you're targeting 15% growth. I think earlier, we are targeting 20%, 25%. So is it that -- are we just being conservative here? Or has anything changed in the business?

I mentioned about the existing, what we are doing in the sutures, but including what I told we are going to add some verticals, surely, we are targeting 25% CAGR on the TI Medical.

And just a big picture question, TI over, say, a 5- to 10-year period has always delivered strong double-digit growth. So that thesis is still intact, right?

Yes, it is intact.

We take our next question from Gnanasundaram Saminathan from Avendus Spark.

Vellayan, my favorite question that I often come across in all your calls is that cash current investments has been about INR 150 crores on books currently as we see it, debt has been completely repaid. So what is the plan with capital allocation? Any thoughts on that?

Yes. So if we look into next year, so basically, the breakdown is going to go -- see the core business, we're basically seeing revenue growing by about in the range of like 10 -- I would say, PBT, definitely in the range of like 12% to 15%, 12% to 14%, 12% to 15% is what we see. That's going to require a certain amount of capital for expansion. So that's going to be kind of theme one. Theme two is going to be...

Would you be able to quantify the CapEx requirement for the base business?

Yes. Go ahead. What are you saying -- for the base business?

So for base business, we are going to invest next year about INR 300 crores to INR 400 crores range for the stand-alone business.

Yes. So that would be the base business. The second is what will go into growth on TI Medical and 3xper and businesses like that. And then -- so that is going to be like that's again kind of -- so basically, we look at it, right? If we say that TI stand-alone has to get -- we target close to 14% -- 12% to 14% PBT growth from the stand-alone business, then we need to think of how else we can get up to 6% growth, right? And that's what's going to be from other investments that we kind of look at from a CapEx perspective. So when we look at the CapEx side, like I said, 3 chunks. So some money will go towards TI Medical, both in terms of greenfield -- TI Medical and 3xper. So I would say, again, that's in the range of about like INR 400 crores so we will look at whether we need to invest in TI Clean Mobility. That's a decision we'll make later in the year. And then we are looking at some M&A for new lines of business that are kind of in the same areas that we are, but can kind of potentially provide growth. So I'd say that up to INR 200 crores to INR 300 crores can get allocated towards that.

The last part has certainly got us excited. Vellayan, just one other query with regards to this 3xper is that I remember in the initial clause that we had signed, the remaining of INR 25 crores of investment was supposed to be allocated if certain conditions were met, further investments from Tube at that point of time. Now has that been met. And then what were the internal targets that were decided for 3xper right now?

So we'll take the appropriate call based on the time as of now.

[indiscernible].

No, the INR 25 crores that has been invested in the 3xper as per this quarter. I remember in the initial discussion, it was like certain targets had to be met before you make a further investment into 3xper. Have those been met is the question here?

No.

As we discussed, maybe we will take those calls later point.

He's asking, have the targets been met?

Actually, no, we have planned for INR 300 crores of investments in TI Medical initially.

INR 300 crores we are planning to invest out of which INR 200 crores has been invested till the last year. And this year first quarter, we have invested INR 25 crores and this quarter, we have done INR 25 crores. Remaining INR 50 crores will go this year.

No, I think his question not already answered. Let's just get a better understanding of this, right? And we'll get back to you with the answer to that.

And I think the same thing with medical. There's a certain deadline that we should be looking in terms of the investment or I'm just trying to understand.

Medical, see, the basic thing is like sutures is one business, right? So -- and we've always said that we look at other lines in medical. So the investments will go into other lines. It's not as much more...

One last one is that what has really given us this confidence? Because last quarter, we weren't really this confident of investing into both these higher investment number. Now what has really turned around in the last quarter that gives us confidence to pump in more money into both these ventures?

See, basically, the way we look at it is that the fundamental thesis of these businesses kind of remains, right? Which is there is good long-term growth in both these businesses, right? Now what we have to look at is -- so I think it's better to kind of look at how we kind of ensure that these businesses basically give us the growth and the profitability we need. So that requires more management attention, that's what we're now doing to ensure that we can get growth from each of these. That's what we will start doing now more.

And then that INR 300 crores is going to be predominantly CapEx driven? Or is it going to be operational working capital driven?

No. So it depends, right? So like we said with TI Medical, if we're getting into a new line of business, that obviously also requires CapEx, right? And so it depends on how we kind of get in, right? If it's kind of a new line of business, if it requires anything that's inorganic, then that's kind of -- that requires more capital. Otherwise, it will be more operational.

[Operator Instructions] We now move to our next question, which is a follow-up from Vipul Kumar Shah Sumangal Investments.

Yes. Just a small clarification. You said 50% market share for electric trucks. So that is pan-India or just South India?

Pan-India...

Ladies and gentlemen, that brings us to the end of the Q&A session. On behalf of IIFL Capital Services Limited, that concludes today's conference. Thank you for joining us. You may now click on the leave icon to exit the meeting. Thank you all for your participation.