Tube Investments of India Limited (TIINDIA) 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.