Tube Investments of India Limited (TIINDIA) Earnings Call Transcript & Summary

Good day and welcome to the Tube Investments Q1 FY '27 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, Swapnil. On behalf of IIFL Capital, I welcome you all to the 1Q FY '27 Results Conference Call of Tube Investments of India Limited. From the management, we have with us Mr. M A M Arunachalam, Executive Chairman; Mr. Mukesh Ahuja, Managing Director; Mr. AN Meyyappan, Chief Financial Officer; as well as all the divisional heads. I will now hand over the call to the management for opening remarks, post which we will have Q&A.

Yes. Good morning, everyone. Just to give you a commentary on this quarter result, the Board of Directors of Tube Investments of India Limited, met on 14th August 2026, and approved the financial results for the quarter ended 30th June 2026. Stand-alone results for the quarter. Revenue in quarter 1 was at INR 2,366 crores against INR 2,007 crores in the same previous year. PBT was at INR [ 200 ]crores against INR 2,222 crores in the same period previous year. ROIC annualized stood at 41% for the quarter ended 30th June 2026 compared with 39% in the previous year same period. Free cash flow for the quarter was INR 174 crores. Now I'll give the segmental review. The engineering revenue for the quarter was INR 1,566 crores compared with INR 1,298 crores in the corresponding quarter of the previous year. Profit before interest and tax for the quarter was INR 153 crores, which is same as the corresponding quarter of the previous year. Metal form product revenue for the quarter was INR 408 crores compared with INR 366 crore in the corresponding quarter for the previous year. Profit before interest and tax for the quarter was INR 28 crores as against INR 37 crores in the corresponding quarter of the previous year. Mobility revenue for the quarter was INR 250 crores compared with INR 198 crores in the corresponded quarter of the previous year. Profit before interest and tax for the quarter was INR 9 crores against INR 7 crores in the corresponding quarter for the previous year. For others, revenue for the quarter was INR 256 crores compared with INR 236 crores in the corresponding quarter of the previous year. Profit before interest and tax for the quarter was INR 21 crores against INR 17 crores in the corresponding quarter of the previous year. TI consolidated revenue for the quarter was [ INR 8,215 ] crores INR 5,309 crores in the corresponding quarter of the previous year. The profit before share of profit for JVs, exceptional items and tax for the quarter was INR 461 crores against INR 449 crores in the corresponding quarter of the previous year. CG Power and Industrial Solutions, a subsidiary in which company holds 56.29% stock stake, registered a consolidated revenue of INR 3,281 crores during the quarter against INR 2,878 crores in the corresponding quarter of the previous year. Profit before tax for the quarter was INR 423 crores against INR 364 crores crore in the corresponding quarter of the previous year. Shanti Gears Limited, a subsidiary company in the gears business, in which company holds 70.46% stake, registered revenue of INR 115 crores during the quarter against INR 135 crores in the corresponding quarter of the previous year. Profit before tax for the quarter was INR 14 crore against INR 31 crores in the corresponding quarter of the previous year. Thank you, and we are happy to take questions.

[Operator Instructions] We'll take a question now from Joseph George of IIFL Capital.

So I have 2, 3 questions. One is if I look at the stand-alone performance, we have seen some pressure on margins because of which the EBIT growth in the engineering segment and the Metal Form segment was relatively muted. What I wanted to check is that in the last couple of quarters, we have seen a lot of inflation, all OEMs and suppliers are talking about inflation. So in that context, is there any price hikes that have yet to come from your customers because of which we have seen a compression in margins? Or is the profitability in the quarter reflecting the underlying business dynamics. .

Yes. Thank you, Joseph, for your question. Joseph, as you are already aware of, there was a lot of commodity steel price increase has happened in the quarter 4 and quarter 1, which has resulted into the lower margins. But basically, you are aware that TI maybe gets those price increases with a lag of sometimes 2 or 3 quarters. So we are confident on the steel price increase, particularly, we'll be able to recover fully, and you will see the margin neutralization will happen in the coming quarters.

Sure, sir. Would it be possible to quantify the extent of under recovery in the quarter so that we can think of or we can estimate what sustainable margin in each of the segments is?

So Joseph, maybe I do not like to give a particular number. Maybe like we have given a guidance, we'll be able to grow EBIT margin in the double digit. And post the price recovery, we are confident that double-digit margin improvement will keep happening in the future as well.

We'll take our next question now from Devesh Kayal of Boeing AMC.

Just my question is on the [ PI ] medical side. So mentioned in the annual report that there at the plant is running at new capacity. And we did one acquisition in March '26. So just want to understand how do we see this business from a 3- to 5-year prospect debt. So we did around INR 200 crores revenue, okay. And in the 3 to 5x business over the next 3 to 5 years. Yes.

Yes, thank you, Devesh, for the question. Just to give an overall view of the TI Medical business, like there is a core business, which is basically a surgical business, which we are doing it. In the quarter 1, we had a growth of almost close to 20% in that particular business. And second, maybe to grow a business where we have done a very small acquisition in the IV cannula, which is basically maybe infusion therapy. This IV cannulas are used and we are expecting that business to start giving us revenue from this quarter onwards, maybe basically August or September, this plant will start and we'll start booking the revenue for that. Overall basis for TI Medical, as we said in the previous calls, we are confident to do 20% revenue growth year-on-year, along with the profitability. But however, this Medicare business, what we have just [ required ] may take some time maybe to do the customer acquisition as well as on the margin side. But the core business, we are confident the revenue growth and the profitability will contribute in the leases.

Understood. And sir, on this CDMO 3x -- can also give some color because I understand like we are setting up 200 kl reactor capacity. So if you can also -- what's the trajectory there?

Govindji, are you there in the call?

So the 200 kl [indiscernible] capacity, the commissioning has already happened. The validation batches are going on. The clean room is expected to get commissioned in the next 30 to 40 days. And meanwhile, while the commercial facility is getting commissioned, the semi-commercial facility, the valuation batches will be supplied to the customer for triggering the PAS filing, which can trigger the inspection to the site should happen in the next [indiscernible]. So in terms of the product will move to the customer, after that they have to take their EV -- their batches and then they will wait for the stability and file that were treated the instruction. So we expect the inspection to happen during the next financial year. And we are on track in terms of like, I think, to achieve the numbers, whatever we had released numbers, whatever we have projected, we are on track in terms of achieving that as of now.

So with this business after the inspection next financial, it should it would be under growth trajectory. .

Yes, Currently, we are already supplying products to certain customer example, our semicommercial plan supplying commercial quantities for TC product, which has been launched in Europe and the customer is likely to take the product for the global requirement. We also supplied a key intermediate to one of the customers for the filing as well. So those [indiscernible] are going on current. At any given time, we have around 15 customers who are working with us both for [indiscernible] well as certain projects which would be supply from the semi-commercial plant in niobate.

Understood. And sir, we haven't mentioned anything on the [indiscernible] electronics piece in our annual report. And so I just want to understand what's happening on the [indiscernible] side?

Basically, to be your question is on [indiscernible], right, right. So maybe that business may be like we shared in the previous call, we are yet to make the inroads in that particularly, but we are continuing that business to get inroads into customer approvals for the export business because in the domestic market, basically, these lens, modules and the camera modules manufacturing is yet to start. So bottom line is we had to make inroads on that business.

We are taking our next question now from Salil Desai of Marcellus Investment Managers.

My first question is a follow-up to what Joseph was asking on this price lag of steel price increases. What you -- I mean, your answer just to clarify, means that you will also recover what you lost in Q1, right? So it's not just that there is a lag on just passing on the cost hike. You also recovered cumulatively what has been under recovery. Is that a fair assumption?

Yes, that assumption is right. For steel prices, particularly including Q1, we'll be able to recover fully. .

Okay. All right. My second question is, again, on the standalone business. Now the MFP, after a long time, we have seen almost about 11.5% grow revenues. If you can tell us what has changed here? Last couple of times you mentioned railways was a drag, if you can give an indication of what has changed in the MFP segment this quarter. .

So there are a couple of reasons there. Like you mentioned that railway is a drag. There's no doubt on that. While automobile industry has done pretty well, particularly Hyundai, where one of our business unit is purely depends on them. And maybe, let's say, has not done well. So that is maybe also for this particular quarter, there was a drag on that. And rest of the 2 units, actually, we are maybe like you are aware, we have declared to do a greenfield plant launch in the Western region that is running delayed by 6 months. So capacity maybe in terms of expansion, whatever growth was there. So we are having a lag of 6 months to catch up on that. These all submission put together, there was a pressure on the revenue in the MMP.

Okay. No, I was actually saying that this seems to be better than what you've done in the last few quarters. So if this was volume-led or something else? .

Volume-led only because price recovery is yet to take place. It's normal. Volume led in particular 2 businesses other than railways and the Hyundai business.

The next 2 questions I have on our e-mobility business. So one is our negative EBIT in the segment has come off by almost about, I think, INR 43 crores in this quarter. So which particular product or segment has this happened what have been the overall [indiscernible] drivers of loss reduction. .

So thanks, Salil. This is Jalaj. So quarter 1 has been a very good quarter for us. We have recorded the highest ever turnover of close to INR 240 crores. And I will say that out of all the 4 businesses, we are seeing traction in all 4 of them. When you look at the truck business, which is the HCV business, the momentum is continued from the quarter 4. When it comes to the small commercial vehicle business, we have recorded highest ever volumes in any quarter in the quarter 1. And even including the 3-wheeler business, if you recall, in quarter 4, we had reported there were some challenges on the one of the supply side, which impacted our production volume. All those challenges are behind us now and quarter 1 recorded almost a 64% kind of improvement over quarter 4 volumes. So the overall volumes being good and your observation regarding the margins is also correct. So I will say all the businesses are now seeing traction in terms of their volumes and because the volumes are increasing, although, yes, there is a headwind of the inflationary pressure of the commodity pressure, including the sell prices, but we've been able to post a decent I'd say, performance have got a very good performance.

2 All right. And so just to be sure, there's nothing in one off no benefit this quarter. This is a regular routine volume growth that is driving the margins.

Yes. Yes. .

Great. And lastly, if you can share volumes for each of these products for the quarter? .

Yes. So the billing volumes, the big trucks was 86 numbers. The 3-wheeler business was 1,924 the small commercial vehicle was 347 and tractor was 22 numbers.

We will take our next question now. We have Prithvi Raj Irle of Unifi Capital.

Sir, my first question is on EV business. It's good to see finally some traction there. Given what we are seeing at this point, is it fair to assume that we are behind the peak quarterly losses for this particular segment? .

Can you just repeat Prithvi, can you just please repeat your question again?

Are we behind the paid losses for the EV business at this point of time? And do you also have any time for breakeven?

Yes. So Prithvi, directionally, yes. Directionally, as we see our volumes increasing quarter-on-quarter, your first statement regarding us -- we are in -- for us beyond the peak losses for a quarter is a correct one. Directionally, what you're saying is correct. That's what the endeavor would be. And your second question was? Can you just repeat the second question again?

On the breakeven time line for the EV business.

So Prithvi, this will vary from business to business. There are some business which will breakeven early. So -- and there are some businesses which will go into the breakeven later. We are expecting one of our business to breakeven this year and maybe 2 of them to breakeven next financial year.

Okay. That's clear. And on the engineering side, is it possible to share the volume growth during the quarter?

So volume grew about 17%.

[Operator Instructions] We have Joseph George, again, with his question.

Yes, I had a couple of questions. One is on the EV side, the volumes that you have given, especially on the 3-wheeler side, we pack volumes of registrations on the Vahan website. And what I noticed is that the wholesale volume that you have given is somewhat higher than the retail registrations that we are seeing, is it that things have picked up substantially over the last 1 or 2 months? And as a result, in anticipation, you have wholesale more and there's something that we will see in the registration data in the coming quarter or so? .

Yes. So Joseph, thanks for the question. See, there is always a lag between the billing and Vahan. But over a period of time, the 2 tend to match. So since you specifically mentioned 3-wheeler business. So let's say, last financial year, our billing was about 6,700 and our a registration was about 6,500, right? Specifically to quarter 1, if you recall, we reported that there was some production-linked challenge in quarter 1. Consequently, our billing in quarter 4 was only 1,200 numbers as compared to quarter 1 was 19, 24 numbers. So in a growing business, right, specifically, let's say, our opening pendency for vahan would always be lesser than the closing patency for vahan. So maybe that's the other part of it. But over a period of 3 to 4 months, Max 6 months, the numbers always tally between the vahan and the primary or the billing numbers which we declare. But usually, there is a time lag of at least 30 to 45 days between billing and vahan. .

Understood, sir. That's very clear. The second question that I had was when we think about FY '27 or rather, when we looked at FY '26, there were some investments that has gone out from the stand-alone into some of these new ventures subsidiaries, et cetera. When we think about FY '27, what is the amount that you have allocated in terms of cash flow from the stand-alone entity into some of these subsidiaries if that has been budgeted for already?

So Joseph, like we shared in the previous calls also, we have already infused INR 250 crores in the last quarter, maybe basically Q4 of the last financial year. And we anticipate maybe in Q3, we will infuse another INR 250 crores. We have given a guidance of total put together about INR 750 crore infusion will happen over a period of time. So second tranche of that will happen in Q3. .

We have another question coming in from Anupam Gupta of HDFC.

So can you hear me?

Yes, Yes.

Yes. So a few questions. Firstly, on the core business, both eineering and metal found, you said specifically that steel you will be able to recover, but -- so let's say, other costs, which you had mentioned in the last call that there are others which are higher because of the best share prices? How are you able to manage that? And when do you think that will normalize for you? .

So Anupam, this quantum of increase it is happening up maybe first time, we have already taken up with all of our customers. So as of now, we are in the verge of discussions with all the OEMs to recover, which is on steel inflation, which is basically fuel freight extra. So maybe we'll let you know maybe another quarter down the line of time, how those conversations are going on. But we are hopeful majority of that we'll be able to recover as on this moment. .

Okay. So basically, you should -- both for Engineering and Metal fund, which should revert to your older margin levels which you are seeing in...