Metrics cut 1
- FY27 Forging Division revenue guidance cut to ~₹340 crores (from earlier expectation of ₹400 crores)
Event Participants
Executives
2 Anuj Talwar, Navin Juneja
Analysts
5 Dipen Shah, Jay Jain, Rucheeta Kadge, Shikha Mehta, Subhash Gate
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹242 crores | +15% YoY (₹211 crores in Q1 FY26); highest-ever quarterly revenue, surpassing Q4 FY26 record |
| Gasket & Heat Shield Division Revenue | ₹164 crores | +21% YoY; ~52% of total revenue; driven by HEV exposure (Hyundai, Kia), new data center engine gaskets |
| Forging Division Revenue | ₹78 crores | +4% YoY; export-oriented (UK/Europe) unit impacted by weak European car market, BMW/GKN schedule cuts |
| Maruti Chassis Systems JV Revenue | ₹105 crores | +43% YoY; strong PV OEM volumes and increasing value-added products |
| TMR JV Revenue | ₹40 crores | +31% YoY; improved efficiencies and strong customer demand |
| EBITDA | ₹43 crores (17.6% margin) | Margin temporarily pressured by elevated steel/aluminum prices and labor inflation; OEM price recovery expected in coming quarters |
| PAT | ₹30 crores | +35% YoY |
| Gasket Division EBITDA | ₹29 crores | +32% YoY |
| Forging Division EBITDA | ₹14 crores | vs ₹13 crores in Q1 FY26 |
| TMR JV EBITDA | ₹6 crores | +57% YoY |
| Exports Contribution | ~25% of revenue | Target of 35% by FY28; portfolio includes JCB, Dana, Carraro, JLR, BMW, Cummins America |
| EV Revenue Contribution | ~3.27% (₹12.5 crores) | Up from ₹9 crores YoY and ₹10 crores in Q4 FY26; target >5% in 2 years |
| FY27 Planned CapEx | ₹103 crores | Across gaskets, forging, heat shields to meet OEM demand |
| Order Book (Forging, 5-year) | ~₹500 crores | ~₹100 crores per annum from new orders |
Geographic & Segment Commentary
Gasket & Heat Shield Division: Largest contributor at 52% of revenue (₹164 crores, +21% YoY), with EBITDA of ₹29 crores (+32%). Maintains nearly 50% domestic gasket market share, is single-source for many OEMs, and is India's largest heat shield player. Growth driven by HEV exposure with Hyundai/Kia, data center generator gaskets, and PV industry growth of 26% YoY.
Forging Division: Revenue of ₹78 crores (+4% YoY), largely export-oriented to UK and Europe. European car markets remain weak due to inflation and Chinese competitive pressure, but management sees this as an opportunity, citing a ~₹500 crore order book (₹100 crores/annum), Marelli JV orders, and new Dana/Carraro orders maturing in Q3-Q4. Division expected to close FY27 at ~₹340 crores.
Joint Ventures (MCS, TMR, Loham): Maruti Chassis Systems grew 43% to ₹105 crores on strong PV volumes; TMR grew 31% to ₹40 crores with EBITDA up 57%. Loham Talbros (carbon black and sustainable rubber recovery) is progressing as planned and expected to become a medium-term growth driver.
Data Centers: New growth vertical - gaskets supplied to Cummins and Kirloskar generator engines powering data centers. Current run rate ₹30-40 crores annually (~5-6% of gasket business), single-source position for Cummins engine components; Cummins sales alone ₹25 crores in Q1 vs ~₹90 crores in FY26 full year.
Company-Specific & Strategic Commentary
Exports & China+1 Diversification: Exports contribute ~25% of revenue, targeting 35% by FY28. Working with ~7 OEMs diversifying supply chains away from China - BMW increasing business, Volvo potential new gasket customer, Marelli opening Stellantis doors, and JLR awarding first-time plastic EV component orders (₹15-20 crores per annum).
Marelli/STX Deal: Pending court proceedings; management expects clearer picture by September 30. Marelli is expected to bring additional forging and chassis business once resolved (₹30-40 crores order was lost earlier due to tariffs).
EV Penetration Strategy: EV revenue at ₹12.5 crores (~3.27% of revenue) in Q1, from Tata Motors EV production, BMW EV bushes, and JLR EV rollout; targeting >5% within 2 years across all divisions.
Product Expansion & Order Wins: Kia business fully resumed with new orders; Stellantis chassis production started in Q1 (after 2-year design cycle); new orders from Kia and Cummins; ₹25 crore plastic component order maturing from next fiscal; EV rubber component order from JLR (~₹15-20 crores per annum) starting Q1-Q2 FY28.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 18-20% for FY27 | Driven by gasket growth (17%), forging recovery (15-20%), JV momentum, and new order ramp-up |
| EBITDA Margin | ~17-17.5% for FY27 | Subject to recovery of commodity inflationary costs from OEM price increases |
| Gasket Division Revenue | ₹680-700 crores FY27 | ~17% growth; data center, HEV, and exports driving momentum |
| Forging Division Revenue | ~₹340 crores FY27 | Recovery from Q3 onwards; new orders from Dana, Carraro maturing Q3-Q4 |
| Gasket Division (FY30) | ₹850-900 crores | Data center expected to contribute 15-20% of division mix by then |
| Forging Division (FY30) | ₹600-700 crores | Management notes "maybe more" |
| EV Revenue Contribution | >5% in 2 years | From 3.27% currently; Tata, BMW, JLR EV programs driving growth |
| Exports Share | 35% by FY28 | From ~25% currently; China+1 diversification and new customer wins |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Price Inflation | Elevated steel and aluminum prices, plus labor wage increases, pressured Q1 margins to 17.6%; management expects OEM price recoveries in coming quarters but margin trajectory remains subject to timing |
| European Auto Market Weakness | Directly impacting forging division (grew only 4% YoY); BMW and GKN schedules reduced due to inflation and Chinese competition; mitigation via diversified customer base and ₹500 crore order book |
| Marelli Bankruptcy Proceedings | STX deal stranded in court proceedings; ~₹30-40 crores of forging orders previously lost due to tariff-related pullback; resolution expected by September 30 |
| Tariff/Trade Policy | Trump tariffs caused a key customer (likely Marelli-related) to back out of orders; ongoing policy uncertainty could impact export growth plans |
| Manpower Availability | Q1 forging suffered labor shortages from Haryana (LPG price-driven migration); management states resolved but flags recurring seasonal risk |
Q&A Highlights
New OEM Wins & Supply Chain Diversification
- Question: Details on ~7 OEMs diversifying from China, and new project updates with Stellantis, Kia (Dipen Shah)
- Answer: BMW giving more business; Volvo is a potential new gasket customer; Marelli opening doors with Stellantis (chassis + forging lines); JLR working on first-time plastic EV components; Cummins America a "tortoise" but expected to yield ₹30-40 crores by FY27-28; planning to meet Tata Motors leadership on a potential Gujarat chassis plant (Anuj Talwar)
Marelli/STX Update
- Question: Progress on Marelli STX after multiple quarters of discussion (Dipen Shah)
- Answer: Better picture by end of September; transaction is currently in court proceedings and cannot be discussed further (Anuj Talwar)
Data Center Revenue Breakdown
- Question: What % of gasket revenue comes from data centers, and how are inquiries progressing (Rucheeta Kadge)
- Answer: ~5-6% of gasket business today (₹30-40 crores annually); single-source to Cummins for this engine component; Cummins sales ₹25 crores in Q1 alone vs ~₹90 crores full FY26; could reach ₹100 crores in 2 years; same engine parts also supplied through Kirloskar for generator applications (Anuj Talwar, Navin Juneja)
Forging Division Slowdown Reasons
- Question: Was Q1 forging growth (4%) due to delayed orders or industry weakness (Shikha Mehta)
- Answer: Combination of manpower shortages (Haryana workers left due to LPG price rise), some orders slow to enter execution, and reduced BMW/GKN schedules from weak European markets; trajectory improving - "July is better than June, August better than July"; ~₹500 crore order book (₹100 crores/annum) now in place; new CEO (appointed April 1) spending 50% time on forging; Dana/Carraro orders maturing Q3-Q4 (Anuj Talwar, Navin Juneja)
EV vs ICE Mix
- Question: Are EV orders growing as expected given OEM guidance cuts; is ICE seeing stronger growth (Shikha Mehta)
- Answer: EV revenue ₹12.5 crores in Q1 (vs ₹9 crores YoY, ₹10 crores Q4 FY26), 3.27% of revenue (up from 2.9% last year); driven by Tata Motors EV production ramp, BMW EV bushes, and JLR EV launch in September; targeting >5% in next 2 years; orders received for JLR rubber EV components worth ₹15-20 crores per annum (Navin Juneja, Anuj Talwar)
Segment Growth & Sustainable Margin
- Question: Which segment will grow fastest in FY27, and what is sustainable EBITDA margin (Jay Jain)
- Answer: TMR fastest at 30-40%; forging ~20%+; gasket ~16-17%; MCS ~18-20% (TMR clarified); sustainable EBITDA margin ~17% for the company (Navin Juneja)
Marelli Margin Decline
- Question: Is the Marelli (joint venture) margin decline due to raw material costs (Rucheeta Kadge)
- Answer: Mix of factors - slightly lower other income, new launch expenditures (manpower, shed rental), and raw materials; margins expected to normalize by year-end (Navin Juneja)
FY27 Division Guidance Recalibration
- Question: Earlier expectations were forging at ₹400 crores in FY27; what changed (Rucheeta Kadge)
- Answer: ~₹30-40 crores of orders lost when Marelli backed out due to Trump tariffs, plus muted European demand; revised target of ₹340 crores with 2.5-3% variance; gasket revised to ₹680-700 crores; FY30 targets unchanged at ₹850-900 crores (gasket) and ₹600-650 crores (forging) (Navin Juneja, Anuj Talwar)
Key Takeaway
Talbros Automotive Components delivered a record quarter with total income of ₹242 crores (+15% YoY), EBITDA of ₹43 crores (17.6% margin) and PAT of ₹30 crores (+35% YoY), led by the gasket & heat shield division which grew 21% to ₹164 crores with EBITDA up 32%. Strategic thrust areas include data center engine components (₹30-40 crores annual potential, single-source to Cummins), EV components (₹12.5 crores, 3.27% of revenue, targeting >5% in two years), and exports (25% now, targeting 35% by FY28), supported by China+1-diversifying OEMs including BMW, Volvo, Stellantis, and JLR. Management maintains FY27 guidance of 18-20% revenue growth with margins at 17-17.5%, expects forging division recovery to ₹340 crores and gasket to ₹680-700 crores, with long-term FY30 targets of ₹850-900 crores and ₹600-700 crores respectively. Watchpoints include commodity inflation recovery from OEM price hikes, European auto market weakness impacting forging, Cisco Marelli court proceedings expected to resolve by September 30, and sustaining the forging recovery trajectory through Q3-Q4 ramps.