30-Oct-2026 11:39:38
GREAVES COTTON Q2 FY27 CONCALL: RETAINS 13–15% CORE EBITDA MARGIN TARGET; EXPECTS H2 MARGIN RECOVERY, EV BUSINESS MOVING TOWARDS BREAKEVEN
• Long-Term EBITDA Margin Guidance: Management reiterated its medium-to-long-term core business EBITDA margin target of 13–15%, supported by pricing actions, cost optimization and operating leverage. • H2 FY27 Margin Outlook: Management expects H2 margins to improve compared with H1, despite continuing commodity inflation. • Q4 Margin Recovery: Management expects the full benefit of company-wide price increases to reflect by Q4 FY27, particularly in automotive OEM contracts. • Commodity Cost Pressure: Higher aluminium, copper, steel and platinum-group metal prices continue to affect profitability. Price increases and value engineering remain key corrective measures. • Core Business Growth: Core revenue increased 24% YoY to ₹768 Cr in Q2, supported by strong demand across energy, mobility and engineered components. • Energy Solutions: Revenue grew 36% YoY, accelerating from 21% growth in Q1, supported by infrastructure, industrial and commercial demand. • Genset Market Share: Medium-horsepower gensets in the 160–750 kVA range grew 35% during H1 FY27, outperforming the overall Energy Solutions business and gaining market share. • International Expansion: Company shipped its first batch of enhanced gensets to the Middle East and is building sales and service capabilities, with the Middle East and Africa identified as priority export markets. • Mobility Solutions: Revenue grew 23% YoY, supported by 37% growth in the automotive engines business and stronger demand from three-wheeler and four-wheeler applications. • Excel Control Linkages: Revenue grew 30% YoY, supported by new products and customer wins. Greaves completed the acquisition of the remaining 20% stake for ₹112 Cr, making Excel a wholly owned subsidiary. • Industrial Solutions: Revenue remained broadly flat YoY but grew 9% on a like-for-like basis, excluding the discontinued farm equipment business. • New Product Pipeline: Company launched a 470cc diesel engine, introduced a 750 HP firefighting engine and unveiled a prototype 160cc gasoline engine. • EV Two-Wheeler Sales: Greaves Electric Mobility recorded its highest-ever quarterly volumes of over 37,000 electric two-wheelers, up 114% YoY. • EV Three-Wheeler Sales: L5 electric three-wheeler volumes increased 61% YoY to nearly 2,800 units, marking another record quarter. • EV Market Share: Electric two-wheeler market share increased to 4.8% in H1 FY27 from 4.1% a year earlier. Management highlighted leading positions in Bihar and Tamil Nadu. • EV Revenue Growth: Electric two-wheeler revenue surged 134% YoY to approximately ₹350 Cr, while L5 three-wheeler revenue increased 55% to around ₹60 Cr. • EV Profitability: EBITDA loss per electric two-wheeler declined approximately 70%, from around ₹20,000 to below ₹6,300 per vehicle. The segment's EBITDA margin improved to approximately -7% from -24% YoY. • EV Breakeven Outlook: Management expects the electric two-wheeler business to approach breakeven, supported by higher volumes, improved realizations and lower unit losses. No specific breakeven date was provided. • EV Capacity: Current manufacturing capacity is approximately 40,000 vehicles per month, with utilization approaching 40%. Management expects existing capacity to support growth over the next couple of years. • Rare-Earth-Free Motor: Company developed an in-house rare-earth-free motor, with deployment planned across electric two-wheelers and three-wheelers over the next one to two quarters. Management expects performance and cost benefits. • EV Dealer Expansion: Company issued letters of intent for 160 new dealerships during H1 FY27, while average monthly throughput per dealer improved around 40% YoY. • EV IPO Update: Management has not announced a definite timeline for the Greaves Electric Mobility IPO. The decision will depend on market conditions and the IPO committee's assessment. • EV Funding: Greaves Cotton invested ₹331 Cr in Greaves Electric Mobility's rights issue, which raised approximately ₹530 Cr in total. Management expects funding to cover operating requirements, working capital and incremental capex over the next 12–18 months. • Data Centre Opportunity: Management is developing internal capabilities and exploring strategic partnerships to expand its presence in high-horsepower power generation for data centres. • Q2 Financial Performance: Consolidated revenue increased 44% YoY to ₹1,176 Cr, while consolidated EBITDA margin improved to 6.2% from 5.8% QoQ. • Core Profitability: Core EBITDA margin stood at 11.5% versus 14.8% YoY, reflecting higher raw material costs and delayed price pass-through. • Exceptional Expenses: Company recognized approximately ₹27.3 Cr of accelerated depreciation and ₹32.8 Cr of exceptional charges, totaling ₹60.1 Cr in Q2. Management does not currently anticipate further similar write-offs. • Balance Sheet: Management reported approximately ₹150 Cr of cash and ₹40 Cr of debt, resulting in a net cash position of around ₹110 Cr for the indicated business scope.
GREAVES COTTON LTD.