JTEKT India LtdQ3 FY25Auto Components

JTEKT India Ltd

Q3 FY25 Earnings Call Analysis

Management growth scorecard

Revenue

Category 4

Margin

Category 2

Fundraise

Yes

Order

N/A

Capex

Yes

2 of 4 growth signals are positive.

Revenue guidance

Category 4

→Sales growth in the first half of FY 25-26 was 5.6%, outperforming the passenger vehicle market growth of 1.6%.
→New business from Maruti Suzuki models (e-Vitara, Victoris) contributed significantly to growth.
→Exports to group entities like JTEKT Brazil are expected to start mid-2026, with potential to reach INR 150 crores, improving margins.
→New product launches (e.g., a new variant from Maruti Suzuki anticipated around August 2026) will support sales growth.
→Supply for EV vehicles like Tata's Punch EV and potential new models from Honda (linked to Elevate) will add to volumes.
→Export contribution is expected to increase from current low levels (2-4%) to between 8-10%, aiding topline growth.
→Capacity expansions especially in manual gear production and CVJ forging will support volume growth.
→Company targets steady domestic growth of 5-7% aligned with industry trends.

Category 2

→JTEKT India anticipates an improved margin recovery and growth in profits over the next 2-3 years, reversing the declining gross margins trend seen since FY '17-'18.
→Growth drivers include expanding new product markets, especially CVJ, electric power steering, and manual gears.
→Export expansion is a key focus, notably starting exports to Brazil in FY '26 with an expected potential of INR 150 crores, helping increase export contribution to 8-10% of total sales.
→Operational efficiencies from capital expenditure (~INR 460 crores) in capacity expansion, manufacturing rationalization, and backward integration are expected to enhance profitability and deliver better ROCE than current single-digit levels.
→Management expects sales growth above single digits and continued margin improvement, targeting operating margins in the 9-10% range.
→Support from parent company and global entities will facilitate technology upgrades and new export opportunities, further boosting earnings growth.
→Overall optimism on automotive sector growth and new vehicle launches should sustain revenue and profit growth.

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Yes

→In H1 FY 2025-26, JTEKT India incurred capital expenditure of INR 118 crores, funded partially by cash generation of INR 72 crores and increased long-term borrowings by approximately INR 76 crores.
→Debt equity ratio is healthy at 0.23 level, up slightly from 0.7 level.
→The company completed a maiden rights issue recently, which was highly successful, with promoters and public shareholders participating enthusiastically.
→Around INR 249 crores raised through rights issue; INR 114 crores allocated for the Gujarat facility construction.
→No explicit mention of upcoming or planned new fundraising rounds (debt or equity) in the near future.
→Current capital expenditure and expansions are being funded with existing borrowings and rights issue proceeds.

→JTEKT India has secured a significant order from JTEKT Brazil for steering manual gears, with an initial supply of around 1 lakh units and potential growth up to 5 lakh units as new models on the same platform are introduced.
→The Brazil export business is expected to start from June/July 2026, with huge growth potential and better profitability compared to the domestic market.
→The company is actively engaged in front-loading activities with customers like Maruti Suzuki, leading to awards of new business including complete product sets for models like e-Vitara and Victoris.
→There is ongoing work on expanding exports to the U.S. market, which currently contributes about 4% of total sales.
→Efforts continue in backward integration projects such as in-house forging production for CVJ to support cost and quality advantages.
→JTEKT India expects export contribution to increase to 8%-10%, driven by these new orders and global coordination.

Yes

→Ongoing CAPEX mainly towards capacity expansion in manual gear, electric power steering (CPS), and CVJ.
→Sixth manual gear line at Dharuhera operational from August 2025, increasing capacity from 28 lakh to 32 lakh units.
→Third CPS line operational from July-August 2025, increasing capacity from 10 lakh to 15 lakh units.
→Working on fourth manual gear line at Chennai (primarily for Brazil export order).
→Second CVJ line at Dharuhera under implementation, expected operational in 1-2 months, doubling capacity from ~3.7-4 lakh to ~7.5-8 lakh units.
→New manufacturing facility being set up in Gujarat; factory design completed, construction to start December 2025, expected completion early 2028. Committed INR 250 crores so far.
→INR 460 crores allocated for forging backward integration facility for CVJ parts with installed capacity of 4-5 lakh units; project underway.
→Total capital expenditure planned to enhance capacity and support growth, with significant investment from rights issue proceeds.

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