Subros LtdQ1 FY27
Subros Ltd Q1 FY27 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹725P/E: 27.8Market Cap: ₹4.8K CrSector: Industrial Products
Management growth scorecard
Revenue
Category 4
Margin
Category 3
Fundraise
N/A
Order
Yes
Capex
Yes
2 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 4- →Truck Cabin AC market in India is currently Rs. 600-700 crore; expected to grow to approximately Rs. 800 crore with CV segment growth.
- →Subros currently holds ~41% share in Cabin AC for Commercial Vehicles.
- →Truck AC segment revenue was Rs. 260 crore in FY 2025-26; expected to reach Rs. 300 crore in FY 2026-27, Rs. 400-450 crore in next 2-3 years.
- →Overall company revenue growth expected in line with industry growth (~moderate single-digit growth).
- →Non-passenger vehicle business (commercial vehicle AC) grew 77% in the last quarter; bus AC grew 6%.
- →Railway segment expected to cross Rs. 100 crore in next 3 years.
- →New product launches such as electric compressors (phased SOP from FY 2027) expected to break even around FY 2028-29.
- →Capacity expansions planned at Kharkhoda and West India to support demand, especially from Maruti Suzuki.
Margin guidance
Category 3- →Subros expects growth aligned with industry trends, projecting moderate single-digit growth overall due to current geopolitical uncertainties.
- →Truck Cabin AC segment (Commercial Vehicles) revenue expected to grow from Rs. 260 crore in FY 25-26 to around Rs. 300 crore in FY 26-27 and Rs. 400-450 crore over the next 2-3 years.
- →EBIT margins target of double digits pushed out by 12+ months due to wage hikes and commodity inflation; margin improvement expected between FY 2028-2029.
- →Revenue for electric compressor project from Maruti’s EV segment to stabilize and contribute significantly by FY 28-29, reaching company-level margin profiles.
- →Investments in automation, localization, and productivity ongoing to sustain long-term growth and improve margins once macro environment normalizes.
- →Railway business expected to cross Rs. 100 crore revenue in next 3 years, contributing to diversification and growth.
- →Overall, profits and EPS growth are linked to market recovery and execution of strategic projects, with cautious optimism post FY 28-29.
Fundraise plans
- →Subros Limited has taken approvals for long-term funding specifically for the Kharkhoda and Karsanpura projects.
- →These projects' funding will be supported via loans, with the expectation that once operational, their cash flows will support repayment.
- →There was no mention of any immediate or planned equity fundraising during the call.
- →The company's cash flows are intact, with internal accruals being reinvested into the business except for the strategic projects mentioned.
- →Overall, the focus is on financial prudence with existing hedging policies for foreign exchange volatility and managing receivables efficiently.
Order book
Yes- →Railway business is a key focus area with a growing footprint.
- →Last year, a large order of approximately Rs. 32 crores was completed.
- →In the current year, there is a firm order of around Rs. 31 crores.
- →Additionally, there is an Annual Maintenance Contract (AMC) business worth Rs. 50 crores spread over 3-4 years.
- →Several large railway orders are currently in the pipeline.
- →The company targets to cross Rs. 100 crores revenue from the railway segment in the next 3 years.
Capex plans
Yes- →Kharkhoda Greenfield project: progressing well, construction at advanced stage, machine readiness underway; capacity expansion to support Maruti Suzuki's increased production, with Phase 1 capacity of 4.75 lakh units and Phase 2 totaling 9.5 lakh units.
- →New plant planned in West India (Sanand area) to support Maruti's upcoming plant of 1 million units; discussions ongoing for SOP and line installation.
- →Greenfield project at Karsanpura, Gujarat: focused on compression manufacturing for EV and hybrid ecosystems and expanding mechanical compressors for ICE engines.
- →Signed technology assistance agreement with Denso Corporation Japan and Toyota Industries Corporation Japan for local manufacturing of e-compressors, strengthening electric mobility portfolio.
- →Investments aimed at increasing automation, productivity improvements, and localization to de-risk from global supply disruptions and wage inflation pressures.
- →Long-term funding approvals taken for Kharkhoda and Karsanpura projects to support strategic expansions and repayment plans.
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Margin guidance
Category 3- →Subros expects growth aligned with industry trends, projecting moderate single-digit growth overall due to current geopolitical uncertainties.
- →Truck Cabin AC segment (Commercial Vehicles) revenue expected to grow from Rs. 260 crore in FY 25-26 to around Rs. 300 crore in FY 26-27 and Rs. 400-450 crore over the next 2-3 years.
- →EBIT margins target of double digits pushed out by 12+ months due to wage hikes and commodity inflation; margin improvement expected between FY 2028-2029.
- →Revenue for electric compressor project from Maruti’s EV segment to stabilize and contribute significantly by FY 28-29, reaching company-level margin profiles.
- →Investments in automation, localization, and productivity ongoing to sustain long-term growth and improve margins once macro environment normalizes.
- →Railway business expected to cross Rs. 100 crore revenue in next 3 years, contributing to diversification and growth.
- →Overall, profits and EPS growth are linked to market recovery and execution of strategic projects, with cautious optimism post FY 28-29.
Order book
Yes- →Railway business is a key focus area with a growing footprint.
- →Last year, a large order of approximately Rs. 32 crores was completed.
- →In the current year, there is a firm order of around Rs. 31 crores.
- →Additionally, there is an Annual Maintenance Contract (AMC) business worth Rs. 50 crores spread over 3-4 years.
- →Several large railway orders are currently in the pipeline.
- →The company targets to cross Rs. 100 crores revenue from the railway segment in the next 3 years.
How does Subros Ltd rank vs peers in Industrial Products?
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