Subros Limited (NSE: SUBROS) Q3 2026 Earnings Call dated Feb. 02, 2026
Corporate Participants:
Parmod Kumar Duggal — Executive Director and Chief Executive Officer
Analysts:
Annamalai Jayaraj — Analyst
Arjun Khanna — Analyst
Neel Shah — Analyst
Mihir Vora — Analyst
Mayur Parkeria — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Subros Limited Q3FY26 Post Results Earnings conference call hosted by Batliwala and Karani securities. As a reminder, all participants line will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand over the conference to Mr. Annamalai Jayraj from Badliwala and Karani securities. Thank you. And over to you sir.
Annamalai Jayaraj — Analyst
Thanks Pari. Good morning all the participants. Welcome to Subaru’s limited 3QFY26 conference call from Subaru’s Limited Management. We have with us today Mr. Pramod Kumar Dugal, Executive Director and Chief Executive Officer Mr. Heman Kumar Agarwal, Chief Financial Officer and Senior Vice President Finance and Mr. Sukhinder Jing Hill, Vice President Finance. I’ll now hand over the call to. Mr. Dugal for the opening remarks to be followed by question and answer session. Over to you sir.
Parmod Kumar Duggal — Executive Director and Chief Executive Officer
Good morning everyone. Good morning to all of you. Thank you. Good morning ladies and gentlemen and welcome to Subro’s investor call for Quarter 3 FY 2526. Indian auto industry is witnessing the extraordinary period in last quarter and still it is ongoing. This is a historic performance by almost all the segment of auto industry. After a period of moderate start in initial 2/4 the industry has shown a very clear sign of recovery supported by festival growth as well as impact of GST 2.0. The overall sentiment across passenger vehicle, commercial vehicle and mobility is linked with strengthening the reinforcement of India’s position in automobile and manufacturing hub.
Passenger vehicle and commercial vehicle both have witnessed improved traction while export remains the highest overall industry growth of 18.86% out of which PV segment has grown by about 19% and CV segment has grown by 20%. However, since we had a slow start in first two quarter overall growth in nine months is around 9.25% and the key driver what we understand is impact of GST rising adoption of SUV and alternative powertrain and steady infrastructure led demand for commercial vehicle etc. Subroz has consistent performance in quarter three. We have achieved a revenue growth of over 15.43% during the quarter and nine months April to December our growth is 10% which is higher than the industry in CV segment.
After implementation of mandatory AC N2 N3 category our revenue growth is recovered and we have recorded 136% growth in quarter three and nine months. We have 92% growth. Geopolitical tensions may impact the Indian automotive industry through the supply chain volatility, cost pressures or market uncertainties. Freight cost, shipping routes and delivery timelines may have some challenges going forward. We are preparing for that as a risk mitigation. The result of Quarter 32526 have been shared with the stock exchanges and posted on our website. Let me elaborate these results one by one. Subros has performed in line with the industry performance.
Revenue growth is 15.43 with a significant improvement in margin result in aggregate push towards our operational efficiencies and cost down efforts. The company has achieved a revenue of 948 crores during the quarter. Our share of business in passenger vehicle thermal market is 41% during the quarter and share of business in truck AC market is 42% during the quarter. There is 15% improvement in profitability due to our consistent push in cost optimization efforts. The company has realized a bit of 87.19 crores in quarter three which is 9.23% of the net sale as against EBITDA of 80.64 during the previous quarter which has 9.85% percentage in corresponding quarter.
So there is overall improvement in absolute term EBITDA by 8.13% as compared to the corresponding quarter. Profit before tax in quarter three is 52.75 which is 5.58% of the net sale. Profit margin against the corresponding quarter has improved by 15.17%. There was provisioning done for the new wage code, liability of gratuity and leave in cashmere which is shown as exceptional item. The total impact of Such provision is 8.08 crores. Profit after tax in quarter three is 34.84 crores which is 3.69% of the net sale and pat margin has also improved by 6.08% during the quarter.
Now on the business update we have been reported constantly about the truck notification for end to end three categories. So these all the SOPs have started. The ramp ups have already been achieved. Now our business growth in hybrid cars and as well as electric vehicle business segment including CNG has been growing. Now our total revenue from these particular segment is 24% of the total revenue. Our railway business continue to emerge as a strong growth vertical and with the accelerated investment in railway infrastructure and electrification there is a lot of potential and opportunities coming in for sucrose we have already announced that we backed a large standard of 52 crores for annual maintenance contract for the railway AC installations to be executed in next three years.
Another major milestone which we have announced with the stock exchange last week is about our expansion of product profile. This was one of the due item for a long time. Lot of questions on this particular action was expected. This is with respect to the electric compressor which we are using in EV and hybrid vehicles. So we would like to update that. Subaru, Zenso and Toyota Industries I.e. tICO has agreed for localization of E compression of 20cc and 27cc and 34cc in India through Subros. We have also secured E compression business from Maruti Suzuki through Suzuki Motor Corporation for the future models which are planned in 2728 and 2829.
We have decided to set up this facility in our Karsanpura plant. So we’ll be expanding our Katsanpura plant as Plant 2 to set up an initial capacity of the construction activity of this plant two will start shortly. We have three phases of this localization. As a first phase our investment would be around 175 crore. And gradually when we do backward integration the subsequent investments will be planned as the business progress will happen. In addition to this we are also enhancing our capacity of fixed displacement compressor which we are producing right now in Noida. This also will be produced in Karsanpura so that the utilization of that facility would be better.
And also this would be a de risking activity for our OEMs because right now we are producing all our compressor of around 1.7 million from one location only. So we’ll set up half million of capacity of its displacement compressor in Gujarat in addition to electric compressor. So this investment will be in phased out manner and this would be out of our regular capex. So before I conclude let me summarize the results. Overall revenue of 948 crore with a growth of 15.43%. A beta of 87.19 crore with a growth of 8.13%. PBT of 52.75 crores in quarter with a growth of 15.17%.
And PAT after the exceptional item booking is 34.84% with a growth of 6.08%. That’s it from my side. Now we are ready to take questions.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue. You may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Arjun Khanna from Kotak Mutual Fund. Please go ahead.
Arjun Khanna
Thank you sir for taking my question. And congratulations on the award of the new business. So there are two parts to this. There is the ICE and there is the ev. So just on the EV compressor bit. Sir, in terms of the margin profile, given that this is a scale project, how do you look at the margins coming from this business?
Parmod Kumar Duggal
So Arjun, there are two parts to this. First, this localization will start gradually with one model sop. Then second model SOP and then it will go on the setting up. That’s why I said in my brief is that we are going very careful while making investment to start with what is bare minimum required to assemble this compressor and then gradually going for backward integration. Finally we have to be more competitive in this market. And since this localization is a breakthrough for Indian OEM in terms of increasing their localization content, of course margins will be comparable to our existing business. Will not be able to compromise on the margin side. But still there is a time to to review this whole market situation going forward.
Arjun Khanna
Sure. So over a three year period as we scale up and stabilize, you would expect margins of this to be slightly superior to your existing margin profile?
Parmod Kumar Duggal
Of course it would be because slightly it would be a premium product and the value is also very high.
Arjun Khanna
Sure. And given that we are getting this product through our technology partners, so is there additional royalty or how do we understand this in terms of related party transactions?
Parmod Kumar Duggal
So royalty arrangement would be similar to our existing products. So there will not be any differential. So right now also we are paying royalty in the range of 3 to 6% variably on different contracts. So this would be also falling the same. There will not be any special royalty additionally other than that.
Arjun Khanna
Sure Sir, my second question is in terms of our volume. So if we look at the largest customer for us they saw very robust volume growth and they were supposed to be very strong growth due to the N2, N3 which you also articulated in your opening remarks. So essentially have we seen issues in terms of uplift of our product where they may have inventory on their end because the numbers don’t seem to completely match up sir.
Parmod Kumar Duggal
So it is mortal mix issue. Because suddenly due to this GST rationalization there is a mixed change. Earlier it was more on suv. Suddenly small car also started selling sale. So the volume is all about the last week of sale and then subsequently production and then inventory holding at the other time. So from our share of business point of view there is no major change point with our largest customer also. So it’s only impact of model mix.
Arjun Khanna
Sure. And as that gets normalized you should see that growth coming through.
Parmod Kumar Duggal
Of course, of course.
Arjun Khanna
Sir, just the final question. If you can just help us with the revenues of various parts of our business.
Parmod Kumar Duggal
Sure. So in quarter three we have total sale of 948 crore. So out of that 846 crore is coming from passenger vehicle, 74 crore is coming from trucks, 12 crore is from buses and rest is from all other segments.
Arjun Khanna
So railways potentially will scale up over period of time?
Parmod Kumar Duggal
Of course now since the last tenders are in place. So I believe this would. This will.
Arjun Khanna
So we should see revenues from the fourth quarter sir.
Parmod Kumar Duggal
Should be. As the market is progressing positively, we should be able to clock better.
Arjun Khanna
Sure. Thank you and wishing you all the best sir.
Parmod Kumar Duggal
Thank you.
operator
Thank you. Ladies and gentlemen, please press star and one to ask a question. The next question is from the line of Neel Shah from Poornatha Investment Advisors. Please go ahead.
Neel Shah
Hello. Am I audible? Yes. I actually missed your comment from the opening remarks. So can you just repeat the market share in various segments?
Parmod Kumar Duggal
So Market share in PV segment is 41%, in truck segment it is 42% and in buses it is 11%.
Neel Shah
Okay. And what I wanted to also ask was can you give an update related to a timeline of the compressor plant that you are planning?
Parmod Kumar Duggal
So compressor plant setup will happen, the construction work will finish by end of this calendar year and then installation activity will be there. So as per the customer milestone the SOP would be by December 27th.
Neel Shah
Okay, thank you, that is helpful.
operator
Thank you. The next question is from the line of Mihir Vora from Equitus. Please go ahead.
Mihir Vora
Yeah, so my question is on the Q6. Yeah. Basically in the previous calls we had, you know mentioned that we would be looking at an EV industry of 2 lakh 50,000 and then we would move forward for the E compressor capex. So are we seeing that kind of target achievable? What has moved us to you know, do the capex earlier like previously it was something which was expected to be later on in the stage. So some color on that.
Parmod Kumar Duggal
So EV industry and hybrid segment put together has shown quite remarkable growth in last 2 to 3 quarter and I think it has already crossed 3 to 4% of the total market size as of now. We are expecting now that this space will be there more and more hybrid. And since the important part of our decision is that this compressor is not only dedicated to electric cars only this compressor manufacturing plant will be able to cater to hybrid as well as ev. So whether hybrid will grow or EV grow, it will be neutral to us.
The second part is that we are able to finalize or innovate into our manufacturing facility where common line will be able to cater to the whole segment that is hybrid, EV and EV also between 27cc and 34cc. So up to large segment also will be able to cater to this from this line. So that’s why since the lead time of the setup is quite high, we are starting today and SOP would be December 27th. So that’s how we decided to conclude our discussion with our collaborator for localization approvals. And finally since the RFQ was also in place. So it was the decision taken in that spirit.
Mihir Vora
All right, so just a follow up on this. So we have mentioned we have got an order of around 1200 odd crores for 7 years period. But just understanding at the peak what would be an annual revenue from this facility.
Parmod Kumar Duggal
So as a peak it would be roughly 240250 crore rupees from the these three models only. But if as the facility we are going to set up is for 400,000. So gradually even if we apply this in the running models of EV and hybrid also this electric compressor, this revenue can scale up up to 600 to 700 crores.
Mihir Vora
Okay, okay, okay. So my second question is on the gross margin front. So there has been some compression on the gross margin since the last two quarters now. And basically just want to try and understand what kind of raw materials do impact us and what should we track in terms of the movement of RM prices going ahead.
Parmod Kumar Duggal
Okay, so there are two aspects to that. So as you know that quarter two, quarter three commodity prices were on the upside. So even though we have a compensation arrangement with few customer at six monthly basis and few customer on quarterly basis, the recovery of the inflation cannot be done 100% because again in the next quarter the increase has happened. So that will impact in quarter four. So unless these commodity and foreign exchange is normalized at least in one quarter and we could recover everything and then show some marginal improvement, this situation will continue. So the impact on I’ll say quarter on quarter basis is between half percent to 0.75%.
Since the market is volatile in commodity and foreign exchange, we need to see the margin growth on a contribution side more because that is directly Reflected through the revenue growth. And so. But material cost definitely will be one of the element which may be impacting the growth margin in that proportion.
Mihir Vora
Basically in commodity basket there would be also some gases which you would have to look at or is it also only the metal part here?
Parmod Kumar Duggal
So it is basically for us there are only four commodities which are relevant. That is one is aluminium which is driven through lme. Then copper which is which is very volatile as of now. Then pp, that is plastic material which is directly related to the oil prices. And so. And the last one would be the steel. So these are four which are impacting us.
Mihir Vora
Okay, okay.
Parmod Kumar Duggal
The impact will continue but majorly it will get compensated through the revenue or the Jimboson from the customer.
Mihir Vora
Right. And lastly sir, now that we are into February now, so how are we seeing trends across OEMs now in terms of demand still? Is it continuing in terms of volumes or are we some kind of stack?
Parmod Kumar Duggal
No, for Jan is already completed. So you may have the OEM figures already available. Fab and March is more or less in the similar range. There is no negative thing which we have observed so far. So I believe the Jan trend or maybe quarter three, quarter four would be slightly better than quarter three, but I cannot specify on on the percentage.
Mihir Vora
All right. Okay. Thank you sir. That’s all for myself.
operator
Thank you. Anyone who wishes to ask a question may press star and one on their touchstone telephone. The next question is from the line of Mayur from wealth managers. Please go ahead.
Mayur Parkeria
Good morning, sir. I hope the voice is clear. Am I audible? Yes. So sir, actually I also had a question on margin in the opening remarks. Did you mention anything in the numbers which was there which has also impacted specifically. I just missed that part, if at all. Did you. Did you highlight any particular number in terms of employee cost or gratitude or something with respect to the cost which is, you know, which is impacting the EBITDA margin.
Parmod Kumar Duggal
The highlight was that provision for gratuity and dement as per the new labor code which amounts to 8.08 crores for the quarter for the part service cost. So. Okay, that was the information in opening remarks for our employee cost per se for the quarter three is lower than the previous quarter.
Mayur Parkeria
So sir, actually a slightly broader question here. No. If we leave the these two quarters where the volatility in material cost and currency has started to impact us but slightly over the last three years we have been quite successful in increasing our margin and it had made us quite confident towards the journey of around 12% which was appearing more visible now in the light of two, three things in terms of the change in the volume mix which you are witnessing even in small cards or also because of the increasing volatility in the raw materials and forex. Will it be fair to see say that the our expiration of that 12% gets pushed by at least a year period now given what is happening in already two quarters of.
Parmod Kumar Duggal
Yes, yes. Because see commodity and the currency is back to back reimbursement from the customer. Definitely it will have slightly or the quarter impact. Once the commodity and currency get stabilized the impact will be over. Rather the the way commodities are prices are now reducing. Definitely the gap which we are incurring since last two quarter which is around 0.6 to 0.7% definitely will get the positively impacted to the company. Second is you talk about the margin expansion. If you see for the quarter three we have shown 9.323% EBITDA margin.
Mayur Parkeria
If you compare with excluding other income. Sir. Sir, I was looking at excluding the other income means the only the operating margins.
Parmod Kumar Duggal
Okay, so. So what I’m trying to say still you see even on excluding the other income in the previous quarter we have a. We have already disclosed that we have 14 crores of income which was incentive over Gujarat plant. That was one time. We are posted for the earlier period. If you eliminate that you will see the expansion margin even in from the previous quarter also.
Mayur Parkeria
I understand sir, from previous quarter there is some improvement. Surely I was talking more in the light of our guidance and directionally guidance in terms of where we were moving. We moved very strongly till 10% or closer to 10% not till Q1 or till March 25. And then the journey has reversed again and we were appearing to be more confident towards 12%. So while there is a point 6%.
Parmod Kumar Duggal
Yeah, that is precisely what he must have mentioned. These volatility in the market in terms of foreign exchange and commodity definitely is impact for us because what we get is what we spend. So there is no markup available on that. Whereas if you see the revenue growth you always see the gross margin which is in the range of around 20%, 22%. But on the reimbursement you will not have that margin available. So ultimately you will see in absolute term we are growing in ebitda. But in percentage term we will have some fluctuation. But this is market driven. Of course our efforts in terms of maximizing our profit and 12%. We have not still lost our hope of 12%. But yes, there would be some time gap but we’ll catch up to that for sure.
Mayur Parkeria
Sir, at a project level, if we exclude the compressor side which is recent, what expansion side, that will be something. It will take two to three years. Two years as the capacity comes up and know the more as the volume ramps up, two to three years. But if we include that part at a company level, will it mean that now given that that will be also in the early stages the. Again sorry, it’s not that. I’m just trying to understand the 12% aspect actually pushes because of two aspects. One is the volatility and the second is even the new project coming up it will take two years for it to come to company level margins. So we should actually look at three to four years. Now is will it be a correct understanding if I understand that the new project will take some time, but at a company level will it mean that it will take some more time for those to come up?
Parmod Kumar Duggal
No, there is no relationship directly, indirectly with that investment versus the margin for existing business. Because once we decide any project feasibility that is on a standalone basis, so whether that investment will yield a return in two year three years, that is purely, purely a separate decision point. But first our focus is on as is business. Whatever we are growing in ICE and EV products other than compressor, we need to realize better margins. So that’s our key focus. So for that whatever is required which is controllable is on operational efficiencies as well as on the cost down plan through the localization.
This is what we are pushing. So we are not diluting our vision. We are still keeping our long term target as is. But of course the efforts will be slightly more now in terms of the geopolitical and volatility available.
Mayur Parkeria
Sir, just a comment, not a question, sorry. Actually where the investor little bit sentiments and our expectations, you know, every year half a basis point, 50 basis point, 60 basis point. As we have been seeing earlier, the improvement was much more and the expectation was to continue to improve on those lines, you know, 50 basis point, 60 basis point which are not over expectation. So we were looking at 10, 10 and a half and then 11 and then even if we say 0.75 impact of raw material and forex and everything else and there is a lag, it should have still come closer to no.
10 excluding other income. Again I’m saying this because the trajectory of operational efficiency and localization and improvement in SUVs and everything was playing out and then we come down to less than, you know, closer to eight and a half again after other income I’m saying that was something which is a little bit below expectation. And we hope that the management takes the right measures to ensure that either the direction is more in the line of what we are saying or you know, or we come up to those levels as expected. Thank you and wish you all the best.
Parmod Kumar Duggal
Thank you.
operator
Thank you. Ladies and gentlemen, please press star and one to ask a question. The next question is from the line of Mr. Annamalai Jayaraj from BNK Securities. Please go ahead.
Annamalai Jayaraj
Yeah, thanks. Sir, I have few questions. I’ll start with one clarification first. This hybrid ratio already there will be a engine motor still they’ll be using EA compressors or how is it.
Parmod Kumar Duggal
So hybrid compressor hybrid vehicle require only E compressor because although there is engine available but it is interchangeable energy between engine to batteries. So you cannot switch compressor and not have two compressors. So to ease on that only one compressor which is electric compressor. But of course the CC of that compressor is lower. So that is used in hybrid vehicle.
Annamalai Jayaraj
And the currently it’s being imported and once we localize I and Toyota everything. So probably after we localize we need to be a part of this.
Parmod Kumar Duggal
Of course that would be a long term plan. As I said, that’s how the revenue from 250 can be potentially go to 600, 700. Because then all running model also will go for the switch to local compressor. But that will depend upon the milestone they have for minor change or a full model change.
Annamalai Jayaraj
Okay, and then see if I heard you correctly. You said commercial vehicle has grown around 130% year on year, correct? No sir. Yeah, but. Yeah, sorry, go ahead, go ahead. No, no. So see on a commercial vehicle last year this compulsory AC was not there. And so now it is in place and our understanding is the content earlier they were using a blower motor. Now actually it means that content for us will be no maybe 3x4x like that. But why the transition is happening? I mean not fully is it something like that or why is that where the difference?
Parmod Kumar Duggal
So both statements correct. Truck AC when it will happen the the content per vehicle is going to be 4x more than 4x. So that’s our truck 9 months we could able to do around 180 crores as against. I think the last year was roughly around 70 or 75 crores. So that results are coming. But the implementation happened from 8 June but there was no mandate that it cannot be sold non ac. So sales based on the inventory available has gone up to mid October or end October. So impact during this year is practically so far is only four months. So we will see the full year impact which will be coming in practically next year where the whole whole year will be using this end to end three.
Annamalai Jayaraj
But then even year on year, why is it slow, sir? Because compared to last year it is only 130%.
Parmod Kumar Duggal
No, 130% is a good growth. Because last year.
Annamalai Jayaraj
No, I understand. But for the realization improvement is good. But even the. Even the commercial vehicle sector also has grown a bit.
Parmod Kumar Duggal
The commercial vehicle segment has grown in only last quarter. Otherwise if you see the cumulative impact of commercial vehicle is not so. So initially two quarter it was slightly moderate.
Annamalai Jayaraj
Okay. And there is no change in our market shareholders. 42% remain.
Parmod Kumar Duggal
Yeah, it is. I mean.
Annamalai Jayaraj
Okay. And then other than our major customer on our fourth air conditioning. Have you got it? Any newer new business in the recent times there with any other customer for which segment on the passenger and the passenger.
Parmod Kumar Duggal
The passenger vehicle. Our existing customers are growing quite rapidly. So we are increasing our business in Mahindra. So we already secured two or three platforms for future that will start SOP from next year onward. Other than that I think the growth numbers what we have from our existing customers are quite substantial. And we need to cater to that. But other than passenger vehicle, of course our expansion as you said in truck, AC as well as railway, that has to be first kept because these segments have much larger potential. So in truck segment we have added new customer.
We got into Daimler, we got into Ashok Leyland and also railways. Now we are into driver cabin then to coast. So our expansion effort is all through. We are not only focusing on passenger vehicle. Yes, yes we are. We are now participating in our tenders for Vande Bharat also.
Annamalai Jayaraj
And on the Mahindra. You talked about Mahindra. Are we in the electric vehicle ranges, sir? Or we are more tight vehicles for Mahindra.
Parmod Kumar Duggal
So we are in Mahindra EV also. But not on full system but on a few selective components. So we are there in all three platforms of Mahindra.
Annamalai Jayaraj
I think there is nobody in the virgin queue. So any closing comments you want to make, sir?
Parmod Kumar Duggal
So overall summary, as I mentioned, that market is right now bullish. And we are aligning to the market expectations. Of course next year the base would be high. We are right now estimating our plans for the next next year also based on that our capacity expansion also the new technology expansions are being planned for the next year. Of course everybody had made a comment on the margin shrinkage and so. But this is more on external factors, not on internal efficiencies. So whatever we could do in terms of margin improvements, still our efforts are on. So we are very optimistic that the organization in next one to two years will be shaping up much better aligning to the industry unless there is any geopolitical risk which may impact adversely. But that would be to the whole industry, not to the Subros alone. So thank you very much for joining and participating in this investor call.
operator
Thank you on behalf of BNK Securities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.