Sharda Motor's Strategic Path to Future Growth

Ashwin Thakker

— 1 min read
  • Sales Outlook: The company anticipates continued industry growth in FY26, driven by stable macroeconomic conditions, normal monsoon, and sustained exports. It targets the non-PV segments (emissions control, off-highway, exports, light-weighting) to contribute 80% of total revenue. New light-weighting orders and temperature-controlled pipes for CEVs are expected to ramp up in upcoming quarters. The Chakan plant has also begun contributing revenue.
  • Margin Outlook: Q1 FY26 Gross Profit grew 5% (INR 189.5 crores), with EBITDA margin at 13%. The company views gross profit as the primary growth indicator and does not provide specific forward guidance on margin improvement, expecting it to remain within the current range. Capacity utilization is currently around 80% and is expected to rise slightly during festive seasons.

Sharda Motor Industries reported a revenue of INR 756.2 crores and a 5% gross profit growth in Q1 FY26, signaling robust performance. The company is actively pursuing strategic initiatives to capitalize on future opportunities, focusing on innovation, market diversification, and operational efficiencies to sustain its growth trajectory amidst dynamic market conditions.

Expanding Horizons: New Growth Levers

Sharda Motor is aggressively expanding its market reach and product portfolio. The company secured new export orders, notably with a leading Japanese construction equipment firm, with SOP anticipated in 12-18 months. Management views upcoming TREM V and BS7 emission norms as significant growth opportunities, expecting increased content per vehicle. Additionally, new temperature-controlled pipes for Construction Equipment Vehicles (CEV) and the rapidly growing light-weighting vertical, particularly control arms, are key focus areas for future revenue.

Operational Strength and Strategic Investments

Operationally, Sharda Motor maintains a strong foundation with its gross profit growing 5% in Q1 FY26 and an EBITDA margin of 13%. While not providing specific margin guidance, the company emphasizes gross profit as the true growth indicator, managing product mix effectively. Strategic investments include augmenting light-weighting capabilities, pursuing powertrain-agnostic M&A for technical agreements and joint ventures, and bolstering its leadership team. This strategic capital allocation aims to balance shareholder returns with long-term growth, leveraging a healthy cash surplus for future opportunities.

Sharda Motor Industries remains focused on strategic growth through market expansion and innovation. Despite market dynamics, the company's commitment to new technologies, diversified product lines, and disciplined investments positions it for sustained future performance. The focus on non-PV segments and light-weighting will be critical drivers in navigating the evolving automotive landscape.

Read more