Automotive Axles posted its strongest quarterly earnings and EBITDA margin in the first quarter of FY27, leveraging capacity expansion and an improved demand environment despite market volatility, with exports gaining momentum.
Automotive Axles said its first quarter of fiscal 2027 delivered the strongest quarterly earnings per share in its history, even as the broader market remained soft. In a post-results briefing, the company reported an EBITDA margin of 13.6%, up from 12.4% in the previous quarter and 11.7% a year earlier, helped by a better product mix and one-off gains. Profit after tax margin reached 8.7% and earnings per share came in at INR30. Revenue, however, fell to INR5,168 million from INR6,690 million in the prior quarter as industry volumes weakened.
Management said the near-term demand backdrop has improved from earlier expectations. The company now sees medium and heavy commercial vehicle volumes falling by just 5% to 10% in fiscal 2027, compared with an earlier view of a 15% to 20% decline, and said the best case would be for the market to match last year’s 480,000 units. A delayed monsoon has helped freight movement and replacement demand, although executives warned that geopolitical risks and weather disruption could still weigh on the outlook.
Expansion work remains a central priority. Automotive Axles said it has completed about 40% of its Phase 1 and Phase 1a capital spending programme and expects the investment to lift capacity by 25% to 30%. The company has already started some production linked to the project and is aiming to be ready for stronger demand in the December quarter and beyond. A report earlier this year from Machinist said the company intended to begin adding capacity in the first quarter of fiscal 2027 and finish the expansion by the third quarter.
The product pipeline is also being reshaped around higher-horsepower vehicles and tighter rules. The company said a 160 tandem axle is in pilot production, while a bus axle remains under development after re-engineering work for forthcoming noise requirements. Executives said upcoming standards such as ABS, type 2 endurance braking and BS VII should not be major problems, but quieter designs will be needed. The company also said its relationship with Meritor continues to provide technology support, licensing and application expertise, particularly for India-specific adaptations.
Exports were another bright spot, rising to 13% of revenue in the quarter, above the company’s usual 8% to 12% range. Automotive Axles said overseas shipments go to Cummins group entities and that it is working to manage volatile sea freight costs. Commodity inflation, including higher steel and LPG costs, is largely passed through to customers, though some conversion-cost pressure was absorbed in the quarter. Management said the company remains confident of preserving its minimum share of business with Ashok Leyland and sees limited direct overlap with American Axles for now.
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