Sharda Motor Industries reported 28% Y-o-Y revenue growth for Q3 FY26, reaching INR881.6 crores, driven by broad-based growth in the Indian auto industry. Gross profit grew 12% Y-o-Y to INR202.3 crores, with EBITDA at INR106.4 crores (12.1% margin). Management highlighted strong momentum in lightweighting, bolstered by new order wins, and discussed the positive structural impact of the India-U.S. trade deal on exports.
Q3 FY26 Financial Highlights
Sharda Motor Industries announced its financial performance for the third quarter ended December 31, 2025. On a consolidated basis, the company reported revenues of INR881.6 crores, marking a robust Y-o-Y growth of 28%. Gross profit for the quarter stood at INR202.3 crores, reflecting a 12% Y-o-Y growth. EBITDA reached INR106.4 crores, translating to EBITDA margins of 12.1%, a 13% Y-o-Y growth. Profit after tax for Q3 FY’26 was INR81.4 crores.
Nine-Month Performance Summary
For the 9 months ended December 31, 2025, total revenue grew 16% Y-o-Y to INR2,425 crores. Gross profit increased by 7% Y-o-Y to INR586.7 crores, while EBITDA rose 3% Y-o-Y to INR305.9 crores. Profit after tax for the nine-month period stood at INR256 crores, up from INR 231 crores in the corresponding period last year.
Industry Trends and Outlook
Management noted that the Indian automobile industry witnessed broad-based growth, supported by festive demand and favorable macro factors. Key production growth figures included: Passenger Vehicles up over 19%, Light Commercial Vehicles up over 16%, Three-Wheelers up nearly 35%, and Tractors showing robust growth of 31.5%.
The outlook remains positive, supported by a healthy order pipeline and policy focus on domestic manufacturing. The Union Budget of February 2026 is seen as supportive, strengthening localization efforts.
Key Business Updates
Structural Tailwinds from Trade Deals
The India-U.S. trade deal is considered a positive structural development, reinforcing Sharda’s position as a manufacturing base for emission and lightweighting components. Similarly, the India-EU trade deal improves predictability and market access, benefiting existing business development efforts in Europe.
Lightweighting Vertical Momentum
The lightweighting segment is experiencing strong momentum with significant new wins:
- Bagged an order for control arms worth USD3 million annual value (USD15 million lifetime value) from a leading PV OEM, with SOP expected in Q3 FY’27.
- Secured two additional orders for control arms and links valued at a combined USD5 million (USD25 million lifetime value).
- The previous Q2 wins totaled approximately USD14 million revenue (USD70 million lifetime value) with SOP starting in Q1 FY’28.
The partnership with Donghee is strengthening R&D in control arms, links, Subframes, and Torsion beams, leveraging their global technology.
Exports and R&D
New export orders were announced with an aggregate lifetime value of USD18.5 million from a North American manufacturer, with SOPs starting from Q3 FY’27. The company filed 20 patents to date, with 4 awarded, including one this quarter. Manufacturing expansion is underway in Uttarakhand with a capex of approximately INR20 crores.
Q&A Insights
Gross Profit Growth vs. Industry
When questioned on Q3 Gross Profit growth lagging industry volume growth, management attributed this to significant Work-in-Progress (WIP) inventory within the auto value chain, noting that the 9-month gross profit growth of 7% was closely aligned with industry growth.
Joint Venture Contribution
The JV contribution remains positive (a little over INR1 crores this quarter) but is not yet highly significant due to its focus on the M&HCV segment (above 4-liter), where market share opportunities are currently limited. The JV recently secured a new program, SOP for which has just commenced.
Impact of New Regulations (WLTP/BS7)
Regarding the WLTP emission change, management expects it may lead to recalibration and optimization of after-treatment systems, potentially increasing content per vehicle, especially for units up to 3.5 tons GVW. No capex has been initiated yet for TREM5.
Commodity Costs and Product Mix
Management clarified that catalyst costs are completely passed through to the OEM. Other commodity costs for raw materials are managed on a back-to-back basis using indexation, meaning commodity price movements do not impact margins significantly.
AI and Lightweighting
AI implementation is focused on two areas: internal process innovation across business functions, and seeking growth in AI infrastructure and robotic components. This theme is closely linked to lightweighting advancements.
Source: BSE
