CIE Automotive India Ltd (CIEINDIA) Q2 FY27 Earnings Call: Growth Capex To Nearly Double, India Margins Under Pressure

CIE Automotive India Ltd held its Q2 FY27 earnings call on October 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Solid Top Line, Margin Compression in India

• Consolidated Q2 FY 2026-2027 sales of Rs.25.6 bn — +11% YoY and +8% QoQ; EBITDA Rs.4.2 bn (+11% YoY), EBIT Rs.3.2 bn (+14%), EBT Rs.3.2 bn (+14%), with the bottom line largely supported by the Indian business.
• India sales of Rs.18 bn — +18% YoY and +9% QoQ; EBITDA margin 16.3% (management's calculation basis) vs 17.3% in Q2 FY 2025-2026 and 16.7% in Q1 FY 2026-2027; EBITDA +11%, EBIT +12%, EBT +10% YoY.
• Europe sales of Rs.7.6 bn — -4% YoY and -15% QoQ (sequential drop is the normal seasonal pattern from the 3-week August shutdown); EBITDA margin 16.3% vs 14.1% YoY, aided by CY2025 restructuring; EBIT +20%, EBT +26% YoY.
• India margin decline attributed to West Asia conflict — price pressures mainly in raw materials, energy and consumables.
• Other income jump in Q2 FY 2026-2027 — driven by capital grant income of about 100 in the aluminum business, recognized after final approval was received.
• 9M CY2026 consolidated sales of Rs.76.4 bn — +12% YoY; EBITDA margin 16.6% vs 16.3%; PAT margin 9.5% vs 9.2%; consolidated PAT Rs.7.3 bn, +17% YoY.

Robust Demand, Tractor Slowdown, GST Base Effect

• India demand robust across all segments in Q2 FY 2026-2027 — though tractor growth slowed appreciably versus earlier quarters; management noted a wide discrepancy in heavy truck growth figures reported by different agencies, with even the lower estimate described as very good.
• Management expects a relative slowdown in India market growth over the next few quarters — as GST cut effects diminish; over the medium term, all India market segments are expected to have good growth prospects despite continuing geopolitical tensions.
• Agency forecasts project flat to +5% growth for the larger part of the market over the next six months (H2 FY 2026-2027) — despite a high base created in FY 2026-2027 following the September GST cut; ~80% of CIE's business is four-wheeler and two-wheeler; management concurred except for tractors, which may track the weaker forecasts.
• 9M CY2026 India sales of Rs.50.7 bn, +16% YoY — growth could have been higher, held back by streamlining of the aluminum vertical's business portfolio; EBITDA margin 16.9% vs 17.8% in 9M CY2025 on West Asia conflict-driven energy/material inflation.
• Stellantis orders flat in Q2 FY 2026-2027 — its India engine assembly volumes are not growing, affecting the BillForge four-wheeler business; Vikas Sinha noted Stellantis has announced big plans but the on-ground situation differs; CIE is actively looking for other customers, and a delayed export order (6 months) is expected to pick up.
• Standalone other expenses rose 20% in Q2 FY 2026-2027 — attributed to energy, gases and consumables cost increases; management is working with customers to secure pass-through.

Stagnant Top Line, Strong Bottom Line, GKN Volume Cut

• Europe revenue fell ~10% in Euro terms in Q2 FY 2026-2027 — partly due to a 20% drop in the Mexican business (Vilfors turnover down ~20% vs prior year, to remain at current levels in coming quarters) and electrification-driven demand shift in a flat market.
• GKN cut volumes by ~20% — the renegotiated contract (signed) reduces volumes but extends duration; the cut follows American Axle's acquisition of GKN in FY 2026-2027, after which American Axle is partially insourcing products to utilize substantial idle forging capacity in the combined group.
• Mitigation via India transfer — the machinery from the GKN 20% volume reduction (FY 2026-2027) is a generic hot-forging press usable for any customer, being moved to India (receipt in Q1 CY2027) where CIE faces capacity constraints; together with new prices secured, output in India will increase.
• Europe PAT grew 44% YTD (9M CY2026) — Vikas Sinha flagged this as a significantly strong performance; margins recovered to previous levels after the Italian business restructuring, with margins claimed among the best in Europe.
• Management expects to maintain current European sales levels in coming quarters — and sees no growth options unless European market consolidation occurs, expected only in the long run (no visibility whether in 2-3 quarters); management expects CIE to be "one of the winner companies."
• European auto market remains stagnant — coupled with expanding Chinese imports and increasing EV penetration; the bottom line continues to be robust despite the stagnant top line.

Regulatory Tailwind, EV Orders Building

• European Commission has decided to set an annual quota of 350,000 hybrid vehicle imports from China — pushed by European car makers; CEO Ander Alveris said implementation "probably" will happen, less than half the 800,000 hybrids Chinese OEMs have already sold in Europe YTD FY 2026-2027 after pivoting to hybrid/plug-in/mild-hybrid models following the EU's steep EV tariffs imposed about a year earlier; management confirmed this should benefit CIE over the medium term via engine and transmission components supplied to Volkswagen, Audi, Renault and Mercedes.
• ~24-25% of cars sold in Europe in Q2 FY 2026-2027 were EVs — driven by the oil price spike from the Iran war and cheaper EV offers from Chinese and European OEMs.
• ~10-12% of new orders won in FY 2026-2027 are for EVs in Europe — CIE is working with customers on aluminum forging components and gears for EVs; management noted EV revenue per car is lower because components are much smaller than crankshafts.
• CIE is entering EV components in its forging divisions — which carry much lower volumes/turnover than crankshafts due to lower weights; gears and composites also have orders in the EV space.

Organic Growth Pivot with Capex Nearly Doubled

• Rs.9.7 bn of new orders won in 9M CY2026 across all India verticals plus ~Rs.3 bn in Europe — aluminum and forgings the key growth drivers; additional presses being added at Chakan and a machining expansion planned for newly awarded crankshaft orders.
• Foundry 4th project began SOP and deliveries mid-October 2026 (Q3 FY 2026-2027) — after a ~6-month customer-driven delay (not the company's responsibility); no sales recorded as of the call; once ramp-up completes by mid FY 2027-2028, the Urse foundry will be fully booked for FY 2027-2028, and a new casting division expansion is being planned.
• FY 2026-2027 India growth capex guided to approximately double versus FY 2025-2026 — after no proper acquisition fit was found over the last 4-5 years despite cash earmarked for inorganic growth; FY 2027-2028 India growth capex is expected to be almost similar to CY26 growth capex for India, with all expansion plans already having orders booked (per Vikas Sinha).
• Capacity additions across verticals — one press from Mexico plus two new presses for Chakan; an additional press and part formers at BillForge Bangalore; a new 4,000 square meter gear plant; composite presses; one new stamping line plus building expansion at Kane; the iron foundry is fully booked and will need an additional foundry by 2028 for already-nominated orders; further greenfield expansions under consideration.
• Capex intensity of ~8% of sales under consideration (period unspecified) — versus the historical standard of ~5% of sales, with previous years running a little below that.
• No buyback — CEO Ander Alveris said a stock repurchase in India is not being considered at this moment, as cash is needed for the decided strong capex plan; management will pursue organic growth, seeing no inorganic deals at reasonable valuations.
• Aluminum portfolio optimization to continue until at least mid FY 2027-2028 — as customer commitments prevent a faster pace; the aluminium merger is not yet effective, with the company awaiting the order.

Pass-Through Progress and Growth Bet Reaffirmed

• Non-raw-material pass-through negotiations ongoing with all customers — some agreements already closed and partially recognized; CFO K. Jayprakash expects all pass-throughs to be agreed by end of FY 2026-2027, noting competition and market-share discussions make it slow.
• Raw material is fully indexed (no pass-through needed) — per the CFO, higher RM value only dilutes margin% because added value is unchanged on a larger revenue base — "just a margin issue."
• Delayed projects have started ramping up or entered production in FY 2026-2027 — the fourth project has finally started; management expects incremental growth over and above market growth from these ramp-ups.
• India market situation expected to remain good across segments except possibly tractors — management directed to page 16 indicative industry forecasts, which are much lower than Q2 FY 2026-2027 levels; non-tractor segments may not be as good as Q3 FY 2026-2027 but are not expected to be bad.
• CEO Ander Alveris reaffirmed the growth bet in India — reinforced with the additional capex now being deployed (no capex amount quantified in closing remarks); he expects the company will fulfill the expectations of the market and of investors in FY 2027-2028.
• Europe business relocation question left open — on moving the Europe business into the CIE parent, Ander Alveris said such decisions belong to CIE and the question will be transferred to CIE for discussion; no commitment made.