SUNDRMFAST Q2 FY27 Earnings Call: Guides ~25% FY27 Growth, Exports Jump 57% YoY

SUNDRMFAST held its Q2 FY27 earnings call on October 28, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Export-Led Beat, But Raw Material Inflation Bites

• Q2 FY 2026-2027 revenue grew ~30% YoY — led by the OE segment; exports rose 57% YoY (~10% from rupee weakness, ~47% from volumes/realizations), with key customers Cummins and Navistar recording strong revenues and improved schedules.
• Q2 PBT of Rs.160 crore — vs Rs.140 crore in Q2 FY 2025-2026.
• H1 FY 2026-2027 revenue of Rs.3,254 crore — vs Rs.2,605 crore in H1 FY 2025-2026 (+25%); exports up 40%; EBITDA margin 15.9% (Q2: 15.7%); PBT Rs.311 crore vs Rs.278 crore.
• Tonnage volume growth of 15-16% in Q2 — up from 13% in Q1 FY 2026-2027 (CFO Dilip Kumar).
• Contribution margin took a ~3% hit vs Q2 FY 2025-2026 — steel and aluminum inflation that began in Q1 FY 2026-2027 persisted through Q2, with war-driven inflation also in indirect materials (stores & tools). Management attributed the reported margin dip to RM prices inflating the revenue line ("mathematical expression"); internal adjusted margins are ~1.5% higher than reported EBITDA for the reported FY 2026-2027 periods.
• Fixed costs lower by almost 1% — H1 FY 2026-2027 vs H1 FY 2025-2026, with operating leverage and improved asset utilization keeping depreciation lower as a% of revenue (not in absolute terms).
• ~Rs.7 crore exchange gain in Q2 FY 2026-2027 — explicitly for the quarter, not H1; the rupee held a narrow range during the quarter.

Recovery Mechanics and the Uncompensated 40%

• RM price impact ≈3.7% of revenues in H1 FY 2026-2027 — with realization from customers ≈2.5% (≈1% gap); management said the combined effect resulted in an ≈2.5% dip in contribution/gross margin.
• ~40% of business bore RM increases without corresponding compensation — ~10% aftermarket and ~30% exports; aftermarket prices have been raised depending on competitive intensity, and export-side inflation is offset by rupee depreciation.
• OE-segment RM increases recovered largely immediately — CFO Dilip Kumar said the earlier 3-month lag has been corrected to a 1-month indexation lag, which works both ways (e.g., on aluminum, the company retains the benefit of higher prices until reset).
• RM impact already reflected in Q2 P&L — R. Ganesh confirmed it will not worsen prospectively; only a 1-month lag benefit for specific customers remains, to flow in Q3 FY 2026-2027, unless RM prices are revised further upwards.
• Gas/fuel impact "very negligible" — HSD and petroleum product prices rose from sub-Rs.100 pre-geopolitical event to a peak of Rs.200+ (>100% increase in some items), moderating to ~Rs.150 as of Q2 FY 2026-2027, still above pre-March 2026 levels; CFO said this does not materially alter margins (H1 FY 2026-2027).

Stellantis Ramp, Wind, Aerospace and the 50% Aspiration

• Stellantis revenue guided at Rs.150-175 crore in FY 2026-2027 — vs ~Rs.50 crore in FY 2025-2026; billing has started on the plug-in hybrid and ICE portions, with a clearer picture on peak volumes expected by H2 FY 2027-2028. US EV orders remain in a "lull phase."
• Rs.4,000 crore order book — management did not provide specific revenue-recognition phasing when queried; the response centered on the Stellantis contract ramp.
• Wind: third-phase investment of Rs.70-80 crore being executed — expected to take annual wind revenue past Rs.500 crore (period unspecified).
• Aerospace: Rs.50 crore in FY 2025-2026 guided to Rs.100 crore+ in FY 2026-2027 — a Rs.30-40 crore investment in testing and other equipment is aimed at the next level of Rs.200 crore in FY 2027-2028.
• Non-auto share of revenue at 35%+ in FY 2026-2027 — up from ~30% in earlier years (35-37% in Q2 FY 2026-2027), with the aspiration at 50% (period unspecified); railways tenders/orders are serviced from existing capacity with no separate investment planned.
• New product guideline targets 20% of revenue — internal rule (R. Ganesh) measures parts developed in a given year over the development period plus the following three years; performance "fairly" on target as of Q2 FY 2026-2027.

Strong Schedules, EPA 27 Clarity, Tractor Softening Ahead

• Demand visibility of 1-month firm plus 2-month indicative schedules — S. Baradan said buoyancy continues in both domestic and exports, with turnover sustenance at current levels and only prospective growth.
• H1 FY 2026-2027 domestic: M&HCV +21%, LCV +27% — combined commercial vehicle segment at 25% growth; car segment and M&HCV are propelling domestic performance, with wind energy investments also contributing.
• H2 FY 2026-2027 moderation expected on high base — commercial vehicles to mid-teens (vs 25% in H1), cars/SUVs low-to-double digits, tractors below 10% (~6-7%); overall domestic growth of 3-5% in H2, though absolute volumes should be slightly higher than H1.
• Tractor demand softening expected in Q3 FY 2026-2027 — and moderately lower in Q4 FY 2026-2027, citing base effect and an uneven monsoon; IMD has predicted 88-112% of normal average levels. Full-year FY 2026-2027 tractor volumes still expected higher than FY 2025-2026.
• EPA 27 confusion largely cleared (per S. Baradan) — heavy-duty engine life decision postponed by 3 years, emissions parts warranty continues at 5 years/100,000 miles, NOx limit enforced at 35 mg/bhp vs 200 mg/bhp earlier; a non-compliance penalty clause leaves each OEM/buyer to choose, though pricing still has "some gray area."
• Class 8 industry backlog well beyond historic levels — cumulative preliminary orders of 353,000 units over the past 12 months with OEM order books full; Class 8 retail down 5% YTD through September (CY 2026 vs CY 2025), though management hopes CY 2026 ends 3-5% above CY 2025; initial CY 2026 projection of 232,000 trucks is held by some while others see 210,000-220,000.
• Overseas subsidiaries profitable and robust — China grew 10-12% in local currency (25-30% in INR) in Q2 FY 2026-2027 on construction equipment and CB supplies; UK posted 20%+ INR growth, mirroring European truck market growth despite market uncertainties.

FY27 Capex On Course; Cash Flows "Not Stressed"

• Rs.280-281 crore of the Rs.400 crore FY27 capex already incurred YTD — management said the FY 2026-2027 program is on course and may come in "slightly on the higher side" depending on customer requirements.
• Historical Rs.350-450 crore annual capex range indicated for FY 2027-2028 — management called firm FY28 guidance premature, with a firmer answer only after Q3 FY 2026-2027 once business plans take shape.
• Cash flows "not stressed" per CFO Dilip Kumar — apparent strain attributed to long export cycles (receivables can stretch up to 9 months), inventories and receivables rising with activity, piled-up GST input credit, and the capex program; sufficient banking limits are in place.
• Borrowings expected to moderate — cash flows to improve and return to normal levels going forward.
• Other expenses rose 32% YoY in Q2 FY 2026-2027 — CFO said the increase is in line with operations, which grew 25% in H1 and 33% in Q2 FY 2026-2027.

Export Mix Recovery Is the Margin Lever

• Export mix back to ~30% of revenues in Q2 FY 2026-2027 — from ~25% in FY 2025-2026 on tariff and other impact; exports carry >20% EBITDA margins, and management indicated margin expansion would follow automatically as exports return to ~one-third of revenues (mix last seen around FY 2024-2025) (period unspecified).
• Management guided FY 2026-2027 full-year growth almost at H1's level — with slight improvement over H1 across OE, retail, and exports; H2 FY 2026-2027 expected to mirror H1's ~25% consolidated growth given current market indications. This exceeds the 20% growth run-rate guidance for FY 2026-2027 highlighted at the Q1 FY 2026-2027 call (cited by analyst Himanshu Singh, Baroda BNP Paribas MF, vs Q2 standalone ~32% and consolidated 30%+).
• Margins should "definitely expand," per CFO — optimism primarily from a higher share of exports in the revenue mix; a cooling in steel pricing would also benefit margins.
• Management declined FY 2027-2028 growth guidance — calling it premature given the volatile situation.
• Outlook "continues to remain strong" — customer schedules remain strong and management is "quite excited" about the export outlook; CFO Dilip Kumar closed the call on an optimistic note with no additional remarks.