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India to drive growth; EU weakness to persist

* CIE Automotive (CIEINDIA)’s 3QCY26 PAT was 10% above our est. due to higher grant income in the aluminum business. While India revenue jumped 18.1% YoY, broadly in-line with the industry, Europe revenue dipped 2.9% YoY, primarily due to weak demand and rising competition from Chinese imports that has led to wider adoption of EVs.

* The company’s India business is likely to be a key growth driver, given the pickup in demand across segments. Further, aided by its new order wins, we expect the India business growth to resume its outperformance vs. the industry growth, which has been lacking in the recent past. In Europe, CIEINDIA will continue to focus on maintaining its margins amid reduced demand. At CMP, the stock trades at 14.5x/13.5x CY26E/CY27E consol. EPS. Reiterate BUY with a TP of INR440 (based on ~16x Sep’28E consol. EPS).

Margin in line; PAT beat due to higher other income

* CIEINDIA’s 3QCY26 consol. revenue grew 11% YoY to INR26.3b (in line). Revenue growth was led by ~18% rise in the India business. The Europe business saw a ~3% YoY decline in revenue, dragging down overall growth.

* EBITDA stood at ~INR3.7b (in line), up 5.1% YoY. The EBITDA margin stood at 14.2% (in line), down 80bp YoY/70bp QoQ.

* Other income came in ahead of our estimates at INR439m (v/s est. INR300m). The surge in other income was attributed to grant income for the aluminum business being realized this quarter.

* Hence, adj. PAT beat our estimates, having grown 13.8% YoY to INR2.4b.

* Indian business performance: Revenue grew 18.1% YoY to INR18.5b (in line). India’s EBITDA margin stood at 14% (in line), down 190bp YoY. Margins were affected by energy/gas/material cost inflation due to the conflict in West Asia.

* EU business performance: EU business revenue dipped 2.9% YoY to INR7.8b (in line). A stagnant European automotive market led to the decline during the quarter. Margins, however, expanded 140bp YoY to 14.6%, slightly above our estimate of 14.4%. The margin expansion was driven by the restructuring benefits of Legazpi and Metlascastello.

Valuation and view

* The company’s India business is likely to be a key growth driver, given the pickup in demand across segments. Further, backed by its new order wins, we expect the India business to resume its outperformance relative to industry growth, which had been lacking in recent periods. In Europe, CIEINDIA will continue to focus on maintaining margins amid reduced demand. At CMP, the stock trades at 14.5x/13.5x CY26E/CY27E consolidated EPS. Reiterate BUY with a TP of INR440 (premised on ~16x Sep’28E consolidated EPS).

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