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Shriram Pistons (SPRL) logged a robust Q1, with consol. revenue/EBITDA up 16%/13% YoY (a ~10% beat on EBITDA). The management guided to healthy growth across segments in FY25, owing to a generally positive demand outlook, new order wins, and greater content per vehicle in core engine products amid rising penetration of alternative fuels. Continued strengthening of the already dominant core engine product franchise via emerging opportunities (CNG, hybrids, hydrogen, etc.), strong export tailwinds amid extended visibility for ICE, and accelerated foray into EV-specific and powertrain-agnostic parts via M&A drive 15% EPS CAGR over FY24-27E (our estimates are unchanged; we introduce FY27 estimates). We retain BUY on SPRL, raising our TP to Rs2,600/sh (from Rs2,450) at 18x Jun-26E PER (rolled over from Mar-26E)

Strong performance continues, with ~10% beat on EBITDA

Consolidated revenue grew ~17% YoY to Rs8.4bn (above estimates). Growth accelerated at subsidiaries, with revenue rising ~2% QoQ and margins up by ~120bps QoQ to 12.0%. EBITDA grew 13% YoY to Rs1.65bn (a ~10% beat), while margin dipped by 92bps QoQ to 19.8%, amid slightly lower scale; though gross margins expanded by ~180bps QoQ on better mix. Adj. consol. PAT was higher by 13% YoY.

Earnings call KTAs

1) End-market outlook remains generally positive amid healthy monsoons and the upcoming festive season; SPRL expects continued outperformance vs the underlying automobile industry driven by new business wins/client additions at subsidiaries and growth in alternative fuels, incl. opportunities for faster growth in content per vehicle. 2) Seeing increased enquiries amid rising vacancies of capacities in several markets; the company is working on converting such opportunities into business. 3) Subsidiary EMFI has won orders from 2Ws and 4Ws, incl. CVs (as part of OEMs’ localization drive); Takahata has also won orders for plastic injection molding parts, incl. for EVs; the company expects subsidiaries to continue contributing 12-14% of revenue. 4) In EMFI, SPRL’s business proposition of one of the few players with grounds-up solutions for Indian markets and combined supplies of motors and controllers is helping it win business; its Coimbatore facility would be ready by Q4; SPRL is also in the process of acquiring additional land, next to its existing facility in Rajasthan, to cater to the higher growth for Takahata; SPRL is helping add non-Japanese customers for the latter. 5) The company is working on a number of alternative fuel programs, incl. hybrids and CNG (sole supplier to the recently-launched BJAUT CNG motorcycle Freedom 125). 6) The non-Auto business is expected to see enduring growth; SPRL is also looking at new product additions in the aftermarket, for continued growth. 7) The mgmt. retains focus on further M&A for growth and derisking, while ensuring EBITDA accretion and acquisition of future technology. 8) Continued growth, sustainable cost actions (e.g. rising use of renewable power) are seen helping SPRL maintain and potentially improve profitability levels.

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