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Steady quarter

* 4QCY25 consol. revenue grew 13.4% YoY to INR23.9b, coming in slightly below our estimate of INR24.5b. Primary drivers of growth in the consol. business were the strong business evolution in India and a positive exchange rate impact in Europe.

* EBITDA stood at ~INR3.3b (vs est. INR3.5b), growing 12% YoY. EBITDA margin stood at 14.0% (est. 14.3%), down 20bp YoY/100bp QoQ.

* Margin contraction was primarily due to one-off costs in the form of: 1) New labor code impact of INR132m included in employee costs, and 2) Restructuring costs of ~INR200m pertaining to Legazpi.

* Adj. PAT grew 12.2% YoY and stood at INR2b, coming in line with estimates.

* India business performance: Revenue grew 10% YoY to ~INR15.9b (in line). India EBITDA margin stood at 15.1% (est. 15.3%), up 40bp YoY. The slight contraction in margins was primarily attributed to the energy tariff increase in Maharashtra (30bp impact) and the new labor code impact (80bp).

* EU business performance: EU business revenue saw a healthy 20% YoY growth to INR8b, slightly below our estimated INR8.3b. Positive foreign exchange translation aided growth in revenue, far ahead of the real sales growth of +4%. EBITDA margin stood at 11.8% (est. 12.3%), down 140bp YoY. Margin was impacted by a one-time restructuring-related cost at CIE Legazpi.

* CY24 CFO/FCF grew ~36%/76% YoY.

* BOD recommended a final dividend of INR7 per share for CY25.

* The stock currently trades at ~19.4x/18.4x CY26E/CY27E consol EPS.

Key highlights from the presentation

* India light vehicle forecast: IHS forecasts production growth of 7.4% over CY25-26 and 5.3% over 2025-2030.

* India MHCVs forecast: IHS forecasts production growth of 5.3% over CY25-26 and 1.8% over 2025-2030.

* India tractor forecast: CRISIL forecasts 5-7% CAGR over FY25-30.

* India 2W forecast: CRISIL forecasts 7-9% CAGR over FY25-30.

* EU (w/o Russia) light vehicles forecast: IHS Global has estimated that light vehicle production will decrease in CY26 by 1.6%, compared to CY25, and will post a CAGR of 0.25% over CY25-30.

* EU (w/o Russia) MHCV forecast: IHS Global has estimated that MHCV production will increase in CY26 by 5.0%, compared to CY25, with positive growth expected in CY27 and CY28.

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