Sector Pulse
The Auto Ancillaries - Others sector, represented by TENNIND, is showing an IMPROVING demand environment. TENNIND delivered a 14.7% YoY growth in Value Added Revenue, reaching INR 11,941 million, and a 24.8% YoY growth in EBITDA at INR 2,225 million. The EBITDA margin stood at 18.6% of VAR. The primary headwind was a one-time INR 203 million charge related to a new labor code, which reduced reported PAT to INR 1,188 million.
Catalysts Playing Out Across the Pack
Operating leverage is a primary driver, with TENNIND operating at over 90% capacity utilization. Order book wins are exceptional, with 100% of FY 2028 revenues already secured. Geographical expansion is accelerating, as exports now make up over 20% of TENNIND's order book, aided by US tariff reductions from 50% to 18%. New product launches, specifically the DaVinci DCx suspension system, are adding INR 2,200 million in annual revenue potential. Mandatory industry norms like CAFE and TREM 5 are acting as tailwinds, as OEMs upgrade systems to maintain export competitiveness.
What Managements Are Guiding
TENNIND is guiding for a double-digit CAGR over the next three years. To support this volume, the board approved an INR 710 million capex for a greenfield plant in Kharkhoda, Haryana, expected to start production in Q3 FY27.
Shared Risks (9-type taxonomy)
Labor risks materialized sharply, with TENNIND taking a one-time INR 203 million charge due to a newly notified labor code requiring retrospective statutory benefit calculations. Commodity risks remain a low-level threat due to elevated precious metal prices (platinum, palladium, rhodium), though mitigation through design optimization is underway. Regulatory and geopolitical risks are present but currently viewed as tailwinds, as OEMs push ahead with emission norms and benefit from reduced export tariffs.
Bottom Line
The sector outlook is BULLISH. Despite a one-off labor charge impacting PAT, underlying operating performance is expanding, driven by 100% order book coverage for FY 2028, expanding export shares to 20%, and capacity utilization exceeding 90%.