CIE Automotive India Navigates Q3 CY25 with Strong Indian Growth Amidst European Headwinds

CIE Automotive India Limited, a key player in the automotive components sector, has released its Q3 and 9M CY25 results, showcasing a robust performance in its Indian operations while navigating a challenging European market. The company reported consolidated sales of INR 2,309.7 crore for Q3 CY25, marking a 12% year-on-year growth. EBITDA stood at INR 374.8 crore with a margin of 16.2%, and Profit After Tax (PAT) for the nine-month period was INR 623.9 crore, reflecting a 9.2% PAT margin on sales.

The Indian business emerged as a significant growth driver, achieving its highest-ever quarterly sales of INR 1,523.2 crore in Q3 CY25, representing a 9% year-on-year increase. This growth outpaced the weighted average market growth, with light vehicles growing by 5.6%, two-wheelers by 10-10.5%, and tractors by 14% in production terms. The company attributes this strong performance to new orders coming back on stream and a generally supportive market environment. Conversely, the European operations faced headwinds, with Q3 CY25 sales at INR 786.6 crore, showing an 18% growth over Q3 CY24, which included an 11% positive exchange rate effect. However, the 9M CY25 European sales saw a 3% drop in euros due to a weak forging market and uncertainties surrounding electric vehicles (EVs).

Strategic Initiatives and Market Outlook

CIE Automotive India is actively pursuing several strategic initiatives to sustain growth and improve profitability. In India, the company is focused on offsetting the impact of increased energy tariffs in Maharashtra, which led to a slight decrease in EBITDA margins. Management expects the market situation in India to become more attractive due to the optimization of the GST structure, which could lead to lower taxes and more affordable vehicles. This reform is projected to improve the three-year growth CAGR for passenger vehicles to 5-6% and for two-wheelers by 2-3% points.

The company is also making significant strides in the EV segment, developing newer parts, especially in aluminum, and transferring technology from Europe to India. This includes the acquisition of higher added value components and advanced manufacturing capabilities in the aluminum division, with an aim to improve EBITDA margins from approximately 10% to 15%. The company is developing aluminum forging and gears for crossover EVs for the US market, with orders already secured.

Navigating European Challenges

Europe presents a more complex picture. The market is characterized by stagnant EV penetration, OEM variances in producing internal combustion engine (ICE) vehicles due to environmental penalties, and increasing competition from Chinese imports. The light vehicle market in Europe is expected to remain largely stagnant, with forecasts ranging from -1.5% to +1% growth between CY2024-CY2026. The company's strategy in Europe involves proactive corrective actions to adjust operations, defend margins, and undertake restructuring efforts, as seen with Metalcastello, which is now operating with reasonable EBITDA margins. Management anticipates further consolidation in the European market and aims to be a key consolidator.

Outlook and Future Focus

Despite the European uncertainties, CIE Automotive India remains optimistic about its Indian business, expecting continued growth across all verticals. The company is committed to innovation and disciplined execution, particularly in the evolving EV landscape. While the European market's recovery remains uncertain, the focus on cost efficiency, strategic product development, and leveraging India's growth momentum positions CIE Automotive India to navigate the dynamic automotive industry landscape effectively. The management's emphasis on long-term value creation through strategic investments and operational excellence underscores its commitment to sustained performance.