JTEKT India Limited Navigates H1 FY26 with Strategic Expansions Amidst Margin Pressures

JTEKT India Limited, a prominent manufacturer of steering systems and driveline components, reported a mixed performance for the second quarter and first half of the financial year 2025-26. While the company demonstrated resilience by outperforming the broader passenger vehicle market in sales growth, it faced notable pressures on its profitability margins. For the first half of FY26, JTEKT achieved a sales growth of 5.6%, surpassing the Passenger Vehicle market's 1.6% growth. However, EBITDA margins for the period stood at 6.3%, a decline from 7.6% in the previous financial year. Profit After Tax (PAT) also saw a decrease, reflecting the challenges in cost absorption and product mix.

The company's revenue for the first half of FY26 (YTD Sep'25) reached INR 1205.1 crore. The product mix was dominated by CEPS (Column Electric Power Steering) contributing 45.6% of total revenue, followed by RPS M (Rack and Pinion Steering Manual) at 27.2%. Hydraulic Power Steering (HPS) accounted for 6.9%, while Columns contributed 6.6%. Constant Velocity Joints (CVJ) made up 3.6% of the revenue, with other products contributing the remaining 10.0%. This breakdown highlights the company's diversified portfolio within the steering and driveline segments. The management noted that the sales growth was primarily supported by new business from Maruti Suzuki, including models like e-Vitara and Victoris, which contributed approximately INR 26 crore in the first half.

Financial Performance Snapshot (H1 FY26)

Strategic Initiatives and Capacity Expansion

JTEKT India is actively pursuing several strategic initiatives to bolster its manufacturing capabilities and expand its market reach. The company successfully commissioned its sixth manual gear line at the Dharuhera facility in August 2025, increasing manual gear production capacity from 28 lakh units to 32 lakh units. Concurrently, the third CPS line became operational between July and August 2025, boosting CPS capacity from 10 lakh units to 15 lakh units. These expansions are critical for meeting growing demand and supporting new product introductions.

Furthermore, JTEKT is establishing a fourth manual gear line at its Chennai facility, primarily to fulfill export requirements, including a significant order from Brazil. A second CVJ line is also under implementation at Dharuhera, projected to be operational within one to two months, which will nearly double CVJ capacity from 3.7-4 lakh units to 7.5-8 lakh units. A major long-term project involves setting up a new manufacturing facility in Gujarat, announced in October 2024, with building construction expected to commence in December 2025 and completion by early 2028. This facility is strategically important to cater to OEM expansion in the Western region. The company has allocated INR 250 crore for this project.

Addressing Profitability and Future Outlook

The decline in EBITDA margins was attributed to several factors, including higher employee costs due to annual salary increments that could not be fully absorbed by lower-than-expected sales. Manufacturing expenses increased due to higher power tariffs and increased power utilization for new production lines under trial. Additionally, an adverse product mix, with less volume from new products and exports, contributed to higher material costs. The management acknowledged delays in new vehicle launches and lower-than-expected volumes, which impacted gross margins.

Despite these challenges, JTEKT India remains optimistic about the second half of FY26. The company anticipates improved market conditions, leading to better profit margins. Key growth drivers include the expected start of exports to JTEKT Brazil from June or July 2026, with a potential to grow from 1 lakh units to 5 lakh units, and a new Maruti Suzuki variant similar to e-Vitara expected around August 2026. The company also highlighted its entry into the EV segment by supplying components for Tata Coral. Management expects overall exports to increase from 4% to 8-10% of total sales, with the Brazil export business alone potentially reaching INR 150 crore within two to three years, significantly boosting overall sales and improving operating margins.

JTEKT India's proactive approach to capacity expansion, backward integration (like the INR 55 crore investment in in-house CVJ forging), and strategic customer engagement, coupled with strong support from its parent company, positions it for long-term growth. The successful rights issue, with overwhelming shareholder participation, underscores investor confidence in the company's strategic direction and future prospects, even as it navigates short-term profitability headwinds.