Is India’s Automobile Momentum Signaling a Sustained Growth Drive in FY26?
About the Automotive & Mobility Landscape
The auto and mobility segment continues to be a key pillar of India’s manufacturing recovery. As premium truck demand remains steady, companies like Ashok Leyland, Tata Motors, HAL, and Varroc Engineering are leading the charge with strong earnings visibility and improved margin discipline in Q2 FY26.
The quarter reflected resilience in operational performance even as exports and input cost headwinds persisted across the broader automobile sector. Investors are closely watching how these large-cap and mid-cap auto companies maintain momentum through festive and fleet-replacement cycles.
Ashok Leyland Q2 FY26 – Management Commentary 🚛
CEO Commentary: The company achieved its 11th straight quarter of double-digit EBITDA, marking record PAT and margin expansion, driven by a premium product portfolio and stringent cost control. “Truck and bus demand remains steady,” the CEO said, adding that the company remains on track to reach its mid-teen EBITDA margin target.
Chairman Commentary: “We continue to deliver profitable growth, driven by sustained demand,” the Chairman noted, highlighting strong international traction in markets like the Middle East and Africa. Switch Mobility also maintained its momentum with an order book of nearly 1,500 electric vehicles, reflecting confidence in EV adoption.
| Metric | Q2 FY26 | Estimate | Result |
|---|---|---|---|
| Net Profit | ₹771 Cr | ₹705 Cr | ✅ Beat (+9%) |
| Revenue | ₹9,588 Cr | ₹9,530 Cr | ✅ Slight Beat (+0.6%) |
| EBITDA | ₹1,162 Cr | ₹1,116 Cr | ✅ Beat (+4.1%) |
| EBITDA Margin | 12% | 11.7% | ✅ Beat (+30 bps) |
The operational improvement showcases Ashok Leyland’s ability to retain profitability while balancing global headwinds and domestic cost structures.
HAL Q2 FY26 – Margin Pressure but Structural Strength ✈️
HAL reported a healthy topline growth but missed margin estimates due to cost escalations and lower mix realization. The company reiterated that H1 margins stood at 24.8% versus guidance of 31% for FY26, with management expecting H2 recovery as order execution normalizes.
| Metric | Q2 FY26 | YoY Change |
|---|---|---|
| Net Profit | ₹1,669 Cr | +10.5% |
| Revenue | ₹6,628 Cr | +10.9% |
| EBITDA Margin | 23.5% | ↓ -394 bps YoY |
While HAL’s Q2 miss was modest, execution pipeline remains robust with expected uptick in defense capex through FY27–FY28.
Varroc Engineering – Margins Narrow Despite Revenue Growth
Varroc Engineering reported moderate topline growth but witnessed margin compression due to higher raw material costs. The company remains focused on supply-chain optimization and improving export realizations to stabilize profitability in the coming quarters.
- Net Profit: ₹60.9 Cr vs ₹55.6 Cr YoY (+9.5%)
- Revenue: ₹2,207 Cr vs ₹2,080 Cr (+6.1%)
- EBITDA Margin: 9.19% vs 10% (-81 bps)
A mid-sized but important player in India’s auto supply ecosystem, Varroc’s results underline the delicate balance between cost absorption and operational leverage.
Tata Motors CV – Structural Rerating in Progress 🚚
After demerger, Tata Motors has bifurcated into two distinct listed entities – Passenger Vehicles and Commercial Vehicles. Both are now trading independently on NSE and BSE, signaling a focused valuation path for investors. The CV vertical remains key to operating leverage and infrastructure-linked demand revival in FY26.
The demerger creates sharper accountability and unlocks value for shareholders by allowing investors to directly participate in each segment’s performance cycle.
Investor Takeaway
Auto and mobility names remain key cyclical beneficiaries of India’s capex upcycle and consumer recovery. Maintain selective exposure to premium OEMs and defense-linked names with improving balance sheets.
Nifty and Bank Nifty Expert Gulshan Khera, CFP®, who is a SEBI Regd Investment Adviser.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
