Tube Investments of India shares surged over 8% to ₹2,963.20 on the NSE following the company's Q1 FY27 earnings announcement, with the stock trading at ₹2,963.20, up 8.09% as of latest trading. The positive market response came after Motilal Oswal Financial Services maintained a bullish stand on the company, reiterating a 'Buy' rating with a target price of ₹3,379. As per The Economic Times reports, the brokerage noted that Tube Investments' Q1FY27 adjusted PAT came in line with its estimate despite a 5% decline on year-on-year basis, with the company demonstrating strong core business performance and 17% engineering volume growth.
Tube Investments of India delivered robust financial performance in Q1 FY27, with consolidated revenue from operations growing 17.7% year-on-year to ₹2,227.63 crore compared to ₹1,892.48 crore in the same period last year. However, consolidated profit after tax declined 5% to ₹158.62 crore from ₹168.09 crore in Q1 FY26, primarily due to rising raw material costs and widening losses in the electric vehicle and semiconductor segments. Standalone operations recorded revenue of ₹2,366.20 crore, registering 17.92% growth compared to the previous year. Standalone EBITDA margins compressed by 194 basis points to 10.39% due to rising material consumption expenses, reflecting the impact of steel inflation pressures across the company's operations. EBITDA remained broadly flat at ₹547.8 crore against ₹546.2 crore in the year-ago quarter, while EBITDA margin contracted to 8.8% from 10.3%.
The Engineering segment emerged as the key growth driver, with standalone revenues of ₹1,566.26 crore representing a 20.64% increase year-on-year. According to CNBC TV18 reports, Engineering division PBIT remained flat at ₹153 crore despite the revenue growth. Industrial Systems revenue increased to ₹1,789.54 crore, while Power Systems revenue rose to ₹1,398.24 crore. Metal Formed Products reported revenue of ₹407.79 crore, compared with ₹365.76 crore year earlier, with Metal Formed Products PBIT declining to ₹28 crore from ₹38 crore. Mobility revenue increased to ₹250.42 crore from ₹198.71 crore, with Mobility division revenue rising 26.3% year over year to ₹250 crore. Management highlighted that the Engineering business delivered 17% volume growth and exports grew in double digits during the quarter, as reported by Business Standard. Motilal Oswal noted that two of the standalone entity's business segments, viz., Engineering and Metal Formed divisions, which contribute ~80% of its revenue, are dependent on the auto business, with the GST rate reduction helping revive auto demand across segments.
The company's e-mobility business faced significant headwinds during the quarter, with losses in the electric vehicle subsidiary widening to ₹147.32 crore from ₹136.49 crore in the previous year. As reported by CNBC TV18, one e-mobility business is expected to reach break-even this year and two more are expected to do so in the next financial year. The semiconductor segment losses expanded dramatically to ₹49.99 crore from ₹8.70 crore year ago, reflecting the challenging operating environment in these emerging technology sectors. Despite these near-term challenges, the company maintains its long-term optimism about these businesses, with management expressing confidence in their future prospects.
Tube Investments of India expects operating margins to recover in the coming quarters as the Murugappa Group company works to pass on higher steel costs and improve profitability across its core businesses. According to reports from CNBC TV18 and Investing.com, the company said it expects to fully recover steel price increases, including those incurred in Q1, over the coming quarters. The company also expects to see double-digit improvement in EBIT margins, with the Engineering and Metal Formed Products businesses expected to return to their earlier margin levels. From management's commentary, the brokerage highlighted that Tube Investments' core business remains fundamentally strong, with the 2-3 quarter lagged recovery of steel inflation, management expects margins to recover and improve, despite near-term margins remaining under pressure due to input cost inflation. Executive Chairman M.A.M. Arunachalam reiterated confidence, stating the company expects to recover the steel-cost impact within two to three quarters and expressed optimism about double-digit margin improvement once pricing catches up. Motilal Oswal expects the standalone business to post a steady CAGR of 8%/8%/7% in revenue/EBITDA/PAT over FY26-28, citing the company's diversified revenue streams and steady growth in core businesses.
