Enkei Wheels India Ltd Q2FY26 – The Alloy Alchemist’s Turnaround, or Just a Polished Rim on Rusty Steel?

1. At a Glance

The wheel of fortune seems to have rolled a little smoother forEnkei Wheels India Ltd (EWIL)this quarter. After a bumpy FY25 that left investors wobbling, the company has finally managed to tighten the nuts inQ2FY26, posting a sharp rebound in profits.At amarket cap of ₹917 crore, the stock trades at₹510– a price that says, “I’m back in the game,” but not quite ready for a burnout. Quarterlysales stood at ₹265 crore, up11.1% YoY, whilePAT zoomed 274%to ₹7.94 crore. For a company that recently had more red ink than a schoolteacher’s notebook, that’s an impressive pit stop.

But don’t get carried away – this alloy wheelmaker still carries adebt of ₹250 crore, alow ROCE of 3.94%, and aROE of 1.06%, which means the returns are thinner than a tyre at a drag race. Still, with aMAP 2 facility upgradein Pune and a newManaging Director from Japan (Mr. Kenjiro Hama)taking charge, the wheels might finally be aligning.

So, is Enkei back on track, or just spinning in circles? Buckle up, because we’re about to find out.

2. Introduction

If you’ve ever wondered what it takes to survive in India’s hyper-competitive auto components industry, Enkei Wheels’ story is a masterclass in persistence and polishing. Born in2009as the Indian arm of Japan’s mightyEnkei Corporation, the company set out to give local car and bike makers a taste of Japanese alloy precision.

But while competitors likeUno Minda,Endurance, andSchaefflerraced ahead with roaring engines, Enkei often found itself idling in the pit lane – producing good products, but not enough good profits.

FY25 was a particularly tricky year: raw material costs inflated like a bad tyre, interest coverage barely made it past0.89x, and PAT slipped into negative territory at₹-2 crore. Investors started wondering whether Enkei Wheels would end up like that spare tyre everyone forgets about until it’s too late.

Yet, the latestQ2FY26 resultssuggest the alloy artisan is rolling back with a vengeance. Sales are rising, margins are inching up, and profits have returned – not blazing, but at least glowing. TheMAP 2 line upgrade and MAT facilityexpansion in March 2025 have started contributing, adding20,000 pieces per monthto production capacity.

So the comeback is here – modest, measured, and most importantly, metallic.

3. Business Model – WTF Do They Even Do?

Enkei Wheels India’s business is quite simple to describe but difficult to execute: they makealuminium alloy wheelsfortwo-wheelers and four-wheelers. These wheels are the silent heroes of your vehicle — strong enough to hold your entire car, yet stylish enough to make you feel you overpaid for them.

The company’s Pune facility is its manufacturing fortress, producing around1.20 lakh two-wheeler wheelsand1.10 lakh four-wheeler wheels per month, backed by a newpainting linecapable of1.70 lakh wheels monthly. That’s a serious output for what many think of as a ‘smallcap auto parts company.’

Its customer list reads like a who’s who of Indian automotive royalty:

• Two-wheelers:Honda, Suzuki, Kawasaki
• Four-wheelers:Honda, Maruti Suzuki, Toyota

Essentially, if you’ve ever ridden or driven a Japanese machine in India, there’s a decent chance Enkei has helped it roll.

Revenue mix?67% from four-wheeler wheels,31% from two-wheelers, and2% from scrap sales– proving even their waste has a resale value.

But here’s the kicker: despite operating in a high-demand, high-visibility industry, Enkei’sreturn ratios are flatter than a deflated tyre. Maybe too much Japanese precision, too little Indian aggression?

4. Financials Overview

Let’s hit the numbers.

Commentary:After two quarters of negative profits, Enkei finally hit the accelerator. EBITDA margin expanded to11.31%, its best since FY23, thanks to higher volumes and better cost absorption from the MAT facility. PAT flipped from a loss to a decent ₹7.94 crore profit — a 274% YoY swing. It’s like watching a Maruti 800 suddenly pull off a Formula 1 overtake.

5. Valuation Discussion – Fair Value Range Only

Let’s get nerdy for a bit.

a) P/E Method:Annualised EPS