Munjal Auto Industries: FY2026 Results—The Hero Dependency, Crystallised
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Revenue grew 11% year-on-year to ₹2,295 crore in FY2026, continuing its modest expansion trajectory.
Net profit expanded to ₹40 crore from ₹36 crore in FY2025—a 10% climb that masks a deeper story: the company swung to a loss in Q4 FY2026 (₹-0.26 crore), after reporting ₹8 crore profit in Q4 FY2025.
Operating profit held steadier ground at ₹128 crore (FY2025: ₹117 crore), yet operating margins compressed to 5.6% from 5.7%, a sign that top-line growth is not translating into margin expansion.
The tension: A company tethered 90% to Hero MotoCorp’s muffler demand, now diversifying through Indutch Composites (the subsidiary making windmill blades), is racing against two clocks—the death of the internal combustion engine two-wheeler, and the capital intensity of composites scaling.
Indutch carries an order book of ₹850+ crore (per ICRA rating rationale, FY2026 execution scheduled), but working capital stress is real: the company switched from customer-funded advances to self-managed working capital in October 2024, requiring fresh credit lines.
Does the 11% revenue growth fix a 9% ROCE, or just delay the deeper question?
2 — Introduction
Munjal Auto Industries Ltd, incorporated in 1985, is a ₹963 crore market-cap auto components company controlled by the Satyanand Munjal family (75% stake) and part of the Hero ecosystem.
The business model is two-tier: the parent company manufactures sheet metal, composites, molds, and assemblies for automotive (mufflers, fuel tanks, rims, BIW parts), with heavy dependence on two-wheeler OEMs—especially Hero MotoCorp. The subsidiary, Indutch Composites Technology Pvt. Ltd., pivots to wind energy composites and serves renewable energy OEMs including Enercon, Nordex, and Senvion India.
Revenue composition: automotive components dominate (roughly 79% historically), with composites adding 20% and scrap contributing the remainder.
In May 2026, the company won long-term sheet metal and stamping work from Honda Motorcycle—a crack in the Hero door, though quantified impact remains absent.
On the regulatory front, the company has absorbed multiple tax notices over recent quarters. In March 2025, an Income Tax notice arrived for AY 2020-21. In September 2024, a GST demand of ₹6.76 crore landed; in January 2024, another GST show cause of ₹2.39 crore. These remain under contestation but highlight operational friction in compliance.
In August 2025, the company’s CFO resigned, with a successor appointed from October 15, 2025—a transition typically worth watching in smaller cap industrial firms.
3 — Business Model: WTF Do They Even Do?
The parent company is a metal-bashing, mold-making, welding operation serving the Indian two-wheeler and four-wheeler OEM ecosystem.
Exhaust systems (mufflers) are the crown jewel: the company claims 90% of Hero MotoCorp’s business here. Installation capacity sits at 94.5 lakh units per annum. The engineering tie-up with Italy’s Lafranconi (exhaust design) and Samsung Industrial Co. Ltd (South Korea, fuel tanks) adds credibility, though the assembly model keeps margins tight—OPM of 5.6% is instructive. You make 1,000 mufflers; you clear 56 rupees per muffler. That math is why the company needs scale or diversification.
Steel wheel rims (12.5 lakh annual capacity) and fuel tanks (2 lakh capacity) are secondary earners. Spoke rim production uses Japanese and Taiwanese multi-stage forming mills, suggesting some manufacturing sophistication, yet volumes remain modest against the muffler base.
BIW (Body-In-White) assemblies for four-wheelers and two-wheelers add breadth but not material profit: the company supplies cross-car beams, battery trays, seat structures—again, assembly margin compression.
Enter Indutch: The 2024 acquisition or buildup (details murky) pivots the company toward windmill blade manufacturing and composites molds. Order visibility is robust: ₹850+ crore scheduled for FY2026 execution (per ICRA), driven by wind energy capex cycles in India. Enercon represents 50-55% of Indutch revenue; this concentration mirrors the Hero risk at the parent level, merely shifted.
The big picture: Munjal Auto is a contract manufacturer caught in the margin squeeze of assembly-based auto components work, betting that composites and renewables can offset the slow death of the petrol two-wheeler.
4 — Financials Overview
Figures are consolidated, in ₹ crore.
Metric
FY2026
FY2025
FY2024
FY2023
Revenue
2,295
2,066
1,882
1,984
EBITDA
193
176
176
143
PAT
40
36
38
56
EPS (Annualised)
4.02
3.64
3.85
5.61
FY2026 Quarterly Performance:
The year broke into two halves: a weak Q4 that erased full-year confidence. Q4 FY2026 delivered revenue of ₹614 crore (versus ₹612 crore in Q4 FY2025, essentially flat), but net profit swung to ₹-0.26 crore from ₹27.15 crore in Q4 FY2024. This is not a rounding error—it is operational deterioration within the quarter.
Operating profit in Q4 was ₹18.67 crore (2.8% OPM), down sharply from ₹42 crore in Q3 FY2026 (6.9% OPM). The drop hints at either input cost inflation, pricing pressure from Hero, or one-off charges.
For the full year, EBITDA rose 10% to ₹193 crore (8.4% margin), and PAT expanded 10% to ₹40 crore, but annualized EPS stands at ₹4.02 per share—marginally below FY2025’s ₹3.64 after adjusting for the Q4 loss impact.
The earnings volatility (TTM profit growth: -15%, per the data) reflects quarterly lumps and working capital timing in the composites business.
5 — Valuation Discussion: Fair Value Range (Educational Only)
What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example — not a target, not a forecast, not advice.
Method 1 (P/E): Annualised EPS ₹4.02 × peer band 27–46x (peer median 27.3x, MAIL trading at 27.2x) produces ₹108–185 crore in market-cap terms, or roughly ₹54–92 per share in terms of equity value per share. The peer median multiple applied to MAIL’s EPS outputs ₹109 per share.
Method 2 (EV/EBITDA): Full-year EBITDA ₹193 crore × peer band 8.6–21.5x (peer median EV/EBITDA ~15–16x, MAIL at 8.6x) produces enterprise values ranging ₹1,660–4,150 crore. Net cash position: ₹22.8 crore cash equivalents minus ₹423 crore borrowings equals ₹-400 crore net debt. Adjusting for net debt of ₹400 crore lifts equity value; applying the peer median 15.5x to EBITDA suggests EV ~₹2,990 crore, equity value ~₹2,590 crore or ₹259 per share.
Method 3 (Simplified DCF, 5-year horizon): Assume revenue growth moderates to 8% CAGR, EBITDA margin sustains at 8.4%, tax rate holds at 27% (blended historic rate). Free cash flow generation, post-capex, runs ₹40–50 crore annually. Discounting at 10% WACC over five years plus terminal value at 5% perpetual growth outputs a range of ₹800–1,200 crore in NPV terms, or ₹80–120 per
