Tube Investments:
₹5,801 Cr Revenue. 49% ROIC.
The Conglomerate Betting Big On EVs (While Bleeding Cash)
Engineering division on fire. Cycles finally making money. But TI Clean Mobility burned ₹164 crore in Q3 alone. The parent company keeps writing cheques. Is this empire-building or a cash sink?
The Conglomerate Playing 4D Chess (And Possibly Losing)
- 52-Week High / Low₹3,420 / ₹2,165
- Consolidated Revenue (TTM)₹21,783 Cr
- Consolidated PAT (TTM)₹1,042 Cr
- Full-Year EPS (TTM)₹30.9
- Annualised EPS (Q3×4)₹34.28
- Book Value₹389
- Price to Book7.01x
- Dividend Yield0.13%
- Debt / Equity0.09x
- Recent Dividend (Q3)₹2/share
Welcome to TII: Where Good Divisions Fund Bad Bets
Tube Investments is not one company. It’s six companies wearing the same shirt, three of them trying to become something else, and one of them actively losing money faster than it can be replaced.
At its core: engineering, metal-formed products, and bicycles. Standard industrial fare. Reliable. Boring. Profitable. The engineering division (CDW tubes, CRS strips) threw up double-digit growth in Q3 despite export headwinds. Metal-formed products (chains, stamped parts) trudged along, hamstrung by railway delays. Cycles turned profitable for the first time in years — thank you, e-bikes.
But then you look at the consolidated picture and the narrative changes. Through wholly-owned and majority-held subsidiaries, TII operates power systems (58% of CG Power), gearboxes (70% of Shanthi Gears), and increasingly, electric vehicles through TI Clean Mobility. The EV bet is the aggressive one. The confidence is real. The losses are realer.
In Q3 FY26 alone, TI Clean Mobility burned ₹164 crore. The parent has committed to funding ₹500–750 crore more over the next couple of years. The company also approved a ₹300 crore borrowing in May 2025 and raised ₹3,000 crore as QIP for a semiconductor assembly project through CG Power. Capital allocation is moving fast. Valuation multiples are not.
Here’s what you need to know: the core businesses are healthy. The PE multiples are grotesque. And the EV venture is either the smartest bet management has made or the most expensive way to lose shareholder capital. The Feb 2026 concall gave us some clarity on which.
Engineering Pays The Bills. Everything Else Is Hope.
Let’s start with the mothership. Tube Investments manufactures cold-drawn welded (CDW) tubes — India’s market leader at ~51% share. Also: cold-rolled steel strips (CRS). Also: electric resistance welded tubes. These go into cars, motorcycles, construction equipment, railways, and mining. It’s not exciting. It’s what actually makes money.
Metal-formed products division: chains (automotive, transmission), fine-blanked stamped parts, door frames for passenger coaches. Another steady cash generator. Both divisions lean on industrial scale — 35+ manufacturing plants nationwide — and customer stickiness that takes years to build and cannot be replicated overnight by a competitor offering 2% better pricing.
Cycles (BSA, Hercules, Montra): 25% market share in the retail segment. Historically a dead product category in India — smartphones killed the commute bike. Then e-bikes happened. Q3 revenues climbed to ₹183 crore (vs ₹142 crore YoY). More importantly, it turned profitable — PBIT of ₹4 crore vs a ₹0.8 crore loss last year. The narrative has shifted from “when will cycles go away” to “how fast can e-bikes scale.”
Then the subsidiaries. CG Power (58% owned): transformers, motors, industrial systems. Top-10 globally in transformers. No. 1 in Indian motors. Q3 revenues ₹3,175 crore, profit ₹420 crore. Single-handedly funding the parent’s expansion dreams. Shanthi Gears (70% owned): gearboxes, specialized equipment. Q3 profit fell 34% YoY to ₹23 crore. Management blames order book slowdown. Translation: Shanthi is struggling.
Finally: TI Clean Mobility. Subsidiary burning cash. ₹164 crore loss in Q3. Yet management insists it’s on a path to breakeven — 3W and M&HCV first (12–18 months per them), then SCV, then tractors. The company has 117 dealerships covering ~65–70% of the relevant addressable market. Volumes are coming — Q3 saw 1,816 3Ws sold, 301 SCVs, 56 M&HCVs. But every unit sold loses money.
Q3 FY26: The Numbers That Raise Questions
Result type: Quarterly Results (Q3 FY26; Dec 31, 2025) | Q3 Standalone EPS: ₹8.57 | Annualised EPS (Q3×4): ₹34.28 | TTM EPS: ₹30.90
| Metric (₹ Cr) | Q3 FY26 Dec 2025 | Q3 FY25 Dec 2024 | Q2 FY26 Sep 2025 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 5,801 | 4,812 | 5,523 | +20.6% | +5.0% |
| Operating Profit | 585 | 491 | 544 | +19.1% | +7.5% |
| OPM % | 10.1% | 10.2% | 9.9% | -10 bps | +20 bps |
| PAT | 279 | 280 | 302 | -0.36% | -7.6% |
| EPS (₹) | 8.57 | 10.01 | 9.65 | -14.4% | -11.2% |
What’s This Conglomerate Actually Worth?
Method 1: P/E Based (Earnings Power)
TTM EPS = ₹30.90. Auto sector median P/E = 26.7x. Conglomerates trade at discount (lack of focus) vs. at premium (diversification). TII’s core businesses justify 18x–22x; EV drag warrants discount. Fair P/E band: 16x–24x.
Range: ₹494 – ₹742
Method 2: EV/EBITDA Based
Q3 EBITDA annualised ~₹2,300+ Cr (10.1% OPM × ₹5,801 = ₹585 Cr/qtr). Enterprise Value: ₹52,363 Cr → EV/EBITDA = 22.8x. Industrial conglomerates trade 12x–18x. TII trades at premium to peers (CG Power strength + bifurcation discount). Fair multiple: 14x–18x.
Implied per-share value (14x–18x EBITDA):
Range: ₹395 – ₹570
Method 3: Sum-of-Parts (SOTP)
Engineering (TI): ₹5,000 Cr revenue @ 12x = ₹600 Cr value. CG Power (standalone valuation): ₹3,175 Cr @ 15x = ₹4,763 Cr × 58% = ₹2,762 Cr. Gearboxes + Cycles + Others @ blended 10x = ₹500 Cr. Less: EV burn = -₹500 Cr (2yr commitment). Total equity value: ~₹4,362 Cr → per share: ₹262.
Fair Value: ₹240 – ₹500
The Plot Thickens (And So Does The Balance Sheet)
🔴 The EV Bet: ₹164 Cr Loss Per Quarter. Going Nowhere Fast.
TI Clean Mobility burned ₹164.31 crore in Q3 FY26 alone. That’s not a typo. Management’s official stance: breakeven in 12–18 months for 3Ws and M&HCVs, then scaling others. Translation: 18+ months of additional burn before we know if this business is viable. Parent has committed ₹500–750 crore incremental capital over the next 2 years. For perspective: that’s 48–72% of the company’s current annual PAT being funneled into a loss-making EV subsidiary. Bet structure unclear — pro-rata dilution or stake increase? Unresolved.
✅ Engineering Division Firing On All Cylinders
- • Revenue ₹1,438 Cr (vs ₹1,212 Cr YoY; +18.6%)
- • PBIT ₹196 Cr (vs ₹156 Cr YoY; +25.6%)
- • Domestic market “absolutely bullish” post-GST cut
- • Capacity ramping — “fully booked by Q1 next year”
- • Still battling US export headwinds (50% effective tariff)
⚠️ Shanthi Gears In Freefall; Cycles Turned The Corner
- • Shanthi Gears revenue ₹117 Cr (down 26% YoY from ₹158 Cr)
- • Profit ₹23 Cr (down 34% YoY from ₹35 Cr)
- • Management: “another 1–2 quarters of slowdown, then recovery”
- • Cycles PBIT ₹4 Cr vs -₹0.8 Cr loss last year
- • E-bike traction strong; offsetting seasonality
✅ CG Power Services Bet: Long-Term Play
- • CG Power Q3 revenue ₹3,175 Cr (+26% YoY)
- • Profit ₹420 Cr (up 25.4% YoY)
- • Current services revenue only ~1–2% of mix
- • Key hires expected Q1 FY27 to scale services
- • Management sees underpenetrated growth lever
⚠️ Large Capex Commitments Ahead
- • ₹1,200–1,500 Cr annual capex (medium term)
- • Semiconductor OSAT project: ₹7,584 Cr total
- • Parent contribution: ₹2,683 Cr (rest govt-funded)
- • ₹300 Cr borrowing approved (May 2025)
- • ₹3,000 Cr QIP raised for semiconductor play
The Debt Story: Low Leverage, High Capex Burden
| Item (₹ Cr) | Mar 2024 | Mar 2025 | Sep 2025 |
|---|---|---|---|
| Total Assets | 13,105 | 15,879 | 20,316 |
| Net Worth (Equity) | 5,099 | 5,535 | 7,518 |
| Borrowings | 896 | 703 | 705 |
| Other Liabilities | 7,109 | 9,640 | 12,093 |
| Total Liabilities | 13,105 | 15,879 | 20,316 |
Borrowings stable at ₹703–705 Cr despite ₹300 Cr new facility approved (not drawn yet). Debt-to-Equity: 0.09x. Net debt negative (cash position). This is lean balance sheet management.
Equity up from ₹5,099 Cr (Mar 24) to ₹7,518 Cr (Sep 25) — 47.4% growth in 18 months. Driven by retained earnings + QIP raise. Good sign of capital deepening.
Total assets up 55% in 18 months. Other liabilities (payables, deferred tax, provisions) jumped 70%. The balance sheet is expanding fast. Capex-heavy model needs monitoring.
Operating Cash Flow Is King (But Capex Is Hungry)
| Cash Flow (₹ Cr) | FY24 | FY25 |
|---|---|---|
| Operating CF | +675 | +1,213 |
| Investing CF | -1,657 | -1,615 |
| Financing CF | +645 | +522 |
| Net CF | -336 | +120 |
The Numbers Don’t Match The Price
Revenue Growing. Margins Flat. Profits Stalling.
| Metric (₹ Cr) | FY23 | FY24 | FY25 (TTM) |
|---|---|---|---|
| Revenue | 14,964 | 16,890 | 21,783 |
| Operating Profit | 1,883 | 1,969 | 2,012 |
| OPM % | 12.6% | 11.6% | 9.2% |
| PAT | 1,325 | 1,723 | 1,042 |
| EPS (₹) | 49.48 | 62.08 | 30.90 |
The Story: Revenue grew 45.6% over 3 years (FY23 to TTM). PAT fell 21.3% in the same period. Margins compressed 340 bps. Why? EV losses. Gestational losses in new ventures. Increased depreciation from capex. The core business is healthy. The consolidated picture is messy because management is investing heavily in unproven businesses.
TII vs The Competition: A Tale of Valuation Arbitrage
| Company | Q3 Revenue (₹ Cr) | Q3 PAT (₹ Cr) | P/E | ROCE % |
|---|---|---|---|---|
| Tube Investments | 5,801 | 279 | 85.3x | 21.8% |
| Bharat Forge | 4,343 | 273 | 78.8x | 12.2% |
| Bosch India | 4,886 | 532 | 42.6x | 21.1% |
| Schaeffler India | 2,643 | 328 | 56.5x | 29.8% |
| Sector Median | 3,943 | 243 | 26.7x | 14.4% |
TII is trading at 3.2x sector median P/E. Bharat Forge (67% lower ROCE) also trades at 78.8x. The entire auto sector is in a valuation bubble, but TII’s EV bet is adding premium risk on top of that bubble.
Who Owns TII (And What They’re Betting On)
- Promoters (Murugappa)44.06%
- Public12.67%
- FIIs23.15%
- DIIs19.68%
Pledge: 0.01%. Retail base: 1.08 lakh shareholders (growing steadily). Ambadi Investments (Murugappa holding company) controls 35.64%. Concentrated but not oppressive.
The Murugappa Group
Diversified conglomerate. ₹7.42 lakh crore revenue. 73,000+ employees. Spans agriculture (Parrys, Coromandel), engineering (TII, CG Power, CUMI), and fintech (Chola). TII is the manufacturing crown jewel. EV transition is a group-level bet — not just TII’s.
FII/DII Action
FIIs increased to 23.15% (from 21% six months ago). DIIs at 19.68%. Strong institutional backing on both sides. This suggests confidence in management’s medium-term strategy, or a liquidity/ momentum play. Recent ESOP allotments (Feb 2026) suggest employee participation in upside.
Orderly, Boring, And Competent
✅ The Clean History
- ✓ ICRA credit rating reaffirmed at AA+ (Stable) — Nov 2025
- ✓ 48-year audit history; no material qualifications
- ✓ Regular quarterly concalls (Q3 Feb 2026; Q2 Nov 2025; etc.)
- ✓ Integrated ESG rating submitted to BSE/NSE
- ✓ Board independence strong; annual AGM on schedule
- ✓ Pledge: 0.01% — essentially zero. Management is long TII.
⚠️ The Watch Items
- ⚠ Valuation multiples at conglomerate discount → market trusts management but not the EV bet
- ⚠ Large capex (₹1,200–1,500 Cr/yr) depends on execution
- ⚠ Semiconductor project (₹7,584 Cr) is government-backed but tech risk remains
- ⚠ EV subsidiary burning cash; no clear path to unit economics yet
- ⚠ ROE compression (21% to 12.8%) due to capex-heavy model
The Auto Components Bubble: Who’s Really Winning?
The Indian auto component sector is in the throes of a valuation bubble. P/E multiples at 3–4x global averages. Revenue growth justified the premium for the last two years. Now earnings are stalling — and the market hasn’t noticed yet.
🔧 The Core TII Story Still Works
Engineering segment (CDW tubes, CRS strips) is a genuine oligopoly. 51% market share in CDW. Customer stickiness is real. Domestic demand accelerating. Exports headwinds (US tariffs, Europe weakness) are cyclical. By FY27, if US tariff relief comes (unlikely but possible), TII could see 15–20% engineering segment growth. That alone would reset the narrative.
🚗 The EV Transition Contradiction
TII is selling traditional lubricants to car makers while simultaneously betting billions on EVs that need less lubrication. This is the classic innovator’s dilemma. Good news: EVs still need gearbox oils, brake fluids, coolants, and thermal management fluids. TII’s traditional auto business won’t evaporate. Bad news: EV adoption in India is still <5% of new car sales. The transition is a 10–15 year story. TII is burning cash for a 2030+ payoff.
⚡ The Sector Malaise: Margins Under Pressure
OEM consolidation (Maruti, Hyundai, Tata) puts pressure on suppliers. Component makers are competing hard on price. Wage inflation (labor shortage in manufacturing). Capex intensity rising. Raw material costs volatile. TII’s OPM compression from 12.6% (FY23) to 9.2% (TTM) is not unique — it’s the trend. Peers are facing the same. Difference: TII has diversified (CG Power pulling weight) and is investing in adjacencies. Smart or stupid? Depends on execution.
🔄 The Structural Tailwind: Domestic Demand Post-GST
Management’s own concall (Feb 2026): “after GST cut, domestic market is absolutely bullish.” This is real. GST cut on two-wheelers and commercial vehicles is driving demand. Vehicle parc growing. CV utilization at highs. Infrastructure capex running hot. These tailwinds will likely persist through FY27–FY28. TII’s engineering division is the primary beneficiary.
Competitive dynamics: Bharat Forge is a pure-play forging player. Bosch is larger, more diversified, and better-managed. Schaeffler has stronger tech. But TII is the only one with a meaningful EV bet through a separate listed/quasi-listed entity. That’s either visionary or reckless. The market is treating it as reckless (hence the P/B discount despite P/E premium).
Capital allocation red flag: If TII’s core auto business is maturing (margins shrinking), why not return more cash to shareholders? Why commit ₹500–750 Cr to a loss-making EV venture that management itself says will take 12–18 months to breakeven? The answer: management believes in the EV transition. Shareholders are skeptical. That’s the valuation disconnect.
The Conglomerate’s Reckoning
Tube Investments is caught in the paradox of modern Indian manufacturing: the core business is healthy, diversified, and profitable. The parent is essentially a private equity fund writing ₹150–200 crore cheques into a loss-making EV startup every quarter. The stock valuation reflects a bet that the EV pivot succeeds. If it fails — or even delays by 2 years — the downside is 60–70%.
Q3 FY26 Execution: Engineering revenue ₹1,438 Cr (up 18.6% YoY). CG Power revenue ₹3,175 Cr (up 26% YoY). Profit ₹420 Cr. These are not weak numbers. Cycles turned profitable. Shanthi Gears is struggling, but management expects normalization in 1–2 quarters. The core business is fine.
The EV Bet: TI Clean Mobility burned ₹164 crore in Q3. Management guidance: breakeven for 3Ws and M&HCVs in 12–18 months. If true, this is a credible bet on India’s last-mile mobility transition. If false, it’s a ₹500+ crore wealth destruction. No in-between. Feb 2026 concall showed management doubling down: “now is the time to double down… It is not the time to kind of back off.” That’s conviction. Or desperation.
Valuation Context: Trading at 85.3x P/E vs sector median of 26.7x. Even assuming 12% CAGR in earnings over 5 years (well above historical), the intrinsic value is ₹400–600/share. Current price: ₹2,723. The stock has already priced in a 10x+ expansion of the EV business AND the core auto business growing 15%+ annually. That’s aggressive.
Historical Context (The Hard Truth): Three-year ROE has compressed from 21.2% to 12.8%. Five-year profit CAGR is +16.4%, but TTM profit is down 25% YoY. The core business strength is not translating to shareholder returns because capex is eating into cash. The company is reinvesting heavily. That’s often good. Here, it’s unclear if it’s working.
✓ Strengths
- 51% market share in CDW tubes — genuine oligopoly
- CG Power: ₹3,175 Cr revenue, ₹420 Cr quarterly profit
- Diversified revenue base — not dependent on single segment
- Domestic demand bullish post-GST cut (structural tailwind)
- Net debt negative; balance sheet fortress-like
- Management committed to medium-term strategy (EV bet)
✗ Weaknesses
- OPM compression: 12.6% (FY23) → 9.2% (TTM)
- ROE down from 21% to 12.8% — capex diluting returns
- EV subsidiary burning ₹164 Cr/qtr — no profitability horizon clear
- Shanthi Gears struggling (revenue down 26% YoY)
- Valuation stretched at 85.3x P/E vs 26.7x sector median
- FCF negative — capex > operating CF
→ Opportunities
- Export growth if US tariffs ease (50% duty currently)
- CG Power services play (currently 1–2% of revenue; underpenetrated)
- EV breakeven in 12–18 months could re-rate stock upward
- Semiconductor OSAT (govt-backed capex; long-term optionality)
- E-bikes traction — cycles return to relevance
- Domestic CV/commercial vehicle growth legs ahead
⚡ Threats
- EV losses extend beyond 18 months (cash burn accelerates)
- US export tariffs persist (Section 232 headwind structural)
- Margin compression in core auto (OEM consolidation pressure)
- Shanthi Gears slowdown persists beyond 2 quarters
- Semiconductor project execution risks (geopolitical tech)
- Stock valuation mean reversion if EV bet falters (60–70% downside)
Tube Investments is a strong business trapped in an expensive stock.
The engineering division is firing. CG Power is a cash machine. Cycles are turning around. But management is betting the entire conglomerate on an EV transition that, frankly, faces headwinds. The stock has already priced in success. If TI Clean Mobility reaches profitability by end of FY27, the stock re-rates to ₹3,500+. If it slips to FY28 or beyond, it corrects to ₹1,800–2,200. The risk-reward is 2.5:7 (upside:downside). For risk-averse investors, the margin of safety is thin.
The core business justifies ₹400–600/share. The EV bet is priced at ₹2,100+. You’re paying a ₹2,100 premium for management’s conviction that EVs will scale in India. Conviction is not data. And in India, last-mile transport is still dominated by lead-acid batteries and used imports. EVs are coming. But slowly.
For long-term investors with 3–5 year horizon: wait for a 25–30% correction and entry near ₹2,000. For those who believe in the EV thesis: the conviction is there. You’re betting on management execution, not financial metrics. For dividend seekers: 0.13% yield is a waste of capital. Cash allocation is going into capex, not shareholders.