ZFCVINDIA - ZF Commercial

📊 NSE: ZFCVINDIA 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 15:23

💰 Financial Performance

Revenue Growth by Segment

Overall revenue for H1 FY26 grew 4.1% YoY to INR 2,003.6 Cr. OE sales for commercial vehicles > 6 tonnes grew 7.4% in Q2 FY26. Export of services grew by a robust 12.1% in Q2 FY26, while export of parts and products registered a 16% decline in the same period.

Geographic Revenue Split

Domestic India remains the primary market. Exports are split between the US (which saw volume reduction due to tariffs) and Europe/EMEA (which saw volume increases that did not fully offset the US decline).

Profitability Margins

Net Profit Margin improved to 12.06% in FY25 from 10.70% in FY24. Operating Profit Margin rose to 16.10% in FY25 from 14.52% in FY24. Gross margin improved by approximately 160 bps Q-on-Q in Q2 FY26 due to material costing and production efficiency.

EBITDA Margin

The company reported an EBITDA margin of 22.9% for Q2 FY26. Consolidated net profit for H1 FY26 reached INR 230.65 Cr, up 10.6% YoY.

Capital Expenditure

The company reported a working capital improvement of INR 187 Cr in H1 FY26. Specific future capital expenditure in INR Cr was not disclosed in available documents.

Credit Rating & Borrowing

The company maintains zero debt with a Debt-Equity Ratio of N.A. and relies on cash reserves to meet obligations, avoiding the need to borrow or raise capital.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include Aluminum and Scrap (facing rising costs) and Iron Ore (benefiting from lower prices).

Import Sources

Not specifically disclosed, though the company is pursuing localization strategies to counter global cost pressures.

Capacity Expansion

The company operates 6 manufacturing units in India. The Jamshedpur plant recently implemented rainwater harvesting infrastructure with a capacity of 1,300 cubic meters.

Raw Material Costs

Material to sales ratio improved in Q2 FY26 due to active material costing and production efficiency. Rising scrap and aluminum costs are expected to offset benefits from lower iron ore prices.

Manufacturing Efficiency

Achieved a 160 bps Q-on-Q gross margin improvement. The company recorded a Parts per Million (PPM) rate of 71 in FY25, with a target of zero field failures.

📈 Strategic Growth

Growth Strategy

Growth will be achieved by focusing on the LCV segment (< 6 tonnes) which grew 8% in H1 FY26, scaling engineering services exports (12.1% growth), and launching new products like Actuator 4.0 and air compressors for global OEMs.

Products & Services

Automotive components and spares (100% of turnover), Actuator 4.0, air compressors, and engineering services.

Brand Portfolio

ZF, ZF Commercial Vehicle Control Systems India (formerly WABCO India).

New Products/Services

Successful start of production for Actuator 4.0 and air compressors for global OEMs.

Market Expansion

Strategic focus on the LCV category (< 6 tonnes) and reinforcing India as a strategic hub for global engineering services.

Strategic Alliances

The company is a subsidiary of the ZF Group, which holds a 63.16% stake.

🌍 External Factors

Industry Trends

The LCV segment grew 8% in H1 FY26, driven by GST reductions and rising consumption. The industry is shifting toward safer, smarter, and sustainable transportation ecosystems.

Competitive Moat

Moat is sustained by cost leadership through localization, value engineering, and being a strategic global hub for ZF Group's engineering services.

Macro Economic Sensitivity

India's real GDP recorded a robust growth of 7.8% in Q1 FY26. Global GDP growth is projected to slow from 3.3% in 2024 to 3.2% in 2025.

Consumer Behavior

Rising consumption demand is facilitating fixed investment and driving expansion in the LCV category.

Geopolitical Risks

Ongoing tariff and trade policy uncertainties, particularly in the US market, have decreased external demand for parts.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by Indian Accounting Standards (Ind AS) and the Companies Act, 2013. GST reductions and government infrastructure investments are key regulatory drivers.

Environmental Compliance

Sustainability initiatives include rainwater harvesting infrastructure at the Jamshedpur plant with a 1,300 cubic meter capacity.

Taxation Policy Impact

The company provided INR 148.14 Cr for taxation in FY25. GST reductions are cited as a direct driver for growth in the LCV segment.

⚠️ Risk Analysis

Key Uncertainties

Key risks include US tariffs (impacting exports by 16%), global GDP slowdown (projected at 3.2% for 2025), and the cyclical nature of the Indian commercial vehicle industry.