About the Company:

The Company is the leading manufacturer of thermal products for automotive applications in India, in technical collaboration with Denso Corporation, Japan. It is engaged in manufacturing and sale of thermal products for automotive and home air-conditioning original equipment manufacturers.

Denso Corporation (formerly Nippon Denso) provides technical information to implement projects and to manufacture automotive air-conditioning systems including swash-plate type compressors, clutches and other associated components for cars and light commercial vehicles. In addition to providing advice about the design, manufacturing, and production problems, it also trains technical personnel of Subros. Subros caters to the OEM segment with clients such as Maruti, TELCO and PAL. Subros signed a MoU with Allied Signal Environment Catalysts (ASEC), US, for a joint venture to produce catalysts to be used in catalytic convertors in vehicles using unleaded petrol.

Currently company is a joint venture with 36.79% ownership by Suri Family of India, 20% ownership by Denso Corporation, Japan & 11.96% ownership by Suzuki Motor Corporation, Japan.  It is engaged in the business of manufacturing and supplying Auto Air Conditioning products for all major Automakers in Passenger and Commercial Vehicle Space along with a technical collaboration with Denso Corporation. The company also manufactures a range of thermal cooling products like Compressors, Condensers, Radiators, Blowers, Hoses & Tubes, etc, for cars, buses, trucks, tractors, reefers, Railways, and Home ACs. The company is India's largest Air Conditioning & Thermal Products manufacturer, holding a 42% market share in passenger car ACs and 44% in the truck aircon/blower segment.

The company operates 8 manufacturing plants across India and has 2 Technical Centres & a Tool Engineering Centre in Noida. The company has recently initiated the Start of Production (SOP) for 2 new models and plans to begin SOP for new business in the EV Vitara and truck segments.

Figure 1Company's Clientele

In FY26, the company plans to invest Rs. 150 Cr in a greenfield project at Kharkhoda to expand its capacity by 4.5 lakh p.a. parts for air-conditioning, along with Rs. 120 Cr for regular capex, product development, and technology advancement. The company is working to capitalize on the Government of India's mandate requiring air-conditioned (AC) cabins in N2 and N3 category trucks (GVW >3.5 tonnes) from October 2025. Having secured all relevant businesses, the company is in the development phase and expects significant growth in the truck segment.

Fundamentals:

Financial Results:

In Q1Fy26 company reported Revenue of Rs. 878.25 Cr. with 8.45% jump, PAT of 40.66 Cr. with 16.48% jump, EBITDA of 87.7 with 9.05% jump compared to same quarter on YoY basis.

Conclusion:

In summary, Subros Ltd stands as a major player in India’s automotive thermal products segment, holding a strong leadership position in passenger car air conditioning and truck aircon/blower systems, backed by solid technical collaborations. The company has delivered steady revenue growth in recent years, though profitability and capital return metrics remain moderate. At current market levels, its valuation appears somewhat stretched compared to intrinsic value, which limits the margin of safety for fresh investors.

The broader automotive HVAC industry in India is on a robust growth trajectory, driven by rising demand for automatic climate control, higher comfort standards, improved in-cabin air quality, and greater emphasis on energy efficiency. The accelerating shift towards electric vehicles is also reshaping HVAC requirements, with manufacturers expected to deliver energy-efficient systems that can adapt to new powertrain technologies. In addition, evolving environmental regulations around refrigerants and emissions are influencing design, innovation, and cost structures across the industry.

Given Subros’s market leadership, established capabilities, and exposure to these favorable industry trends, it remains an attractive long-term player in the automotive supply chain. However, considering the current valuation, cautious investors may prefer to wait for more attractive entry levels, while existing shareholders can continue to benefit if the company sustains its growth momentum and advances in energy-efficient HVAC solutions.

HET ZAVERI
info@smartinvestment.in

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