Subros Plans To Extend Dominance In Auto Air-Conditioning Market

It has set a long-term target of increasing market share to 45% in passenger vehicle segment and 55% in truck segment.

(Source: Subros website)

Auto air-conditioning market leader Subros Ltd. unveiled plans to boosts its dominance in both the passenger vehicle and truck segments, while improving its profitability to double-digits.

It has set a long-term target of increasing market share to 45% in passenger vehicle segment and 55% in truck segment, up from 42% and 51%, respectively, in the first half of the ongoing financial year.

It also aims to raise Ebitda to over 10% in the short-term and 12% in the long-term, according to the company's investor presentation shown to analysts on Monday.

The analyst meet comes on the heels of the government's directive mandating air-conditioned truck cabins from Oct. 1, 2025, which Dolat Capital has projected to be a Rs 400-450 crore market opportunity.

Also Read: Here's Why Subros Is Poised To Capture Rs 450 Crore Auto Air Conditioning Market

Growth Drivers

Subros expects the 7% CAGR growth in passenger vehicle sales till FY30 will drive the demand higher for its products, while it continues to focus on extracting more business from the existing clients.

"This increase in SUV market share, along with expected penetration of 20-30% for EVs, will bode well for Subros going forward," Nirmal Bang Securities Pvt. said in a note. "This trend would lead to increased content per vehicle, besides aiding in revenue growth and margin improvement."

In the commercial vehicle segment, it sees industry growth, higher penetration of air-conditioners and increased regulations as the key growth drivers.

Following the government notification on Sunday, Subros' shares saw an intraday surge of nearly 18% on Monday.

Tata Motors, the leading heavy truck maker and a client of Subros, currently has 25% AC penetration.

This will reach 100% once the mandate is implemented, benefitting the company, Subros said in the investor presentation.

In the quarter ended September, the company's revenue rose 17% year-on-year to Rs 813 crore, its highest ever.

Of this Rs 813 crore, Rs 42 crore came from the truck segment.

It expects the sales in the category to grow 2 times in the next 2-3 years.

The company recorded 11% growth for AC or blower applications in commercial vehicles in Q2, compared to the same period last year, at par with industry growth.

The company also laid out plans to improve localisation, renegotiate existing contracts and reduce costs to boost its Ebitda margin to 12% in the long-term.

Ebitda margins have displayed a recovery trend, reaching their highest point in 11 quarters at 8.6% in the quarter ended September. The company is targeting a double-digit margin in FY25.

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WRITTEN BY
Vinay Khulbe
Vinay writes on automobile, aviation and developments related to mobility f... more
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