ZF Steering Gear India Ltd (505163)
Latest quarterly results (Q1 FY27)
In its latest reported quarter, Q1 FY27, ZF Steering's revenue was ₹143 Cr (+7.6% year on year, -17.9% on the previous quarter), and net profit ₹11.4 Cr (+59.7% year on year); the operating margin was 9.3%.
| Q1 FY27 (₹ Cr) | Value | YoY vs Q1 FY26 | QoQ |
|---|---|---|---|
| Revenue | ₹143 | +7.6% | -17.9% |
| Operating profit | ₹13.3 | -26.5% | -36.1% |
| Net profit | ₹11.4 | +59.7% | from loss |
| EPS (₹) | 13.63 | +55.2% | from loss |
| Operating margin | 9.3% | — | — |
📢 Recent Corporate Announcements
ICRA has reaffirmed ZF Steering Gear's long-term credit rating at [ICRA]A+ with a Stable outlook and short-term rating at [ICRA]A1+ for its Rs 105 crore facilities. The company demonstrated healthy performance with 15% YoY consolidated revenue growth in FY2026 and operating margins expanding to 14.6%. While a significant capex of Rs 140-150 crore is planned for FY2027-28, the company maintains a strong liquidity position with Rs 87 crore in free cash and liquid investments. However, a pending Rs 100 crore patent infringement claim by ZF Germany remains a key monitorable risk.
- Ratings reaffirmed at [ICRA]A+ (Stable) and [ICRA]A1+ for Rs 105 crore bank facilities
- Consolidated revenue grew 15% YoY in FY2026 and 11% in Q1 FY2027
- Planned consolidated capex of Rs 140-150 crore over FY2027 and FY2028 for backward integration
- Free cash and liquid investments stood at Rs 87 crore as of March 31, 2026
- Operating Profit Margin (OPM) expanded to 14.6% in FY2026 from 11.6% in FY2025
ICRA has reaffirmed ZF Steering Gear India's credit ratings at [ICRA]A+ (Stable) and [ICRA]A1+ for its Rs 105 crore working capital facilities. The rating reflects the company's dominant duopolistic position in the domestic M&HCV and tractor steering market. While consolidated revenue grew 15% in FY26, margins saw a slight moderation to 11.9% in Q1 FY27 due to commodity inflation and costs associated with a new aluminium extrusion plant. The company maintains a strong liquidity position with Rs 87 crore in free cash and unpledged investments as of March 2026.
- Reaffirmed Long-term rating of [ICRA]A+ (Stable) and Short-term rating of [ICRA]A1+ for Rs 105 crore facilities.
- Consolidated revenue growth of 15% in FY2026 and 11% in Q1 FY2027 supported by CV wholesale volumes.
- Planned consolidated capex of Rs 140-150 crore over FY2027 and FY2028 for backward integration and capacity addition.
- Operating Profit Margin (OPM) expanded to 14.6% in FY2026 from 11.6% in FY2025, though moderated in Q1 FY2027.
- Ongoing litigation with ZF Germany involves a potential Rs 100 crore damage claim regarding trademark infringement.
ZF Steering Gear India Ltd held its 46th Annual General Meeting on July 27, 2026, to adopt FY26 financial statements and re-appoint key leadership. Shareholders voted on six resolutions, including the re-appointment of Mr. Dinesh Munot as Chairman and Mr. Utkarsh Munot as Managing Director. A critical agenda item involved the approval of material Related Party Transactions (RPTs) between the company and its subsidiaries, which are central to its backward integration strategy. The company is currently navigating a cyclical downturn in the CV segment, with TTM PAT at Rs 12 Cr against a Rs 490 Cr market cap.
- 46th Annual General Meeting concluded on July 27, 2026, with 45 members present via video conference.
- Shareholders voted on the re-appointment of Mr. Dinesh Munot as Chairman and Whole-Time Director via Special Resolution.
- Approval sought for material Related Party Transactions (RPTs) involving subsidiaries DriveSys, NexSteer, and Metacast.
- Company is executing a planned capex of Rs 150 Cr for FY26-27, representing approximately 26% of TTM revenue.
- The meeting addressed financial performance for FY 2025-26 and the first quarter of FY 2026-27.
ZF Steering Gear's wholly-owned subsidiary, DriveSys Systems, has revised its Aluminium project cost upward from ₹100 crore to ₹150 crore. This 50% increase in budget is intended to transform the facility into an 'Integrated Aluminium Value Chain Unit' by adding downstream processes like anodizing, machining, and assembly. The company is also seeking to acquire additional land for capacity expansion. This total capex of ₹150 crore is significant, representing approximately 31% of the company's current net worth.
- Project cost for DriveSys Systems revised upward to ₹150 crore from the initial ₹100 crore
- Expansion includes new facilities for anodizing, machining, cutting, punching, and assembly
- Application submitted for acquisition of additional land adjacent to the existing project site
- Standalone Q1 FY27 PAT increased to ₹18.52 crore from ₹11.95 crore in the previous year's quarter
- Standalone revenue for Q1 FY27 grew to ₹137.78 crore compared to ₹130.93 crore YoY
ZF Steering Gear reported a strong Q1 FY27 with standalone PAT rising 55% YoY to ₹18.52 Cr, though this was significantly aided by a jump in other income to ₹18.84 Cr. Consolidated revenue grew moderately to ₹139.01 Cr. A major strategic update involves the subsidiary DriveSys, where the Aluminium Project cost has been revised from ₹100 Cr to ₹150 Cr to include downstream processing like anodizing and machining. This ₹150 Cr capex is substantial, representing approximately 26% of the company's TTM revenue and 31% of its market cap.
- Standalone PAT increased 55% YoY to ₹18.52 Cr for the quarter ended June 30, 2026.
- Other income surged to ₹18.84 Cr from ₹7.54 Cr in the corresponding quarter last year.
- Aluminium project cost for subsidiary DriveSys revised upward by 50% to ₹150 Cr.
- Cumulative capex already incurred for the Aluminium project stands at approximately ₹118 Cr.
- Standalone EPS for the quarter improved to ₹20.41 compared to ₹13.17 in Q1 FY26.
ZF Steering Gear reported a 55% YoY increase in standalone net profit to Rs 18.52 Cr for Q1 FY27, though this was significantly aided by a jump in other income to Rs 18.84 Cr. Operationally, standalone revenue grew 5.2% YoY to Rs 137.78 Cr. A major strategic update involves the subsidiary DriveSys Systems, which has revised its Aluminium Project cost upward from Rs 100 Cr to Rs 150 Cr to include downstream processing and capacity expansion. This project is highly material, representing approximately 31% of the company's current net worth.
- Standalone Net Profit increased 55% YoY to Rs 18.52 Cr in Q1 FY27 from Rs 11.95 Cr.
- Aluminium Project cost revised upward by 50% to Rs 150 Cr for integrated value chain capabilities.
- Cumulative investment already incurred in the Aluminium Project stands at approximately Rs 118 Cr.
- Other Income spiked to Rs 18.84 Cr, representing 12% of total income for the quarter.
- Standalone revenue from operations grew 5.2% YoY to Rs 137.78 Cr.
ZF Steering Gear India has scheduled a board meeting on July 24, 2026, to approve its standalone and consolidated financial results for the quarter ended June 30, 2026. The company is coming off a volatile period, having reported a net loss of ₹0.89 Cr in the March 2026 quarter despite revenue growth to ₹174.34 Cr. Investors will be monitoring for margin recovery, as the company executes a ₹150 Cr capex plan for FY26-27, representing approximately 31% of its current market cap. The trading window for company securities is currently closed per insider trading regulations.
- Board meeting scheduled for July 24, 2026, to approve Q1 FY27 results
- Company reported a net loss of ₹0.89 Cr in the preceding quarter (March 2026)
- Ongoing ₹150 Cr capex program for FY26-27 focused on backward integration
- Trading window closed until 48 hours after the results declaration
- TTM revenue stands at ₹571 Cr with a current P/E of 40.3
Financial Performance
Revenue Growth by Segment
The Auto-Components segment reported a Profit Before Tax (PBT) of INR 20.43 Cr in FY25, showing substantial improvement. The Renewable Energy segment reported a PBT of INR 8.55 Cr. Standalone revenue from operations and other income grew by 1.05% YoY from INR 515.65 Cr in FY24 to INR 521.07 Cr in FY25. Consolidated revenue grew by 0.47% from INR 512.16 Cr to INR 514.59 Cr.
Geographic Revenue Split
Not disclosed in available documents. The company primarily caters to the domestic Indian market, specifically supplying to various State Transport Undertakings and leading automotive OEMs.
Profitability Margins
Consolidated PAT margin declined significantly from 9.0% in FY24 to 2.5% in FY25. Standalone Net Profit Margin decreased by 31% YoY, falling from 10.00% in FY24 to 6.90% in FY25, primarily due to lower other income and a 99% increase in tax expenses (from INR 8.32 Cr to INR 16.55 Cr).
EBITDA Margin
Consolidated OPBDIT/OI margin stood at 10.8% in FY25, down from 12.0% in FY24. Standalone Operating Profit Margin remained stable at 11.09% in FY25 compared to 11.00% in FY24, reflecting consistent core operational efficiency despite subsidiary-level pressures.
Capital Expenditure
The company has planned a consolidated capital expenditure of INR 140-150 Cr for FY2026-FY2027. This is focused on backward integration and capacity addition. As of March 31, 2024, the company had already incurred over INR 75.0 Cr of this planned outlay.
Credit Rating & Borrowing
ICRA reaffirmed the long-term rating at [ICRA]A+(Stable) and short-term rating at [ICRA]A1+ as of June 2025. Borrowing costs have increased, leading to a 72% drop in the standalone Interest Coverage Ratio from 62.58x in FY24 to 18.64x in FY25.
Operational Drivers
Raw Materials
Machined castings represent the primary raw material component. The company is pursuing backward integration to manufacture these in-house to reduce dependency and improve margins.
Import Sources
Not disclosed in available documents; however, the company is shifting toward in-house sourcing via its Pithampur plant and subsidiaries.
Key Suppliers
Not disclosed in available documents. The company is transitioning to internal supply through subsidiaries like DriveSys Systems and Metacast Auto Private Limited.
Capacity Expansion
Planned capex of INR 150 Cr for FY26-27 is dedicated to backward integration and capacity addition. DriveSys Systems Private Limited started commercial production in March 2024 to support this expansion.
Raw Material Costs
Not disclosed as a specific percentage of revenue, but the company notes that backward integration into machined castings is expected to support future profitability by reducing procurement costs from external vendors.
Manufacturing Efficiency
The company emphasizes quality betterment and productivity at all levels. Standalone Inventory Turnover Ratio improved slightly by 1% from 7.48x to 7.57x in FY25.
Strategic Growth
Growth Strategy
Growth is driven by a backward integration strategy through subsidiaries (DriveSys, NexSteer, Metacast) to manufacture key components in-house. This is intended to stabilize the supply chain and improve consolidated margins as these entities scale up from their current nascent stage.
Products & Services
Steering Gear Systems (Power Steering and Mechanical Steering) for Medium & Heavy Commercial Vehicles (M&HCV), tractors, dumpers, and haulage trucks.
Brand Portfolio
ZF (currently under litigation), ZF India.
New Products/Services
The company is investing in technology-driven products to prevent obsolescence during emission norm transitions. Expected revenue contribution from new subsidiaries is envisaged to improve over the medium term as they attain operational stability.
Market Expansion
The company is focusing on deepening its presence in the domestic CV and tractor steering systems market, where it already holds a dominant position.
Market Share & Ranking
The company operates in a duopolistic market for M&HCV and tractor steering systems, jointly commanding virtually the total market share with the Rane Group.
Strategic Alliances
Formed a Joint Venture, Metacast Auto Private Limited, for manufacturing machined castings. Previously had a JV with Robert Bosch Automotive Steering GmbH, which exited in March 2023.
External Factors
Industry Trends
The industry is shifting toward tighter emission controls and electric vehicles. While the transition in M&HCVs is gradual, the company must invest in EV-compatible steering components to remain relevant.
Competitive Landscape
The primary competitor is the Rane Group. JTEKT is a competitor but is primarily focused on the passenger vehicle segment.
Competitive Moat
The moat is based on a duopolistic market structure and long-standing OEM relationships. This is sustainable due to the high technical barriers and safety-critical nature of steering systems, though it is currently challenged by trademark litigation.
Macro Economic Sensitivity
Highly sensitive to the domestic CV and tractor industry cycles, which are linked to infrastructure spending and agricultural output.
Consumer Behavior
Demand is driven by OEM production schedules rather than direct consumer behavior, though end-user demand for haulage and transport affects OEM orders.
Geopolitical Risks
The exit of the foreign JV partner (Bosch) and the ongoing litigation with ZF Friedrichshafen AG (Germany) represent significant corporate-geopolitical risks regarding technology access and brand usage.
Regulatory & Governance
Industry Regulations
Subject to automotive safety standards and tightening emission norms (BS-VI and beyond), which require continuous product redesign.
Environmental Compliance
The company operates a zero-discharge plant at Pithampur and utilizes renewable energy (windmills) for 25-30% of power, reducing regulatory risk related to carbon footprints.
Taxation Policy Impact
Standalone tax expense increased by 99% to INR 16.55 Cr in FY25, which significantly impacted net profit margins.
Legal Contingencies
A major Commercial Suit is pending in the Bombay High Court regarding trademark infringement. ZF AG has demanded INR 100 Cr in damages, while ZFI has filed a counter-suit claiming INR 200 Cr for 'passing off' and injunctions against ZF AG.
Risk Analysis
Key Uncertainties
The outcome of the trademark litigation with ZF AG is a key uncertainty. A negative ruling could result in a INR 100 Cr payout and the loss of brand identity. Subsidiary ramp-up risks also impact near-term consolidated profitability.
Geographic Concentration Risk
High concentration in the domestic Indian market, specifically within industrial hubs catering to CV and tractor OEMs.
Third Party Dependencies
Historically dependent on external suppliers for castings, which is being mitigated by the INR 150 Cr backward integration capex.
Technology Obsolescence Risk
Risk of obsolescence if the company fails to transition steering technology for electric vehicles or advanced driver-assistance systems (ADAS).
Credit & Counterparty Risk
Receivables quality is generally high due to established relationships with major OEMs, reflected in a stable Debtors Turnover Ratio of 4.71x.
