Ladies and gentlemen, good day and welcome to the CIE India Q2 CY 2026 Results Conference Call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta. Over to you, sir.
Yeah. Thank you, Ananya. Good afternoon, everyone. On behalf of ICICI Securities, we would like to welcome you all to CIE Automotive Q2 CY 2026 Earnings Conference Call. Today we have with us from the management team, Mr. Ander Álvarez, CEO, Mr. Kiyath Jayaprakash, CFO, Mr. Vikas Sinha, Senior VP, Strategy, and Mr. Oroitz Lafuente , Business Controller. We will start the call with a brief opening remarks from the management team about the quarter gone by, and then we will proceed with a Q&A session. Thank you, and over to you, management team.
Yeah. Hi, Ronak. Thanks to everyone. I welcome all of you on this call and also Ander, our CEO. I will present CIE India results for the quarter two and H1 CY 2026. The results of the India operations for Q2 CY 2026 are on Page six. Sales at INR 16.5 billion were 13% higher year-on-year. Market demand was robust in Q2 CY 2026, though we expect a gradual slowing down of growth over the next few quarters as the effect of GST cuts filters out and the negative impact of an expected below normal monsoon season starts impacting rural incomes. We have new orders and projects coming through in the next few quarters and expect the good growth trend to continue. The India operations achieved an EBITDA margin of 16.7% in Q2 CY 2026 versus 17.5% in Q2 CY 2025 and 17.6% in Q1 CY 2026.
Margins in the quarter have been affected by price inflation generated by the conflict in West Asia, affecting mainly energy consumables and also part of raw materials. We are taking countervailing measures against these increases which will show up in the next two quarters. In Q2 CY 2026, EBITDA grew 9% year-on-year, EBIT 8% and EBT 6% in the Indian operations. On Page seven we have the Q2 CY 2026 results for our European operations. Sales of INR 8.9 billion in Q2 CY 2026 were 7% higher year-on-year versus Q2 CY 2025 but lower sequentially by 3.7% versus Q1 CY 2026. The sales growth in euro terms was -6% as there was an exchange rate translation impact of +13%. This is reflective of the underlying market trend.
The EBITDA margin in our European operations in Q2 2026 was 15.9% versus 12.5% in Q2 2025 and 15.7% in Q1 2026. Margin recovery is because of last year's restructuring activities. In Q2 2026, EBITDA grew by a healthy 36% year -on- year, EBIT by 46% and EBT by 46% in the European operations. On Page eight, we have the consolidated CIE India Q2 2026 results. Consolidated sales were INR 25.4 billion, 11% higher versus Q2 2026 and fractionally higher sequentially. EBITDA was INR 4.2 billion, EBIT INR 3.2 billion and EBT INR 3.1 billion higher year -on -year by 17%, 18% and 15% respectively. This represents a decent consolidated performance especially of the bottom line, supported by the business growth in India and the currency impact in Europe. The full year H1 2026 results for our Indian operations are on Page 10. Sales increased by 14% versus H1 2025.
To INR 32.7 billion. The double-digit growth was supported by favorable market growth in the period, but it could have been higher. Two reasons need to be highlighted. The restructuring of our business portfolio at our aluminum vertical, wherein we have let go of some loss-making products. Second, it was the second successive quarter when exports underperformed year -on -year. Also, we have started delivery in our key machined casting exports project in the foundry vertical, but revenue recognition will happen next quarter onwards. The EBITDA margin of our Indian operations in H1 2026 was 17.2% versus 18% in H1 2025. As explained earlier, the margin was slightly depressed due to cost inflation on account of the situation in West Asia. While sales in the Indian operations grew 14% in H1 2026, EBITDA grew 9%, EBIT 9%, EBT 8% and PAT 8%.
On Page 11, we have the H1 2026 results for our European operations. Sales increased by 12% versus H1 2025 to INR 18.1 billion. In euro terms, sales declined by 3% due to the weak European automotive market evolution that can be seen on the table to the right. There was a healthy increase in EBITDA margin to 15.8% in H1 2026 versus 13.1% in H1 2025, thanks to restructuring actions taken in the previous year. This had a cascading effect with EBITDA in the European operations increasing by 35% in H1 2026, EBIT by 43%, EBT by 50%, and PAT by 51%. The half-yearly PAT crossed INR 1.5 billion, and this is a silver lining around the gloomy market situation in Europe.
The European automotive market continues to be near stagnant on account of the various reasons we have discussed in the last few calls. On Page 12, we have the H1 CY 2026 consolidated results of CIE India. Sales were INR 50.8 billion, which is 13% higher than H1 CY 2025. The EBITDA margin was 16.7% versus 16.3% in H1 CY 2025. EBIT 12.9% versus 12.4%, EBT 12.6% versus 12.1%, and PAT 9.5% versus 9.1% in the previous half-year. The consolidated PAT in H1 CY 2026 was INR 4.9 billion, which is 18% higher than in H1 CY 2025. That again, I would say, is a reasonable PAT growth. The abridged consolidated balance sheet is on Page 14, and the cash flow statement is on Page 15. Both show the healthy state of CIE India.
Return on net assets at the end of H1 CY 2026 was 19.4%, versus 18.4% at the end of CY 2025. The consolidated net financial debt at the end of H1 CY 2026 was INR -14.2 billion, which means we have healthy liquid cash available, and we are actively evaluating organic and inorganic growth opportunities. The CapEx during H1 CY 2026 was INR 2.1 billion as compared to INR 3.8 billion in full year CY 2025. The growth CapEx is mainly concentrated in India.
The CapEx in H2 CY 2026 is expected to be significantly higher than in the first half of the year. Some of the approved projects for which partial spend has happened include the machine casting project at the iron foundry vertical and expansion projects at gears, composites, stampings Pune and at our forgings plants in Chakan and Bengaluru. We are also evaluating brownfield expansion of our casting molding capacity at the iron foundry plant and additional new expansion projects in different verticals, including greenfields. Now we will proceed to Q&A. Hello? Hello?
Thank you very much.
Yes.
We will now begin with the question -and -answer session. Anyone who wishes to ask a question may press Star and One on their touchtone phone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nishit Jalan from Axis Capital. Please go ahead.
Yeah. Hi, good afternoon, everyone. I have three questions. Firstly, on both India and Europe business, our revenue growth performance. Sorry, I joined the call a little late, so if I missed anything, apologies for that.
Please go ahead, Nishit. Hello? Hello?
Nishit has disconnected from the line. We will move on to the next participant. Pratik Kothari from Unique PMS. Please go ahead.
Yes. Hi, good afternoon. Sir, first question on India. Compared to how the industry tailwind is and how strong that is, also our comments earlier that we take time to ramp up, but every quarter we see higher growth numbers. None of that happened this quarter. If you can just highlight anything that is missing. Even last quarter, we called out some long pending orders, delayed orders had started ramping up too. Our expectations were much different than what is being delivered. If you can just highlight anything, what's going wrong?
Pratik, we have highlighted two and a half reasons. One, the restructuring of our business portfolio at our aluminum vertical, wherein we have let go of some loss-making products so that we are below market growth rate as far as two-wheelers is concerned. Exports has been a dampener for the second successive quarter. There was no growth in the exports income. These two would account for roughly 23%-25% of our portfolio in India. Of course, some of the OEMs have not done as well. Mahindra has done very well, Maruti has done well, Bajaj has done well. But some other OEMs, for example, Hyundai has a negative growth this quarter, and they are about 5%-6% of our business. As far as Q2 is concerned, these are the main reasons. I think the impact of raw material is not very high in this quarter.
I think the steel prices for us have not gone up very much. They're very much stable. Aluminum prices have gone up a lot, but the recognition of the increased aluminum prices will probably happen next quarter onwards. So you're not seeing as far as the impact on revenue or sales of the raw material inflation as much. That's around the sales side. The weighted average market would be for us around 16.5%-16.7%, and we are close to 13% in our growth. These are the reasons as far as this particular quarter is concerned.
Right. Second on Europe. We were expecting that on the Metalcastello side, your CV market were expected to be flat to +2%, -2%, and Metalcastello was supposed to pick up. Are we seeing that recovery? Where are we? Because if you look at in euros, we used to be EUR 100 million a quarter, came down to some high 80s, and now we are at EUR 80 million, EUR 81 million.
On Europe side, I've not mentioned it in my note, in the opening note. I think a part of our European business is actually Mexico. If you remember last year, we had shifted Mexico from India to Europe. In Mexico, one of our main customers, there are two big customers, GKN and Mexichem. On GKN side, because they have changed ownership, we evaluated some of our contracts. What we were supposed to supply to them in a certain number of years, now we are supplying to them in a longer number of years. That has been the diminution. In Mexico, I think there has been a drop about 20% in revenues in this quarter. If you add that on to the market impact in Europe, is what you are seeing in this quarter in Europe in revenue terms.
Okay. On the Metalcastello side?
Metalcastello is doing well. Metalcastello in terms of EBITDA, et c, also has gone back to the old margins that they used to do in the high teens or even closer to 20% kind of EBITDA margin that they used to do. Metalcastello is not a problem. It is not Metalcastello.
Yeah.
And-
In Metalcastello we did. In the quarter, we did almost EUR 13 million turnover, that is the size of Metalcastello in the quarter, and the EBITDA margin was around 20%. That is the reality. Compared to Q2 2025, we had a double-digit growth in Metalcastello in this quarter. Metalcastello is stable, it is doing quite well. With this almost 15% of growth compared to the last year. That is the situation in Metalcastello, and as Vikas explained, a drop is coming from Mexico where one of our customers, they decided to in-source part of the production. We renegotiated with them our contract, so that is the main reason for the drop in Europe. On top of that, the market in Europe is weak, as we highlighted. In the next years, the market will continue this weak evolution.
There will be a drop of around 2%-3% this year. Next year will be similar. So that is the reality of the European business. However, in this poor market evolution, our margins are reasonable, and we are with EBITDA margins of above 15%. So that is remarkable thing, I would say. It is true that the market is complicated in Europe, but the performance of the company is quite good, I would say.
Fair enough. Thank you, and all the best.
Yes. Thank you.
Thank you. The next question is from the line of Nishit Jalan from Axis Capital. Please go ahead.
Yeah. Hi. Just one question. You are looking to expand capacity across product segments in India. Can you give us some color in terms of order wins that you have got? If you can't name the customers, that's fine, but at least in which segment, what kind of orders you have got? Because that will give us the visibility on how your performance would be going ahead compared to industry growth. Because we understand the reasons you have given us in this quarter, but it will make us more informed and our ability to forecast revenues compared to industry growth will improve if you can give color on different order wins across different segments, which is giving you confidence to expand capacity across different product segments. Thank you.
Yeah.
Okay. I would say we have got the new order book around INR 5 billion per year. That's the new order book that we have got during the first half of the year. We are in line with our internal targets, and in that sense, we are quite confident that we will continue growing and we will continue expanding the businesses. That's the reality. We cannot give this information, let's say by customer, because this is confidential information. But overall, I would say that it's well shared in the different verticals, and we are expecting to grow in all of them. Okay? I can tell you that we are expanding our iron foundry business where we have Now with the new project that Vikas mentioned in the introduction, we are now ramping up one big program for our American customers.
This will give us around INR 2,000 million per year of new turnover that will fulfill our capacities in the foundry. So we need to expand our foundry, and we will build a new line, and we are launching that new line. So that's, for example, in the iron casting business. Gear business, we have two plants, one in Rajkot and the other in Chakan, in Pune. We are expanding both plants. I mean, we are expanding the buildings because we need more surface to continue expanding the business, and new businesses are coming. So we are doing very well. So gears is also growing. The stamping business is also growing, and we have added a new complete line that we have launched, a completely robotic line that we will receive by mid of next year.
Mid of next year, we will have this new line running, and it will be installed in Raebareli. I can tell you that in all the businesses, we have expansion plan, and we are working on that. We have our roadmap. I understand that some people is expecting higher growth, but we have our roadmap. We are doing it consistently and professionally, and everything is running according to our plan. Sometimes some customers, let's say they have certain delays or certain slowdowns, as Vikas explained in the introduction, but we expect to continue growing with all the customers. We are also expanding the customer base. Overall, I would say that the situation in all the verticals is good. In this moment, for example, and one additional information, we have launched new three presses for our forging activity.
One big press for Chakan plant and two presses for our Bengaluru plant, our Bill Forge plant. I could continue explaining in all the verticals, because all of them are expanding the capacities, and all of them are getting new businesses. Let's say the speed of this growth is also given by our internal capacities because we think that the too fast growth is not good. I mean, we are focused on the profitability also and also in the return on the investment. We prioritize the return on investment and, let's say, the reliability in the deliveries and in the quality rather than the fast growth with difficulties. That's the explanation we can give you about our performance. Our view is that the market is solid.
We can expect a certain slowdown in the second half of the year because the market is very strong in this first half. But the demand from the customers and the expectations are good, and they continue chasing us for capacity. We are fulfilling the demands of our customers. Overall, I would say that the performance and the growth of the company and the margins of the company are good in a difficult situation with all this inflation impact that we have had due to the war in the Middle East. That's the summary that I can give you.
Okay. Thank you. Just one request. Like you talked about export order from your U.S. customer. Without naming the customers or maybe talk about in PV segment, we have got orders for X amount in, let's say, iron foundry or stamping or anything. Because any color, I know you cannot share customer-wise details, but any color would be helpful. Maybe if you cannot give it right now, maybe in future quarters, if you can incorporate that.
Or alternatively, if you can give us some guidance as to what kind of growth you are targeting vis-à-vis industry growth, because that will give us some colors to how you are looking at the business and how should we look at growth for the company going forward. Yes, you are doing very well on margins and ROC, that is very well accepted. But on growth front, we wanted to get more color. If not in this quarter, it will be really useful if you can incorporate some of these details in the coming quarters.
Thank you.
Okay. Thank you.
Thank you. The next question is from the line of Ganeshram from Unifi Capital. Please go ahead.
Thank you, Vikas and Ander. I will pick up where Nishit left. Obviously, from what we can see, you have the reasons for why the business has performed the way it has, both in India and Europe. What is getting difficult for us to really understand is how the business is going to perform. On one end, we do not have the granularity, which I understand you do not want to share based on confidentiality. Then we rely on the higher level commentary that comes from you, given that you have the granularity on how the business will perform.
When we look at the previous quarters, when there was an indication that we should expect outperformance over industry, in this quarter, we are told that 25% of the business was impacted because you decided to let go of a low-margin order. My question then is this not visibility that you had previously, or did you not feel it was material to communicate to shareholders? Going from here, how do we really form a view of how the business is going to perform maybe in the coming quarters and years?
Ganeshram , this is Vikas. On the portfolio restructuring, we have referred to it. Of course, there has been an expansion in the portfolio restructuring exercise, given the expanded volumes at that particular customer. So we have indicated that. Yes, the scale has increased in this quarter. Moving forward, we are talking about a growth in the range of 12%-15% is what has happened in these two quarters this year.
I think, going forward also, we are trying to maintain, as Ander was saying, that we are proceeding in a measured way. I think that is the range of growth we would like to maintain going forward. As far as the market is concerned, I think we do expect a bit of a slowdown in the market. I think as far as the growth is concerned, I think somewhere close to whatever we have been doing in Q1 and Q2 is something that we are aiming at. Ander?
Yeah. You are right. Our aim is to, let's say, outperform the market. That is our aim, and that is our internal target too. Some quarters we can be slightly below, some quarters we expect to be quite above that. It is true that in this moment, we are adding capacities, and we are launching new projects in all the verticals. For the near future, we expect to continue our growth trend. This 14%, 15% of growth that we have in this first half of the year in India, what we consider is a solid growth, maintaining good margins despite this inflationary situation and this very special situation that we had in the Q2. Despite that, we were able to get good margins, some slight decrease in margins because of this effect. But overall, I think the performance of the business is very solid.
And we expect to continue growing in a solid way. My message is that you can expect that our company is a reliable company, solid professional. We do not, let's say, play games with the customers or with that. We maintain our strategies. Also, we have this focus on the return on the investment that is critical for us, for the, let's say, long-term financial viability of the business. As you can see, we have done this during the last 10 years in a very good manner, and we are now recognized for that. And customers, let's say, are satisfied with our performance. So we think that we will continue growing, and especially in these difficult times when there is a having growth and there are difficulties in the supply chain that we are, let's say, our customers are suffering, we are fulfilling, and we are recognized for that.
I can tell you that in one of our main customers supply day, the customer expressed their gratitude to us because of our outperforming the delivery and the quality ratios, compared to the rest of the competitors. So in that sense, we are recognized. We are a good company, and we will continue growing for sure. What I can say is that the growth rate also depends on the structure and the people, engineering teams that you have. Sometimes excessive growth is painful for the company. That is why also we try to keep our growth under control to avoid, let's say, growth difficulties as some of our competitors have. That is the message. So you can rely on us on that we will continue with the growth around the market, and our expectation is to be above that growth.
Yeah. No, I appreciate the answer, Vikas and Ander. I think perhaps if there is some feedback I might share and share, it is perhaps not the business decisions that are catching investors off guard. It is perhaps the disclosures or the predictability of when things might happen or the quantum of it that is catching us off guard. So even now, when you say over the next two quarters, we expect 14%, 15% growth, do we expect that, on the upside, you might not have grown as much, but when the market is not as solid as it has been, that you would continue to maintain the 14%, 15% because the benefit has to be both ways, right, if that is what we are getting.
Perhaps if you can reconsider some of the granularity that you give us or your internal forecast that you would like to share that will provide confidence. Maybe you can compare some other peers. Even we are investors in other peers. I am happy to share it offline. That would really help investors build some confidence. You can take them along with you in your plans.
Yeah. Okay. There is one difficulty in our side because, as you know, we are a well-diversified company where we have gears, we are iron foundry, we have magnets production, we have composite metal stampings, forgings, and also aluminum. We have quite a variety of technologies. The situation in each of these technologies is different with different customers, different products, and different strategies. Okay? That is why I say we give a general picture. Also we do not want to disclose too many details because we have our non-disclosure agreement with our customers, we cannot disclose details on projects, and we do not want to also give information to our competitors either. Okay? That is the reason, because we are just giving general guidelines and general information. I would say that, as explained before, in all the verticals, we are developing and growing.
In all the verticals, we are adding capacity, we are adding new buildings, and we are also considering two, three greenfield in two different technologies that are not yet approved, so I cannot disclose, but we are discussing in the last, let us say, stages of negotiation with the customers. That is the approach that we have. CIE is betting on India. What we think is that India will be our growth market in the near future. Unfortunately, you saw that Europe is flat or even negative. The American market is also growing slowly in the next years. Not big growth expected in North America. We expect to grow in India. There is no change on that. Rest assured that we will continue investing and developing the business here in India. That is the strategy. We expect to succeed in the next years. That is the general information that I can give you. I do not know, maybe Vikas, if you want to-
Yeah, Ganeshram .
... go in details.
Thanks for your suggestions and thanks to Nishit also. I think both of you have given very detailed suggestions. We will of course consider them given some of the constraints that Ander has talked about. It is very considerate of you to take the time and do that. As far as the growth is concerned, if you look at the last few quarters, we have been close enough to the market growth rate, either in the range of ± 2%. I think this would be the first time that we have fallen somewhat lower, say, by in the range of 3.5%- 4%, around 3.5% we have fallen below the market growth rate.
As far as the weighted average market growth rate, I think, we definitely at this point of time, given that how the market is behaving, I think that is what we should be expecting at this point of time going forward as far as to whatever the weighted average market, quite close to that. I think that is something as of now we would like to look for in, let us say the next quarter. After that we will see how things go and tell you if there is any change around that. On the market side, yes, this quarter particularly has been a little bit of an outlier, and I don't think that would happen the next quarter or the quarters after that. Let us focus on the next quarter as of now.
Yeah.
Thanks, Ganeshram .
Thank you.
Thank you. Reminder for all participants, please press Star and One to ask a question. The next question is from the line of Abhishek Patel from Blue River. Please go ahead.
Yeah. Am I audible?
Yes, Abhishek, go ahead.
Thank you for the opportunity. I have two questions for Ander. My first question is, again, around growth, as some of the other participants have already asked on the call. I just wanted to understand why we have underperformed our underlying market in India, not just this one quarter, but over the, let's say, the last seven, eight odd quarters. It is not just a one quarter issue. I understand that one quarter there can be some genuine excuse for such performance, but consistent disappointment, so to speak, that is just not acceptable over an extended period, so to speak. Especially when I look at some of the other auto ancs over the past, again, on a longer term basis, CIE has been a laggard. Is it that we are losing market share to some of our peers? Why are we not being aggressive on growth?
I understand the focus on margins, but at some point, there is an inherent trade-off between growth and margins, right? Is this call being taken by someone in India, someone in Spain? Why is this not being communicated to the investors on a public forum? Secondly, when I look at CIE a couple of years back, in 2020, we are at start, compared to our peers, they were smaller than us. Today some of our peers, I won't take names on this public forum, but some of our peers who were, let's say, half of us are now one and a half times us, 50% probably larger than us. I just wanted to understand where CIE really lost the plot in that sense. To Sebastian's point about India growing in double digits.
Coming from Spain where the market itself is flat or declining, a double-digit growth in India might seem good on an absolute basis. But I would urge you to look at it on a relative basis wherein if the Indian market itself is growing at a certain rate of mid-teens and then you're growing even, let's say, 2% or 3% below that, it implies underperformance, right? I think then this performance doesn't really deserve plaudits so to speak of. Further breaking down the growth as well.
Inorganic, we've always been complaining that valuations have been higher in the Indian market and that's why we don't really do anything. But why has organic growth not kicked in for us? Be it every quarter, every customer, we have some or the other excuse. It's not like our peers also don't have excuses, right? They also face the same customers, they have the same products, but they don't come out with excuses every quarter on the quarter -after -quarter. Just wanted to get your broad sense on what is really going wrong for us.
Abhishek, thanks. First, as far as the underperformance, etc , as I said, for the last three, four, five quarters we are somewhere around the range of the organic market. It's only in this quarter that we are a little lower. That is one aspect. Of course, you talked about the point of a trade-off between growth and margins and we have been pretty much emphatic on that subject that we give equal priority to margins on that issue. That is clear and that has nothing to do with decisions being taken here or in Spain. Decisions are taken here, but the guideline is very clearly growth as well as margins, both are equally important. That's the CIE philosophy of running things, whether it is in Spain or in India or Mexico or Brazil or anywhere else. That's the way they run.
Vikas.
Hold on. Abhishek, just let me complete and I'll come back to you. That's the reason why there is resilience in that business model. I'll stop there. Yes, Abhishek. Back to you.
No, some of our peers, you spoke about margin versus growth and the trade-off. Some of our peers have not just been growing revenue but expanding margins as well. This could come from product portfolio, cost efficiency, however you look at it, some of our peers have been expanding margins as well as growing. I don't think it's fair to look at it just from that perspective. Both can be complementary and achieved together as well, right?
Yes, that's true, Abhishek. The fact is the base levels are different. When you make a comparison you also have to look at the starting base. Going from 15.5% - 16.5% is one thing, and going from 10% to 12% is another thing. That's something I would request you to also have a look at, what are the base margins. Your point is largely taken. There is a trade-off. We'll, of course, go back and evaluate some of the things that you are saying. It's an important point of view and we take it. I'll now hand it over to Ander, let him talk about his experience and CIE philosophy and decision-making a little bit more because he's our leader, so you should hear from him.
Just to take off names, Endurance and Craftsman would be prime examples.
Yes. They are good companies and we have admiration for them. I'm not about to launch into a defense of our strategy. They are good companies, and we appreciate that.
Yes. Of course, we respect our competitors and we are happy that they are doing well. We are following our own roadmap, and we have always said that one of the pillars of CIE's strategy, not CIE Automotive India, the CIE Automotive, S.A., the holding company, is the investment discipline. Okay? This is something that we follow strictly in all our regions, in Europe, in North America, in Brazil, in China, and in India. Okay? That's one key parameter that we follow. Then, of course, we want to growth and the growth is one of our strategies, and we will grow, okay, as we have been growing during all this period. We do it with, let's say, certain financial mindset also. The ROI is not negotiable. Okay?
We see a lot of competitors investing and doing things, and then three, four, five years later, they have difficulties. You probably know some of them. That's not our case. We are professionals and we have a very clear view of what we have to do and that's what we are following. Regarding the disappointment on growth, that I can understand, and of course, we would like to have grown more than we have done. We are taking our measures, and we are investing, and now we are also expanding the businesses. We will see the growth, and the growth will come. Because what is important also is that our growth is solid and sustainable. That's the strategy we have. In certain businesses we have not grown as expected, but we have plans to recuperate that.
In other businesses, we have been growing above the market. In gears, in this quarter we grew 18%, for example. In composite, 17%. Stamping 16%. This is the reality of the business. Of course, we have different businesses, so the performance is different. But in the long run, I think that we will continue growing, and that's our rate. I don't think we should give the impression that CIE is not betting on the growth. We want to grow, and we will grow for sure. But we need to do it in certain conditions and with the assurance that we will do it correctly. Also, the limitation of the internal skills and internal engineering capabilities are also something that need to be considered. Growing above 20% every year is very difficult for companies to maintain the stability.
Our view is we want to have a strong, solid, and reliable, and sustainable growth in the next years, and that's what we are trying to do. There is no limitation from our side. There is no CapEx limitation. As far as the business is profitable, we will go for it. That's the only limitation that we have. Because we are in a net cash position, we are free of debt. So the situation for us is very good to continue growing. Regarding the organic growth, sorry, the inorganic growth, because we talk about till now about organic.
Inorganic, we are also active in the inorganic growth. That's a reality. But it's true that the expectations in the Indian market, price expectations are very high, and the business cases are not positive. That's the only reason we are not going forward executing inorganic growth. But we continue being active, and if we find some company with the proper business case, we will go for it also. That's what we can explain about our strategy. We would like to continue growing, and we will continue. Thank you.
What is really changing, right? On inorganic, you said there is a certain viewpoint, but as peers have executed inorganic transactions, and they have continued to do well or either seen margin improvement or revenue growth accelerating after the acquisition that they have done. I would not like to take names again, but there are many examples out there for you to see. From a change perspective, what is it that has to change? Is it the leadership? Because I think probably we are the only auto company based in India who has the MD, so to speak, sitting out of Spain and not in India. What really changes, and how are things supposed to improve going ahead? What is really changing on the ground here?
All the management team in CIE India is Indian, except me. I am the only one that is seated in Spain and traveling frequently to India. I have been here in the last-
That is true.
No, but-
It's plausible to have an Indian head there.
Yes, but the management is completely local, 100% local. There is no doubt on that. The decisions and everything are taken quickly and locally and just with, let's say, confirmation from my side in the important decisions. But the management is completely local, so there is no problem on that side, okay. Also, I can confirm you that I have been, in the last three months, I have been every month in India, visiting and following the businesses. So we are very active on the management.
So the team is solid. The team is, I would say, fantastic, very professional, and we are 100% aligned in our Indian views and with the European views of our holding companies and owners' views. Okay. So there is no disparity. There is no differences in our view of the business. The target that we have is that we should grow as much as we can, providing we get the proper margins and proper return on investment. That's as simple as that.
Something has to change, right? Something has to give for the same set of input being same, output can't change, right? Input has to change. Be it management, either in Europe, either in India, strategies, how you look at inorganic, what valuation you're willing to pay for, the margin versus growth payoff. Something has to change for the output, which is, for us, simply put, numbers at the end of the day. For numbers to change, something at the back end, qualitatively, has to change. That would be my last statement here.
Yeah.
No, but it is. If I may add, you know, Ander, what Ander said, he gave very detailed inputs, very valuable. What has to change, in simple words, we have to accelerate our projects, which is exactly what Ander has talked about, sometime on this call also. The thing is, we have to accelerate our projects. We have enough projects, we have enough order books. Maybe we need to push some of those projects a little harder. That is the change that will drive growth faster, and that is the message that we are taking back. As far as the leadership, et c, is concerned, it's a philosophy. We work under CIE philosophy. There is no point in saying whether
The decision is taken by a Brazilian gentleman or a Russian gentleman or an American gentleman. That really doesn't make a difference because it is the whole CIE team, India team, in this case, that we are responsible. I will not go down that path. But to your point, see, what has to change? The projects have to be accelerated. The projects have to increase. Both these points we do take, and thank you very much for your patient interaction. We really appreciate your case.
We understand the point and we take note on that. Okay. Point taken from our side, and we understand your views, and we will internally analyze and take our actions as we are doing every month. Okay. Because we are following this situation, of course, we will try to continue improving. But we understood. We just wanted to explain you what is our thinking process of how we look at the businesses and how we want to grow. Okay. We don't want to grow losing margins. We don't want to grow having difficulties with our customers and creating stressful situations. That was something that we want to avoid. Having said that, of course, we will consider your comments also. Thank you.
Thank you.
Thank you. The next question is from the line of Khush Nahar from Electrum PMS. Please go ahead.
Yeah. Thank you for the opportunity. I just wanted your views. I think in the month of June, the EU registrations have increased by around 13%, where obviously the share has gone more to the plug-in hybrid and the BEV rather than the normalized cars. Also, I think in previous calls, we had mentioned there's been discussion with some Chinese OEMs in terms of entering the supply chain. Is this growth that we're seeing is because of the shift that is happening, where more Chinese OEMs are gaining market share and accordingly, are we benefiting from that? I just wanted your views on that. Secondly, are we planning any shift in the manufacturing facility in order to better optimize the cost, et c, from Europe to India?
As far as, you talked about the June figures, and I am looking at the production numbers per se in Europe. We track Europe without Russia. The June figures for production in Europe is - 1%. This is the latest IHS data, which was released just on Thursday last week. Registrations may be different, but production. Again, that brings us to the second part of your question is on the Chinese impact in Europe. Yes, the Chinese are making a big headway in the European market, especially, in the area that you mentioned, plug-in hybrids and hybrids, but through products which are coming from China at this point of time. Because, the tariffs that were introduced in Europe were on the normal ICE vehicles, and I do not think it is on the plug-in hybrids. That is where they are concentrating on.
If I am not wrong, the market share for Chinese OEMs in Europe on the registration side, and here we are talking registration, not production. It is roughly in the range of 10% or perhaps even higher than 10%, but 10% - 12%, somewhere around that number. This of course, keeps fluctuating on a monthly basis. That is the situation. As of now, the Chinese OEMs do not have a supply chain in Europe. As we see it, for the next two years, the more market share Chinese gain, European automotive suppliers, auto component suppliers are at a disadvantage.
Of course, they will develop their supply chain. The Chinese OEMs are in talks with Volkswagen to buy some of their plants, as you are aware. Those developments are happening. I am sure they will ramp up their production in Europe. Of course, if say, for example, they buy a plant from Volkswagen, we would know that plant, because the people there would remain the same. That is the situation in Europe as far as your question is concerned. The production in Europe is under stress. The registrations might go up, but the production numbers are under stress for the reasons that I talked about. Ander, would you like to add anything?
To correct you talked about the tariffs on ICE vehicles, on Chinese vehicles, and it is not an ICE, it is an EV. The tariffs that Europe put on Chinese cars was on EVs. That is why they are now selling plug-in hybrids and ICE cars. That is the reality. It is true that they are now bringing cars, either fully finished or in CKD to Europe. In the future, they are planning to produce the cars in Europe and in that sense, they will develop the supply chain in Europe, and we will try to be there also for the Chinese car makers.
That is what we are also already talking to them. Till now, there is no demand yet because all the products are coming from China. If they localize the production in Europe, as they are now trying to do, we will be there for them too. That will be p robably a change in our customer portfolio that will come, we will see. In this moment, as Vikas said, Chinese cars are around 10% of the registration in Europe.
Thank you. For any follow-up questions, I request Mr. Khush to please rejoin the queue. The next question is from the line of Ganeshram from Unifi Capital. Please go ahead.
Thank you, Vikas and Ander. I have been listening to other participants' questions as well. I am going to be frank in saying this. In understanding any business, both retrospectively and prospectively, we just need to know things, the quantum and timing, right? What is the base business? What is the organic growth that usually is industry-driven, the net new business, and at what incremental ROI it is coming. We do not need to know the client's name always to know this. I am not sure after this call, I fully understand that going into the next two quarters or into the next two years also, however you want to put it, how you expect to perform versus industry and the quantum of order inflow. These things do not require for you to disclose anything.
I think it has to be viewed in context with the market reaction today and the call that we had a few months back. You told us that we should expect outperformance over the industry, and then within two months, there is an underperformance. That makes it tough, when we do not have this granularity, then basically we are relying on what you are saying. When that does not really translate to results, it becomes very challenging.
If you do not want to get into the details and we need the details, then we have no choice but to exit the stock. That I think is basically what we are seeing in the market today. I would urge you to just, even in this call if you can, just provide some clarity as to where we are in terms of revenue and margins and growth. What do you expect over the next one or two quarters? Thereon, how should we think of the business? That would be a great starting point for most investors on this call.
Yes. Thanks, Ganeshram. I think in terms of you are asking, we do not make forward-looking statements. That has been our policy. We will definitely re-look into whatever you are saying. I accept your concerns. Let us re-look into some of these things because we have never made forward-looking statements. Let's do that internally and we will see. As far as the market is concerned, we have largely been around the weighted average market growth for the last at least since the GST cuts have happened.
We were in the range of ± 2%, and I think it is the first quarter where we have fallen below that band. So that is an indication as of now, let's run with it. As far as margins are concerned, we have seen a drop of about 80 basis points this quarter, largely because of the cost inflation. A large part of that will be recouped in the next two quarters. That is mainly around some of the consumables, some of the gas and tools and some other inputs that we have seen. As of now, let's move with this. But we take your concern. Of course, we have heard you, and we will introspect and see if we can do some things differently. So allow us to do that and then we will come back. But thank you for your suggestion.
Thank you.
Thank you, Mr. Ganeshram. I request you to rejoin the queue for any follow-up questions. The last question is from the line of Saizal Agarwal from Desvelado Advisory. Please go ahead. Mr. Saizal, are you there? Please unmute your mic. Mr. Saizal Agarwal? The last participant has lost the line, so we will be moving on to the next question. Siddhant Dand from Goodwill. Please go ahead.
Yes. You mentioned that we are looking forward to brownfield and greenfield assets. So ideally, we had not been doing greenfield assets, right? So which division would this be in, and what kind of aspiration do we have there? Anything that you are still looking in plastics, even if it is small, because I think since five years we have been wanting to get in, but we are not get, like we have spoken before also, we are not getting inorganic opportunities. So any organic route, even if it is a INR 25 crore, INR 50 crore business that we want to get in?
Siddhant, I will answer your second question first. As of now, plastics is a lower priority for us both organically or, sorry, inorganically and organic obviously, we are looking at, except for magnets, we are looking at growth opportunities. Magnets is something we are retaining at back because of the Chinese competition. But other than magnets, we are looking at growth projects in every other vertical. Your first question around greenfields. Yes, greenfields. Our last greenfield would have been CIE Hosur which we did, which was complete greenfield. Before that, we had done the stampings plant in Raebareli, then the expansion plant at Pune for the gear business. So that would, like for 2023 would have been just two to three years back. The greenfields we are looking at in two different verticals, and that is because our customers are asking us to move to a new location.
We have enough land in our existing plants. So wherever possible, we are looking at brownfields and pure expansions because as you know, that makes it faster. If it is just a pure expansion, you just have to put a few machines like we are doing in our forgings segment business. We have to just put up a machine in the existing setup, make a foundation, and do that. Then you have brownfields where you have to put up a plant. You have the land, but you have to put up a plant. In a greenfield, you have to acquire the land and then put up the plant. So both the costs and the timelines increase. As far as possible, we will be happiest to do an expansion and greenfield is obviously based on what the customer is asking, and it is in different verticals.
Right now, as I said, we have been prioritizing forgings. I think we have talked about BS-VII transition that will happen in 2028 and 2029. Basically by 2028. We are prioritizing our diversification into the four-wheeler aluminum business. That is a very important aspect that we are looking at for rebalancing the aluminum. We had comments on the balancing of the aluminum portfolio from the earlier participants and some express surprise. We are doing that rebalancing and trying to move into four-wheelers. We have a very small business in four-wheelers and aluminum that right now would be in the range of INR 500 million - INR 750 million, which we have already started doing, but we want to expand a lot. That is the second area that we are looking at.
The third big area is of course exports in iron castings, and I think that is something that we have talked about. We already have one big order, and certainly we are in line for some more. The fourth area that is driving all our expansion projects, not greenfield in that area, is basically the EV opportunity in composites and gears. I think we have a very good portfolio for both in the EV parts and composites and gears.
So these are the three, four areas we are looking at, and greenfields are part of these four. Right now we are not prioritizing plastics. For a lot of time we did look at plastics in a very aggressive way. We were not able to swing a deal. But right now, these are the priorities for our expansion projects. Greenfield is when the customer specifically asks us to do it because it is the most difficult of the lot. Ander, would you like to add anything?
No, I think you mentioned a lot.
In the iron castings order.
Sorry.
No, sorry. Please go ahead.
Sorry. I have to add that in our iron foundry business, we expanded two plants of 4,000 sq m each one for machining. That is 8,000 sq m additional that we already have. Now we are also expanding an additional 4,000 sq m for the molding line, new molding line. This is something that is now happening. Also we are expanding our composite business plan. We have added 2,000 sq m, now we are adding 4,000 additional. In gears we have the same situation.
Let's say that this is the trend that we are following, and that's why we are confident that we will continue growing as we have the orders and we have the businesses. The pace of the growth, if it is adapted to the market or not, that will depend on each of the specific projects. But in the long run we will continue growing as we have highlighted before.
Thank you.
Correct. Just on the iron castings export business, you had mentioned it was supposed to start already. Has there been delays because those are very large orders, right?
No. Dispatches have happened. I think revenue recognition will happen from the next quarter onwards.
Okay. Understood.
Because the supply chain is long.
Okay. How is the export strategy? Is it the same or do we want to go a little more aggressive there or slow because of the policies and more?
Because we have our hands full. We will be happy to do that. We have had a long discussion today and a lot of things have been highlighted. So let us focus on some of the things that we are doing. Let us focus to do it better, do it faster. I think that would be a priority at this point in time. But I expect that exports in certain critical areas will be a big opportunity going forward for us. As the ICE supply chain in Europe, and I am not sure about U.S. at this point in time, but definitely the ICE supply chain in Europe will wind down over the next 5-10 years.
There we will see an opportunity because the ICE business will be strong in India. So that opportunity is there. But I think for the context of today's discussion when we are discussing our growth this quarter and the next few quarters, that won't have a major impact. But yes, we are keeping an eye on that.
Okay, perfect. Thank you. Best of luck.
That was the last question for today. I now hand the conference over to the management for the closing remarks. Over to you.
I just want to say thank you to all the participants for their comments and well-directed questions. We take note on the comments and we hope that we will fulfill the expectations in the next quarters for sure. I just wanted to say that our company is a solid company and we are doing things properly and professionally and in the long run this will be recognized by the market, and we are sure of that. We continue with our strategy. Also I would like to thank you to our team because they are doing a good job. They are creating nice factories, state-of-the-art factories, and for sure we will have the chance to continue this journey with growth and margins as expected by CIE and by all our shareholders. Thank you very much and all the best to all of you.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us today. You may now disconnect your lines.