After a brief stumble post its Q4FY25 results, Tube Investments of India (TII), a Murugappa Group company, has staged a robust comeback on the bourses. Shares dropped 4.6% on 15 May, reacting to lacklustre numbers, but quickly rebounded and touched ₹3,230 on 19 May. The stock currently trades at ₹2,984—up nearly 20% in the past month—highlighting growing investor confidence in the company’s long-term narrative.
Core Business: Stable but Sluggish
At the standalone level, TII operates across three major verticals:
Engineering (CDW Tubes)
Metal Formed Products
Mobility (Bicycles)
Together, these contribute 84% of revenue. In FY25, the engineering segment remained the key driver, contributing ₹5,029 crore out of ₹7,892 crore in total standalone revenue. However, the segment’s growth was modest—up just 2% YoY—due to capacity constraints. Profit before tax stayed flat at ₹617 crore.
To address this, the company has commissioned a new facility in Nashik, adding 7–8% capacity (4,000 tonnes/month). With customer approvals expected over the next few months, utilization is likely to ramp up in H2FY26. This expansion could be instrumental in reigniting double-digit growth and improving margins.
Metal Formed Products: Awaiting Railway Revival
This division, known for cold roll-formed sections and components for the auto and railway sectors, posted subdued growth at 3% YoY in FY25. Revenue rose to ₹1,564 crore, but profit before tax dropped 14% to ₹161 crore. Margin erosion—down two percentage points to 10.3%—was due in part to underperformance in the railway business, which has remained dormant for over six quarters.
The tide may turn soon. TII secured a ₹1,000 crore, 7-year railway bogie contract from Indian Railways. Execution is set to begin in Q4 of the current fiscal, with operations likely to ramp up by FY26-end, potentially restoring segment profitability.
Mobility: Export Tailwinds for Bicycle Biz
TII holds over 20% market share in India’s retail bicycle space through brands like Hercules, BSA, Montra, and Rodeo. Yet, the segment saw only a 1% increase in revenue to ₹671 crore in FY25, hampered by stiff competition from the unorganised sector.
Encouragingly, exports have provided a silver lining. The segment swung to a profit of ₹4.8 crore from a ₹17.8 crore loss in FY24. Expansion into premium e-bikes and international markets is in focus, with management doubling down on exports as a growth lever.
EV Business: Scaling Fast, Losses Widen
Through subsidiary TI Clean Mobility, TII has made an aggressive push into the electric vehicle ecosystem. It manufactures electric three-wheelers, tractors, and commercial vehicles.
FY25 Revenue: ₹541 crore (↑163%)
Losses: ₹549 crore (↑112%)
While losses widened, part of it was due to a ₹137 crore fair value loss on CCPS. Adjusted losses stood at ₹412 crore. Management remains confident of achieving operational break-even in the electric truck and three-wheeler categories within this fiscal. The long-term goal? A $1 billion revenue mark in 3–4 years.
CDMO and Electronics: Long-Term Plays in the Making
The Contract Development and Manufacturing Organization (CDMO) venture is currently under construction and is expected to be operational by FY26-end. Customer acquisition is already in progress, with initial signs of interest. Similarly, medical consumables and electronics businesses are at the incubation stage, offering promising diversification in years to come.
Financial Snapshot: Muted Core, Boosted by Valuation Gains
Despite tepid segmental growth, reported net profit jumped 76% to ₹1,297 crore in FY25, bolstered by a ₹569 crore fair value gain on CCPS. Adjusted net profit stood at ₹751 crore, up just 2% YoY.
Segmental Profit Growth (FY25 vs FY24):
Segment
FY25 (₹ Cr)
FY24 (₹ Cr)
Growth (%)
Engineering
617
617
0%
Metal Formed Products
161
187
-14%
Mobility
5
-18
NA
Others
48
65
-26%
Total PBT
1,525
970
+57%
Valuation and Outlook: Recovery Priced In?
From its 52-week high of ₹4,811 in October 2024, TII has corrected by about 38%, suggesting that much of the near-term underperformance is already factored in. With a P/E multiple of 44—well below its 10-year median of 73—the stock offers reasonable valuation comfort.
Brokerages remain bullish. Motilal Oswal has a “Buy” call with a target price of ₹3,658—a potential upside of ~20% from current levels.
Final Take
Tube Investments is evolving from a traditional engineering company to a diversified industrial powerhouse. While core segments are navigating near-term hurdles, strategic capacity expansions, a revival in railway orders, EV scale-up, and future-ready ventures like CDMO and electronics position the company well for a structural re-rating.
FY27 could be the inflection point. Until then, patient investors may find value in this turnaround story.
