Stock Fall: 10 reasons why this Murugappa Group share fell 9% on Thursday

Shares of Tube Investments of India Ltd. declined over 9% on Thursday, February 5, following its management's post-earnings conference call for the October-December period.

The company's management highlighted 10 points, including weak Europe demand, incumbents becoming more aggressive in launches and features in the EV business, delay in commencement of railway business, and more.

Following are the highlights of the conference call:

1. The management said the railway business commencement is delayed, with prototype samples expected between March and April (first quarter of the financial year 2027). It said FY27 is anticipated to be better for this business.


2. The management expects the heavy vehicles and three-wheeler EV segments to reach breakeven within the next 12 to 18 months, followed by small commercial vehicles (SCV) and tractors.


3. In the EV business, the management acknowledged that incumbents have become more aggressive in launches and features, particularly in the three-wheeler segment, where Mahindra has taken the lead.


4. In the Shanthi Gears business, the market is more competitive, leading to challenges in the orderbook, but the management said it prioritises margins over revenue. Shanthi Gears' profit declined to ₹23 crore from ₹35 crore, as the management said it prioritises maintaining margins over orderbook in a competitive market.


5. A new plant for the engine division is experiencing delays of six to nine months due to challenges with machine suppliers. The Europe demand has been weak, and the US market faces a 50% effective duty due to Section 232 tariffs, hindering export growth, the management said.


6. The Tube Investments management noted that building out the TI Clean Mobility business was more challenging than anticipated, but the capacity is now built, and green shoots are emerging.


7. The 3xper contract, development, manufacturing and organisation (CDMO) business faced significant delays of over 18 months in building its manufacturing facility in Andhra Pradesh due to difficulties in obtaining permissions and consents; production is expected to begin in the next three months, followed by a lengthy certification cycle.


8. Exports for the engineering business have not met expectations due to weak demand in Europe and a persistent 50% effective duty in the US under Section 232, which management does not foresee changing soon.


9. The Metal Formed Products Division (MFPD) is experiencing divergence in growth rates compared to the engineering segment due to challenges in the Railway business and weaker European export markets.


10. The L34A (E-scooter) product is currently in a seeding phase in select markets to test product acceptability and price points, with a decision on its future and go-to-market strategy to be made after feedback over the next quarter.

Tube Investments' standalone net profit in the third quarter increased 17.6% to ₹189 crore from ₹160.7 crore in the previous year. Its revenue increased 12.7% to ₹2,152 crore, while its earnings before interest, tax, depreciation and amortisation (EBITDA) increased 27% to ₹309 crore. The company's margins expanded to 14.3% from 12.7% in the year-ago period.

It also announced an interim dividend of ₹2 per equity share, the record date for which is February 10, 2026.

Shares of Tube Investments declined 9.3% to hit an intraday low of ₹2,392 apiece on Thursday. The stock was currently down 8.4% at ₹2,417.2 apiece, having declined over 16% in the last six months.

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