ZF Commercial Vehicle Control Systems India Ltd. share price target

Given the strong fundamentals and product diversification, we believe ZFCV will be a direct beneficiary in the long run owing to economic growth, a wider portfolio and government *over or under performance to benchmark index thrusts on infrastructure development. The firm is driven by higher AMT and ECAS penetration and strategic e-mobility initiatives, despite flat trailer volumes and adverse mix. Regulatory tailwinds (ESC, AIS 113, ADAS) and a robust product pipeline support future growth. EV segment momentum continues, with targeted solutions for independent bus OEMs. Hence, factoring in 14% earnings CAGR over FY25-27E. Having said that, we...

ZF Commercial Vehicle Control Systems India (ZFCV) reported Q1FY26 EBITDA margin of 13.5% (vs. I-Sec estimate 17%), was down ~120bps YoY/380bps QoQ.

Slightly lagging ARe of Rs1.79bn, ZF’s Q4 EBITDA rose 17% y/y to Rs1.73bn on less-than-expected revenue. The ADAS regulation draft notification is out, proposing ESC, AEBS and 4 ADAS functions from Oct’26, with content opportunity of >Rs65,000/vehicle for CVs (>3.5-tonne trucks and >5-tonne buses).

ZFCVCS’ (ZFI) operational performance was in line vs our estimate, with EBITDA at INR 1.4bn (-5% QoQ) in Q1FY25. Revenue was down 2% YoY at INR 9.5bn with OEM/export/aftermarket segment revenue at INR 4.3bn/INR 2.8bn/INR 1.3bn.

ZFCVCS (ZFI)’s operational performance was in-line with our estimate, with EBITDA at INR1.46bn versus our estimate of INR 1.5bn (+35% YoY). OEM/export/aftermarket segments’ revenues came in at INR 4.5bn/INR 3.2bn/INR 1.2bn, up ~29%/~23%/~15% YoY, driving overall revenue by 25% YoY.

ZFCVCS (ZFI) has delivered a 10-quarter high gross margin, driven by improving mix and lagged price hikes, resulting in flat EBITDAM QoQ. ZFI’s revenue from domestic OEMs was up ~20% YoY, driven by new business generation from electronic stability control system sales to buses, electronic braking system applications, electronic compressors and driver assistance systems.

ZF CV Control Systems India’s (ZFI) Q4FY23 EBITDA margin at 14.7% was up 104bps QoQ, and was purely driven by operating leverage as raw material prices did not benefit GM QoQ. Revenue increased 12% QoQ driven by CV OEM volume growth led by seasonality and pre-buying, other than expansion in after-market business.

ZF CV Control Systems India’s (ZFI) Q3FY23 EBITDA margin at 13.7% was up marginally by 10bps QoQ despite 60bps improvement in GM as other expense line item was up 20% (as against QoQ revenue growth of 11%).

ZF CV Control Systems India’s (ZFI) Q2FY23 EBITDA margin at 13.6% was up 120bps QoQ, and was largely driven by 150bps gross margin improvement led by favourable movement of input commodities.

ZF CV India’s (ZFI, formerly WABCO) Q4FY22 operating performance was a beat as EBITDA margin came in at 11.4% (up 240bps QoQ) driven primarily by operating leverage benefits. Receding RM cost pressures ahead and governmental push towards higher infra spends augur well for the company as it has a dominant share in the M&HCV braking solutions market.