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The Ministry of Road Transport and Highways announced the mandate on Sunday.
Following the notification, Subros’ shares saw an intraday surge of nearly 18% on Monday. The company specialises in automotive air conditioning systems, along with fan motor assemblies and multi-flow condensers.
With a dominant 51% market share in the truck air conditioning and blower segment, Subros also commands a 42% market share in the passenger car AC segment.
Dolat Capital also expects a reduced effective tax rate of 25% in FY25 to stimulate earnings per share growth.
Subros has major commercial vehicle manufacturers like Tata Motors Ltd., Mahindra & Mahindra Ltd., Daimler, Ashok Leyland Ltd., and SML Isuzu Ltd. as its clients.
The company recorded 11% growth for AC or blower applications in commercial vehicles in Q2, compared to the same period last year, at par with industry growth.
In the quarter ended September, the company’s revenue rose 17% year-on-year to Rs 813 crore, its highest ever.
Of this Rs 813 crore, Rs 42 crore came from the truck segment.
Ebitda margins displayed a recovery trend, reaching their highest point in 11 quarters at 8.6%. The company is targeting a double-digit margin in FY25.
The AC fitment ratio, which shows the proportion of vehicles in a category equipped with factory-installed air conditioning systems, improved by 9% in Q2 to 24%, Subros Chief Executive Officer Parmod Kumar Duggal told analysts post-Q2 results.
Duggal sees this number going up to 100% once the regulations come into force and a greater product range is available to the truck segment.
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