Tube Investments of India Ltd. reported a steady set of numbers in the third quarter, but its free cash flow is increasingly being diverted to its loss-making electric vehicle business, pushing up cash burn. The stock fell 10% in today's session. Brokerage firm Avendus Spark estimates that the Rs 950 crore cash balance at the end of FY25 has largely been used by the end of 9MFY26.
Management's decision to allocate Rs 750 crore from the core business to the EV business has raised concerns at the brokerage, given delayed scale-up and elevated operating losses in the EV venture.
The company sold 2,200 units in Q3 FY26, including about 1,800 electric three-wheelers, which accounted for most EV sales. Other segments include e-trucks, the 301 e-small commercial vehicle and e-tractors. The company operates through 117 dealerships for electric three-wheelers and is working to ramp up volumes and strengthen its presence through select large dealers in north and east Asia.
Capital deployment has emerged as a concern. Capital employed in the EV business stood at Rs 1,908 crore at the end of the third quarter, nearly three times the Rs 694 crore reported a year earlier. The company expects to invest another Rs 500 crore to Rs 700 crore in the EV business in FY27. Brokerage firm Axis Securities remains cautious on the scale-up of the EV business and has assigned limited value to it, saying performance remained subdued with high EBIT losses — earnings before interest and tax.
The end of investment in the EV business is not yet in sight. At the current burn rate, additional funding may be required, which could keep free cash flow under pressure in the medium term until breakeven visibility improves. Beyond the EV business, capital allocation is expected to remain selective, largely focused on medical devices and CDMO expansion — contract development and manufacturing — which may limit optionality elsewhere.
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