RANE (MADRAS) LTD – Q1 FY27 CONCALL HIGHLIGHTS
#Q1FY27
Q1FY27 Financial Performance
- Q1 revenue stood at ₹1,050.6 Cr.
- Revenue grew 18.8% YoY.
- New business wins reached ₹2,040 Cr LTV.
- Export programs formed around 54% of new-business LTV.
- Margin remained impacted by elevated input costs.
- Commodity and logistics costs remained elevated.
- Cost-reduction initiatives are being implemented.
- Management aspires for double-digit margins.
- Q3 is targeted for achieving double-digit margins.
- Full-year FY27 margin target remains double-digit.
Margin Recovery
- Commodity pass-through has already started.
- Some price recovery reflected in Q1.
- Additional recovery expected during Q2.
- Pass-through timing varies by customer.
- Some customers operate monthly adjustments.
- Others operate quarterly adjustments.
- Premium freight and overtime increased costs.
- Internal cost initiatives should reduce these expenses.
- Improving export and aftermarket mix supports margins.
- Cost-reduction benefits should mature in FY28.
Rane Steering Systems
- FY27 margins expected to remain muted.
- Legacy low-priced orders remain a key drag.
- Prior-year benefited from retrospective price increases.
- Cost-reduction efforts remain ongoing.
- Better margins expected from FY28.
- Steering export programs remain a growth focus.
- Rack-and-pinion and ball-joint exports are targeted.
- Some exports are deemed exports.
- Deemed exports do not benefit from forex movements.
Hindustan Composites Acquisition
- Friction business acquisition has been completed.
- Transaction was completed after required conditions.
- Acquisition strengthens RML's friction business.
- Business complements existing brake components.
- Existing business has PV and two-wheeler strength.
- Acquired business is strong in CV and railways.
- Around 40% of acquired friction revenue is railways.
- Acquired business has 11–12% EBITDA margins.
- Management believes current EBITDA is around 13–14%.
- Acquired margins are accretive to RML.
- Two Maharashtra manufacturing locations added.
- Integration planned over 12–18 months.
- Brand and aftermarket synergies are being evaluated.
- New formulations may create additional synergies.
Railway Opportunity
- Railway business is tender-driven.
- Order visibility is around 12–14 months.
- Acquired friction business has strong railway exposure.
- Railway penetration provides significant growth opportunity.
- RML expects synergies from existing railway presence.
- Friction business supports commercial vehicle growth.
- Aftermarket offers additional growth opportunities.
Brake Business & Aftermarket
- Brake division sees strong growth opportunities.
- Two-wheeler demand remains a key driver.
- Railway and CV friction businesses add growth.
- Aftermarket remains a sizeable business.
- Aftermarket sales growth has improved.
- Price increases have been implemented.
- Around 20–22% aftermarket sales are outsourced.
- Integration should improve aftermarket synergies.
- Management remains positive on 2–3 year growth.
Automotive Market
- Indian auto industry started FY27 strongly.
- Several vehicle segments posted record Q1 sales.
- PV growth led by SUVs.
- CV growth supported by replacement demand.
- Mining and cement sectors supported CV demand.
- Tractor demand remained healthy.
- Two-wheelers benefited from domestic demand.
- Export volumes also improved.
- EV two-wheeler adoption supported growth.
- Supply-chain challenges remain.
- West Asian crisis increased cost pressures.
Market Share & Growth
- Management sees no broad market-share loss.
- Growth differences reflect vehicle-model mix.
- Some OEMs and models are growing faster.
- Technology migration has limited impact.
- LCV systems are gradually shifting technologies.
- Tractor hydraulic steering penetration remains healthy.
- Pack values differ across vehicle applications.
- New business wins remain healthy.
Capex & Expansion
- RML FY27 capex planned at ₹270–300 Cr.
- RSSL capex planned around ₹70 Cr.
- ZF group capex planned around ₹250–280 Cr.
- RML capex increased due to order advancement.
- Some FY28 capex was pulled into FY27.
- Acquisition consideration is around ₹370 Cr.
- Funding will use internal accruals and debt.
- Velachery land proceeds support funding.
- Peak debt may reach around ₹1,100 Cr.
- Year-end debt expected below ₹1,000 Cr.
- Net debt-to-equity target remains 0.5x.
- Target remains achievable by March 2028.
Debt Reduction
- Velachery property sale is underway.
- Proceeds are being received in phases.
- Other land parcels may be monetized.
- Sales depend on achieving appropriate valuations.
- Management remains committed to deleveraging.
- Debt reduction planned over 12–18 months.
- Target net debt-to-equity remains 0.5x.
Aluminium Casting
- Lightweighting remains a favorable structural theme.
- Aluminium casting continues to grow strongly.
- Export growth has been particularly strong.
- Domestic growth also remains healthy.
- Higher aluminium prices boosted reported revenue.
- Volume growth remains reasonably good.
- Growth reflects both volume and pricing.
Operating Efficiency
- External consultants support cost transformation.
- Support includes merger-related activities.
- Aftermarket restructuring is also underway.
- Logistics and packing costs are being reviewed.
- Direct and indirect costs are being optimized.
- Cost initiatives should support FY28 profitability.
- Aftermarket integration offers additional synergies.
KEY TAKEAWAY
- 18.8% growth; double-digit margins targeted from Q3.
August 24, 2026 3.7K 5
