Carraro India Limited — Q2 FY26 earnings call

Call held 17 Nov 2025

Management summary

Carraro India delivered robust financial performance in Q2 and H1 FY26, marked by significant revenue growth across both domestic and export markets, particularly in teleboom handler axles. While profitability faced temporary pressure from product mix shifts and localization delays, the company remains optimistic about achieving its revised upward revenue guidance for FY26 and improving margins in the long term through strategic initiatives. Investments in capacity expansion and engineering services are ongoing to support future growth.

Highlights

  • H1 FY26 Revenue from operations grew 18% YoY to INR 1,079 crores, driven by strong domestic and export demand.

  • Q2 FY26 Income from operations grew 33% YoY to INR 586 crores, with PAT increasing 44% YoY to INR 31.7 crores.

  • Engineering services revenue in Q2 FY26 was INR 50 million, significantly up from INR 17 million a year ago, boosted by a new INR 17.5 crores agreement.

  • Localization of raw materials reached 78% of total requirement, with a target to reach 80% by the end of the year, strengthening cost structure.

  • FY26 revenue guidance was revised upwards, with management confident of exceeding EUR 220 million, potentially reaching EUR 225 million.

Concerns

  • Realizations and margins were temporarily impacted by a change in product mix towards lower-margin products within the agriculture segment.

  • Domestic construction equipment market declined 9% in H1 FY26, with backhoe loader volumes down 12% due to prolonged monsoon and higher BS-V model costs.

  • Delays in the third level of validation at the vehicle level can defer the absorption of localized parts, affecting the timeline for margin improvement.

Key financials

2 periods

Q2

  • Income from Operations
    ₹586 Cr
    YoY +33%
  • EBITDA
    ₹59.3 Cr
    YoY +25%
  • EBITDA Margin
    10%
  • PAT
    ₹31.7 Cr
    YoY +44%
  • PAT Margin
    5.3%

H1

  • Income from Operations
    ₹1,079 Cr
    YoY +18%
  • EBITDA
    ₹114 Cr
    YoY +13%
  • EBITDA Margin
    10.4%
  • PAT
    ₹60.8 Cr
    YoY +22%
  • PAT Margin
    5.6%

What they filed

Q1 FY27: revenue up 10.4%, net profit up 6.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue437 445 441 489 582 +33%565 +27%603 +37%540 +10%
EBITDA42 31 44 47 51 +21%54 +74%62 +41%42 −11%
Net profit22 14 23 29 31 +41%28 +100%41 +78%31 +7%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Q2 Agricultural Vehicle Segment
    ₹254 Cr Revenue
  • Q2 Construction Vehicle Segment
    ₹266 Cr Revenue
  • H1 Agricultural Vehicle Segment
    ₹476 Cr Revenue
  • H1 Construction Vehicle Segment
    ₹484.3 Cr Revenue
  • Q2 Engineering Services Business
    50 Mn Revenue

Capital allocation

high confidence
  • Capex Capex disclosed
    • New sealed-quench furnaces, 800 mm pallet Mazak machining center, TLB test bench, robotic washing machine ₹21.1 Cr
    During H1, we invested INR211 million into our world-class facility at Ranjangaon with two new sealed-quench furnaces and 800 mm pallet Mazak machining center. We also installed the TLB test bench in July and a robotic washing machine in September, further strengthening our operational readiness for future growth.
  • Liquidity Liquidity disclosed Balance sheet remains strong with healthy liquidity levels that enable us to fund operations comfortably, support strategic investments, and remain agile in capturing growth opportunities.
    Our revenues are growing well with the market absorbing Carraro products and technology, and our balance sheet remains strong with healthy liquidity levels that enable us to fund operations comfortably, support strategic investments, and remain agile in capturing growth opportunities.

Guidance & targets

Revenue

  • Full Year FY26 Revenue Revenue · FY26 · High confidence EUR 220-225 million

    Previously EUR 215-220 million → EUR 220-225 million

    Now we are very confident that we will surely touch EUR220 million and probably something more could be an added sugar to the entire revenue that we have. But things are very positive and we are very excited with the growth in revenue that is coming up. You have seen we have already clocked 18% higher revenue compared to the comparable numbers last year and the going goes in the way it is now, we should surpass even the EUR220 million guideline that we had given for the full year.

    — Balaji Gopalan

Localization

  • Localized Raw Material Percentage Localization · by end of this year · High confidence 80%

    From 78% today

    Also, on the localization front, we have made steady progress with localized raw materials now accounting to 78% of our total requirement and expected to touch 80% by the end of this year, thus strengthening our cost structure and supporting long-term profitability.

    — Balaji Gopalan

Margin

  • EBITDA Margin Margin · current year · Medium confidence 10.85-10.9%

    Previously 11% → 10.85-10.9%

    So I would factor in a little bit marginal reduction, if at all, if it is there in spite of our best efforts. So, 11% could be 10.9%, 10.85%, something like that.

    — Balaji Gopalan

  • EBITDA Margin Margin · next year · Medium confidence 11.9% (if not 12%)

    Previously 12% → 11.9% (if not 12%)

    But answering again for the margins, next year, if not 12%, probably 11.9%, you know, those kind of numbers is what we are looking at.

    — Balaji Gopalan

Capacity

  • Domestic OEM Serial Production Start Capacity · future · High confidence 18-24 months
    You are absolutely spot on, sir, regarding the -- it will take 18 to 24 months before the serial production start with the local OEMs because we have given the prototypes to them.

    — Ashok Rai

Market Share

  • Four-wheel Drive Market Penetration Market Share · next 12 to 18 months · High confidence 40%

    From 23-25% today

    Today, unconfirmed sources talk about 23% to 25% penetration of four-wheel drive. Once technology like four-wheel drive gets absorbed in the market then the ramp-up becomes very steep. So, what we were anticipating 40% after three to four years, seems like we will achieve it in the next 12 to 18 months period itself.

    — Balaji Gopalan

Market Outlook

  • Domestic Construction Market Performance Market Outlook · full year · High confidence flat
    In the second half, we are expecting slightly better than the first half, but not as a... overall year would be more or less flat. We are not expecting to have an increase in the sale of the machine in the full year vis-à-vis the previous year.

    — Ashok Rai

What to watch in Q3 FY26

FY26 Revenue Achievement

By FY26 end
Current Confident to touch EUR 220 million, potentially EUR 225 million
Target > EUR 220 million

Why it matters

Verifies management's revised upward guidance and overall business momentum.

Now we are very confident that we will surely touch EUR220 million and probably something more could be an added sugar to the entire revenue that we have.

Risks & concerns

  • Temporary Margin Pressure from Product Mix

    medium

    Realizations and margins were temporarily impacted by a change in product mix towards lower-margin products within the agriculture segment.

    Management acknowledged

  • Localization Validation Delays

    medium

    Delays in the third level of validation at the vehicle level can defer the absorption of localized parts, affecting revenue and margin improvement timelines.

    Management acknowledged

  • Domestic Construction Market Slowdown

    medium

    The domestic construction equipment market declined 9% in H1 FY26 due to prolonged monsoon and higher BS-V model costs, expected to remain subdued for the rest of the year.

    Management acknowledged

  • Supply Chain Bottlenecks

    low

    Capacities at supplier end can be affected during boom periods, posing a challenge to meet demand.

    Management acknowledged

Q&A highlights

7 direct
FY26 Revenue Guidance Revision Direct
Now we are very confident that we will surely touch EUR220 million and probably something more could be an added sugar to the entire revenue that we have... we should surpass even the EUR220 million guideline that we had given for the full year.

Management revised its full-year revenue guidance upwards, indicating stronger-than-expected performance and confidence in exceeding previous targets.

Asked by Raghunandhan NL

Export Sustainability and Teleboom Handler Axle Orders Direct
in the first half, we have billed roughly around INR87 crores for Teleboom Handler... for the same OEM -- the global OEM, in the backhoe loader, we clocked around INR34 crores INR35 crores.

Management provided specific H1 billing figures for key new export programs, confirming the strong traction and sustainability of export growth.

Asked by Raghunandhan NL

Margin Pressure due to Product Mix and Ramp-up Partial
when there is a ramp-up and the technology absorption, in the beginning the margins do get affected because the kind of exponential growth that has come in, certain element of localizations were factored in because the numbers would have grown higher next year, by that time, our localizations have kicked in.

Management explained the temporary margin compression as a natural consequence of ramping up new products and a shift to lower-margin products, reassuring that it's not a structural issue.

Asked by Raghunandhan NL

Localization Delays Impacting Margin Improvement Direct
Very often, the third level of validation at the vehicle level gets delayed. And because of that, our program, the absorption of that localized part into the product or into our revenue gets affected.

Management clarified that delays in validation processes, particularly at the vehicle level, can hinder the timely absorption of localized parts, impacting the pace of margin improvement.

Asked by Jaymin

Timeline for Domestic OEM Serial Production Direct
it will take 18 to 24 months before the serial production start with the local OEMs because we have given the prototypes to them... it will take 18 to 24 months to get into the serial production.

Management provided a clear timeline for when new domestic OEM programs are expected to move from prototype to serial production, offering visibility on future revenue streams.

Asked by Jaymin

India as a Global Manufacturing Hub for Carraro Group Direct
anything that is working in the agriculture transmission side, globally, wherever we get contracts, and if it is of a significant volume, then it comes into India, from anywhere in the world.

Management highlighted India's strategic importance as a global manufacturing hub for specific product lines within the Carraro Group, indicating potential for increased volumes and exports.

Asked by Jaymin

Comparison of Gross Margins with Peers Direct
We don't manufacture to the OEMs design. It is Carraro technology. It is our IP and we manufacture it... don't compare us with a forging company because they make huge margins. We are stuck in between.

Management explained the unique business model of Carraro India as an IP-driven technology provider, differentiating its margin structure from pure component manufacturers like forging companies.

Asked by Lakshminarayanan

Domestic Construction Market Outlook for FY26 Direct
will assume that the market will be subdued till the end of the year and then, probably pick up for next year... overall year would be more or less flat.

Management provided a cautious outlook for the domestic construction market, expecting it to remain subdued for the rest of FY26 and result in a flat performance for the full year, impacting a key segment.

Asked by Vijay Pandey

3 min read 7 chapters

Detailed narrative

Strong H1 FY26 Performance Driven by Domestic and Export Growth

Carraro India reported robust financial results for H1 FY26, with revenue from operations growing 18% year-on-year to INR 1,079 crores. This growth was fueled by healthy volume expansion in both domestic and export markets. Exports demonstrated an even stronger performance, increasing 31% year-on-year, primarily driven by demand for teleboom handler axles, while domestic revenue rose 11% year-on-year, led by four-wheel drive axles in the agriculture segment.

Q2 FY26 Financial Highlights and Profitability

In Q2 FY26, the company's income from operations grew 33% year-on-year to INR 586 crores, with total income also increasing by 33% year-on-year to INR 593 crores. EBITDA for the quarter stood at INR 59.3 crores, marking a 25% year-on-year growth and translating to an EBITDA margin of 10%. Profit after tax (PAT) saw a significant 44% year-on-year increase to INR 31.7 crores, achieving a PAT margin of 5.3%.

Product Mix and Localization Impact on Margins

Despite strong revenue growth, realizations and margins experienced temporary pressure due to a shift in product mix towards lower-margin products within the agriculture segment. Management acknowledged that the initial ramp-up phase for new technologies and products can affect margins. However, the company is making steady progress on localization, with raw materials now accounting for 78% of total requirements, projected to reach 80% by year-end, which is expected to strengthen the cost structure and support long-term profitability.

Strategic Growth in Engineering Services and New Products

The engineering services business showed strong traction, with its revenue reaching INR 50 million in Q2 FY26, a substantial increase from INR 17 million a year ago. A key highlight was an INR 17.5 crores agreement with Montra Electric for the industrialization and supply of e-transmissions for electric-powered agriculture tractors. The ramp-up of new teleboom handler axles and backhoe loader programs for a major global OEM is progressing well, with H1 billing of approximately INR 87 crores and INR 34.5 crores respectively for these products.

Capex and Capacity Expansion Strategy

Carraro India invested INR 21.1 crores in H1 FY26 for facility upgrades, including two new sealed-quench furnaces, an 800 mm pallet Mazak machining center, a TLB test bench, and a robotic washing machine. Management is adopting a step-by-step approach to capacity expansion, deferring large-scale investments over two to three years. More significant capex is anticipated in the next two to three years to support the long-term revenue target of EUR 350 million.

Cautious Outlook for Domestic Construction Market

The domestic construction equipment market experienced a decline of approximately 9% in H1 FY26, with backhoe loader volumes falling 12% compared to the previous year. This downturn was attributed to a prolonged monsoon season and the slower adoption of higher-cost BS-V models. Management expects the market to remain subdued for the rest of FY26, projecting an overall flat performance for the full year, with a potential pick-up only in the next financial year.

Focus on Four-Wheel Drive Market Expansion

Carraro India is strategically focusing on the four-wheel drive (4WD) market, which has seen accelerated adoption following GST reductions. Current 4WD penetration is estimated at 23-25%, and management anticipates it will reach 40% within the next 12-18 months. This rapid technology absorption is expected to significantly expand the company's addressable market and drive future growth, irrespective of emission norm changes in the tractor segment.

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