Carraro India Limited — Q3 FY26 earnings call

Call held 12 Feb 2026

Management summary

Carraro India delivered strong Q3 and 9M FY26 results, driven by robust domestic and export demand, particularly in agriculture and construction segments. Profitability saw significant improvement, and the company upgraded its full-year revenue guidance. Strategic investments in capacity expansion and aftermarket services are underway, though management maintains a cautious outlook on immediate ramp-up and export market volatility.

Highlights

  • Revenue from operations grew 21% YoY for 9M FY26 to INR1,648.8 crores, driven by domestic volume growth and healthy recovery in exports.

  • EBITDA grew 28% YoY for 9M FY26 to INR176.5 crores, with margin at 10.6% (vs 10% in 9M FY25), supported by operating leverage and cost management.

  • PAT grew 38% YoY for 9M FY26 to INR88.9 crores, with margin at 5.3% (vs 4.7% in 9M FY25).

  • Axle capacity expansion approved with a capex outlay of INR623 million to increase capacity from 1,34,000 units to 1,54,000 units over 18 months.

  • Overall revenue guidance upgraded from INR3,200 crores to INR3,500 crores for FY26, reflecting strong execution momentum.

Concerns

  • Product mix remained dynamic across quarters, impacting profitability until it settles in 6-9 months.

  • The gear business remained subdued during 9M FY26, with near-term growth likely to remain muted.

  • Export markets in China and Latin America have historically shown short-term fluctuations, implying potential variability beyond the next two quarters.

Key financials

2 periods

Q3 FY26

  • Revenue
    ₹569.6 Cr
    YoY +27%
  • EBITDA
    ₹62.4 Cr
    YoY +71%
  • EBITDA Margin
    10.8%
  • PAT
    ₹28.1 Cr
    YoY +91%
  • PAT Margin
    4.9%

9M FY26

  • Revenue
    ₹1,648.8 Cr
    YoY +21%
  • EBITDA
    ₹176.5 Cr
    YoY +28%
  • EBITDA Margin
    10.6%
  • PAT
    ₹88.9 Cr
    YoY +38%
  • PAT Margin
    5.3%

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

Share of Revenue
₹1,473.2 Cr Total
  • Agricultural Vehicle (9M FY26) ₹740.8 Cr 50.3%
  • Construction Vehicle (9M FY26) ₹722.4 Cr 49.0%
  • Engineering Services (9M FY26) ₹10 Cr 0.7%

Capital allocation

high confidence
  • Capex ₹130 Cr through a mix of internal accruals and debt
    • Axle capacity expansion (from 1,34,000 to 1,54,000 units) ₹62.3 Cr
    • New telescopic handler axle production
    • High-performance range transmission for agriculture
    • Incremental capacity additions for FY26 sales
    Additionally, the board has approved a capex outlay of INR623 million to expand our axle capacity from 1,34,000 units to up to 1,54,000 units over the next 18 months, to be funded through a mix of internal accruals and debt. This expansion is aligned with our strong demand outlook, with the plant capacity operating nearly at about 90% utilization.
  • Liquidity Liquidity disclosed We continue to maintain a robust balance sheet with ample liquidity, enabling us to efficiently fund operations, support strategic investments, and stay agile in responding to market opportunities.
    We continue to maintain a robust balance sheet with ample liquidity, enabling us to efficiently fund operations, support strategic investments, and stay agile in responding to market opportunities.

Guidance & targets

Revenue

  • Overall Revenue Revenue · FY26 · High confidence INR3,500 crores

    Previously INR3,200 crores → INR3,500 crores

    we are confident of possibly reaching but also exceeding the earlier guidance of INR3,200 crores, and we would be moving close to INR3,500 crore, which will be higher than our earlier target of INR3,200 crore, which we mentioned as EUR350 million at that point in time.

    — Balaji Gopalan

  • New Business Revenue Contribution Revenue · long-term · Medium confidence 20%-25%
    we can expect that at least 20%-25% of our revenue should come from the new business.

    — Ashok Rai

  • Engineering Services Revenue Revenue · FY27 · Medium confidence INR10 crores
    we'll be expecting in the similar range including the balance 7.5 in the next year.

    — Ashok Rai

  • Spares Revenue Contribution (India) Revenue · long-term · Medium confidence 10%

    From 3.5%-4% today

    we feel that at least 10% of the revenue should come from spares in India because our products are good.

    — Balaji Gopalan

Profitability

  • EBITDA Margin Improvement Profitability · ongoing · High confidence 100 points year-on-year
    Having said that, we have given a commitment of 100 points year-on-year. I think more or less we will still stand by it, and we feel we will achieve it.

    — Balaji Gopalan

Raw Material Localization

  • Raw Material Localization Percentage Raw Material Localization · in the next 2 to 3 years · High confidence 86%-88%

    From 78% today

    Our raw material localization stood at 78%, and we remain on track to increase this to 86% to 88% in the next 2 to 3 years.

    — Balaji Gopalan

Capacity

  • Axle Capacity Capacity · over the next 18 months · High confidence 1,54,000 units

    From 1,34,000 units today

    Additionally, the board has approved a capex outlay of INR623 million to expand our axle capacity from 1,34,000 units to up to 1,54,000 units over the next 18 months

    — Balaji Gopalan

Market Share

  • Four-wheel Drive Market Share Market Share · FY27 · Medium confidence 26%-27%

    From 25% today

    if you ask me in '27, it should reach to 26%, 27% of the market should be four-wheel drive against the 25% today.

    — Ashok Rai

Capex

  • Total Capex Capex · FY27 · Medium confidence INR130-INR140 crores
    So, would the total capex for FY'2027 be around INR130-INR140 crores? More or less, yes.

    — Davide Grossi

What to watch in Q4 FY26

EBITDA Margin Trajectory

next quarters
Current 10.6% for 9M FY26
Target Improvement towards 100 bps YoY

Why it matters

EBITDA margin is a key profitability metric, and management committed to 100 bps YoY improvement despite dynamic product mix.

Having said that, we have given a commitment of 100 points year-on-year. I think more or less we will still stand by it, and we feel we will achieve it. There could be a marginal difference; instead of 100, it could be 80, 85, but the direction will be there. You will find improvements in EBITDA happening over the next quarters, and we are consistent that we will be improving our EBITDA every year.

Risks & concerns

  • Dynamic product mix impacting profitability

    medium

    The product mix remained dynamic across quarters, and it will take 6 to 9 months for the effect to trickle down into EBITDA numbers.

    Management acknowledged

  • Muted growth in gear business

    medium

    The gear business remained subdued during 9 months FY26, and near-term growth is likely to remain muted.

    Management acknowledged

  • Volatility in export markets (China, Latin America)

    medium

    Historically, these economies have shown short-term ups and downs, implying potential fluctuations beyond the next two quarters.

    Management acknowledged

  • Lead times for production ramp-up

    low

    Significant ramp-up requires lead times for supplier base and internal production, preventing immediate response to demand spikes.

    Management acknowledged

Q&A highlights

4 direct, 2 evasive
Q4 growth expectations given strong January tractor sales Evasive
We have lead times. It is an engineered product, so there is a lot of checks and tests to be done before we can actually go ahead and assemble. So, to answer your question, it takes at least a month, month and a half for Carraro to significantly ramp up. Normal fluctuations which are historical, that are already considered in our production plan.

Management cautioned against expecting immediate, dramatic growth spikes due to operational lead times and focus on quality, despite strong market indicators.

Asked by Op Gandhi

Export outlook for the next 12 months, especially for China and Latin America Partial
See, when we talk about the last two quarters, the export is mainly, the traction has come from our backhoe loader drive line which were sold in China as well as in Latin America. And also, as we said that we are doing well in our Tele Boom Handlers segment for the international big customer, so those have driven the growth of our last two quarters.

Management provided color on recent export drivers and short-term visibility for specific markets, but acknowledged historical volatility for China/LatAm beyond two quarters.

Asked by Mahesh Bendre

EBITDA margin expectation and commitment to 100 bps improvement Direct
Having said that, we have given a commitment of 100 points year-on-year. I think more or less we will still stand by it, and we feel we will achieve it. There could be a marginal difference; instead of 100, it could be 80, 85, but the direction will be there. You will find improvements in EBITDA happening over the next quarters, and we are consistent that we will be improving our EBITDA every year.

Management reaffirmed its commitment to 100 bps YoY EBITDA margin improvement, providing confidence despite dynamic product mix.

Asked by Vijay Pandey

Limiting factors for growth beyond capacity, such as inbound supply chain Direct
See, for our growth, we are very clear that we have all the resources. Now, it is left to us when to pull it out and do the execution. In terms of land bank, we have a total of 53 acres of land in which we have currently used just about 50%, 55%, 60% of that land.

Management clarified that internal resources and land bank are sufficient, and the focus is on execution and de-bottlenecking rather than external limiting factors.

Asked by Lakshminarayanan

Revenue potential from new products and new capex Direct
we can expect that at least 20%-25% of our revenue should come from the new business. Now the question is what is the starting point? If the starting point is the previous year as a new business, then probably we are talking about 30%-35%.

Management provided a quantitative estimate for the contribution of new products to future revenue, indicating significant growth potential.

Asked by Vijay Pandey

Breakdown of export geography mix (Europe, US, China, Latin America) Evasive
It's very difficult to inform in terms of geographical mix, because we sell to our parent company, and they sell it to the OEM. Not only that, what we sell to parent and goes that is within our Carraro group, we can always get that information, that is not a very big issue. But the second issue is what is not in our circle of control is very often we supply to a particular plant in Europe, and it doesn't remain in Europe. It is then exported to Latin America or US.

Management indicated difficulty in providing a precise geographical breakdown due to indirect exports through its parent company and re-exports from European plants.

Asked by Raghunandhan NL

Rationale, cost, and revenue potential of authorized service centers Direct
Now, the target is because everybody knows the margins in spares are very significantly high. And looking at the numbers that we have sold, we feel that at least 10% of the revenue should come from spares in India because our products are good. We have a disadvantage that our products are so reliable and so well-engineered, that the requirement for spares is very less.

Management detailed the strategic importance of the aftermarket segment, its high-margin potential, and the target contribution to overall revenue.

Asked by Raghunandhan NL

2 min read 6 chapters

Detailed narrative

Q3 & 9M FY26 Performance Overview

Carraro India delivered a strong financial performance for Q3 and 9M FY26. Revenue from operations grew 27% year-on-year in Q3 to INR569.6 crores and 21% year-on-year in 9M FY26 to INR1,648.8 crores. Profitability saw significant improvement, with Q3 EBITDA growing 71% year-on-year to INR62.4 crores, translating to an EBITDA margin of 10.8% compared to 8.1% in Q3 FY25. For the nine-month period, EBITDA grew 28% year-on-year to INR176.5 crores, with a margin of 10.6% versus 10% in 9M FY25. PAT also increased significantly, up 91% in Q3 to INR28.1 crores and 38% in 9M FY26 to INR88.9 crores.

Segmental Performance & Market Trends

The broader agriculture equipment industry remained resilient, supporting Carraro India's domestic agriculture segment revenue growth of 17% year-on-year, driven by strong demand for four-wheel drive axles. Exports demonstrated even stronger growth of 29% year-on-year, primarily led by increased offtake of Tele Boom Handler axles. In the construction equipment segment, sales increased by approximately 4% during the first nine months, outperforming the overall market decline of 5%. The gear business, however, remained subdued, with near-term growth expected to be muted.

Capacity Expansion & Utilization

To meet robust demand and high plant utilization (nearly 90%), the board approved a capex outlay of INR623 million to expand axle capacity from 1,34,000 units to 1,54,000 units over the next 18 months. During 9M FY26, INR304 million was deployed to support new telescopic handler axle production, high-performance range transmission for agriculture, and incremental capacity additions. The total capex for FY27 is projected to be around INR130-INR140 crores.

Innovation & Engineering Services

Carraro Technologies, the company's engineering center, leveraged its in-house design capabilities to receive multiple inquiries from OEMs for engineering support. Engineering services revenue for Carraro India stood at INR50 million in Q3 FY26 and INR100 million during 9M FY26. The company developed 14 prototypes, with four already entering production, and successfully completed the first batch of CVT transmission units, marking a key milestone towards commercialization.

Aftermarket & After-sales Ecosystem

Carraro India advanced its efforts to strengthen the aftermarket and after-sales ecosystem by inaugurating its first authorized service center in Faridabad in January 2026. This is part of a long-term plan to establish four such centers across India, strategically positioned to serve customers with genuine spare parts and OEM quality service. The initiative aims to improve customer experience, minimize downtime, and is expected to contribute 10% of total revenue from spares in India, up from the current 3.5%-4%.

Outlook & Strategic Vision

Management expressed optimism for the future, upgrading the FY26 revenue guidance from INR3,200 crores to INR3,500 crores. The company is focused on disciplined execution, value-led growth, and delivering sustained performance. Key strategic initiatives include achieving 100 bps year-on-year EBITDA margin improvement, increasing raw material localization from 78% to 86%-88% in 2-3 years, and capitalizing on the growing four-wheel drive tractor market, aiming for 26%-27% market share by FY27.

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