Carraro India Limited — Q4 FY26 earnings call

Call held 27 May 2026

Management summary

Carraro India delivered a strong operational and financial performance in FY26, marked by robust revenue and profit growth, margin expansion, and a strengthened balance sheet. The company saw significant growth in both domestic and export markets, particularly in agricultural drivelines. While the outlook remains positive, management acknowledged potential headwinds from geopolitical volatility and domestic market conditions, leading to a cautious near-term growth guidance.

Highlights

  • Revenue from operations grew 25% YoY to INR2,255.5 crores in FY26, driven by 19% domestic and 37% export growth.

  • EBITDA increased 33% YoY to INR247.5 crores in FY26, with margins improving to 10.8% from 10.2% in FY25.

  • PAT grew 48% YoY to INR130.6 crores in FY26, reflecting strong operational performance.

  • Debt-to-equity improved to 0.27x as of March 2026, and working capital days reduced to 38 from 45 in FY25.

  • Secured a business nomination for bull gears valued at INR150 million annually starting FY28 and signed an engineering services agreement worth INR175 million.

Concerns

  • Domestic construction equipment market declined by approximately 2% YoY in FY26, and the broader BHL market declined by nearly 10%.

  • Geopolitical situation, particularly in West Asia, could lead to production and supply-related impact in H1 FY27, potentially extending to H2.

  • Uncertainty regarding monsoon conditions and inflation could impact the construction market and overall growth trajectory.

Key financials

2 periods

Q4 FY26

  • Revenue from Operations
    ₹606.7 Cr
    YoY +37%
  • EBITDA
    ₹71 Cr
    YoY +45%
  • EBITDA Margin
    11.6%
  • PAT
    ₹41.7 Cr
    YoY +76%

FY26

  • Revenue from Operations
    ₹2,255.5 Cr
    YoY +25%
  • EBITDA
    ₹247.5 Cr
    YoY +33%
  • EBITDA Margin
    10.8%
  • PAT
    ₹130.6 Cr
    YoY +48%

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
₹4,258.4 Cr Total
  • Domestic Revenue (FY26) ₹1,443 Cr 33.9%
  • Agricultural Vehicles (FY26) ₹1,019.2 Cr 23.9%
  • Construction Vehicles (FY26) ₹983.7 Cr 23.1%
  • Export Revenue (FY26) ₹812.5 Cr 19.1%

Capital allocation

high confidence
  • Capex ₹130 Cr
    • New telescopic handler axle production
    • High-performance transmission programs
    • Incremental manufacturing capacity expansion
    On the manufacturing front, we continue to invest in technology, capacity expansion, and operational efficiency improvements. During FY 26, we deployed capex approximately of INR417 million towards new telescopic handler axle production, high-performance transmission programs, incremental manufacturing capacity expansion.
  • Debt Debt disclosed
    Debt-to-equity improved to 0.27x as of March 2026 compared to 0.42x in March 2025.
  • Dividend ₹6.75/share (final) Payout ratio 30%
    On the dividend front, the Board of Directors has recommended a final dividend of INR6.75 per equity share for FY '26, resulting in a payout ratio of approximately 30%, subject to shareholder approval.
  • Liquidity Liquidity disclosed Cash generation remained healthy, supporting growth investment and balance sheet strength. Company is financially well-positioned with sufficient liquidity for strategic investments and future growth.
    Cash generation during the year remained healthy and continued to support both growth investment and balance sheet strength. Overall, we remain financially well-positioned with a healthy balance sheet, improving profitability profile, and sufficient liquidity to support strategic investment and future growth initiatives.

Guidance & targets

Revenue

  • Revenue Growth Revenue · by FY30 · High confidence INR3,500-4,000 crores

    Previously earlier target → INR3,500-4,000 crores

    With improving industry sentiment, expanding opportunities across domestic and export markets, and strong execution momentum, we remain confident of achieving revenues of around INR3,500 crores to INR4,000 crores by FY '30, exceeding our earlier target.

    — Balaji Gopalan

  • Revenue Growth Revenue · FY27 · Low confidence 4-8%

    Previously 8-12% → 4-8%

    8% to 12% can become probably 4% to 8%, but these are all speculation.

    — Balaji Gopalan

EBITDA Margin

  • EBITDA Margin Improvement EBITDA Margin · FY27 · Medium confidence improvement
    On profitability, we continue to target EBITDA margin improvement during FY '27, supported by our continued focus on localization, operating efficiencies, value-accelerated product mix, and disciplined cost management initiatives.

    — Balaji Gopalan

Capex

  • Capex Capex · FY27 · High confidence INR130-140 crores
    Yes, we confirm that amount, more on the INR130 crores than INR140 crores, but we will be in that range. As of now, everything is confirmed.

    — Davide Grossi

Localization

  • Raw Material Localization Localization · next two to three years · High confidence 86-88%

    From 78% today

    Raw material localization stood at approximately 78% during FY '26 and we remain on track to increase this to nearly 86% to 88% over the next two to three years.

    — Balaji Gopalan

Market Share

  • Four-Wheel Drive Market Share Market Share · another three year to five year · Medium confidence 40-45%

    From 24% today

    And we expect that another three year to five year, it should be almost 40% to 45% of the market.

    — Ashok Rai

What to watch in Q1 FY27

FY27 Revenue Growth

Next quarter (Q1 FY27 results)
Current 25% YoY in FY26; FY27 guidance 4-8% (speculative) or 8-12% (if normal)
Target Confirmation of FY27 revenue growth within the guided range, or a clearer indication of the impact of volatility.

Why it matters

This is a key indicator of demand and execution in a volatile environment, directly impacting overall financial performance.

For FY '27, we are currently maintaining our revenue growth to be realistic and cautious, but we are supported by healthy underlying demand... 8% to 12% can become probably 4% to 8%, but these are all speculation.

Risks & concerns

  • Geopolitical situation and energy prices

    medium

    Developments in West Asia could lead to production and supply-related impact in H1 FY27, potentially extending to H2 if the situation persists.

    Management acknowledged

  • Inflation and government subsidies

    medium

    Inflation and fertilizer subsidies could reduce funds available for infrastructure projects, potentially keeping the construction market at lower levels.

    Management acknowledged

  • Volatile operating environment

    medium

    The current situation is volatile, making it difficult to provide precise guidance, though profitability is expected to improve.

    Management acknowledged

  • Monsoon conditions

    low

    Monsoon is expected not to be good, which could impact the agricultural side, though reservoirs are full.

    Management acknowledged

Q&A highlights

5 direct
Export outlook for FY27 and TBH/BHL revenue to major global OEM for FY26 and FY27 expectation. Partial
when we talk about the export market, there are two aspects. One is the agricultural and other is construction... For TBH... by '29 we will have that INR30 million revenue from the TBH business.

Provides qualitative insights into export market segments and future revenue projections for specific products, though current year OEM revenue was not quantified.

Asked by Raghunandhan NL

Reasons for RM cost increase in Q4 and pass-through lag. Direct
the major driver of that increment of the material percentage on total sales is actually the adverse mix that we have faced during the quarter... usually, as majority of our agreements with customer foresee an adjustment over a period of 3 months.

Clarifies that Q4 margin impact was due to product mix rather than commodity inflation and confirms typical 3-month pass-through for cost changes.

Asked by Raghunandhan NL

FY27 revenue growth outlook (8-12%) and margin expansion. Partial
8% to 12% can become probably 4% to 8%, but these are all speculation... profitability will go up for sure. We will not decline.

Management revised near-term revenue growth expectations due to volatility but reaffirmed commitment to margin improvement, providing a more cautious outlook.

Asked by Raghunandhan NL

Domestic four-wheel drive tractor market size, growth, and outsourcing vs in-house split. Direct
this year we have closed almost at 24% as a four-wheel drive market above 40 HP... 60% to 65% is outsourced and 30% to 35% is with OEMs today.

Quantifies the significant and growing market for 4WD tractors, a key segment for Carraro, and clarifies the outsourcing landscape.

Asked by Sonal Gupta

Incentives for four-wheel drive, growth drivers, and future market penetration. Direct
GST reduction by the government came in at the right time. So the differential between the cost of a two-wheel drive tractor and a four-wheel drive tractor has now almost vanished... So there will be a structural shift into four-wheel drive, which is visible now.

Explains the fundamental economic and technological drivers behind the structural shift towards 4WD tractors, reinforcing Carraro's long-term growth thesis.

Asked by Ashok Shah

FY27 capex plan. Direct
Yes, we confirm that amount, more on the INR130 crores than INR140 crores, but we will be in that range.

Provides clear capital expenditure guidance for the upcoming fiscal year, indicating continued investment in growth.

Asked by Raghunandhan NL

Export incentives within other income for FY26. Direct
out of this INR285 million, roughly 83 were a provision that we have reversed. So out of the 200 which are remaining, more or less 75% is export incentive, so roughly 150.

Clarifies the specific components of 'other income', providing transparency on the contribution of export incentives.

Asked by Raghunandhan NL

Geography mix for exports. Partial
Europe remains our main market when we talk about export... Turkey has become more and more relevant. China was also quite relevant this year. Latin America is also on the 10% if I'm not mistaken. US 9% to 10%.

Offers insights into the geographical diversification of export revenues, despite the complexity of tracking final destinations due to contract manufacturing.

Asked by Raghunandhan NL

2 min read 6 chapters

Detailed narrative

Strong Financial Performance in FY26

Carraro India reported a robust FY26, with revenue from operations growing 25% year-on-year to INR2,255.5 crores. This growth was supported by a 19% increase in domestic revenues and a 37% surge in exports. Profitability also saw significant improvement, with EBITDA rising 33% to INR247.5 crores and margins expanding to 10.8% from 10.2% in FY25, driven by operational leverage and cost management. PAT grew 48% year-on-year to INR130.6 crores, with a PAT margin of 5.7%.

Q4 FY26 Highlights and Margin Drivers

The fourth quarter of FY26 continued the strong performance, with revenues from operations up 37% year-on-year to INR606.7 crores. EBITDA for the quarter grew 45% to INR71 crores, leading to an EBITDA margin of 11.6%, up from 10.9% in Q4 FY25. Profit after tax saw a substantial 76% increase to INR41.7 crores, with PAT margin improving to 6.8%. Management attributed the Q4 material percentage increase to an adverse product mix rather than commodity inflation, with typical cost pass-through taking about 3 months.

Segmental Growth and Market Dynamics

The agricultural vehicles segment recorded 19% year-on-year revenue growth to INR1,019.2 crores in FY26, primarily fueled by strong demand for four-wheel drive axles. The construction vehicles segment grew 31% year-on-year to INR983.7 crores, despite a 2% decline in the overall domestic construction equipment market. Exports contributed 36% of total revenue, growing 37% year-on-year to INR812.5 crores, with Europe, Turkey, China, Latin America, and the US being key markets.

Strategic Investments and Localization Initiatives

Carraro India invested approximately INR41.7 crores in capex during FY26, focusing on new telescopic handler axle production, high-performance transmission programs, and incremental manufacturing capacity expansion. The company also secured a business nomination for bull gears valued at INR150 million annually starting FY28 and signed an engineering services agreement worth INR175 million. Raw material localization stood at 78% in FY26 and is targeted to increase to 86-88% over the next two to three years to enhance supply chain resilience and cost optimization.

Outlook and Geopolitical Risks

For FY27, the company anticipates revenue growth in the range of 4-8% (speculative due to volatility) to 8-12% (if conditions normalize), with a long-term target of INR3,500-4,000 crores by FY30. However, management highlighted potential risks from the evolving macroeconomic and geopolitical situation, particularly in West Asia, which could impact production and supply chains in H1 FY27. Despite these uncertainties, profitability is expected to improve.

Balance Sheet Strength and Shareholder Returns

The company significantly strengthened its balance sheet, with debt-to-equity improving to 0.27x as of March 2026 from 0.42x in March 2025. Working capital days were reduced to 38 from 45 days in FY25, reflecting improved management and operational discipline. The Board recommended a final dividend of INR6.75 per equity share for FY26, representing a payout ratio of approximately 30%, demonstrating a commitment to shareholder returns while supporting future growth investments.

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