Divgi Torq Q1 FY27 earnings call

Divgi Torq reported its highest-ever quarterly revenue of approximately ₹142 crores in Q1 FY27, marking an 85% year-on-year growth and a 25% sequential growth over Q4 FY26. This robust top-line performance was accompanied by significant profitability improvements, with EBITDA reaching approximately ₹42 crores (nearly 30% margin) and PAT at approximately ₹25 crores. The EBITDA margin improved to 29.4% from 24.9% in Q1 FY26, driven by a favorable product mix, higher export contributions, and better margins from 4x4 products. The transfer case business was a key driver, growing 93% YoY to ₹76 crores and contributing 53% of total revenue.

The company is actively pursuing a global strategy, supporting OEM customers' global expansion and building its own global footprint. The Indonesia program, supporting Tata and Mahindra in Southeast Asia, is successfully on track. A new initiative, 'Project Mayflower,' has been launched to establish a manufacturing presence in the U.S., with a wholly-owned subsidiary in Greenville, South Carolina, and initial team operations underway. The first phase of US investment is estimated at $5 million, with commissioning targeted for Calendar '28 or '29, focusing on converting new RFQs into concrete revenue streams.

Divgi Torq is expanding beyond its traditional passenger vehicle focus to a broader light vehicle and mobility player, including pickup trucks and other light commercial truck applications. The company is evaluating opportunities in automatic transmissions, manual transmissions, hybrid technologies, and power takeoff systems for front-wheel-drive all-wheel-drive applications in SUVs. This diversification aims to create multiple growth pillars, moving from individual product opportunities to broader drivetrain and mobility solutions, with a new transfer case for a Japanese OEM's truck and a front-wheel-drive based all-wheel-drive application (content upwards of ₹30,000 per vehicle) added recently.

The core transfer case business continues to be a key growth driver, with revenue increasing 93% year-on-year to ₹76 crores in Q1 FY27, contributing 53% of total revenue. The Indonesia program, involving 70,000 transfer cases over 10-12 months, saw approximately 30% executed in Q1. The company expects further momentum in FY27 from pickup truck programs, new platforms, and facelift programs. A new transfer case production line at the Shirwal facility will have an annual capacity of 120,000 units, ensuring readiness for market opportunities.

While the E-gear drive segment remained relatively subdued at ₹5.7 crores for the quarter, the underlying opportunity for EV transmissions is strong. Forecasts for EV products are now in the region of ₹10-12 crores per quarter, an uplift from the previous ₹6.5-8 crores, with PPAP approval from Tata. The company anticipates shipments to South Africa for transfer cases to begin sometime next year (April 28 to March 29) and expects LCV manual transmissions to start earning revenue next year. Automatic transmission commercialization is projected for the second half of '28, with a potential revenue contribution of ₹300-400 crores.

Divgi Torq aims for a long-term revenue target of INR 2,000 crores, with an immediate focus on reaching INR 1,000 crores through a combination of exports, transfer cases, EVs, and automatic transmissions. Management expects to sustain EBITDA margins in the 20-22% range, acknowledging that the current 30% margin is partly due to a one-off^📎 opportunity. The company emphasizes technology-led innovation, product and geographic diversity, and financial discipline to achieve sustainable, profitable growth, positioning itself as a Tier-1 product leader.