Detailed Narrative
Record Quarterly and Strong 9-Month Performance
Divgi TorqTransfer Systems achieved its highest ever quarterly total income in Q3 FY26, reaching ₹96.3 crores, a significant 67.48% increase year-on-year and 9% sequential growth. For the first nine months of FY26, total income stood at ₹261.4 crores, up 48.52% from the previous year, surpassing the full-year income levels of both FY24 and FY25. EBITDA for Q3 FY26 was ₹23.4 crores (up 72.06% YoY) with a margin of 24.3%, while 9M FY26 EBITDA was ₹64.4 crores (up 46.36% YoY) at a 24.7% margin. PAT for Q3 FY26 increased by 126.92% YoY to ₹11.8 crores, with a 12.2% margin.
Strategic Export Wins and OEM Partnerships
The company secured order confirmations for 70,000 incremental Transfer Case units (35,000 each) from Mahindra & Mahindra and Tata Motors for their pickup vehicle programs in the Indonesian market. This production is expected to commence in calendar 2026, with most deliveries in FY27. Divgi TorqTransfer Systems will be the sole supplier for these programs. Additionally, an exclusive distribution agreement was established with Toyota Tsusho India Private Limited to sell and distribute products to Japanese companies globally, reinforcing the company's international footprint.
Components Segment Outperformance
The Components segment was a star performer, recording an impressive 117% year-on-year growth in 9M FY26. This growth was primarily export-driven, with export revenues reaching a quarterly run rate of approximately ₹19 crores. Exports now contribute 17% to the company's total income, progressing towards a medium-term target of 20-25%. Management highlighted a competitive advantage against Chinese manufacturers in the US market due to high tariffs on Chinese components.
EV Transmission Segment Update and Outlook
Performance in the EV Transmission business remained below initial expectations, with the market experiencing slower penetration and flat volumes. Current capacity utilization is low at 20-25%. However, a new 120-kilowatt EV transmission product (Project Sigma) is in its concluding development phase, with SOP expected by April 2026. This new product is anticipated to add 3,000 units, with management projecting overall EV capacity utilization to improve to 40-60% within the next three months, and eventually to 70-80%.
Long-term Growth Drivers and Global Ambitions
Divgi TorqTransfer Systems aims for a long-term CAGR of 12-15% over five years from FY20. The company is evaluating the feasibility of establishing a manufacturing footprint in the United States, with a preliminary conclusion expected by Q1 FY27, to deepen global presence and capture growth in North America. Furthermore, efforts are underway to conclude a contract for automatic transmissions by July 2026, targeting a launch date in calendar 2028 (FY29), which is seen as a major opportunity to achieve the aspirational ₹1,000 crore revenue mark.
Transfer Case Capacity and Utilization
The company currently averages 13,500 to 15,000 Transfer Case units per quarter. With ongoing modernization and productivity enhancements, the capacity is expected to increase to 8,000 to 9,000 units per month, which can support customer demand for the next 12 to 15 months. The ramp-up for the Indonesian order is scheduled from February to June 2026, after which volumes are expected to plateau until December.