Detailed Narrative
FY25 Performance Overview and Q4 Recovery
Divgi Torq experienced a challenging FY25, with total income declining 12% YoY to INR 240 crores from INR 273 crores in FY24. PAT also saw a significant drop of 39% YoY to INR 24.4 crores. However, the company demonstrated resilience, maintaining profitability with EBITDA margins above 24% and PAT margins above 10%. Q4 FY25 showed a strong sequential recovery, with total income growing 12% QoQ to INR 64 crores and EBITDA increasing 7% QoQ to INR 14.5 crores, indicating a positive momentum shift.
Segmental Performance and Export Growth
The transfer case segment faced headwinds, declining 29% YoY in FY25, while the EV transmission segment showed modest growth of 6% YoY. In contrast, the components business delivered robust performance with a 41% YoY increase. Exports emerged as a key growth driver, with their contribution to overall revenue rising from 1% in FY24 to 5% in FY25. Management aims to achieve a double-digit export contribution by the end of FY26, with a forecast of approximately INR 70 crores in export revenue for FY26.
Strategic Initiatives and Product Development
The company has expanded its product portfolio and geographical reach, particularly in the US aftermarket and with Japanese and Korean OEMs. Significant progress was made in the EV transmission segment, with new products under development for a comprehensive vehicle range, expected to generate revenue from Q2 FY26. Divgi Torq is also shortlisted as one of three global candidates for supplying gear sets to a leading US OEM in the EV space, highlighting its global competitiveness.
Next-Generation Transmission and Hybrid Solutions
Divgi Torq is actively developing next-generation transmissions, including dedicated hybrid solutions. The company has completed the first phase of a feasibility study for hybrid transmissions, quantifying potential fuel efficiency improvements, and has successfully realized the first prototype. These efforts are aimed at positioning the company as a product leader in powertrain technology, anticipating future emission norms and market requirements in India and globally.
Operational Excellence and Cost Management
The company maintained a sharp focus on operational excellence, achieving zero unsafe incidences across all four plant locations and single-digit customer PPM levels (3 PPM at Bhosari, 2 PPM at Shirwal). Cost management initiatives, including supplier cost savings and Kaizen improvements, resulted in a 1.44% cost reduction relative to sales. Investments in new machinery for export-oriented components have been commissioned, enhancing capabilities and productivity.
Capital Allocation and Shareholder Returns
Out of the total IPO process capex of INR 170 crores, INR 64 crores have been deployed to date, with INR 27 crores spent during FY25. The company remains a net cash entity, committed to maintaining a strong financial position. The Board of Directors recommended a final dividend of INR 2.6 per equity share (face value INR 5) for FY25, subject to shareholder approval at the AGM.
Outlook for FY26 and Long-term Vision
Management is guardedly optimistic for FY26, projecting at least 50% improvement in the overall top line, driven by new product introductions and strong growth in the EV segment. They anticipate a significant spike in exports, targeting a double-digit contribution to overall revenues by year-end. The company also maintains a long-term goal of reaching INR 1,000 crores in revenue within the next 2-3 years, underpinned by strategic initiatives and a robust business development register.