Emerald Tyre

Emerald Tyre Manufacturers Limited reported a robust financial performance for H1 FY26, with consolidated top line increasing from 98.53 crores to 105.21 crores, representing a growth of 6.78%. Net profit also saw a significant improvement, rising to 7.56% from 6.38% in the same period last year. This was further underscored by a jump in consolidated EBITDA margins from 16.51% to 17.75%, which management expects to sustain for the remainder of the year.

The company's expansion project, funded by its IPO last year, is in its final stages. The world-class mixing plant is expected to be fully operational within the next 15-20 days, promising substantial cost savings and quality improvements by bringing mixing in-house. The solid tyre plant has already commenced production, with 80% of new moulds received and the remaining 20% under testing. The overall CapEx of 65 crores is largely incurred, with 10-15% retained for performance-based payments.

Despite a challenging global market, particularly in the US, Emerald Tyre has seen growth in its US business by offering products as solutions. While a 50% tariff remains in the US, customers have largely absorbed the impact, with Emerald providing only marginal discounts. The company is actively diversifying into new markets such as Europe (which has shown significant growth), Australia, Latin America, Saudi Arabia, and Southern Africa, which are expected to contribute to future volume growth.

Emerald differentiates itself from larger players like BKT by specializing in application-engineered industrial tyres, including solid tyres for demanding environments like scrap yards and foundries, and specific pneumatic tyres for applications where solid tyres are unsuitable. Management highlighted its 23 years of experience and a team with over 100 years of collective expertise in industrial tyres, enabling constant innovation and the development of 28 different formulations to meet diverse application needs. This focus allows Emerald to command better margins, especially for its super-premium products like 'AXIMO'.

Management guided for a consolidated top line of 250 crores for the current fiscal year (FY26) and aims to reach 350 crores by FY28, leveraging the full capacity of the expansion. They are confident of achieving 300 crores by 2027, with potential to reach 350 crores if market conditions improve. To achieve growth beyond the 350 crore capacity, the company anticipates needing further Greenfield CapEx. The total net debt post CapEx completion is projected to be around 110 crores, with a blended cost of debt ranging from 6% to 10% depending on the facility.

A concern regarding 8 crores in outstanding receivables from S.A. Rubber Engineering Pty. Ltd., a related party, was addressed. Management explained that these receivables stemmed from a partner's death during COVID, resulting in significant stock and outstanding payments in South Africa. They assured that concerted efforts are underway, and they expect these outstanding amounts to be reduced to nil by the end of March 2026, with the amounts representing physically available tyres for marketing.