RACL Geartech Limited

RACL Geartech reported a Q1 FY26 turnover of ₹107.96 crores, marking a ~2% year-on-year increase from ₹105 crores in Q1 FY25. EBITDA for the quarter stood at ₹26.8 crores, a ~20% growth from ₹22 crores in the prior year, with PBT also rising ~33% to ₹11.25 crores. The company achieved a Gross Profit Margin of 74.57% and an EBITDA Margin of 24.83%, demonstrating significant margin expansion compared to Q1 FY25. Exports contributed approximately 60.31% of the turnover, amounting to ₹65.5 crores, while domestic business accounted for 39%.

RACL Geartech is strategically positioning itself as a technology partner for OEMs, focusing on future-ready, high-value components that are fuel-agnostic, catering to ICE, hybrid, and EV platforms. The company is investing in advanced technologies like Electronic Roll Control (ERC) and Active Kinematic Control (AKC) for premium passenger cars, where it is currently the sole supplier for a major customer. This approach aims to differentiate RACL in a market increasingly driven by electrification and demand for safer, lighter, and more comfortable vehicles, with customer projections for these technologies showing strong growth for FY28.

The company secured a new, high-volume business nomination from an Indian 2-Wheeler manufacturer, with commercialization anticipated from February 2026, leveraging existing idle capacity for initial production. Additionally, RACL bagged a new high-volume project from its existing customer BRP Canada, involving the production of ~150,000 shifting drum mechanism parts per annum, with commercial supply expected to commence in June or July 2026. These projects represent significant new revenue streams and an expansion into new product families, reinforcing RACL's position in both domestic and export markets.

RACL is deeply involved in developing components for cutting-edge automotive technologies such as Electronic Roll Control (ERC) and Active Kinematic Control (AKC), primarily for German luxury car manufacturers like Porsche. These systems enhance vehicle stability, comfort, and safety by actively managing roll and improving steering dynamics. Furthermore, the company is developing electric power steering systems for an American OEM's pickup truck platform, a high-volume project that transitions from conventional hydraulic systems to electric, requiring complex assemblies that few companies can produce.

Beyond its core automotive business, RACL is actively exploring opportunities in non-automotive sectors, having recently registered with BHEL, a public sector undertaking, which enables direct RFQs for precision-engineered components. The company is also developing automotive-grade gearboxes for electric bicycles, a rapidly growing market in Europe, with a competitor like Bosch already selling 2 million units. This diversification strategy aims to leverage RACL's precision manufacturing capabilities in high-value, albeit not always high-volume, industrial applications.

For FY26, RACL has planned a capital expenditure of approximately ₹50 crores, with 75% of this expected to be funded through new debt. The company emphasized its judicious approach to capital allocation, stating that preferential allotment money raised previously was entirely utilized to reduce both long-term and short-term debt. Management reiterated its policy of investing in new projects only after securing order visibility, ensuring that investments are aligned with confirmed business opportunities and supported by existing capacity where possible.