RACL Geartech Limited

RACL Geartech reported a Q4 FY25 turnover of ₹106.03 crores, a 7.7% decline compared to ₹114.92 crores in Q4 FY24. For the full fiscal year 2025, turnover grew by 1% to ₹427.29 crores from ₹423.04 crores in FY24. EBITDA for FY25 stood at ₹93.74 crores, an 8.02% drop from ₹101.90 crores in FY24, with EBITDA margins at 22%. PBT for FY25 significantly declined by 36% to ₹34.37 crores from ₹53.74 crores in FY24, resulting in a net profit margin of 5.99%.

In FY25, exports contributed 68% of the total turnover, with domestic sales accounting for 32%. European customers represented 56% of the turnover, and India 42%. Segment-wise, two-wheelers made up 39%, commercial vehicles 18%, passenger cars (including 9% from EV segment) 14%, recreational vehicles (ATV/RTV) 13%, and tractor/agriculture 11%. The company is actively diversifying, with Project Crystal focusing on steering components, which is fuel-agnostic and supports growth in the EV segment.

The company provided an update on the KTM business, noting that Bajaj Auto's acquisition of majority control in KTM AG is expected to stabilize finances. RACL has started receiving confirmed delivery schedules from KTM AG, but is adopting a precautionary approach until KTM is fully stabilized. The KTM fiasco, involving six months of non-production, reduced KTM's contribution to RACL's FY24 revenue to 6-7% from a normal 14-15%, which management estimates cost the company approximately ₹73 crores in potential turnover, suggesting FY24 revenue could have been ₹500 crores without this issue.

Project Titan, involving commercial production at the 'Udyam' facility, has seen over 2000 sets dispatched to customers, with mass production targeted for August 2026. Project Venus, for drivetrain parts for electrical sports cars, has dispatched over 100 sets, also targeting mass production by August 2026. Project Crystal, a new initiative for critical components in electrical power steering systems for a leading American passenger car OEM, is in the advanced prototyping phase, with the first prototype manufactured and offered for assembly and testing in Q2 FY26.

Total debt increased from ₹281 crores to ₹294 crores in FY25, with long-term debt reducing from ₹105 crores to ₹85 crores and short-term debt increasing from ₹176 crores to ₹209 crores. The company raised ₹79.99 crores through a preferential allotment to QIBs and non-QIBs, with proceeds earmarked for reducing both long-term and short-term borrowings. Cash from operations saw a significant 140% growth to ₹63.96 crores in FY25. The planned capex for the current financial year (FY26) is ₹45-50 crores, to be funded 75% by debt and 25% by equity. The cost of debt for FY25 was around 7%, with an expected improvement of 1-1.5% in FY26.

RACL Geartech successfully raised ₹79.99 crores through a preferential allotment of 1,006,480 equity shares to QIBs and non-QIBs. Marquee investors like Malabar India Fund Limited, White Oak Capital Group (India Account Fund Limited and Ashoka India Equity Investment Trust Plc), and Dr. Aniruddha Malpani participated. The proceeds will be used to reduce debt and strengthen the balance sheet. Additionally, Pradeshiya Industrial Investment Corporation of UP Limited (PICUP), a promoter group entity, divested 5 lakh equity shares in the open market, reducing total promoter holding from 51.3% to 42.68% and increasing public shareholding to 57.32%.

Management reiterated its FY26 revenue guidance of ₹500-525 crores, achievable with existing capacity and a 5-10% cushion for seasonal variations. The company maintains its EBITDA margin guidance in the 20-25% range, having achieved 22% in FY25. Investments made this year are primarily for future growth, not current production capacity. The long-term vision is to achieve ₹1000 crores in revenue within 3-4 years, supported by diversification and new customer acquisitions.