Rane Holdings

Rane Group reported robust performance in Q3 FY26, with Rane Madras Limited (RML) achieving a total revenue of INR1,019.1 crores, marking a 21.3% year-on-year increase from INR840.5 crores in Q3 FY25. The EBITDA margin expanded by 106 basis points, reaching 9.3%. This growth was underpinned by a strong recovery in India's automobile sector, benefiting from timely GST rate reductions, a vibrant festive season, healthy retail momentum, and disciplined inventory management across various segments including passenger vehicles, commercial vehicles, 2-wheelers, and tractors.

A one-off^📎 warranty provision of approximately INR230 crores (net of tax INR172 crores) was made by ZF Rane Automotive India Private Limited. This provision relates to a product recall for seatbelt buckles in the Hyundai Palisade SUV in North American markets, specifically under extreme cold climate conditions. Management clarified that the issue stems from a plastic injection molding part supplied by a Tier 2 vendor, Microtech Polymers, and that the company has since changed its source to another global supplier. The adequacy of this provision will be reviewed by March/April 2026.

While overall EBITDA improved, Rane Steering Systems experienced a dip in margins due to the impact of Labor Code provisions (INR1.8 crores) and low pricing on certain orders accepted several years ago. Management expects these margins to remain subdued for the next 12-15 months but anticipates improvement from FY27-FY28 onwards as new programs stabilize. Across the group, significant cost reduction initiatives are underway, focusing on direct and indirect materials, freight, logistics, and warehousing, which are expected to yield positive results and contribute to margin expansion.

Rane Group secured new business worth INR130 crores across various product categories in Q3 FY26. For Rane Madras specifically, the company has won INR650 crores in orders over the last three quarters. These new orders, comprising both replacement and new business, are expected to mature and contribute to revenue within 1.5 to 2 years. The management expressed confidence in the automotive sector's growth trajectory for the next 3-5 years and is actively evaluating both inorganic and new product opportunities.

Despite capital investments of approximately INR100 crores, the company maintained its overall debt levels. Proceeds from land parcel sales were utilized for capex expansion, preventing an increase in debt. Management aims for a substantial debt reduction over the next 12 to 18 months, with remaining land sale amounts of INR230 crores expected through milestone payments over the next year. For Rane Madras, a total capex of INR600 crores is planned over three years (FY26-FY28), averaging INR200 crores per annum, to be funded from internal accruals.