Rane Holdings Limited — Q3 FY26 earnings call

Call held 17 Feb 2026

Management summary

Rane Group reported a strong Q3 FY26 with RML's revenue growing 21.3% YoY to INR1,019.1 crores and EBITDA margin expanding by 106 bps to 9.3%. The company secured INR130 crores in new business during the quarter. However, a significant one-off warranty provision of INR230 crores was made by ZF Rane Automotive for a product recall, and Rane Steering Systems faced margin pressure from Labor Code provisions and older low-margin orders. Management is focused on cost reduction and debt reduction, with targets for double-digit EBITDA for Rane Madras by March '27.

Highlights

  • RML's total revenue for Q3 FY26 was INR1,019.1 crores, a 21.3% increase compared to INR840.5 crores in Q3 FY25.

  • EBITDA margin improved by 106 bps, from 8.2% to 9.3% in Q3 FY26.

  • The company won new business worth INR130 crores across product categories in the quarter.

  • Over the last three quarters, Rane Madras has secured INR650 crores in new orders.

  • The automotive sector in India showed strong recovery in Q3, driven by festive demand, GST reductions, and improved consumer sentiment.

Concerns

  • A one-off warranty provision of around INR230 crores (net of tax INR172 crores) was made by associate entity ZF Rane Automotive India Private Limited for product recall liability related to seatbelt buckles.

  • EBITDA margins for Rane Steering Systems were impacted by Labor Code provisions (INR1.8 crores) and low pricing on older orders.

  • Working capital increased due to conscious inventory buildup, though management expects it to reduce quarter-on-quarter.

Key financials

  1. RML Total Revenue ₹1,019.1 Cr +21.3%YoY
  2. EBITDA Margin 9.3%
  3. EBITDA Margin Improvement 106 bps
  4. ZF Rane Warranty Provision (Gross) ₹230 Cr
  5. ZF Rane Warranty Provision (Net of Tax) ₹172 Cr
  6. Rane Holdings Consol PBT ₹44.78 Cr

What they filed

Q1 FY27: revenue up 18.3%, net profit down 15.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue916 1,241 1,374 1,341 1,399 +53%1,535 +24%1,609 +17%1,587 +18%
EBITDA81 78 95 102 97 +20%42 −46%126 +33%107 +5%
Net profit185 4 12 57 31 −83%-40 −1100%88 +633%48 −16%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • ZF Rane Automotive (Q3 FY26)
    37% Steering Division Revenue Share63% Occupant Safety Division Revenue Share78% Domestic Revenue Share22% Exports Revenue Share
  • Rane Group (Q3 FY26)
    7% Other Segment Revenue Share

Order book

high confidence

Total value

₹650 Cr

as of 2025-12-31 quantified

Inflow this quarter

₹130 Cr

Execution

New business won will mature in 1.5-2 years, orders are for future businesses

The company has a significant order book, with new orders for Rane Madras totaling INR650 crores over the last three quarters, and INR130 crores won in Q3 FY26.

Source: Prepared remarks

Capital allocation

high confidence
  • Capex ₹200 Cr from own funds based on business
    As far as absolute debt is concerned, I would say INR600 crores INR150 crores reduction is something we can look for over and above the capex investment, which we'll be doing from our own funds based on business. ... It will be around INR200 crores. ... Yes, for 3 years.
  • Debt Gross ₹1,661 Cr
    • Repayment Debt reduction expected over the next 12 to 18 months, with milestone payments from land sale contributing.
    RML is INR764 crores, RSSL is INR175 crores. ... ZF Rane combined is INR722 crores.
  • Liquidity Liquidity disclosed Land parcel sale advance money was used for capex expansion, avoiding INR100 crores additional debt.
    had we not got this land parcel sale-related advance money, we would have gone for another close to INR100 crores debt, which we could avoid by using those funds for our capex expansion.

Guidance & targets

Profitability

  • Rane Madras EBITDA Margin Profitability · by '27 March · High confidence 11% to 12%
    Yes, 11% to 12% we are hopeful by '27 March.

    — P. A. Padmanabhan

  • RSSL Consolidated Margin Improvement Profitability · maybe in the year of '27-'28 onwards · Medium confidence start seeing improvement
    It will be maybe in the year of '27-'28 onwards, we can start seeing improvement. We'll require at least another 15 months for this to stabilize. After that, once the new program starts, that will help in overall improvement. So I would say '27-'28 onwards, we can see an improvement in the EBITDA number.

    — P. A. Padmanabhan

  • Rane Steering Systems Contribution to RHL Bottom Line Profitability · from '27-'28 year onwards · Medium confidence contribute
    So from '27-'28 year onwards, we are hopeful that Rane Steering Systems also will start contributing to Rane Holdings bottom line.

    — P. A. Padmanabhan

Debt

  • Rane Madras Gross Debt Debt · by end of financial year '27 · Medium confidence INR600 crores

    Previously INR764 crores → INR600 crores

    It may go to INR600 crores.

    — P. A. Padmanabhan

Capex

  • Rane Madras Capex Capex · for '26, '27, '28 (3 years) · High confidence INR200 crores per annum
    It will be around INR200 crores. ... Yes, for 3 years.

    — P. A. Padmanabhan

Order Book

  • New Business Maturation (Rane Madras) Order Book · 1.5-2 years · High confidence mature in 1.5-2 years
    Yes. In terms of the new orders, one, this has a combination of both the replacement business, which is for our existing ones, as well as the new business, right? And these will actually mature probably like 1.5 to 2 years later, right?

    — S. Prasad

Market context

  • Rane Madras EBITDA Margin Profitability · coming financial year · High confidence double-digit
    fairly confident that in the coming financial year, we will touch double-digit EBITDA numbers for Rane Madras.

    — P. A. Padmanabhan

What to watch in Q4 FY26

ZF Rane Warranty Provision Adequacy

April/May 2026
Current INR230 crores provision made, under review
Target Final number confirmed, no further provision required

Why it matters

To assess the final financial impact of the product recall and ensure no further one-off charges.

As far as the adequacy of provision is concerned, again it's very early to comment. We will be reviewing it sometime in March, April of this year and at that time, we will have a better idea if this amount is sufficient or any additional provision may have to be made.

Risks & concerns

  • Product recall liability and warranty provisions

    high

    One-off warranty provision of INR230 crores (gross) for seatbelt buckle recall in Hyundai Palisade SUV, due to a Tier 2 supplier's part failing under extreme cold conditions. Adequacy of provision to be reviewed by March/April.

    Management acknowledged

  • Subdued margins for Rane Steering Systems

    medium

    Margins impacted by Labor Code provisions (INR1.8 crores) and low pricing on some orders accepted years back, expected to remain subdued for the next 12-15 months.

    Management acknowledged

  • Working capital increase

    low

    Slight increase in working capital due to conscious inventory buildup, but management expects optimization and reduction quarter-on-quarter.

    Management acknowledged

Q&A highlights

6 direct
Impact of new orders and Mexico pipeline on future revenue/EBITDA Partial
So this INR130 crores orders are for future businesses, right, and so they are not going to start immediately. So the other thing which you have mentioned about what is that related to the INR250 crores, that portion of it is not very clear.

Analyst sought clarity on the immediate and long-term impact of new order wins and pipeline, but management indicated the INR130cr orders are for future and the Mexico pipeline was unclear.

Asked by Abhay Tibrewala

Achieving 11-12% EBITDA margin given growth and merger benefits Direct
See, like we mentioned in the past calls also, Sunil, we are taking a lot of initiatives wherein we are expecting quarter-on-quarter improvement in our EBITDA numbers. And as you have seen in the last quarter, we have shown an improvement in EBITDA numbers. And you will also be aware that we had a new Labor Code coming in and we have also made a onetime provision for that additional any possible expenses on account of the Labor Code. That is also contained in this P&L for the quarter. So in spite of that, we have grown in the EBITDA number. And due to our cost reduction initiatives, we are fairly confident that in the coming financial year, we will touch double-digit EBITDA numbers for Rane Madras.

Analyst pressed on margin targets, and management reiterated confidence in achieving double-digit EBITDA for Rane Madras in the coming FY, citing cost reduction initiatives despite Labor Code provisions.

Asked by Sunil Kothari

Debt reduction plans and land sale proceeds Direct
And going forward also, our clear thought process is that we want to bring down the debt substantially. And we are hopeful that with further amounts which as we receive towards this land sale, we'll be using it towards debt reduction. So that's the brief to you. Overall, you'll see a substantial reduction over the next 12 to 18 months as already indicated.

Management confirmed plans for substantial debt reduction over 12-18 months, funded by future land sale proceeds, and noted that current land sale advances helped avoid additional debt for capex.

Asked by Sunil Kothari

ZF Rane Automotive warranty issue and future mitigation steps Direct
This is not happening on all the vehicles that has been there. This is due to environmental specific conditions. And we have estimated the number of vehicles and this is again related to NHTSA recall and the customer has actually decided to go in that route and we have actually made the provision to this. ... So this is again not specifically related to a part that is manufactured by us. This is being supplied to us through one of the company, and you will be able to actually identify this company because this is public information as well, related to a plastic injection molding part, right? So we have been able to learn from our way in which we were able to deal with some of these suppliers and we have actually taken corrective measures.

Analyst raised concerns about recurring quality issues. Management clarified the ZF Rane issue is specific to extreme conditions, involves a Tier 2 supplier, and corrective measures (changing supplier) have been taken, while customer relationships remain strong.

Asked by Sunil Kothari

Adequacy of warranty provision and potential for future remediation costs Partial
See, as far as adequacy of provision, like I mentioned earlier, it's a bit early to commit right now because we are still in the process of reviewing it. So by April, May, we will have a better idea whether this provision is sufficient or any more provision is required. So we'll come back to you during the next call on that aspect.

Management stated it's too early to confirm the adequacy of the INR230 crore provision and will provide an update by April/May, indicating potential for further provisions.

Asked by Rajakumar Vaidyanathan

Rane Steering Systems margin dip and Labor Code impact Direct
See, in Rane Steering Systems, Labor Code, yes, that is having an impact on the margins. And also like we have mentioned, for the next 12 months or so, the margins will be subdued in case of Rane Steering Systems mainly due to some low pricing at which we have accepted some orders a few years back. So that is also playing a role. So due to poor product mix and as well as the Labor Code, both have contributed to a lower margin in case of Rane Steering Systems.

Management confirmed that both Labor Code provisions (INR1.8 crores) and low-margin older orders are impacting Rane Steering Systems' profitability, with subdued margins expected for the next 12 months.

Asked by Rajakumar Vaidyanathan

Rane Madras capex for FY26-FY28 and expected sales from it Direct
It's very difficult to give 1 single number, Harshit, because each business has its own ratio of fixed assets turnover. So it varies from business to business. And overall numbers, currently ballpark numbers, we have picked it up and we feel it will be around INR200 crores per annum.

Management clarified Rane Madras plans INR600 crores capex over 3 years (INR200 crores/annum) but did not provide a specific asset turnover or sales target from this investment, citing business variability.

Asked by Harshit Vora

Timing gap between Rane Madras and Rane Holdings results Direct
It will be difficult to reduce that time gap because see, Rane Holdings is the holding company of Rane Madras. So after the Rane Madras results are approved, the same has to be taken into consideration by Rane Holdings and then they have to finalize their financials. So this reasonable gap will continue to be there, at least a week's gap.

Analyst suggested reducing the reporting gap for better investor clarity. Management explained the necessity of the gap due to Rane Holdings being a holding company that consolidates Rane Madras's results.

Asked by Saket Kapoor

2 min read 5 chapters

Detailed narrative

Strong Q3 FY26 Performance Driven by Auto Sector Recovery

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.

Significant Warranty Provision by ZF Rane Automotive

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.

Margin Pressures and Improvement Initiatives

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.

Order Wins and Future Growth Outlook

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.

Debt Management and Capex Plans

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.

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