Raymond Limited

Raymond Limited reported a robust Q3 FY26, with total income increasing by 18% year-on-year to INR 580 crores. EBITDA also saw significant growth, rising 28% year-on-year to INR 83 crores, leading to an improved EBITDA margin of 14.3% compared to 13.3% in Q3 FY25. For the nine-month period, total income grew 13% to INR 1,699 crores, and EBITDA increased 5% to INR 250 crores, though the 9M EBITDA margin slightly contracted to 14.7% from 15.8% in 9M FY25 due to reduced non-operating income.

The Aerospace & Defense business (JKMGAL) demonstrated exceptional performance, with Q3 FY26 revenue surging 49% year-on-year to INR 105 crores. EBITDA for the segment grew 39% to INR 19 crores, achieving an EBITDA margin of 18.6%. For 9M FY26, revenue was up 34% to INR 273 crores, and EBITDA grew 34% to INR 57 crores, with a healthy margin of 20.9%. This growth is attributed to increased production requirements from OEMs and Tier 1 suppliers, product portfolio expansion, and India's growing role in global supply chains.

The Precision Technology & Auto Components segment (JKMPTL) reported a 15% year-on-year revenue growth in Q3 FY26, reaching INR 417 crores. Notably, EBITDA for this segment grew 51% year-on-year to INR 57 crores, with the EBITDA margin expanding significantly to 13.7% from 10.4% in Q3 FY25. For 9M FY26, revenue grew 12% to INR 1,225 crores, and EBITDA increased 38% to INR 156 crores, with the margin improving to 12.7%. This margin improvement was driven by higher sales volumes, a favorable product mix, and a one-time^📎 gain of INR 13 crores from a land sale in Q2 FY26.

Raymond remains a debt-free company, boasting a net cash surplus of INR 214 crores as of December 2025. The company plans significant capital expenditure in Andhra Pradesh over the next five years, allocating approximately INR 500 crores for Aerospace and INR 430 crores for Auto & Precision Technology. These investments are aimed at enhancing production capabilities, expanding facilities, and supporting future growth in new product categories and geographies, ensuring sustained momentum.

Management is optimistic about future margin expansion, targeting Aerospace EBITDA margins of 23-25% in the long run and aiming for Auto & Precision Technology EBITDA margins to break the 15% barrier and increase yearly. The Aerospace order book is characterized by 5-10 year contracts, with a typical window of 2.5 to 3 years based on current sales and new product development. The company continues to develop new parts daily, contributing to a continuously growing order book.

Raymond is actively increasing its market share in existing programs, moving from an initial 35% to over 65% in many parts due to strong quality and delivery performance. The company benefits from global supply chain diversification trends, with OEMs increasingly sourcing from India. The Aerospace business supplies 300-350 part numbers for LEAP engines and is involved in at least 15 different engine programs, with its contribution to overall engine cost being a small 0.1-0.3%, indicating massive potential for growth.

The company maintains efficient working capital management, with free cash flow funding operations and packaging credit lines supporting export-oriented businesses. Receivable days are in line with industry averages, not exceeding 100 days. For Aerospace, raw material inventory is crucial due to long lead times, while Auto Components have higher finished goods inventory due to export logistics. Material price fluctuations, such as for Inconel, are managed through contractual passthrough clauses, ensuring no direct impact on margins.