Raymond

Raymond Limited reported a consolidated total income of INR613 crores in Q4 FY26, a 2% increase compared to Q4 FY25. However, Q4 FY26 EBITDA stood at INR85 crores, a 14% decline from INR99 crores in Q4 FY25, with the EBITDA margin contracting to 13.9% from 16.4%. For the full fiscal year FY26, total income grew 10% YoY to INR2,312 crores from INR2,105 crores in FY25. Despite revenue growth, FY26 EBITDA remained flat at INR335 crores, leading to a margin compression to 14.5% from 15.9% in FY25, partly due to reduced non-operating income.

The Aerospace, Defense and Precision Technology division demonstrated robust performance, with Q4 FY26 revenue reaching INR119 crores, an 11% YoY increase, and EBITDA of INR30 crores, maintaining a 25.5% margin. For the full year FY26, this segment's revenue grew significantly by 26% YoY to INR392 crores from INR311 crores in FY25. EBITDA also saw a 25% YoY increase to INR88 crores, with the margin at 22.3%. This growth was attributed to a dual strategy of portfolio expansion and increased volume allocations from core OEM and Tier 1 partners.

The Precision Technology & Auto Components segment reported a Q4 FY26 revenue of INR442 crores, a 5% growth, and an EBITDA of INR67 crores, representing a 26% YoY increase and a margin of 15.2%. For the full fiscal year FY26, revenue grew 10% YoY to INR1,667 crores from INR1,513 crores in FY25. EBITDA for FY26 surged 34% YoY to INR223 crores, with the margin improving to 13.4% from 11% in FY25. This margin improvement was partly due to higher sales volumes, favorable product mix, and a one-time^📎 gain of INR13 crores from a land sale in Q2 FY26.

Raymond has outlined a transformative capital expenditure program of INR930 crores over the next 5 years to meet surging international demand. This includes INR500 crores dedicated to Aerospace and INR430 crores for Precision Technology & Auto Components. Management confirmed that the capex will be funded through the company's existing net cash surplus of INR68 crores as of March 2026 and strong internal generation. They anticipate spending approximately INR100 crores per company per year, totaling around INR1,000 crores over five years, without needing to draw capital from the parent company.

Analysts noted an aerospace order book of INR2,300 crores executable over 5 years, averaging INR460 crores annually. Management clarified that their 'order book' is dynamic, continuously growing with new products and existing orders, rather than a fixed backlog. They emphasized that over 75% of their products are for the engine segment across global OEMs. The company plans to sustain a 25% growth rate until the new greenfield facility is ready, ensuring capacity is managed to meet demand.

The company acknowledged several macroeconomic challenges, including the moderation of manufacturing PMI to 53.9% in March due to energy shocks and rising input costs from Middle Eastern conflicts. Q4 was specifically impacted by contraction in aerospace-grade titanium and aluminum alloys due to logistic blockades in the Gulf. Global trade pressures from U.S. tariffs also introduced logistical complexities, causing temporary rescheduling and delays. While automotive tariffs have reduced to 18%, supply chain disruptions from geopolitical events continue to pose challenges.

Raymond is establishing a new greenfield facility in Andhra Pradesh, with commercial production expected to start by the second half or last quarter of FY28 (calendar year end FY27). This facility is crucial for future growth, with an estimated contribution of INR150-200 crores in its second year of operation (FY29). The company aims to ensure a seamless transition, with current facilities managing growth until the new plant is fully operational and approved by customers.

The company is strategically pivoting towards co-design and value engineering collaborations with global OEMs, moving beyond build-to-print services. This involves migrating from basic component manufacturing to high-complexity subsystems and precision engineered assemblies. Most R&D costs (3-5% of cost) are expensed as operational costs, reflecting a business model focused on aggressive growth. The company is also exploring vertical integration for surface and heat treatments where needed, aiming to become a one-stop shop for customers.