Rico Auto Industries Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Rico Auto Industries delivered a strong Q3 FY26 performance with consolidated revenue growing 14.1% to INR 632 crores and EBITDA increasing 33.2%, leading to a 10% margin. For the 9-month period, revenue grew 7.7% to INR 1,806 crores, and net profit more than tripled. The company is optimistic about the Indian automotive sector's long-term prospects, driven by localization, increased content per vehicle, and export recovery, despite cautious near-term demand visibility and pricing pressures.

Highlights

  • Consolidated revenue grew 14.1% to INR 632 crores in Q3 FY26.

  • EBITDA increased 33.2% with margin improving to 10% in Q3 FY26.

  • 9-month period consolidated revenue grew 7.7% to INR 1,806 crores.

  • 9-month period EBITDA grew 23.2%, and net profit more than tripled.

  • Well-positioned to benefit from continued localization by OEMs and increasing content per vehicle.

Concerns

  • Near-term demand visibility remains cautious.

  • Pricing pressure from customers partially offsets EBITDA margin expansion.

  • Railway revenue target of INR 60-70 crores for FY26 will not be met, now expected in FY27.

Key financials

2 periods

Q3 FY26

  • Consolidated Revenue
    ₹632 Cr
    YoY +14.1%
  • EBITDA Growth
    33.2%
  • EBITDA Margin
    10%

9M FY26

  • Consolidated Revenue
    ₹1,806 Cr
    YoY +7.7%
  • EBITDA Growth
    23.2%
  • EBITDA Margin
    9.6%

What they filed

Q1 FY27: revenue up 38.9%, net profit down 120.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue576 552 545 543 627 +9%629 +14%677 +24%755 +39%
EBITDA49 45 50 54 61 +23%61 +34%48 −5%35 −35%
Net profit7 2 7 17 18 +170%11 +504%7 −7%-3 −120%
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.

Guidance & targets

Volume

  • Industry Passenger Vehicles Growth Volume · FY27 · High confidence 5% to 7%
    Looking ahead to financial year '27, the industry is expecting to grow at mid to high single digits with passenger vehicles growing 5% to 7%

    — Kaushalendra Verma

  • Industry 2-Wheeler Growth Volume · FY27 · High confidence 6% to 8%
    2-wheeler around 6% to 8%

    — Kaushalendra Verma

  • Industry Commercial Vehicles Growth Volume · FY27 · High confidence 4% to 6%
    commercial vehicles, 4% to 6%

    — Kaushalendra Verma

  • Industry 3-Wheelers Growth Volume · FY27 · High confidence 9% to 10%
    and 3 wheelers are expected to grow between 9% and 10%.

    — Kaushalendra Verma

  • Industry 2-Wheeler EV Penetration Volume · FY27 · High confidence 7% to 8%
    EV penetration in 2-wheelers is predicted to increase to 7% to 8%.

    — Kaushalendra Verma

Revenue

  • Rico Auto Overall Growth Revenue · FY27 · Medium confidence more than 10-12%, maybe 15%
    I think there will be a growth of double-digit growth definitely this year and, both in the export front as well as the domestic front... Growth more than 10-12%, maybe 15%.

    — Arvind Kapur

  • Rico Auto Hybrid Growth Revenue · Next year · Medium confidence double-digit growth
    next year, the growth that is taking place in the hybrid, we are hoping that there would be a double-digit growth.

    — Arvind Kapur

  • Rico Auto Railway Revenue Revenue · FY27 · Medium confidence INR 60-65 crores

    Previously INR 60-70 crores (for FY26) → INR 60-65 crores

    Our target is much higher, but we are talking we are committing about INR60 crores – around INR60 crores this year, INR60-65 crores.

    — Arvind Kapur

  • Rico Auto Revenue Revenue · FY26 · High confidence close to INR 2,500 crores
    by the time we close this year, we'll be somewhere around INR2,500 crores.

    — Naveen Sorot

Profitability

  • EBITDA Margin Profitability · Long-term · Medium confidence 13%
    Yes, we are not there, but we will get there. We have a very clear path on getting to the margin of 13%.

    — Arvind Kapur

Tax

  • Tax Rate Tax · Ongoing · High confidence 25%
    25%.

    — Naveen Sorot

What to watch in Q4 FY26

Railway Revenue Contribution

Q2 FY27
Current Very little direct contribution in Q3 FY26, indirect contribution present.
Target Regular supplier (direct and indirect) to railways, with fast revenue growth.

Why it matters

Management expects the railway segment to become a regular and fast-growing contributor by Q2 FY27, which will significantly impact future turnover.

I think in the second quarter of next year, we should be a regular supplier to railways directly and indirectly. And we are hoping that the revenue will grow pretty fast.

Risks & concerns

  • Near-term demand visibility

    medium

    Management noted that near-term demand visibility remains cautious, despite optimism for the medium- to long-term.

    Management acknowledged

  • Pricing pressure from customers

    medium

    Pricing pressure from customers partially offset the benefits of internal cost initiatives and productivity improvements on EBITDA margin.

    Management acknowledged

  • Commodity price volatility and lag in pass-through

    medium

    While RM prices are indexed with customers, there can be a lag in full recovery, and the 'denominator effect' can impact EBITDA percentage margins.

    Both acknowledged

  • Government policy changes impacting specific business segments (fuses)

    low

    A significant tender for electronic fuses was withdrawn by the government, which reverted to public sector undertakings, causing a setback in this segment.

    Both acknowledged

Q&A highlights

4 direct, 1 evasive
Auto business growth and margin recovery Partial
Fortunately, the tax relief were given last year, the GST and also the income tax reduction that had taken last year that is reflecting in the growth of the auto industry. And hence, the auto component industry is also benefited by that.

Management attributes industry growth to government policies and expects a good future, but the timeline for margin recovery to historical levels remains vague.

Asked by Aman

EV/Hybrid share of turnover and growth dynamics Direct
So we will be close to 7%. What has happened is both the IC engine and the hybrid and the EV both are growing, and we are participating in both, but the IC engine grew faster. And the IC vehicles grew faster. And so, our EV share has gone up, EV hybrid gone up to 9% of our turnover. But now it is in the region of about 7%.

Provides current EV/Hybrid mix and highlights that IC engine growth was faster, influencing the overall mix, despite hybrid's potential for double-digit growth.

Asked by Siyaa Deshmukh

Railway revenue contribution and FY26 target achievement Direct
No, no, we are not on track there, but '27, definitely we'll be crossing that.

Management confirms that the FY26 railway revenue target of INR 60-70 crores will not be met, pushing the expectation to FY27, indicating a delay in this new segment's ramp-up.

Asked by Yash Jhunjhunwala

Impact of commodity price increases on margins Partial
Our RM prices is indexed with the customer... There may be a lag for some time before we get the entire recovery from the customer... the margin, if you look at the percentage of EBITDA, that does get impacted because your sales goes up, but what we get from the customer is just that clean differential in pricing that has gone up.

Explains the pass-through mechanism for commodity prices but acknowledges potential lags and the impact on EBITDA percentage, which can be a drag on reported margins.

Asked by Yash Jhunjhunwala

Status of electronic fuses business and government policy changes Direct
There was a big tender we participated in. And that finally, the government withdrew that tender after almost 3 to 4 years... they have gone back to the old policy of giving it back to the public sector undertaking.

Clarifies the setback in the electronic fuses business due to a government policy reversal, indicating that direct supplies are not currently happening, despite prior readiness.

Asked by Yash Jhunjhunwala

Timeline for achieving 12-13% EBITDA margin Evasive
Though we are getting it transferred and settled with the customer, but because of the denominator effect, the percentage will go down. So it is very difficult to say that when exactly we are going to achieve 12% to 13-odd percent.

Management expresses difficulty in providing a clear timeline for reaching the previously guided margin target, citing commodity volatility and the 'denominator effect' as challenges.

Asked by Deepak Poddar

Revision of FY27 revenue target from INR 3,000 crores+ Partial
That is what we will plan for the next 3 to 4 years. And those are the figures we have quoted on there, but a lot has changed and let's see what happens, and I think we might do even better.

Management suggests that the previous long-term revenue target might be revised upwards due to changing market dynamics, but no new specific target is provided yet.

Asked by Deepak Poddar

Impact of US-India trade deal tariffs on margins and competitiveness Direct
we will return whatever tariffs have been lowered, we will return it back to the customer. So there won't be any additional profit because of that, but we are hoping to get better business, we'll be able to compete better with -- against China and the other countries around us.

Clarifies that tariff reductions will be passed on to customers, indicating no direct margin benefit but a strategic move to enhance competitiveness and potentially increase business volume against rivals.

Asked by Akash

2 min read 6 chapters

Detailed narrative

Robust Q3 FY26 Performance Driven by Auto Sector Tailwinds

Rico Auto Industries delivered a strong Q3 FY26, with consolidated revenue growing 14.1% year-on-year to INR 632 crores. This performance was underpinned by a supportive macroeconomic environment, including duty exemptions on lithium and cells, and incentives for semiconductor manufacturing, which are expected to reduce EV production costs. The company's EBITDA saw a significant increase of 33.2%, with the margin improving to 10%, reflecting the positive impact of internal cost initiatives and enhanced capacity utilization.

Strong Nine-Month Financials and Optimistic Long-Term Outlook

For the nine-month period of FY26, Rico Auto reported consolidated revenue of INR 1,806 crores, representing a 7.7% growth. EBITDA for this period grew by 23.2%, and net profit more than tripled, demonstrating strong operational leverage. Management expressed optimism for the medium- to long-term prospects of the Indian automotive sector, citing continued localization by OEMs, increasing content per vehicle, and a gradual recovery in export markets as key growth drivers.

Segmental Dynamics: EV/Hybrid, IC Engine, and Railways

While the overall auto sector is projected to grow at mid to high single digits in FY27 (PVs 5-7%, 2-wheelers 6-8%, CVs 4-6%, 3-wheelers 9-10%), Rico Auto's EV/hybrid share of turnover is currently around 7%, with IC engines showing faster growth. The company anticipates double-digit growth for hybrid vehicles next year. The railway segment, which had minimal direct contribution in Q3 FY26, is expected to contribute INR 60-65 crores in FY27 and become a regular direct and indirect supplier by Q2 FY27, indicating a strategic diversification.

Margin Management Amidst Commodity Volatility and Pricing Pressures

EBITDA margin expansion was partially offset by ongoing pricing pressure from customers. Management clarified that raw material prices are indexed with customers, mitigating direct impact, but acknowledged a potential lag in recovery and the 'denominator effect' on percentage margins. Despite these challenges, the company maintains a clear path to achieving a 13% EBITDA margin, although a precise timeline for this target remains difficult to predict due to market volatility.

Impact of Trade Agreements and Government Policy Shifts

The India-U.S. trade agreement, offering zero-duty access for select auto components, is expected to enhance export competitiveness. However, management stated that tariff reductions will be passed on to customers, aiming for increased business volumes and improved competitiveness against rivals like China, rather than direct margin benefits. The electronic fuses business faced a setback as a large tender was withdrawn by the government, which reverted to public sector undertakings, though new policies encouraging private sector participation are now emerging.

FY26 Revenue Outlook and Long-Term Aspirations

Rico Auto projects to conclude FY26 with consolidated revenue close to INR 2,500 crores. While a previous long-term target of INR 3,000 crores+ for FY27 was mentioned, management indicated that 'a lot has changed' and they 'might do even better,' suggesting a potential upward revision to their long-term revenue aspirations. The company is strategically focusing on items requiring minimal investment and maximizing capacity utilization to enhance its bottom line.

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