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    Rane (Madras) Limited

    RML
    Automobile and Auto Components·13 Aug 2025
    Management Summary

    Rane Group reported a mixed Q1 FY26 with a 7.4% revenue increase to INR 884.4 crores and a 30 bps EBITDA margin expansion to 8.9%. The company secured INR 800 crores in new business wins, driven by strong performance in the ZF Rane Occupant Safety business which grew 28%. However, demand softened towards the quarter-end, impacting segments like passenger cars and two-wheelers, while global trade tensions and component shortages pose ongoing uncertainties.

    Highlights

    5

    • Total revenue increased by 7.4% YoY to INR 884.4 crores from INR 823.8 crores.

    • EBITDA margin improved by 30 bps, reaching 8.9% from 8.6%.

    • Secured INR 800 crores of new business wins in the quarter, positioning for future growth.

    • The ZF Rane Occupant Safety business recorded a strong 28% growth.

    • Farm Tractor segment showed strong growth due to rural sentiment revival and early monsoon.

    Concerns

    5

    • Demand softened towards the close of the quarter, leading to subdued overall growth across vehicle categories.

    • Passenger Car segment saw a noticeable slowdown, and the 2-wheeler segment experienced muted growth due to OEM inventory correction.

    • The Aftermarket segment faced a challenging quarter.

    • Near-term uncertainty persists due to global trade tensions and recent U.S. tariff measures.

    • Component shortages, OEM inventory adjustments, and price increases remain key monitorables.

    Key financials

    Single quarter

    03 metrics
    1. 01Revenue₹884.4 Cr+7.3%YoY
    2. 02EBITDA Margin8.9%
    3. 03New Business Wins₹800 Cr

    Segment breakdown

    ZF Rane Automotive India Private Limited
    ₹389 Cr Occupant Safety business Revenue28.0% Occupant Safety business Growth₹218 Cr Steering business Revenue-3% Steering business Growth
    List

    Order Book

    high confidence

    Total Value

    ₹ 800 crores

    as of 2025-06-30

    quantified

    Inflow this qtr

    ₹ 800 crores

    "The company is optimistic about continuing to win new business and has a good order book pipeline."

    Source:
    Prepared remarks

    Capital allocation

    4
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    ZF Rane joint venture company's balance sheet can support its own source of funds.

    Debt

    Debt disclosed

    M&A

    ZF Rane Occupant Safety business carve-out

    divestment · pending regulatory

    Liquidity

    Liquidity disclosed

    Velachery land sale generated INR 350 crores, with INR 100 crores received and balance over 12 months, contributing to debt reduction.

    Guidance & targets

    6
    CategoryTargetPriority
    Volume
    Occupant Safety Growth
    15-20%
    		High
    Profitability
    ZF Rane EBITDA Margin
    10-11%
    		High
    Profitability
    New Business EBITDA Margin (Rane Steering)
    8%
    		High
    Profitability
    EBITDA Margin Improvement from Synergies
    1%
    		High
    Profitability
    Rane Madras Steering Business EBITDA Margin
    3-4%
    		High
    Debt
    Rane Madras Debt Reduction
    INR 150 crores
    		High

    ZF Rane Safety business carve-out completion

    Next 6-9 months (Q2, Q3, or Q4 FY26)
    CurrentUnder NCLT process, expected in FY26
    TargetCompletion of carve-out, separate JVs established

    Why it matters

    This structural change will establish two separate joint ventures and is a key strategic move.

    So the process is well underway as announced earlier. Right now, the matter is going through the NCLT process. I am not able to give an exact time line, but it should happen during this financial year. So in the next 2 quarters, Q2, Q3, I don't know in case some procedural, it could go to Q4. But I think during the next 6 to 9 months, it should happen.

    How to verify

    capital_allocation.m_and_a[target='ZF Rane Occupant Safety business carve-out'].status

    Risks & concerns

    6
    RiskSeverity

    Softening demand and subdued growth across vehicle categories

    Demand softened towards the close of the quarter, leading to subdued overall growth across vehicle categories. — Management acknowledged

    medium

    Passenger Car segment slowdown and muted 2-wheeler growth

    Passenger Car segment saw a noticeable slowdown, signaling a shift in consumer preferences. ... The two-wheeler segment saw muted growth, impacted by OEM inventory correction as well as decline in demand for some of the entry-level commuter bikes. — Management acknowledged

    medium

    Challenging Aftermarket segment

    The Aftermarket segment faced a challenging quarter, but we are actively driving capability building, range expansion and new product introductions to strengthen the market presence. — Management acknowledged

    medium

    Global trade tensions, U.S. tariffs, and geopolitical shifts

    The recent tariff announcements by the U.S. administration could impact pricing and supply chain flows in the short term. ... While the near-term uncertainty persists due to global trade tensions and the recent tariff measures, we remain cautiously optimistic about FY'26. — Management acknowledged

    medium

    Component shortages, OEM inventory adjustments, and price increases

    However, the impact of component shortages, inventory adjustments of OEMs and price increases will remain key monitorable. — Management acknowledged

    medium

    Steer-by-wire technology disruption in the Indian market

    As far as the Indian market is concerned, the market is still far away for steer-by-wire type of products in the Indian market. — Analyst acknowledged

    low

    Q&A highlights

    8

    “Eventually, it will come down. But I think in the short term, when I can look at the next 1 or 2 years, it will continue at these levels. Because of the strong order position of ZRAI, most of the debt is on the seatbelt and airbag side. So we are seeing good growth opportunities, and therefore, the business needs more investments. So we are using debt as one of the reasons.”

    Clarifies that ZRAI's debt of INR 679 crores is strategic for growth in the Occupant Safety segment and will remain high in the short term due to ongoing investments.

    asked by Lakshminarayanan K.G.

    3 min read7 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview

    Rane Group reported a total revenue of INR 884.4 crores for Q1 FY26, marking a 7.4% increase compared to INR 823.8 crores in the same quarter last year. The EBITDA margin improved by 30 basis points, rising from 8.6% to 8.9%. The company also secured INR 800 crores in new business wins during the quarter, which is expected to drive future growth and strengthen its market position.

    02

    Segmental Performance Highlights

    The automotive industry experienced a mixed quarter, with demand softening towards the end. The Passenger Vehicle segment maintained growth, supported by Multi-Utility Vehicles and exports, but the Passenger Car segment slowed. The Commercial Vehicle segment saw recovery, while the Farm Tractor segment recorded strong growth due to rural sentiment. The two-wheeler segment, however, faced muted growth due to OEM inventory corrections.

    03

    ZF Rane Automotive India Private Limited (ZRAI) Dynamics

    The Occupant Safety Systems division within ZRAI demonstrated strong growth, up 28% to INR 389 crores, and is projected to grow at 15-20% annually over the next 3-4 years, requiring significant investments (INR 1 investment for every INR 5 of sales). The Steering Gear division, however, saw a 3% decline in revenue to INR 218 crores, primarily due to a softer Commercial Vehicle market. ZRAI's EBITDA margin is expected to hover around 10-11%.

    04

    Strategic Debt and Investment

    ZRAI carries a debt of INR 679 crores, which management views as strategic for investments to capitalize on strong growth opportunities, particularly in Occupant Safety. Rane Steering Limited (RSSL) has INR 170 crores in debt, while Rane Madras Holdings (RML) had INR 796 crores as of June 30, with INR 70-75 crores paid off since, targeting a total reduction of INR 150 crores this year. The Velachery land sale generated INR 350 crores, with INR 100 crores received and the balance due over 12 months, contributing to liquidity.

    05

    Merger Synergies and Margin Outlook

    Following the merger, Rane Madras has focused on unlocking synergies, with tangible progress in operational efficiency and cost reduction. Short-term synergies are expected to yield a 1% improvement in EBITDA margin over the next year. Longer-term synergies from consolidated direct material purchasing and centralized functions are also anticipated, aiming for double-digit EBITDA margins for Rane Madras.

    06

    Global and Domestic Market Outlook

    The company remains cautiously optimistic💬 for FY26, expecting moderate growth across major segments, supported by domestic demand, infrastructure projects, and festive season momentum. However, global trade tensions, recent U.S. tariff announcements, component shortages, and OEM inventory adjustments remain key monitorables. The U.S. business, contributing 8% of Rane Madras revenue, has not yet seen an immediate tariff impact🌐.

    07

    Future Structural Changes

    The process to carve out ZF's global Occupant Safety business, which will result in two separate joint ventures in India (RHL owning 49% in each), is underway and expected to be completed within the current financial year (Q2, Q3, or Q4 FY26). Management stated that the Indian JV is self-funded and not impacted by ZF Germany's financial difficulties. There are no immediate plans for further consolidation at the Rane Holdings level, but it remains under review.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.