Detailed Narrative
Q2 FY26 Performance and US Tariff Impact
Rolex Rings reported a revenue from operations of ₹272 crores for Q2 FY26, marking a 9.33% year-over-year decline and a 6.85% quarter-over-quarter decline. This downturn was primarily attributed to the uncertainty surrounding US import duties on Indian goods. EBITDA for the quarter was ₹69 crores (25.37% margin), and Profit After Tax (PAT) was ₹44 crores, both showing a decline compared to previous periods, as export consignments faced significant duty charges of up to 53% before a recent reduction.
US Import Duty Resolution and Export Recovery Outlook
The US government announced a partial waiver, reducing import duties on specified auto components from 53% to 28%, effective November 1, 2025. Management expressed optimism that this clarity would lead to a regain of the US export market from December 2025 onwards. Further, buyers are anticipating an additional reduction to 18-20% once a final trade deal is announced, which is expected by January 2026.
Segmental and Geographic Revenue Trends
In Q2 FY26, domestic bearing ring revenue was ₹105 crores, and domestic auto components contributed ₹37 crores. Export bearing rings accounted for ₹40 crores, while export auto components generated ₹68 crores. For H1 FY26, the US market contributed 25% of revenue (down from 31.5% in FY25), while Europe's contribution increased to 20.5% (from 17.5%), and domestic revenue rose to 52.5% (from 47%), partially offsetting the US slowdown.
FY26 Growth Challenges and Bullish FY27/FY28 Outlook
Management acknowledged that FY26 growth would be difficult, as the first nine months were impacted by tariff issues and delayed orders. However, they are 'very much bullish' for FY27, expecting 'high teen growth,' and 'heightened growth' for FY28. This optimism is driven by the anticipated commencement of previously awarded orders, including a new ₹60 crore annualized business starting commercial supply from February 2026.
EV Market Performance and Product Strategy
The EV market has not performed as expected, with EV revenue currently constituting a single-digit 7-10% of Rolex Rings' total revenue. New inquiries are predominantly from hybrid and traditional fuel vehicles rather than EVs. The company continues to add different ring gears and gear blanks for automotive transmissions and is securing incremental bearing ring business from existing customers' expansion plans.
Competitive Positioning and Market Share Ambition
Rolex Rings highlights its competitive advantages, including over three decades of industry experience, a wide product range, high precision manufacturing, and value-added processes. The company currently holds a 30% domestic market share in bearing rings and expects this to increase towards 50% as new OEM plants become operational and outsource more business.