Rolex Rings

Rolex Rings reported a net revenue from operations of ₹259-260 crores in Q3 FY25, marking a 5.1% decline year-on-year from ₹273 crores in Q3 FY24 and a 13.7% sequential drop from ₹300 crores in Q2 FY25. EBITDA margin for the quarter was approximately 21%, a slight improvement from 20.5% in Q3 FY24 but lower than 24.4% in Q2 FY25. Profit Before Tax (PBT) stood at ₹45 crores, down from ₹50 crores in Q3 FY24 and ₹65 crores in Q2 FY25, primarily due to an extraordinary provision of ₹18.6 crores for debt restructuring liability.

For the nine months of FY25, auto components constituted 55% of revenue, while bearing rings accounted for 45%, a reversal from previous trends due to a drastic reduction in the bearing rings market. Domestic revenue increased to 52% of the total, with exports at 48%, mainly driven by auto component business. The passenger vehicle segment grew to 46%, industrial to 17.3%, and commercial vehicle (domestic/US) to 29%, with EV and hybrid segments contributing 7.7%.

The company has secured new orders worth approximately ₹175 crores for FY26, with a significant portion from new customers and new programs. Management expects a 25-30% ramp-up of these new programs in FY26, increasing to 50-60% in FY27, potentially adding around ₹250 crores in additional supply for FY27. These orders are primarily for auto components and exports to Europe and USA, with some domestic bearing ring business also secured.

Rolex Rings has made an extraordinary provision of ₹18.6 crores in Q3 FY25 towards the Right of Recompense (ROR) liability for debt restructuring from 2013. Management expressed confidence that the maximum liability would be restricted to ₹50.60 crores based on the CDR approval letter. While acknowledging potential for additional components related to payment delays, the company aims to settle this by March 2025 with a one-shot payment, expecting a waiver on the requested ₹73 crores from lenders.

The decline in bearing rings revenue, particularly exports, is attributed to a significant slowdown in overseas markets (Europe and US) and deferment of CapEx by major bearing players. Management indicated that this weakness might persist for another one or two quarters. Regarding the EV transition, while the company has secured EV-related orders, the ramp-up in the EV segment has been 'stagnant,' with new orders predominantly (65%) being for non-EV hybrid segments.

Looking ahead, Rolex Rings is optimistic about the coming fiscal years. For FY26, the company anticipates a revenue growth of 15-20% and aims to achieve EBITDA margins of 22-23%, driven by new business and improved scale of economy. For FY27, a growth of 15-18% is expected. The company is also targeting a Q4 FY25 revenue of around ₹300 crores, aiming to match its previous fiscal year's annual performance.