Tolins Tyres Limited — Q2 FY26 earnings call

Call held 18 Nov 2025

Management summary

Tolins Tyres reported a mixed Q2 FY26, with H1 revenue showing modest growth but Q2 experiencing a significant revenue and EBITDA decline due to GST-related purchase deferment. Management emphasized the temporary nature of the slowdown, with demand normalizing in Q3. New product launches, a substantial order from Tamil Nadu STU, and a new recycling project are expected to drive H2 recovery, alongside softening raw material prices.

Highlights

  • H1 FY26 Revenue grew 1.76% YoY to INR 155.8 crores, reflecting steady growth despite Q2 slowdown.

  • New tractor rear tyres are receiving encouraging feedback and expected to contribute meaningfully from Q3 FY26.

  • Secured an INR 50 crores annual order from Tamil Nadu State Transport for PCTR, which is a good margin business.

  • Terra Rubber recycling project with INR 2 crores capex is on track for commissioning by Dec 2025/Jan 2026, expected to reduce costs and improve PAT margins.

  • Raw material prices (rubber, crude-based products) are softening in Q3, expected to support margin improvement.

Concerns

  • Q2 FY26 Revenue declined 14.04% YoY to INR 66.1 crores due to GST-related purchase deferment, particularly impacting the PCTR segment (20-25% drop).

  • H1 FY26 EBITDA declined 25.57% YoY to INR 22.35 crores, and Q2 EBITDA declined 40.6% YoY to INR 8.91 crores, attributed to lower volumes, fixed cost absorptions, and volatile raw material prices.

  • Employee expenses doubled YoY from INR 2 crores to INR 4 crores in Q2, despite revenue decline, though management is addressing this.

Key financials

2 periods

Q2

  • Revenue
    ₹66.1 Cr
    YoY -14%
  • EBITDA
    ₹8.91 Cr
    YoY -40.6%
  • EBITDA Margin
    13.5%
  • PAT
    ₹6.92 Cr
    YoY -27.8%
  • PAT Margin
    10%

H1

  • Revenue
    ₹155.8 Cr
    YoY +1.8%
  • EBITDA
    ₹22.35 Cr
    YoY -25.6%
  • EBITDA Margin
    14.3%
  • PAT
    ₹16.22 Cr
    YoY -12.4%
  • PAT Margin
    10.4%
  • EPS
    ₹4.16

What they filed

Q1 FY27: revenue down 11.7%, net profit down 33.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue77 70 70 90 66 −14%93 +34%78 +12%79 −12%
EBITDA15 13 14 13 9 −41%14 +13%11 −17%9 −34%
Net profit10 11 9 9 7 −28%10 −4%9 −4%6 −33%
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.

Segment breakdown

  • PCTR Segment
    -20% Q2 Volume Impact
  • Agricultural Tyres
    ₹15 Cr Expected Business (Next 6 Months)
  • Rubber Compound Business
    7% Share of PCTR Sales

Order book

high confidence

Total value

₹50 Cr

as of 2025-09-30 quantified

Execution

executable over one year

Composition

  • PCTR (product) ₹50 Cr 100%
The INR 50 crore order from Tamil Nadu State Transport is for PCTR and is a good margin business, already factored into expectations.

Source: Q&A

Capital allocation

medium confidence
  • Capex Capex disclosed
    • Terra Rubber recycling project ₹2 Cr
    our new project on the recycling Terra Rubber, that also is taking shape. That also will get commissioned by December end or maybe in the first of January, in the month of January itself. So, these are the drivers that will be taking the company forward in the coming months and coming financial year also.

Guidance & targets

Volume

  • Q3 FY26 Volumes Volume · Q3 FY26 · High confidence Back to Q1 levels
    Q3, we are back to what we were in the Q1 positions. So, the volumes have picked up, and it is normalized.

    — Dr. K.V. Tolin

Revenue

  • Minimum Revenue Growth Revenue · Full Year FY26 · Medium confidence 10%

    Previously 20% → 10%

    Always, we are maintaining the same that we will be performing 10% more. That is the industry standard. So, we will be performing better than the industry standard. That is our guidelines. That is our targets.

    — Dr. K.V. Tolin

  • Q3 Revenue Revenue · Q3 FY26 · High confidence INR 90 crores
    So, the revenue in third quarter should be closer to INR 90 crore and not closer to INR 70 crore that we did in last year third quarter, which was INR 70 crore revenue. So, when you say revenues is normalized in third quarter, they have normalized to first quarter levels and not normalized to the same revenue of INR 70 crore that we did last year third quarter. Correct.

    — Dr. K.V. Tolin

Profitability

  • Margins Profitability · H2 FY26 · Medium confidence Maintained at previous years' levels
    the margins also will not be compromised from the previous years. Even if the top lines have reduced, the margins are still intact.

    — Dr. K.V. Tolin

New Products

  • New Tractor Rear Tyres Contribution New Products · Q3 FY26 onwards · High confidence Meaningful pick up
    contributions are expected to pick up meaningfully from Q3 onwards.

    — Dr. K.V. Tolin

Capex

  • Terra Rubber Project Commissioning Capex · Dec 2025 / Jan 2026 · High confidence Commissioned
    That also will get commissioned by December end or maybe in the first of January, in the month of January itself.

    — Dr. K.V. Tolin

What to watch in Q3 FY26

Q3 FY26 Revenue/Volume Recovery

Q3 FY26
Current Q2 revenue INR 66.1 crores, volumes impacted by GST deferment
Target Q3 revenue closer to Q1 levels (INR 90 crores)

Why it matters

Verifies the temporary nature of the Q2 slowdown and the effectiveness of demand recovery post-GST.

Q3, we are back to what we were in the Q1 positions. So, the volumes have picked up, and it is normalized.

Risks & concerns

  • GST-related purchase deferment

    medium

    Q2 sales were impacted by conscious postponement of buying decisions by dealers, distributors, OEM partners, and fleet operators in anticipation of tax revision, leading to a 20-25% drop in PCTR segment.

    Management acknowledged

  • Raw material price volatility

    medium

    Volatile raw material prices in the last two quarters contributed to margin pressure and EBITDA decline in Q2, though prices are now softening.

    Management acknowledged

  • Increased employee expenses

    low

    Employee expenses doubled YoY in Q2, attributed to hiring skilled labor for Q1 growth; management is now working to optimize these costs.

    Analyst acknowledged

Q&A highlights

5 direct, 1 evasive
Contradiction in Sales Deferment and Growth Guidance Evasive
Somehow in the Arihant call, no mention was made of this that people are postponing. And now it seems like an afterthought. In any case, now, Mr. Tolin, going forward for FY '26, what is the realistic expectation for top line as well as for margins for the remaining year and for the full year? ... Sir, I don't recollect that, but then I am not disputing it. Always, we are maintaining the same that we will be performing 10% more.

Analyst challenged management on inconsistent statements regarding GST impact and a significant reduction in revenue growth guidance from 20% to 10%.

Asked by Keshav Garg

EBITDA Margin Decline in Q2 Partial
No, I mean in the second quarter, the margins have come down to 13.5%, and you are very confident about 20% margin. ... That is mainly due to this volatile raw material prices in the last two quarters.

Analyst questioned the sharp drop in Q2 EBITDA margin (13.5%) compared to prior expectations, with management citing raw material volatility.

Asked by Keshav Garg

Doubling of Employee Expenses Direct
Sir, I can see that our employee expense has doubled year-on-year from INR 2 crore to INR 4 crore despite the fall in revenues. So, what is the reason for the same? ... In the first quarter, we have seen very exponential growth in the company, and that is why we have to add some skilled labors, very skilled labors. But now what we are trying to do is we are trying to cut out.

Analyst highlighted a significant increase in employee costs despite revenue decline, which management attributed to Q1 growth hiring and now plans to optimize.

Asked by Keshav Garg

Post-GST Demand Recovery and Q3 Outlook Direct
So, how are you seeing it now from 22nd September, the GST rate cut has been formally announced. So, it has been around two months' time. How are you seeing the sales now as compared to probably sequentially or Y-o-Y? ... Yes, post only everything is fine. ... Q3, we are back to what we were in the Q1 positions. So, the volumes have picked up, and it is normalized.

Analyst sought clarity on the actual demand recovery post-GST, confirming that volumes have normalized to Q1 levels in Q3.

Asked by Vijay Pandey

Tamil Nadu State Transport Order Details Direct
And sir, in terms of the Agri and tractor tyres and that Tamil Nadu State Corporation on the order which we have received, can you give a little bit of idea what the size of the order? ... It will work around INR 50 crores, that order, on annual basis. ... PCTR. No, no, PCTR.

Analyst inquired about the specifics of the new INR 50 crore order, confirming it's an annual PCTR order with good margins.

Asked by Vijay Pandey

Terra Rubber Recycling Project Investment and Impact Direct
Can you please tell us as to what are your plans there? What is the investments requirement in there? And are you going to get any incremental EBITDA benefit out of that? ... It is going to be a recycling of, see, we are now having around 3% to 5% of scrap coming out of our production. ... this 5% will straight away it can come to add benefit our PAT margins in our original products.

Analyst sought details on the new recycling project, revealing its INR 2 crore capex and its expected positive impact on cost and PAT margins.

Asked by Jitendra Nahar

Raw Material Price Outlook Direct
Also, sir, how is the raw material prices looking right now? ... All softening, all softening. So, we should come because nobody has come up with a price reduction in the market and all because already there was a GST cut.

Analyst asked about raw material price trends, with management confirming softening prices, which is positive for future margins.

Asked by Vijay Pandey

2 min read 5 chapters

Detailed narrative

Q2 FY26 Performance Impacted by GST Revision

Tolins Tyres reported a challenging Q2 FY26, with revenue declining 14.04% YoY to INR 66.1 crores, and EBITDA dropping 40.6% YoY to INR 8.91 crores. This slowdown was primarily attributed to GST-related purchase deferment, particularly affecting the PCTR segment, which saw a 20-25% volume drop. Despite the Q2 softness, H1 FY26 revenue showed a modest growth of 1.76% YoY to INR 155.8 crores, reflecting the underlying strength of the diversified business model.

Strategic Product Launches and Market Expansion

The company is strengthening its product portfolio with the launch of new tractor rear tyres, which are receiving positive feedback and are expected to contribute meaningfully from Q3 FY26. Additionally, Tolins Tyres expanded its institutional client base and increased presence in rural and semi-rural geographies. The agricultural tyre business is projected to generate INR 15 crores in the next six months, including INR 3-4 crores from the new tractor rear tyres.

Operational Efficiency and Cost Management Initiatives

Under the leadership of Mr. Cyrus Tolin, Head of Operations, manufacturing efficiencies have improved through process optimization, controlled overheads, and enhanced digital visibility. These steps helped mitigate the impact of lower Q2 volumes. The company is also addressing a doubling of employee expenses in Q2 (from INR 2 crores to INR 4 crores) by optimizing skilled labor and exploring automation.

Raw Material Trends and Margin Outlook

Raw material prices, including natural rubber and crude-based products, remained largely stable in H1 but contributed to margin pressure in Q2. However, management noted that raw material prices are now softening in Q3, which is expected to support margin improvement in the coming quarters. The company aims to maintain its margins at previous years' levels, despite the top-line fluctuations.

Outlook for H2 FY26 and New Projects

Management expressed optimism for H2 FY26, anticipating stronger performance driven by GST clarity, pricing replacement demand, and contributions from newly launched products. Volumes are expected to normalize to Q1 levels (around INR 90 crores revenue) in Q3. The new Terra Rubber recycling project, with a capital investment of INR 2 crores, is slated for commissioning by December 2025 or January 2026, aiming to recycle 3-5% of production scrap to reduce costs and enhance PAT margins.

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