Tolins Tyres

Tolins Tyres reported a 12% year-on-year growth in consolidated revenue from operations for FY26, reaching INR 327.12 crores, compared to INR 292.45 crores in FY25. Tyre production volume increased significantly by 36% to 535,870 units in FY26, up from 393,253 units in FY25. The company also saw a 10% growth in PCTR volume and a 56% growth in bonding gum and flaps. This growth was supported by strengthening domestic and international presence, including a new depot launch in Gujarat and healthy traction in UAE operations.

Despite revenue growth, FY26 EBITDA (excluding other income) declined by 17.5% to INR 47.8 crores from INR 57.91 crores in FY25, with the EBITDA margin at 14.6%. Profit after tax for FY26 also decreased by 7.7% to INR 35.69 crores from INR 38.67 crores in FY25. The quarter witnessed margin pressure due to raw material price volatility, higher inventory, and elongated receivable cycles. The company maintains a strong balance sheet with a consolidated debt-to-equity ratio of 0.03x as of March 31, 2026, providing financial flexibility for future growth.

A significant concern impacting profitability is the GST rate disparity for retreading materials. While new commercial vehicle tyres saw their GST reduced to 18% and agricultural tyres to 5%, retreading materials remained taxed at 18%. This creates a 13% additional cost for retreading agricultural tyres compared to new ones, leading to margin pressure and reduced off-take from dealers. Management has approached the Ministry of India to reduce GST on the retread segment to 5%, which is currently under consideration.

The company's UAE plant in Ras Al Khaimah has a capacity of 1,200 metric tons but is currently operating at less than 50% utilization. This low utilization is attributed to geopolitical issues, a market downturn in the GCC region, and increased credit periods, with China dumping materials in the region. Management is cautious about aggressive expansion in the UAE due to market uncertainties and credit risks, but expects performance to improve by the end of the next quarter as market conditions normalize.

The company experienced higher inventory holding and elongated receivable cycles, with credit periods extending by about one month beyond the traditional 3-4 months. This is due to market uncertainties, GST reforms, and the need to maintain strong dealer relationships. Management aims to reduce the credit period to a comfortable level within a few quarters. IPO funds were utilized to procure additional materials and maintain inventory levels, helping manage supply disruptions and geopolitical issues.

Tolins Tyres continued to expand its product portfolio, including retreading materials, two-wheeler tyres, agricultural tyres, and tractor rear tyres. The newly introduced heavy-duty tractor rear tyre category has received encouraging market response, strengthening the company's position in the agriculture segment. The company is also focusing extensively on improving manufacturing efficiencies, process optimization, and operational discipline across its facilities. These initiatives helped maintain stable profitability despite external challenges^🌐.

The company is progressing with its recycling initiatives under Terra Rubber, which aims to improve material utilization efficiencies and strengthen operating margins. Terra Rubber is manufacturing products from scrap and waste generated from Tolins Tyres' operations, leading to cost savings. Trials for integrating these materials into Tolins Tyres' products are showing positive results, with initial off-take planned for internal requirements. The company also has plans for inorganic growth in this area to further enhance its sustainability and cost optimization strategy.