Detailed Narrative
Exceptional Financial Performance in FY26
VIAZ delivered a strong financial performance for FY26, with revenue from operations reaching ₹10,834.36 lakhs, marking an 89.2% year-on-year growth. The second half of FY26 was particularly robust, with revenue jumping 127.6% YoY to ₹6,574.04 lakhs. This growth translated into a 31.5% increase in EBITDA to ₹957.02 lakhs and a substantial 58% expansion in PAT to ₹527.33 lakhs, demonstrating strong operational cash generation and efficiency.
Strategic Entry into Tyre Manufacturing and Capacity Expansion
The company is making a strategic entry into the tyre manufacturing industry with a new 50,000 square feet facility in Nandasan. This facility, built with a capex of approximately ₹50 crores, will produce for two-wheeler, three-wheeler, LCV, and agri farming equipment segments. Management expects this new plant to generate a total asset turnover of 7x and contribute significantly to future revenue, targeting ₹125-150 crores from the tyre segment next year and an overall revenue of ₹350 crores by 2029.
Margin Pressures and Mitigation Strategies
Despite strong top-line growth, profit margins faced headwinds due to significant raw material price hikes (rubber, reclaim rubber, chemicals) from September-October onwards. This led to a decline in EBITDA margins from 13% to 9% in H2 FY26, further exacerbated by a fire incident in December. However, management noted that domestic sourcing ties with major players like Birla and Reliance helped mitigate some impact, and they expect margins to improve with revised pricing and a focus on increasing profit ratio by 2%.
Ambitious Growth and Market Share Targets
VIAZ aims for a 6-7% market share in the tyre industry within the next 10 years, leveraging its new manufacturing capabilities. In addition to the new tyre segment, the company anticipates a 15-20% increase in its existing tube segment revenue next year, partly driven by new molds expected to improve tube margins by 1-2%. The new plant is projected to contribute ₹160-170 crores in revenue in FY27, with commercialization expected to begin in November-December 2026.
Capital Allocation and Working Capital Management
The ₹50 crore capex for the new facility was primarily funded through a mix of debt and equity. To support the anticipated growth and increased working capital requirements, the company plans to take on additional debt and synchronize credit period cycles. A fundraise is also planned around September-October 2026 specifically for marketing and further working capital needs, ensuring sustainable, non-diluting long-term expansion.
Operational Efficiency and Future Outlook
VIAZ has structurally turned cash flow from operations positive and marginally improved its working capital cycle, indicating enhanced operational efficiency. Current capacity utilization in butyl tubes stands at 90-95%. For the new capacity, the company targets 60-70% utilization next year, eventually reaching 100%. Management expressed confidence in the company's growth trajectory, emphasizing a focus on higher-margin products and geographical expansion beyond current domestic presence.