Summary
Raymond Limited - Q3 FY26 Earnings Call Summary Monday, January 27, 2026 18:00 IST
Event Participants
Executives 5 Gautam Maini (MD, Engineering Business), Navin Sharma (CFO, Engineering Business), Rakesh Tiwary (Group CFO), S. L. Pokharna (President, Corporate Commercial), Sunny Desa (Head, Investor Relations)
Analysts 4 Balasubramanian (Arihant Capital), Jatin Khanna (Raymond), Kaushal Sharma (Equinox Capital), Khushi (Negen Capital), Rupesh Tatiya (Long Equity Partners), Sanjeev Zarbade (Antique Stock Broking), Vishal Prasad (VP Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹580 crores | +18% YoY; Driven by robust growth in Aerospace & Defense and Auto Components. |
| Consolidated EBITDA | ₹83 crores | +28% YoY; Margin expanded to 14.3% from 13.3% in Q3 FY25. |
| Net Cash Surplus | ₹214 crores | Maintained debt-free status as of December 2025 despite ongoing capex. |
| Aerospace Revenue | ₹105 crores | +49% YoY; Reflects increased production from leading OEMs and Tier-1 partners. |
| Aerospace EBITDA | ₹19 crores | +39% YoY; Margin at 18.6% versus 19.8% YoY due to high new product development (FAI) write-offs. |
| Auto & Precision Revenue | ₹417 crores | +15% YoY; Momentum supported by domestic rebound and China Plus One strategy. |
| Auto & Precision EBITDA | ₹57 crores | +51% YoY; Margin improved to 13.7% due to favorable product mix and operational efficiencies. |
| 9M FY26 Revenue | ₹1,699 crores | +13% YoY; Cumulative performance remains steady across high-tech manufacturing segments. |
| 9M FY26 EBITDA | ₹250 crores | +5.5% YoY; Margins at 14.7% impacted by temporary reductions in non-operating income. |
Geographic & Segment Commentary
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Aerospace & Defense (JKMGAL): The segment saw 49% revenue growth and is benefiting from the recovery of Boeing and Airbus production rates. Europe accounts for 60% of Aerospace revenue, with a focus on engines, landing gear, and structural components. The company currently supplies 300-350 different part numbers for the LEAP engine program (1A, 1B, and 1C), maintaining a 0.1% to 0.3% kit value per engine.
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Precision Technology & Auto Components (JKMPTL): Revenue grew 15% YoY with a significant EBITDA margin jump to 13.7%. Growth is driven by the 2-wheeler and passenger vehicle rebound in India and a strategic focus on expanding international exports. Management noted that 30% of this segment’s revenue comes from Europe, with a push toward diversifying into new industrial sectors and geographies.
Company-Specific & Strategic Commentary
- Capacity Expansion (Andhra Pradesh): Management outlined a ₹1,000 crore capex plan in Andhra Pradesh over 5 years, split roughly ₹500 crore for Aerospace and ₹430 crore for Auto. This facility is aimed at providing a low-cost manufacturing base to sustain long-term global competitiveness.
- New Product Development: The company is developing more than one new part every day (FAI process). While this incurs short-term development costs, it is the primary driver for increasing market share from the initial 35% “testing phase” to 65% “preferred supplier” status.
- Operational Synergies: Following the integration of Maini’s engineering expertise with Raymond’s corporate scale, the company has implemented SAP S/4HANA and consolidated teams to drive margin expansion and efficiency.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Aerospace EBITDA Margin | 23.0% - 25.0% | Long-term target as new products move from development (FAI) to mature production. |
| Auto EBITDA Margin | >15.0% | Expected to break this threshold through operational excellence and synergies. |
| Order Book Visibility | 2.5 - 3.0 years | Based on multi-year strategic supplier agreements and contract renewal cycles. |
| Capex | ~₹200 crores p.a. | Maintenance and expansion capex for high-precision machinery (e.g., GROB multi-axis machines). |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical & Tariffs | U.S. tariffs and global trade pressures are causing logistical complexities and scheduling delays in the industry. |
| Supply Chain Lead Times | Aerospace raw materials (e.g., Inconel) have extremely long lead times, requiring heavy raw material inventory holding. |
| Inventory Volatility | The Auto business requires carrying 65-90 days of inventory due to export warehouse models, impacting working capital cycles. |
Q&A Highlights
Aerospace Growth Drivers
- Question: What led to the 49% growth in Aerospace this quarter and is it sustainable? (Rupesh Tatiya)
- Answer: Growth is driven by 5-10 year contracts, increasing market share from 35% to 65% on existing parts, and the “China Plus One” shift. Management believes this trend is robust and sustainable (Gautam Maini).
Andhra Pradesh Capex & Strategy
- Question: Can you detail the ₹1,000 crore investment in Andhra and its revenue potential? (Kaushal Sharma)
- Answer: The investment is spread over 5 years (₹500cr Aero/₹430cr Auto). It will serve as a high-efficiency cost base to handle volumes once current plant capacities (like Sinnar) are saturated (Gautam Maini).
Value Unlocking & Listing
- Question: When will the Aerospace and Engineering businesses be listed separately? (Rupesh Tatiya)
- Answer: It is premature to discuss specific timelines. The businesses must first reach a critical scale of EBITDA and stabilize performance amidst current tariff uncertainties and the Andhra build-out phase (Jatin Khanna).
Working Capital Dynamics
- Question: Why does the company hold high inventory in both segments? (Kaushal Sharma)
- Answer: In Aerospace, raw material lead times are the bottleneck, requiring heavy buffer stocks. In Auto, 60% of business is exports, requiring 65-90 days of transit to international warehouses (Gautam Maini).
Key Takeaway
Raymond Limited delivered a strong Q3 FY26, characterized by an 18% YoY revenue increase to ₹580 crores and a 100 bps expansion in EBITDA margins to 14.3%. The Aerospace segment remains the standout performer, growing 49% YoY as it capitalizes on the recovery of global aviation platforms like the LEAP engine and Boeing 737 MAX. Strategically, the company is pivoting toward a massive ₹1,000 crore capacity expansion in Andhra Pradesh to secure a long-term low-cost advantage. While the business remains debt-free with ₹214 crores in net cash, management is focused on scaling both Engineering and Aerospace divisions to a “critical mass” before pursuing separate listings. Looking ahead, the company expects to reach 23-25% EBITDA margins in Aerospace as FAIs mature, though it remains watchful of global tariff uncertainties and supply chain lead times.
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