Summary
Rico Auto Industries Limited - Q3 FY26 Earnings Call Summary Wednesday, February 11, 2026 4:00 PM
Event Participants
Executives 5 Arvind Kapur (Chairman, CEO & MD), Kaushalendra Verma (Executive Director), Naveen Sorot (CFO), R.K. Miglani (Executive Director), Ruchika Gupta (Company Secretary)
Analysts 4 Akash (Individual Investor), Aman (Astute Investment Management), Deepak Poddar (Sapphire Capital), Siyaa Deshmukh (Pune e-Stock Broking Limited)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (Consolidated) | ₹632 crores | +14.1% YoY; Driven by stable OEM volumes and new program launches. |
| Revenue (Standalone) | ₹526 crores* | +25.5% YoY; Outperformed consolidated growth due to strong domestic demand. |
| EBITDA (Consolidated) | ₹63.2 crores | +33.2% YoY; Growth driven by productivity improvements and better capacity utilization. |
| EBITDA Margin | 10.0% | +143 bps YoY; Improved from 8.57% despite pricing pressures and RM volatility. |
| 9M FY26 Revenue | ₹1,806 crores | +7.7% YoY; Reflects positive momentum across fiscal year. |
| 9M EBITDA Margin | 9.7% | Improved value despite “inflated base” due to high aluminum prices. |
| Net Profit | Multiplied 3x+ | Tripled YoY in 9M period due to strong execution and operating leverage. |
*Derived from consolidated revenue and standalone growth percentage provided.
Geographic & Segment Commentary
- Domestic Market: Performance bolstered by recent tax reliefs, GST 2.0, and RBI rate cuts (5.25%). Management noted high buoyancy in both urban and rural demand across PV and 2-wheeler segments.
- Export Market: Benefiting from “China Plus One” strategy as global firms seek alternatives for castings. While U.S. trade tensions caused some friction, the India-U.S. trade agreement (lowering tariffs to 18%) is expected to enhance long-term competitiveness.
- Railways: Currently contributing via indirect supplies; direct supply remains in the approval stage. Management expects this to become a consistent revenue stream by Q2 FY27 following RDSO approvals for specific components.
Company-Specific & Strategic Commentary
- Capacity Utilization: Strategic focus on utilizing surplus capacity in iron foundries and aluminum die casting for new segments like Railways with minimal incremental capex (primarily jigs/fixtures).
- EV & Hybrid Transition: Combined EV/Hybrid share stands at ~7% of turnover. While EV penetration is growing, management noted a resurgence in IC engine demand following relaxed 2035 deadlines in Europe.
- Defense (Fuses): The ₹10,000 crore artillery fuse tender was withdrawn by the government in favor of PSUs. Rico remains a potential sub-supplier to PSUs and is exploring technology transfers for other fuse types with South African collaborators.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Revenue | ~₹2,500 crores | Revised slightly downward from ₹2,600 crores due to delayed Railway direct orders and mixed export signals. |
| FY27 Revenue Growth | 10% - 15% | Driven by “China Plus One” gains, new export programs, and direct Railway supplies. |
| EBITDA Margin | 12% - 13% | Mid-term target; path involves better capacity utilization and recovering non-RM cost increases from OEMs. |
| Railway Revenue | ₹60 - ₹65 crores (FY27) | Expected to cross the previously guided threshold in FY27 as RDSO inspections conclude. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Volatility | Aluminum and copper price hikes create a “denominator effect” on margins. While indexed to customers, there is a recovery lag and margin percentage compression on an inflated revenue base. |
| Regulatory/Policy | Changes in government procurement (e.g., Defense fuses) shifted from private to public sector, impacting projected growth in the defense vertical. |
| Trade Barriers | Recent U.S. tariffs (18%) are currently passed through to customers; however, any further geopolitical shifts could impact Rico’s 3.2% base duty advantage. |
Q&A Highlights
Railway & Defense
- Question: Is the company on track for ₹60-₹70 crore Railway revenue in FY26? (Yash Jhunjhunwala)
- Answer: No, FY26 will fall short, but Rico expects to cross that figure in FY27 as it moves from indirect to direct supply following RDSO approvals (Arvind Kapur).
- Question: What is the status of the electronic fuse tender? (Yash Jhunjhunwala)
- Answer: The government withdrew the tender to favor PSUs despite Rico being a front runner; Rico may now supply to PSUs instead of the Army directly (Arvind Kapur).
Margins & Pricing
- Question: When will margins revert to the historical 11-12% range? (Aman)
- Answer: While RM increases are passed through, the percentage is impacted by the higher revenue base (denominator effect). Current 9M margins are ~9.7% on an inflated base (Naveen Sorot).
- Question: How will the U.S. tariff reduction impact Rico? (Akash)
- Answer: Rico will pass the savings back to customers in fairness, as customers previously absorbed the tariff increases. The benefit lies in increased competitiveness against China (Arvind Kapur).
Growth Strategy
- Question: What is the revenue target for FY27? (Deepak Poddar)
- Answer: The company is targeting ₹3,000 crores+ in the next few years. Specific FY27 targets will be finalized post-budget exercise (Arvind Kapur/Naveen Sorot).
Key Takeaway
Rico Auto Industries delivered a robust Q3 FY26 with consolidated revenue growing 14.1% to ₹632 crores and EBITDA margins expanding to 10%. The quarter was characterized by strong domestic demand and the successful pass-through of commodity costs, though the “denominator effect” of high aluminum prices continues to mask underlying margin improvements. Strategically, Rico is pivoting toward the Railway sector to utilize idle foundry capacity and is capitalizing on the “China Plus One” trend in global aluminum die-casting markets, with EV/Hybrid components now contributing 7% of revenue. While the Defense fuse tender setback and Railway delays led to a slight moderation of FY26 revenue guidance to ₹2,500 crores, management remains optimistic about double-digit growth in FY27. The company enters the final quarter of the fiscal year focused on launching new export programs and securing RDSO direct-supply approvals to de-risk its automotive-heavy portfolio.
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