V.S.T. Tillers Tractors Limited Q3 FY26 Earnings Call Summary

Summary

V.S.T. Tillers Tractors Limited - Q3 FY 2026 Earnings Call Summary Monday, February 09, 2026 10:00 AM

Event Participants

Executives 3 Antony Cherukara (CEO), Nitin Agrawal (CFO), V.T. Ravindra (MD)

Analysts 5 Annamalai Jayaraj (B&K Securities), Arjun Khanna (Kotak), Krish (Individual Analyst), Saket (Individual Analyst), Shubham (Individual Analyst)

Financials & KPIs

Geographic & Segment Commentary

• Small Farm Machinery (SFM): Significant growth driven by 80% of Indian farmers being small/marginal; Power tillers grew 55% and weeders 63% in 9M. Management is expanding the distribution network from 1,000 to a target of 6,000 counters at the taluka level to capture “bottom of the pyramid” potential.
• Domestic Tractors: Registered 18% growth in 9M; the company is transitioning from compact tractors (up to 30 HP) into the higher-growth 40-50 HP segment via the VST ZETOR range. Strategic focus is on gaining 2-3% market share over the next 4-5 years.
• International Business: Europe remains the primary export market (90% of exports). Management is establishing a base in the Netherlands to handle ground operations and improve distributor cash flow, with plans to enter the U.S. market by 2027.

Company-Specific & Strategic Commentary

• New Product Launches: Launched the FENTM (Fuel Efficient and Torque Max) engine series in Gujarat, with Maharashtra launch scheduled for March 2026. The VST ZETOR revamped series is also undergoing relaunch in Q4 FY26.
• Electrification & Innovation: Seeding of electric power weeders and tillers to begin in March 2026. The company won Design Excellence Awards for its new fuel-efficient engines and electric range.
• Distribution Expansion: Moving beyond traditional dealer networks to a distributor-retailer model for small equipment (brush cutters, weeders). Currently has 10 distributors and 300 retailers in the pilot phase.
• Manufacturing Diversification: Current Malur factory is at peak capacity (70,000-100,000 units); management is evaluating new plant locations in North or West India to de-risk geographic concentration.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Tractor Strategy & Market Share

• Question: What is the trajectory of the Indian tractor market regarding HP preference? (Krish)
• Answer: The 40-50 HP segment is the largest and fastest-growing; VST is entering this via VST ZETOR to increase market share from <1% to ~3% (Antony Cherukara).

Manufacturing & Capacity

• Question: Are you reaching capacity limits for power weeders and tillers? (Shubham)
• Answer: Malur is nearly full at ~70,000 units. We are evaluating new manufacturing sites in North or West India to diversify (Antony Cherukara).

International Markets (U.S. & Europe)

• Question: Is the U.S. market entry still on track given tariff uncertainties? (Arjun Khanna)
• Answer: Product development never stopped. Tariffs are now at feasible levels; entry is targeted for 2027 (Antony Cherukara).
• Question: What is the benefit of the EU FTA? (Arjun Khanna)
• Answer: While tractor taxes were already low, the FTA will help in establishing ground operations, easier visas, and employment for our upcoming Netherlands base (Antony Cherukara).

New Business Adjacencies

• Question: What is the rationale for entering the marine engine market? (Shreyas Dattani)
• Answer: It is an adjacency using existing compact engines for fishing trawlers/small boats. No major capex required as marinization is handled by third parties (Antony Cherukara).

Key Takeaway

V.S.T. Tillers Tractors Limited delivered a robust Q3 FY26, characterized by its highest-ever nine-month turnover of ₹912 crores and a 44% YoY revenue surge in the quarter. Performance was underpinned by a 55% growth in power tillers and a 107% jump in power weeders, capitalizing on the mechanization needs of small and marginal farmers. The company successfully turned around its domestic tractor business (32% Q3 growth) and is aggressively moving into the high-volume 40-50 HP segment through the revamped ZETOR and FENTM series. Strategically, VST is diversifying its manufacturing footprint beyond South India and establishing an operational base in the Netherlands to de-risk its export business, which is currently 90% concentrated in Europe. Management remains confident in achieving 25-30% revenue growth for the full year, supported by normal monsoon conditions and a localized, service-heavy competitive advantage over cheaper Chinese imports. Forward momentum depends on the successful scaling of new 40-50 HP tractor models and the upcoming launch of electric farm machinery in FY27.