Intimation of Earnings Conference Call Transcript

  • Event Type: Earnings Conference Call discussing unaudited financial results for Q2 and H1 FY27 ended September 30, 2026.
  • Date and Time: Friday, November 6, 2026 (time not specified in transcript).
  • Purpose: Discussion of quarterly results, business performance, and outlook amidst challenging global environment and rising input costs.
  • Management Participants:
  • Dr. Balaji Gopalan - Managing Director
  • Mr. Davide Grossi - Whole-Time Director & Chief Financial Officer
  • Mr. Sudhendra Mannikar - Whole-Time Director & Chief Operating Officer
  • Mr. Ashok Rai - Director - Sales and Business Development
  • Other members of leadership team and Strategic Growth Advisors (IR Advisors)
  • Availability of Materials: Transcript hosted on company website at https://www.carraroindia.com/investors/investor-information/announcements-and-notices. Audio recordings were previously uploaded to stock exchanges on November 6, 2026.
  • Compliance Statement: The call contained forward-looking statements based on beliefs, opinions and expectations as of the call date, with disclaimer that these are not guarantees of future performance.

Financial Highlights Discussed

Q2 FY27 Performance:

  • Revenue from operations: INR 6,965 million (up 19% YoY, 28% sequential)
  • Total income: INR 7,058 million (up 19% YoY)
  • EBITDA: INR 652 million (up 10% YoY, 13% sequential)
  • EBITDA margin: 9.2% (vs 10.0% YoY)
  • Gross margin: 23.3% (vs 26.4% YoY)
  • Profit before tax: INR 485 million (up 14% YoY)
  • Profit after tax: INR 351 million (up 11% YoY)
  • PAT margin: 5.0%

H1 FY27 Performance:

  • Revenue from operations: INR 12,411 million (up 15% YoY from INR 10,792 million)
  • Total income: INR 12,644 million (up 16% YoY)
  • Gross profit: INR 3,211 million (up 7% YoY)
  • Gross margin: 25.4% (vs ~27.5% YoY)
  • EBITDA: INR 1,232 million (up 8% YoY)
  • EBITDA margin: 9.7% (vs 10.4% YoY)
  • Profit before tax: INR 905 million (up 12% YoY)
  • Profit after tax: INR 665 million (up 9% YoY)
  • PAT margin: 5.3%

Segment Performance H1 FY27:

  • Agricultural revenue: INR 5,859 million (up 23% YoY)
  • Construction equipment: INR 5,243 million (up 8% YoY)
  • Others (gears, spare parts, engineering services): INR 1,309 million (up 13% YoY)

Geographic Performance H1 FY27:

  • Domestic revenue: INR 8,654 million (up 30% YoY, ~70% of total)
  • Export revenue: INR 3,758 million (vs INR 4,113 million YoY)

Balance Sheet Position:

  • Debt to equity: 0.34x
  • Cash and cash equivalents: ~INR 955 million
  • Net working capital: ~40 days
  • Annualized return on capital employed: 26.3%
  • Annualized return on equity: 24.5%

Business Updates and Guidance

Market Context: Challenging global environment with West Asia conflict impacting energy/fuel prices, freight, insurance and input costs (particularly steel and castings). Mixed export market conditions with European agriculture subdued, Turkey volatile, and US customers measured.

Domestic Business Strength:

  • Domestic revenue grew 30% in H1, now ~70% of total revenue
  • Agricultural revenue grew 23%, outperforming domestic tractor industry wholesales (high single digits)
  • Driven by structural shift from 2-wheel drive to 4-wheel drive tractors due to GST rationalization
  • 4-wheel drive penetration estimated at 23-25%, expected to reach 35-40% over coming years

Export Recovery:

  • Q2 export revenue: INR 2,106 million (4% below YoY but 27% higher than Q1)
  • Q1 dip was largely one-off due to logistics disruption
  • Recovery begun but not complete, overseas demand remains uneven

Product Development:

  • Tele-boom Handler (TBH) axle ramp-up for major international OEM progressing as planned
  • Indian TBH market grew to ~800 machines in H1, creating opportunities with Indian manufacturers
  • 2 TBH programs in series production, 4-5 more at prototype/field validation stage
  • Higher-horsepower transmission programs in field validation for domestic OEMs
  • 7 prototypes developed in H1, 1 moved to production

Engineering Services:

  • e-transmission program with Montra Electric received prototype order for field validation
  • Secured assignments from customer in Western India
  • Shift in focus from independent revenue stream to co-designing with regular customers

Capacity and Localization:

  • H1 FY27 capex: INR 204 million
  • Construction of new paint shop building commenced
  • Side-drive sub-assembly line and backlash machine commissioned to enhance portal axle capacity
  • Raw material localization recovered to ~80% in Q2 from 74% in Q1 (target: 86-88%)
  • Spare parts business recorded strong growth in H1
  • Third authorized service center agreement signed

Outlook:

  • Maintain full-year revenue growth guidance of 10-15%
  • Expect continued growth in absolute EBITDA with gradual margin improvement
  • Margins to improve as cost recoveries catch up, localization moves toward target, and new capacity lifts utilization
  • Input costs still rising into Q3, price recoveries trail by 3-6 months
  • Targeting double-digit EBITDA margin for full year (10%+)
  • Expect double-digit revenue growth in FY28
  • Long-term target of INR 3,500 crores turnover by 2030 maintained

Additional Notes

  • The document is a submission of earnings call transcript to stock exchanges pursuant to SEBI Listing Regulations
  • Transcript hosted on company website as required by regulation
  • The transcript includes full Q&A session with analysts from Nuvama Research, Tunga Investments, Quantum AMC, 3P Investment, and others