Financial Performance (Standalone)

Q2 FY27 Results:

  • Operating revenue from continuing operations: INR 3,231.4 crores (up 16.3% YoY)
  • EBITDA: INR 292.4 crores
  • EBITDA margin: 9.0% (compared to 13.1% in Q2 FY26 and 11.2% in Q1 FY27)
  • PBT from continuing operations: INR 344 crores (compared to INR 431.1 crores YoY)
  • Net profit: INR 255 crores (compared to INR 321.2 crores YoY)
  • EPS: INR 23.18 (compared to INR 29.19 YoY)

H1 FY27 Results:

  • Operating revenue from continuing operations: INR 6,410.3 crores (up 21.9% YoY)
  • EBITDA: INR 647.8 crores
  • EBITDA margin: 10.1%
  • PBT from continuing operations before exceptional items: INR 837.9 crores (compared to INR 849.0 crores YoY)
  • Net profit from continuing operations: INR 642.4 crores
  • EPS from continuing operations: INR 58.38 (compared to INR 63.07 YoY)

Note: H1 FY26 included an exceptional gain of INR 76 crores from sale of land and building. Excluding this, net profit grew by 2.2% YoY. H1 FY26 also included RED business divestment impact, making reported PAT not directly comparable.

Segmental Business Performance

Agri Machinery Segment (Tractors):

  • Domestic industry volumes: ~2.66 lakh tractors (decline of ~3% YoY from 2.75 lakh tractors in Q2 FY26)
  • Company's domestic tractor volume: 32,628 tractors (marginal growth from 32,329 tractors in Q2 FY26)
  • Market share improvement: 48 basis points gain
  • Export volume: 1,389 tractors (down from 1,548 tractors YoY)
  • Segment revenue: INR 2,690.1 crores (up 10.6% from INR 2,432.9 crores YoY)
  • EBIT margin: 7.8% (compared to 12.8% YoY and 10.8% sequentially)
  • Non-tractor revenue (Agri Solutions, engines, spare parts): 22% of Agri Machinery segment revenue (vs 17% YoY)

Construction Equipment Segment:

  • Industry volume growth: ~20% YoY across crane, backhoe loader, mini excavator and compactor
  • Company volume: 1,764 machines (up 54% from 1,146 machines YoY)
  • Segment revenue: INR 536.2 crores (up 58.6% from INR 338.1 crores YoY)
  • EBIT margin: 7.9% (up 411 bps from 3.8% YoY and up 250 bps from 5.4% sequentially)

Management Commentary and Outlook

Macro Environment: India's macroeconomic environment remained broadly resilient supported by domestic consumption, although inflationary pressure from global geopolitical headwinds continues to weigh on operating environment.

Cost Inflation Impact: Commodity and input cost inflation remains a significant headwind with 8-9% inflation in H1 FY27, expected to increase by another 2-3% in Q3 FY27. Margin pressure expected to continue in H2 with recovery anticipated from Q4 onwards.

Price Actions: Company took two price hikes - 1.5% in April and 2-2.5% in August (total 3.5%). Announced additional 3-3.5% price hike effective mid-November 2026 after festive season.

Tractor Industry Outlook: Management expects marginal degrowth for FY27 industry due to high base effect, lower subsidy support, El Niño monsoon disruption, and cost escalation. Regional weakness noted in West (21% degrowth in Q2), South (marginal degrowth), and MP, while North and East showed marginal growth.

Construction Equipment Outlook: Industry expected to deliver high-teen growth in FY27 supported by infrastructure development and project execution. Government initiatives continue to provide supportive demand environment.

Product Portfolio Updates

Tractor Business:

  • New products performing well: Shaurya Series (Powertrac), Promaxx (Farmtrac), Digitrac range expansion, NeoStar Series (Kubota)
  • 4-wheel drive segment growing faster than industry, contributing 20-23% of Farmtrac and Powertrac brand sales
  • New product launches planned for Q4 FY27 in Powertrac brand to address 4-wheel drive segment gaps

Construction Equipment:

  • Launched new BLX75K Backhoe Loader (powered by Kubota engine, jointly developed with Kubota Corporation)
  • Introduced 25-ton F-25 fighter and 16-ton Hydra 16 Plus pick-and-carry cranes

Localization Initiatives: Projects on track for tractors and farm machinery (including rice transplanters) with launches expected in coming quarters.

Capital Expenditure

  • Normal capex for FY27: ~INR 350 crores
  • Greenfield project: Already spent INR 400-450 crores on land acquisition
  • Total project cost: ~INR 2,000 crores over 3-4 years (tractor factory first, then construction equipment plant, then spare parts warehouse)
  • Normal capex for FY28 expected to be ~INR 300 crores

Q&A Session Highlights

Margin Pressure: Commodity inflation of 8-9% in H1 with additional 2-3% expected in Q3. Price hikes of 3.5% taken so far with another 3-3.5% effective November 2026. Full impact of price increases expected in Q4.

Industry Outlook: Tractor industry expected to see double-digit decline in H2 FY27 leading to marginal single-digit degrowth for full year FY27. Regional weakness concentrated in West and South due to deficit rainfall (13% below normal) affecting reservoir levels (currently at 70%).

Export Markets: Q2 exports down 14-15% due to market corrections in key export markets. Expect flattish performance for FY27 with recovery possible in FY28.

Cost Reduction: Annual cost optimization target of ~1% through R&D, design, and procurement, but difficult to achieve in current inflationary environment.

4-Wheel Drive Tractors: Estimated 17-18% of industry volume, growing faster than overall market. Company volumes grew approximately 3x in last 6-7 months with new product introductions.

Construction Equipment Margins: Four price increases taken in calendar year 2026, passing on ~90% of inflation to customers. Margin sustainability depends on demand momentum and future inflation trends.