CARRARO - Carraro India

📊 NSE: CARRARO 🏢 Auto Ancillaries 📅 Last Updated: 12/13/2025 20:43

💰 Financial Performance

Revenue Growth by Segment

Revenue from operations grew 18% YoY to INR 1,079.2 Cr in H1 FY26. The Construction vehicle segment grew 35% YoY to INR 484.3 Cr, while the Agricultural vehicle segment grew 6% YoY to INR 476.0 Cr.

Geographic Revenue Split

Domestic revenue grew 11% YoY, while Export revenue delivered a stronger growth of 31% YoY. Export growth was primarily driven by teleboom handler axles for global OEMs.

Profitability Margins

Gross Margin for FY24-25 was 28.0%. In H1 FY26, the Gross Profit Margin was 27.8%. Profit After Tax (PAT) Margin improved to 5.6% in H1 FY26 from 5.4% in H1 FY25, reflecting better bottom-line efficiency despite operational mix shifts.

EBITDA Margin

EBITDA Margin for H1 FY26 was 10.4%, a decrease from 11.0% in H1 FY25. This 60 bps compression was caused by a change in product mix toward lower-margin 4WD axles in the agriculture segment.

Capital Expenditure

The company maintains a strategic expansion reserve of ~38,000 sq.m. for future capacity. Historical Net Working Capital increased from INR 138.96 Cr in FY23-24 to INR 233.81 Cr in FY24-25 to support scaling operations.

Credit Rating & Borrowing

Debt-to-Equity ratio improved to 0.42x in FY24-25 from 0.58x in FY23-24. Finance costs for H1 FY26 were INR 10.4 Cr, down 12.6% YoY from INR 11.9 Cr, indicating reduced borrowing costs or debt levels.

⚙️ Operational Drivers

Raw Materials

Localized raw materials (including steel-based components and forgings) account for 78% of total requirements, with a target to reach 80% by the end of FY26.

Import Sources

While 78% is localized within India, the remaining 22% is sourced globally through the Carraro Group's international supplier network, including Italy and other European hubs.

Key Suppliers

Not disclosed by specific company names in available documents; however, the company utilizes a resilient network of Tier-II component and forging suppliers.

Capacity Expansion

Current manufacturing facilities (two plants) are operating at over 75% capacity utilization. The company has reserved 38,000 sq.m. of land for future expansion to meet growing OEM demand.

Raw Material Costs

Cost of Goods Sold (COGS) for H1 FY26 was INR 792.8 Cr, representing 73.5% of revenue. The company is aggressively pursuing localization to 80% to mitigate forex risks and reduce procurement costs.

Manufacturing Efficiency

Capacity utilization is currently >75%. The company employs advanced machining, heat treatment, and assembly processes to ensure high-precision output for complex drivetrain systems.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

18%

Growth Strategy

Growth will be achieved through the ramp-up of the teleboom handler axle business for global OEMs, increasing 4WD axle penetration in the domestic agri market, and expanding engineering services. The company is also leveraging its 'Center of Excellence' status within the Carraro Group to attract global agriculture transmission contracts to India.

Products & Services

Axles, transmission systems, gears, and related drivetrain components for tractors and construction equipment (backhoe loaders, telehandlers).

Brand Portfolio

Carraro

New Products/Services

New range of teleboom handler axles and backhoe loader axles for international markets; these new businesses are currently in a high-growth ramp-up phase.

Market Expansion

Targeting growth in China for backhoe loader exports and expanding the teleboom handler axle footprint in global markets, which saw 33% growth in H1 FY26.

Market Share & Ranking

Leading sole supplier in the non-captive segment of the agriculture tractor transmission market with a 60-65% market position.

Strategic Alliances

Operates as a subsidiary of Carraro S.p.A. (Italy), which holds a 68.77% stake, providing access to global R&D and international OEM relationships.

🌍 External Factors

Industry Trends

The industry is shifting toward 4WD technology in agriculture and specialized material handling in construction. Carraro is positioned as a technology partner for these high-performance drivetrain requirements.

Competitive Landscape

Competes with captive OEM manufacturing units and other Tier-I component suppliers, though it maintains a dominant position in non-captive transmissions.

Competitive Moat

Durable advantage through 27 years of local expertise combined with global Carraro Group technology. It holds a 60-65% market position in the non-captive agri transmission segment, making it a critical Tier-I partner for OEMs.

Macro Economic Sensitivity

Highly sensitive to the domestic construction market, which declined 9% in H1 FY26 due to a prolonged monsoon, impacting backhoe loader volumes by 12%.

Consumer Behavior

Farmers are increasingly preferring 4WD tractors for better efficiency, driving volume growth in that segment despite lower initial margins.

Geopolitical Risks

Global export markets for agri drivelines remain subdued, though construction exports to China and other regions remain resilient.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to manufacturing standards for off-highway vehicles and local environmental norms for its paint shops and heat treatment plants.

Environmental Compliance

The company has dedicated ESG initiatives focused on sustainable solutions and responsible growth, as detailed in the 2024-25 Annual Report.

Taxation Policy Impact

Effective tax rate for H1 FY26 was approximately 24.8% (INR 20.1 Cr tax on INR 81.0 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the 'ramp-up phase' for new products where market acceptance and OEM production schedules can cause 5-10% fluctuations in quarterly margins.