RACLGEAR - RACL Geartech

📊 NSE: RACLGEAR 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 11:28

💰 Financial Performance

Revenue Growth by Segment

Total operating income grew by 1% in FY25 to INR 425.94 Cr from INR 421.54 Cr in FY24. In H1 FY26, standalone revenue grew 9.11% YoY to INR 230.8 Cr, while consolidated revenue grew 6.75% YoY to INR 234.56 Cr. Growth was tempered by a revenue loss of INR 35–40 Cr due to the operational halt of a key customer, KTM Austria.

Geographic Revenue Split

Exports contributed 68% (INR 290.97 Cr) of total sales in FY25, while domestic sales accounted for 32% (INR 92.97 Cr). The company maintains a presence across Europe, Asia-Pacific, and North America.

Profitability Margins

PAT margin moderated to 6.01% in FY25 from 9.44% in FY24 due to higher finance costs and fixed cost allocations. However, H1 FY26 saw a recovery with Profit Before Tax (PBT) growing 86.98% YoY to INR 27.45 Cr on a consolidated basis.

EBITDA Margin

EBITDA margin stood at 21.68% in FY25, a decline of 215 bps from 23.82% in FY24. Performance improved in H1 FY26 with an EBITDA margin of 24.52%, up from 21.09% in H1 FY25, driven by higher value addition in the premium segment.

Capital Expenditure

The company incurred capex of ~INR 46 Cr in FY25, funded by INR 35 Cr in term loans and internal accruals. Planned capex for FY25 is INR 37.06 Cr for capacity expansion, following a previous FY24 capex plan of ~INR 61 Cr for modernization and new product capacities.

Credit Rating & Borrowing

CARE Ratings reaffirmed 'CARE A-' for long-term facilities and 'CARE A2+' for short-term facilities in October 2025, revising the outlook from 'Stable' to 'Positive'. Total debt stood at INR 209.49 Cr as of June 30, 2025, following an INR 80 Cr equity infusion.

⚙️ Operational Drivers

Raw Materials

High-precision steel alloys and specialized metal blanks for transmission gears and shafts; specific material cost percentages are not disclosed in available documents.

Capacity Expansion

The company operates two manufacturing units in Gajraula and Noida, Uttar Pradesh. It is currently executing four strategic projects with a combined revenue potential of INR 350 Cr over the next four years to expand its high-precision component capacity.

Raw Material Costs

Raw material price risk is managed through long-term contracts and nomination letters from OEMs, though specific YoY cost change percentages were not provided.

Manufacturing Efficiency

Average utilization of working capital borrowings stood at ~90% for the 12 months ended July 31, 2024, indicating high operational activity despite external headwinds.

Logistics & Distribution

Distribution is heavily export-oriented (68-70% of revenue), making the company sensitive to global shipping disruptions like the Red Sea crisis and rising competition from Chinese EVs in European markets.

📈 Strategic Growth

Expected Growth Rate

15-18%

Growth Strategy

Growth will be driven by four strategic projects with an INR 350 Cr revenue potential. The company is transitioning from a build-to-print model to a design-partner model through a technical collaboration with ARRK Engineering GmbH (Germany) for product design, virtual simulation, and prototyping.

Products & Services

Transmission gears, shafts, precision machined components, and sub-assemblies for next-generation drive trains in the premium automotive and industrial segments.

Brand Portfolio

RACL Geartech (formerly Raunaq Automotive Components Limited).

New Products/Services

Next-generation drive train components and high-precision gears developed through the ARRK Engineering alliance, expected to contribute to the INR 350 Cr project pipeline.

Market Expansion

Targeting increased penetration in the premium segment of the global automobile industry, specifically in Europe and North America, by upgrading technology and engineering skills.

Strategic Alliances

Technical agreement with ARRK Engineering GmbH, Germany, for advanced expertise in product design, prototyping, and testing.

🌍 External Factors

Industry Trends

The industry is shifting toward high-performance engines and electric vehicles. RACL is positioning itself by collaborating with German engineering firms to design components for 'next-generation' drive trains to counter the threat from Chinese EV competition.

Competitive Landscape

Faces competition from domestic gear manufacturers and increasingly from Chinese EV component suppliers in the European market.

Competitive Moat

Moat is built on long-term (3.5+ decades) relationships with global premium OEMs and a high-entry barrier created by the 2-3 year validation and prototyping cycle required for high-precision gears.

Macro Economic Sensitivity

Highly sensitive to European economic cycles and disposable income levels, as these drive demand for the premium vehicles RACL supplies.

Consumer Behavior

Increasing disposable incomes in North America and Europe are driving demand for high-end vehicle features and performance, benefiting RACL's premium product portfolio.

Geopolitical Risks

Geopolitical tensions in the Middle East (Red Sea) and the Russia-Ukraine conflict impact supply chains and increase logistics costs for the export-heavy business.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with international quality standards required by global OEMs; adheres to SEBI Listing Obligations and Disclosure Requirements (LODR) and the Companies Act 2013.

Environmental Compliance

The company underwent a comprehensive ESG assessment by Dun & Bradstreet (D&B) to benchmark sustainability practices against global standards.

Legal Contingencies

The company successfully exited the Board for Industrial and Financial Reconstruction (BIFR) purview in November 2007; no current pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the recovery of European demand and the successful ramp-up of the INR 350 Cr project pipeline, which could be delayed by further geopolitical disruptions.