💰 Financial Performance

Revenue Growth by Segment

In FY24, Automotive Engines revenue grew 12% to INR 384.80 Cr, while Other Engines revenue grew 21% to INR 171.20 Cr. Total revenue from operations for FY24 was INR 566.75 Cr, a 14% increase from INR 497.57 Cr in FY23. However, Q3 FY25 revenue of INR 523.7 Cr showed a marginal growth of only 0.2% YoY due to a 4% decline in Indian OE customer offtake.

Geographic Revenue Split

As of Q3 FY25, the revenue split is dominated by India OEM at 62%, followed by International OEM at 23%. The remaining revenue comes from India Aftermarket (8%) and International Aftermarket (7%). The company is actively trying to increase the international mix to mitigate domestic market cyclicality.

Profitability Margins

FY24 Net Profit Margin turned positive at 2.02% compared to -0.01% in FY23. Operating Profit Margin improved to 5.52% in FY24 from 3.40% in FY23. Return on Net Worth improved significantly to 10.15% from -0.06% YoY. Profitability is driven by a turnaround plan focusing on operational efficiency and capacity realization.

EBITDA Margin

EBITDA for FY24 was INR 50.31 Cr (8.8% margin), up 39% from INR 36.22 Cr in FY23. In Q3 FY25, the EBITDA margin declined to 7.5% (INR 39.2 Cr) from 9.3% (INR 48.4 Cr) in Q3 FY24, impacted by adverse product mix and one-off provisions for obsolete inventory and premium freight.

Capital Expenditure

The company reduced its debt to INR 122 Cr in FY24 from INR 136 Cr in FY23. Rane Holdings Limited infused INR 15 Cr as equity between FY22 and FY24 to support the financial risk profile. Prudent capex spending and asset sales have been used to shore up net worth to INR 120 Cr as of March 31, 2024.

Credit Rating & Borrowing

CRISIL ratings indicate an improving financial risk profile with gearing at 1.0 time in FY24 (improved from 1.2 times). Interest coverage ratio improved to 4.7 times (CRISIL) or 3.07 times (MDA) in FY24, driven by higher cash accruals and operational profits.

⚙️ Operational Drivers

Raw Materials

Specific raw material names like steel or alloys are not explicitly listed, but 'Raw Material (Input) Price Risk' is identified as a significant cost component that can erode margins if not managed.

Capacity Expansion

The company operates across 5 plants. While specific MTPA units are not disclosed, the company is implementing plant automation and modernization to improve sub-optimal capacity utilization which historically constrained profitability.

Raw Material Costs

Raw material costs are a significant part of the total cost structure. The company employs a procurement function for cost reduction through alternate sourcing and localization, and negotiates price pass-throughs with customers to mitigate volatility.

Manufacturing Efficiency

Manufacturing efficiency is being improved through a 'Turnaround and Sustenance Plan' which has resulted in better capacity realization. All plants showed improvement in average production per day as of Q3 FY25.

Logistics & Distribution

Premium freight costs were cited as a one-off factor that reduced EBITDA margins in Q3 FY25, indicating that logistics costs are currently a point of operational pressure.

📈 Strategic Growth

Expected Growth Rate

5-7%

Growth Strategy

Growth will be achieved through a Scheme of Amalgamation with Rane (Madras) Limited (RML) effective April 2025 to create a stronger consolidated entity. The company has a new order book of INR 35 Cr for domestic and export customers to be commercialized starting FY25. Strategic pillars include increasing international revenue mix and diversifying into non-automotive segments like Defence and Railways.

Products & Services

Engine valves and valve train components for various segments including Passenger Vehicles (33%), Two-Wheelers (20%), Commercial Vehicles (12%), and Farm Tractors (6%).

Brand Portfolio

Rane

New Products/Services

The company is focusing on new technology and product introductions that are powertrain agnostic (currently 92%+ of revenue) to protect against the shift toward electric vehicles.

Market Expansion

Targeting increased revenue from international markets and non-automotive sectors such as Defence and Railways to diversify the customer base.

Market Share & Ranking

The company is described as having a 'healthy market position' in the domestic automotive engine valves segment, though specific percentage ranking is not provided.

Strategic Alliances

The company is part of the Rane Group and is currently undergoing a merger with Rane (Madras) Limited and Rane Brake Lining Limited.

🌍 External Factors

Industry Trends

The industry is shifting toward multi-fuel technology and emission reduction. The company is positioning itself by ensuring 92% of its revenue comes from powertrain agnostic products, making it resilient to EV disruption.

Competitive Landscape

The company faces pricing pressure from large OEMs and competition in both domestic and international markets, requiring constant efficiency improvements.

Competitive Moat

The moat is built on the 80-year-old Rane brand, long-standing OEM relationships, and a significant land bank. The merger with RML is intended to sustain this advantage by creating a more financially robust consolidated entity.

Macro Economic Sensitivity

Highly sensitive to the Indian automotive industry cycle, which accounts for 65% of revenue. Any slowdown in domestic vehicle production directly impacts the top line.

Consumer Behavior

Increased preference for safer cars is benefiting group divisions (like occupant safety), while REVL must adapt to changing engine technologies and fuel types.

Geopolitical Risks

Not explicitly detailed, but the strategy to increase international revenue (currently 30% combined OEM/Aftermarket) increases exposure to global trade dynamics.

⚖️ Regulatory & Governance

Industry Regulations

The company complies with SEBI (LODR) Regulations 2015 and the Companies Act 2013. It follows the 'RANE COMPASS' ethical standards for governance.

Taxation Policy Impact

The company adopted the New Income Tax Regime in Q3 FY25, resulting in a one-time tax credit reversal of INR 10.5 Cr which significantly impacted quarterly PAT.

Legal Contingencies

The Secretarial Audit report for FY24 confirms compliance with applicable laws; no specific pending court cases or case values in INR were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful integration and realization of synergies from the merger with RML. Operational risks include raw material price volatility and labor-intensive manufacturing processes.

Geographic Concentration Risk

65% of revenue is concentrated in the Indian automotive sector, creating a high dependency on domestic economic conditions.

Third Party Dependencies

The company depends on OEMs for a large portion of its revenue, leading to pricing pressure and vulnerability to OEM production schedules.

Technology Obsolescence Risk

Risk of engine technology shifts is mitigated by the fact that 92% of products are powertrain agnostic, though the company must continue to innovate in valve design.

Credit & Counterparty Risk

Receivables quality is not explicitly detailed, but the company's financial risk profile is noted as 'improving' by CRISIL due to higher cash accruals.