💰 Financial Performance

Revenue Growth by Segment

Revenue grew 7.5% YoY in H1 FY2025. Segment contribution: Domestic Auto OEM (~60%), Domestic Aftermarket (~25-30%), and Railways/Exports (balance ~10-15%).

Geographic Revenue Split

South India generates ~50% of replacement sales. Exports currently contribute ~7% of the overall topline as of H1 FY2025.

Profitability Margins

Operating profit margins improved to 11.0% in H1 FY2025 from 9.7% in H1 FY2024, supported by improved operating leverage and cost optimization.

EBITDA Margin

Operating margin of 11.0% in H1 FY2025. Historical margins reached 13-15% during FY2019-FY2021, though current competitive intensity makes returning to those levels a challenge.

Capital Expenditure

Planned capex of INR 47 Cr in FY2025, and INR 25 Cr each in FY2026 and FY2027, primarily funded through internal accruals.

Credit Rating & Borrowing

Credit rating reaffirmed at [ICRA]AA- (Stable) for long-term and [ICRA]A1+ for short-term bank lines. The company remains debt-free with minimal borrowing costs.

⚙️ Operational Drivers

Raw Materials

Asbestos (10-15% of revenue), steel, resins, and various friction material formulations.

Import Sources

Japan (via Nisshinbo collaboration), with significant exposure to USD, JPY, and Euro movements.

Key Suppliers

Nisshinbo Holdings Inc. (Japan) provides critical technology and raw material support.

Capacity Expansion

Modest capex of INR 47 Cr in FY2025 is allocated for capacity modernization and capability enhancement to maintain market leadership.

Raw Material Costs

Net forex expenditure was INR 112.9 Cr in FY2024. Margins are vulnerable to commodity price increases due to limited ability to pass on costs to OEM customers.

Manufacturing Efficiency

Cost optimization initiatives and productivity improvements are targeted to restore operating margins toward the historical 13-15% range.

Logistics & Distribution

Widespread pan-India distribution network with 13 key distributors; South India concentration has reduced as penetration in North and West India increased.

📈 Strategic Growth

Expected Growth Rate

7.50%

Growth Strategy

Growth will be achieved through geographic expansion into North and West India (reducing South India concentration from 50%), new business wins in the OEM segment (39% market share), and the amalgamation with Rane (Madras) Limited to achieve revenue and cost synergies.

Products & Services

Brake linings, disc pads, clutch facings, clutch buttons, and brake pads.

Brand Portfolio

Rane.

New Products/Services

Focus on asbestos-free products and powertrain agnostic components, which already account for 92%+ of revenue.

Market Expansion

Increasing penetration in North and West Indian markets and adding a separate dealer network for the two-wheeler market.

Market Share & Ranking

Leading player in India with ~39% market share in the OEM segment and ~29% in the aftermarket for friction materials.

Strategic Alliances

Technical collaboration and 20.64% equity stake from Nisshinbo Brakes Inc., Japan.

🌍 External Factors

Industry Trends

Industry is shifting toward EVs (92% of RBLL products are agnostic), sustainable materials, and ridesharing trends. Current growth is supported by an uptick in industry volumes.

Competitive Landscape

Intense competition from Sundaram Brake Linings, Masu Brakes, Allied JB Friction, and Hindustan Composites.

Competitive Moat

Durable moat through the established 'Rane' brand, 39% OEM market share, and technological expertise from the Nisshinbo collaboration.

Macro Economic Sensitivity

High sensitivity to the cyclicality of the domestic automobile industry, particularly the passenger vehicle segment.

Consumer Behavior

Shift towards electric vehicles (EVs) and increasing awareness of environmental damage from emissions.

Geopolitical Risks

Exposure to global supply chain disruptions due to high import dependency for raw materials and technology from Japan.

⚖️ Regulatory & Governance

Industry Regulations

Tightening emission requirements for customers and waste/pollution norms; risk associated with the use of asbestos (10-15% of revenue).

Environmental Compliance

CSR obligation for the financial year was INR 0.85 Cr based on 2% of average net profit.

Taxation Policy Impact

Group entity REVL adopted the New Income Tax Regime resulting in a one-time INR 10.5 Cr tax credit reversal impact.

⚠️ Risk Analysis

Key Uncertainties

Vulnerability to commodity price volatility and unfavourable USD/JPY/Euro movements impacting the INR 112.9 Cr import bill.

Geographic Concentration Risk

South India generates ~50% of replacement sales, though this is reducing due to expansion in North and West India.

Third Party Dependencies

Significant dependency on Nisshinbo Brakes Inc. for technology and 20.64% equity support.

Technology Obsolescence Risk

Risk of vehicle recalls due to defective parts and the need to keep pace with EV-related technological changes.

Credit & Counterparty Risk

Exposure to major domestic Tier-I suppliers and auto OEMs; liquidity is strong with undrawn fund-based limits of INR 15 Cr.