RACLGEAR Q4 FY26 earnings call.

Guidance to track

• Management reiterated the previously guided FY27 revenue target, with the 5% flexibility band accounting for project ramp-up timing and potential macroeconomic headwinds.
• Final sign-off expected August 2026, with mass production commencing October-November 2026. Both projects share the same EV platform with end-to-end digital traceability (Industry 4.0).
• Samples for 350cc engine gearbox gears submitted last week for validation. Management expressed confidence in quick approval given past validation track record.
• Budgeted capital expenditure for FY27, with corresponding bank debt to be availed. Investment rationale tied to new project ramp-up and Crystal project (EV power steering) capacity build-out.

Risks flagged

• Management acknowledged significant input cost inflation and stated they are in discussions with export customers for interim support. While rupee depreciation partially offsets this, margin recovery depends on successful price negotiations.
• Analyst questioned EV impact on traditional gear demand. Management responded that EV reduction gearboxes (e.g., BMW project) provide content, but admitted uncertainty about long-term EV penetration in premium motorcycle segment where their customers operate.
• High dependence on European (69%) and other export markets exposes RACL to tariff volatility, geopolitical disruptions, and currency fluctuations. Management noted US tariffs are being absorbed by consumers but acknowledged ongoing pricing pressures from customers.
• Management deflected questions on Royal Enfield per-kit value and Kawasaki project revenue potential, citing confidentiality and competitive sensitivity. This limits transparency on near-term earnings contribution from major new wins.

Key quotes

• When the going gets tough, tough gets going. In this challenging period also we are maintaining this growth pattern. This really shows that our perseverance and patience in past maybe one decade. The way we have strengthened our operations, the way we have strengthened our technology, the way we have strengthened our customer base—it has really proven that yes, RACL is a company which is fully now stable on its firm foot.
• We have already disclosed numbers for 26-27 capex. Let the time come mature because we are also preparing documents for that. As and when they are ready with due course of time, we will inform. You can definitely make out that our Crystal project is going to come in a big way obviously it will have additional investments.
• Growing 20, 25, 30 percent—the difference is not the business. The difference is sustaining that growth because our product is highly complicated, highly precision oriented. We don't want to end up doing everything in haste and tomorrow be a very poor quality supplier.