Rico Auto anticipates stronger margins, revenue growth ahead

Rico Auto Industries Limited is optimistic about achieving 12%-13% EBITDA margins by Q4 FY '26, up from current margins of 9.9% in Q2. The company attributes this expected improvement to better utilization of existing equipment and the introduction of new products, which command higher margins in both domestic and export markets. Exports, particularly to the U.S., have seen 22% year-on-year growth, with new components expected to further boost sales.

The company aims for approximately INR2,600 crores in sales by year-end 2025, despite a slight shortfall in the first half due to customer project delays. Long-term borrowings have increased to INR330 crores, primarily funding a greenfield project in Hosur for capacity expansion and new business, including components for Toyota, Mahindra, Tata, Maruti, and electric vehicles. Total consolidated debt remains stable at INR670 crores.

Rico Auto anticipates railway and defense segments to contribute INR70-INR80 crores in revenue in FY '26, with margins ranging from 18%-20% for direct railway supplies. Capacity utilization in its iron foundry is projected to reach 90% next year, up from 50%-52%, while die casting is expected to reach 80%-85%. The company targets over INR3,000 crores in revenue for FY '27, emphasizing a strategic focus on asset utilization and high-margin products.