Metrics raised 1
- Existing facility revenue capacity raised to >₹600 crore (from earlier estimate)
Summary
Raymond Ltd - Q1 FY27 Earnings Call Summary Friday, August 7, 2026, 5:00 PM IST
Event Participants
Executives (5)
• Gautam Maini (Managing Director, Engineering Business) • Rakesh Tiwary (Group Chief Financial Officer) • Sanjeev Sharma (Joint MD & CEO, JKMPTL) • Sunny Desa (Head, Investor Relations) • Naveen Sharma (CFO, Engineering Business)
Analysts (9)
• Dhirendra Tiwari (Antique Stock Broking) • Harshit Chheda (Centra Insights LLP) • Kewal Shah (Sanctum Wealth PMS) • Midhun James (Moat PMS) • Naveen Vijay (NS Capital) • Niraj Mansingka (White Pine Investment Management) • Nishita Shanklesha (Sapphire Capital) • Sanjeev Zarbade (Antique Stock Broking) • Vatsal Kothari (AlfAccurate Advisors)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Income | ₹628 crore | +13% YoY vs ₹555 crore; anchored by aerospace, defense, and precision technology divisions |
| EBITDA | ₹100 crore | +14% YoY vs ₹87 crore; operating leverage from revenue growth and product mix gains |
| EBITDA Margin | 15.9% | +20 bps YoY vs 15.7%; sustainable per management, driven by mix and leverage |
| Aerospace Revenue (JKMGAL) | ₹123 crore | +40.4% YoY vs ₹87 crore; capacity expansion and higher realization across OEM programs |
| Aerospace EBITDA | ₹26 crore | +25.4% YoY vs ₹21 crore; margin compression from R&D write-offs |
| Aerospace EBITDA Margin | 21.2% | Down 250 bps YoY vs 23.7%; R&D expenses expensed fully, expected to stabilize |
| Precision Tech & Auto Revenue (JKMPTL) | ₹444 crore | +11.5% YoY vs ₹398 crore; export revenue ramp-up |
| Precision Tech & Auto EBITDA | ₹61 crore | +45.5% YoY vs ₹42 crore; operating leverage from volume growth |
| Precision Tech & Auto EBITDA Margin | 13.8% | +320 bps YoY vs 10.6%; volume growth plus cost reduction initiatives |
| Order Book (Aerospace) | ₹5,960+ crore | 10-year visibility; changed from 5-year horizon (₹2,350 crore at Q4 FY26); 5-year breakdown implies ~17% QoQ growth |
| RFQ Pipeline (Aerospace) | ₹1,632 crore | Active pipeline, changes daily; management selecting for margin/ROCE, not constraint |
| Net Cash Position | ₹129 crore | Net debt-free balance sheet as of June 2026; flexibility for organic/inorganic growth |
| Capex Plan | ₹1,000 crore | Five-year plan: ₹510 crore aerospace, ₹430 crore auto; on schedule |
| Aerospace Growth Commitment | 25% annual | Committed to market; Q1 delivered 40.4%, ahead of commitment |
Geographic & Segment Commentary
Aerospace & Defense (JKMGAL): Revenue up 40.4% YoY to ₹123 crore with EBITDA margin of 21.2%, down from 23.7% due to full expensing of R&D for new product development supporting the 40% revenue expansion. Mass production of precision defense components has commenced; robust 10-year order book of ₹5,960+ crore and RFQ pipeline of ₹1,632 crore. Aerospace typically generates asset turns of 1.8–2.2x with mature EBITDA margin target of ~25%. Top 3 customers represent ~40–45% of order book across 25+ global customers; management targeting diversification to 8–10 high-value customers. Produces 350+ components for LEAP engine program, predominantly at L4 (critical static parts) with ambitions to move up the value chain toward sub-assemblies and higher tiers.
Precision Technology & Auto Components (JKMPTL): Revenue grew 11.5% YoY to ₹444 crore with EBITDA margin expanding 320 bps to 13.8%, driven by export ramp-up and operating leverage. Automotive aftermarket product line launching in Q2 FY27, leveraging legacy B2C brand heritage and tier-1 OEM base. China Plus One tailwinds being leveraged to diversify into high-potential global markets and industrial verticals. Typical asset turns of 2–2.5x with mature EBITDA margin target of 12–13%.
Company-Specific & Strategic Commentary
India-UK CETA Trade Catalyst: The Comprehensive Economic and Trade Agreement with the UK, effective 15 July 2026, eliminates tariffs up to 18% on machinery, auto components, and metalwork, granting immediate cost competitiveness for India-based precision suppliers. Combined with US tariff rollbacks and conclusion of destocking cycles, export orders for automotive and industrial precision components are witnessing sharp demand revival.
Andhra Pradesh Greenfield Facility: Gudipalli facility near Bangalore airport on track with commercial production targeted for late 2027; revenue contribution expected from FY28 given six-month customer approval cycles. Advanced training and production facility being set up ahead of schedule near the greenfield site for rapid post-launch scaling. New facility will include heat treatment and special processes for vertical integration, positioning for higher value-chain work.
Value Chain Progression: Strategy focused on migrating from standard component machining into high-complexity subsystems, critical aero-engine modules, and precision assemblies. "Parivartan" improvement program expected to push existing facility revenue above ₹600 crore (previous estimate). New build-to-spec design certification received; medical components certification obtained on the day of the call (titanium/stainless steel capability).
Defense Segment Expansion: Former BEL CXO Bhanu Prakash Srivastava joined to lead defense strategy; detailed plan expected within next 1–2 quarters. Mass production of precision defense components has commenced.
Aftermarket & Diversification: Automotive aftermarket product line launching in Q2 FY27, combining tools and hardware with aftermarket business to create synergies, leveraging brand and existing distribution. Management actively exploring adjacencies across humanoid robotics, behind-the-meter power generation, and medical devices through its "capability cloud" approach.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Aerospace Revenue Growth | 25% annual commitment | Q1 FY27 delivered 40.4%, ahead of commitment; management expects to maintain momentum with sufficient order pipeline |
| EBITDA Margin (Consolidated) | Sustain current trend | Q1 at 15.9%; operating leverage to continue, though product mix may cause quarterly fluctuation |
| Aerospace EBITDA Margin (Mature) | ~25% target | Current 21.2% compressed by full R&D write-offs; expected to stabilize as new programs reach steady state |
| Precision Tech EBITDA Margin (Mature) | 12–13% target | Current 13.8% with embedded scalability; upside potential |
| Existing Facility Revenue Capacity | >₹600 crore | Revised upward from earlier estimates due to "Parivartan" improvements and productivity gains |
| Andhra Facility | Commercial production late 2027 | Revenue from FY28 after ~6 months of approval cycles; ramp-up gradual due to aerospace qualification timelines |
| Aftermarket Launch | Q2 FY27 | Leveraging OEM-grade manufacturing ecosystem and B2C brand heritage |
Risks & Constraints
| Risk | Context |
|---|---|
| Input Cost Inflation | Logistics costs elevated due to macro environment; tooling costs (carbide, HSS) and minimum wage increases creating pressure. Management mitigating through efficiency gains and customer price discussions; may cause temporary margin pressure in certain quarters. |
| R&D Expense Drag on Margins | All R&D expensed in the same quarter (no capitalization) to support new program development. Q1 aerospace margin compressed by 250 bps YoY; stabilization expected as products mature and efficiency improves. |
| Aerospace Customer Concentration | Top 3 customers account for ~40–45% of order book. Mitigation underway via actively diversifying customer base toward 8–10 high-value customers leveraging existing RFQ pipeline. |
| Supply Chain Bottlenecks (Casting/Forging) | Global aerospace suppliers face constraints in casting/forging components (2% of components causing significant issues for US peers). Management states current exposure limited as critical volumes haven't transferred yet, but risk remains as business scales. |
| New Facility Execution Risk | Andhra facility approvals and ramp-up subject to six-month customer qualification cycles; any slippage could delay FY28 revenue start. Management mitigating via advance training facility and capacity improvements at existing sites to ensure continuous growth curve. |
| Macro Volatility | West Asia conflict introduces localized supply chain friction and energy market fluctuations; mitigated by structural adaptability of domestic manufacturing and favorable trade agreements. |
Q&A Highlights
Inorganic Growth & Capital Raising
- Question: Why raised equity (warrants) when previously indicating internal accruals and debt capacity would suffice unless inorganic opportunity arose? What is being evaluated? (Yashas Paramesh)
- Answer: Company continuously evaluates opportunities across aerospace, auto components, and defense segments for synergies; warrants provide additional flexibility. Details shared only when deals are near closing. (Sunny Desa)
Supply Chain Exposure & Competitive Moat
- Question: A US aerospace supplier revised down expectations due to 2% of components (casting/forging) having severe bottlenecks. Is Raymond exposed in the same way? (Yashas Paramesh)
- Answer: Not exposed as much currently because critical component volumes haven't transferred yet. Market has large backlog; this is an execution game — good execution attracts more business. (Gautam Maini)
RFQ Pipeline Conversion
- Question: Is Raymond L1 on any RFQs in the ₹1,632 crore pipeline? When will they convert? (Nishita Shanklesha)
- Answer: Aerospace is a daily growth business — RFQs, new product development, and scaling happen daily with time lags depending on component criticality. Pipeline is a fine balance of margin, ROCE, and capacity; selection is a choice given demand is ahead of supply. (Gautam Maini)
FY27 Margin Trajectory
- Question: Can EBITDA margins sustain around 12–13% for FY27? (Nishita Shanklesha)
- Answer: Same trend expected; consolidated margins better than prior years and momentum should maintain. No specific number committed. (Gautam Maini)
Aerospace Revenue Mix & Growth
- Question: Aerospace is ~20% of revenue; how much will it grow by year-end? (Harshit Chheda)
- Answer: 25% growth committed; Q1 delivered 40.4%, ahead of commitment. As the smaller base with higher growth rate, its share will incrementally increase quarter-over-quarter. (Gautam Maini)
LEAP Engine Program & Value Chain
- Question: With 350+ LEAP components, is the plan more components or sub-assemblies? (Harshit Chheda)
- Answer: Goal is to continuously move up the value chain — critical component mix increasing, sub-assemblies increasing. Andhra facility will add heat treatment and special processes for vertical integration, building customer confidence for higher-tier work. (Gautam Maini)
Order Book Comparison (5-year vs 10-year)
- Question: Last quarter order book was ₹2,350 crore (5-year); now ₹5,960 crore (10-year). Is this apples-to-apples? (Naveen Vijay; Niraj Mansingka)
- Answer: 5-year horizon was too small for aerospace's long-term nature; 10-year gives longer visibility. The 5-year breakdown sums to ₹2,765 crore, implying ~17% sequential growth in the near-term book. Order book excludes new facility capacity and daily closes. (Gautam Maini)
R&D Capitalization Policy
- Question: Is R&D expensed or partially capitalized? (Naveen Vijay)
- Answer: No capitalization; all R&D written off in the same quarter. The 40% aerospace growth required substantial new product development expenses, compressing margins; as products mature, margins will stabilize. (Gautam Maini)
Asset Turns & Mature Margin Targets
- Question: What are asset turns per segment, and what are normalized long-term margins? (Vatsal Kothari)
- Answer: Aerospace asset turns 1.8–2.2x; auto 2–2.5x. Mature EBITDA margins: aerospace ~25%, precision ~12–13% near-term. Higher-margin products have slightly lower asset turns but similar ROCE. (Rakesh Tiwary)
Customer Concentration
- Question: What is top-3 OEM concentration in aerospace order book? What is order intake growth outlook? (Vatsal Kothari)
- Answer: Top 3 ~40–45% across 25+ customers; goal is 8–10 high-value customers via RFQ pipeline. Note that even top-3 at ~40% is a diversified number in aerospace given few global players. Order intake growth: 25% organic growth commitment, outperformed this quarter. (Gautam Maini; Rakesh Tiwary)
Existing Facility Capacity & Andhra Ramp
- Question: How much more can existing facility grow, and how will new facility ramp? (Niraj Mansingka)
- Answer: Existing facility's INR600 crore estimate to be exceeded due to "Parivartan" improvements. Andhra facility: up to 6 months approval process, revenue from FY28; both aerospace and precision auto starting in parallel — continuous growth curve expected, no slowdown during transition. Approvals underway for L1/L2 products targeting 2029–2030 vintage programs. (Gautam Maini)
Medical Certification & Margin Sustainability
- Question: Detailed color on medical certification and whether margins are sustainable vs inventory gains? (Kewal Shah)
- Answer: Medical certification received today; too early for business plan — part of routine capability exploration. Margins extremely sustainable; driver is operating leverage (revenue up significantly YoY) plus product mix — directionally stable though quarterly mix may fluctuate. (Gautam Maini; Rakesh Tiwary)
Competition & China Plus One
- Question: Many auto ancillary companies entering aerospace; how does Raymond view competition? (Midhun James)
- Answer: 22 years in business, first-mover among Indian engine component makers; producing 1+ new parts daily with large customer base. Aerospace is high-mix, low-volume — very different from auto; few approved sources per part. China Plus One shift means more business than India incumbents can absorb; collaborative rather than zero-sum. (Gautam Maini)
Key Takeaway
Raymond Ltd delivered a strong Q1 FY27 with consolidated revenue of ₹628 crore (+13% YoY) and EBITDA of ₹100 crore (+14% YoY, 15.9% margin), led by aerospace revenue growth of 40.4% to ₹123 crore and precision technology margin expansion of 320 bps to 13.8%. The aerospace 10-year order book stands at ₹5,960+ crore with ₹1,632 crore RFQ pipeline, while the India-UK CETA and US tariff rollbacks are driving export order inflows. Management reaffirmed 25% annual aerospace growth commitment (exceeded at 40.4% in Q1), with consolidated margin trajectory expected to sustain on operating leverage. Strategic focus areas include aftermarket rollout in Q2 FY27, Andhra greenfield facility (production late 2027, revenue FY28), defense expansion with a former BEL executive, and medical certification enabling new verticals. Key watch points: full R&D expensing compressing near-term aerospace margins, input cost inflation (logistics, tooling, wages), customer concentration at 40–45% for top 3, and execution of the ₹1,000 crore capex program while maintaining the debt-free balance sheet with ₹129 crore net cash. Momentum is expected to continue, with management signaling confidence in exceeding prior capacity estimates through productivity initiatives.