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Rolex Rings Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤13th Nov 25

Summary : Rolex Rings Limited experienced Q2 FY26 revenue decline due to US tariffs but anticipates strong recovery and high-teen growth in FY27-28 driven by new orders and expected tariff clarity.

Management Perspective positive : We are very much inclined and very much positive to regain the US business. We are expecting that we would be on a track from December 25 onwards. We are very much bullish for the fiscal 27, it would be a heightened kind of growth.

Concall Report Analysis & Insights

Business Overview

  1. Rolex Rings Limited manufactures bearing rings and auto components.
  2. Q2 FY26 revenue from operations was 272 crores, down 7% QoQ.
  3. US export consignments faced import duties of 28% to 53% in Q2 FY26.
  4. Domestic and European markets showed positive revenue growth in Q2.
  5. Company maintained EBITDA and PBT margins despite revenue reduction.

Future Growth Prospects

  1. Expects US export market to regain positive response from December 25 onwards.
  2. Anticipates high-teen growth in FY27 and FY28 due to deferred orders.
  3. Secured a new 60 crore annualized business nomination, starting Feb 26.
  4. Solar power plant expected to be operationalized by December 25.
  5. Adding new bearing ring types and auto component gears for existing customers.

Management Insights

  1. Q2 FY26 was tough due to US tariff structure and fluctuations.
  2. US government reduced import duties on specified goods to 28% from 53% in mid-October.
  3. Expects clarity on US import duties for buyers from November 1 onwards.
  4. Domestic and European markets are showing a positive growth curve.
  5. Company has net negative debt and good surplus cash flow.

Signs of Skepticism

  1. Management's high-teen growth projections for FY27/28 are contingent on US trade deal finalization.
  2. The 'right of recompense' update is still pending, with no clear feedback yet.
  3. Optimism about regaining US business seems strong despite ongoing tariff negotiations.

Risk Factors

  1. Uncertainty in US import duties caused importers to hold consignments.
  2. New business from US customers was put on hold due to tariff ambiguity.
  3. EV market growth has not met expectations, with reduced inquiries.
  4. Some customer expansion plans have been deferred due to market uncertainty.
  5. Fiscal 26 growth will be difficult due to tariff impact on nine months.

Good To Know

  1. Domestic market contributed 57% of revenue, exports 43% in H1 FY26.
  2. Passenger vehicle segment is increasing, contributing 50-51% of revenue.
  3. Industrial segment revenue decreased to 17%, commercial vehicle to 24%.
  4. Operating cash flow for H1 FY26 was approximately 87 crore.
  5. Company incurred 13 crore for capex on value-added processes and equipment.

Key Drivers

  1. US trade deal finalization.
  2. New orders commencing FY27.
  3. Solar project operationalization.
  4. Domestic and European market growth.

Key Analyst Discussions

Competitive Environment

  1. Rolex has 25-26 forging lines, competitors have 2-5, offering limited product range.
  2. Rolex differentiates with wide product range, versatility, and high precision.
  3. Company has over three decades in the industry with long-standing customer associations.
  4. Rolex can produce both auto parts and bearing rings, unlike some competitors.
  5. Received a zero PPM award for two consecutive years from a US global giant.

Market Trends & Consumer Behavior

  1. US export market slowed significantly due to tariff uncertainty.
  2. Domestic and European markets are showing positive trends.
  3. EV market growth is slower than expected, with reduced inquiries.
  4. Majority of new inquiries are for hybrid and traditional fuel vehicles.
  5. Customers are waiting for final trade deal clarity before resuming orders.

Financial Highlights

  1. Q2 FY26 domestic bearing ring revenue was 105 crore.
  2. Q2 FY26 export auto component revenue was 68 crore.
  3. Q2 FY26 scrap revenue was 18.5 crore, export incentives 3.4 crore.
  4. H1 FY26 revenue from operations was 527 crore.
  5. H1 FY26 profit after tax was 93.5 crore.

Product Composition

  1. Bearing rings contributed 58% and auto components 42% to Q2 revenue.
  2. EV revenue is a single-digit percentage, ranging from 7% to 10%.
  3. Adding different ring gears and gear blanks for automotive transmissions.
  4. New bearing orders are being secured from existing customers.
  5. Domestic auto component business was impacted by deemed exports on hold.

Strategic Considerations

  1. US orders for new customers/programs were put on hold due to tariffs.
  2. Expects final US trade deal clarity by January 26, leading to incremental revenue.
  3. Company expects to increase market share with new OEM plant expansions.
  4. Committed order book for FY27 and FY28 indicates heightened growth.
  5. Management aims to utilize production capacity for higher-margin products.
Rolex Rings Ltd (ROLEXRINGS) Concall Report Analysis & Insights | Dhanarthi