Carraro India sees margins rising to 12% next year as new products scale up

Balaji Gopalan, Managing Director of Carraro India, a Pune-based company that makes transmission systems for tractors and off-highway vehicles, said the company expects to reach about 12% margins in the fiscal year 2026-27 (FY27) as new product lines scale up and supply-chain issues ease. “The guidance we gave for this financial year is 11%,” he said, adding that margins should rise further next year as validations and localisation plans fall into place.Gopalan said revenue growth has been strong, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) and profit after tax rising from last year. He attributed this to customer acceptance of Carraro’s technology and rising orders from original equipment manufacturers (OEMs). “The four-wheel drive has been the key factor in the domestic area,” he said. He added that exports also performed in line with expectations, supported by the tele-boom handler business.

He noted that Carraro’s recent expansion is driven by new products, not market-led or organic growth. The faster-than-expected shift to four-wheel drives has led to pressures on raw materials, logistics, and localisation timelines. “The absorption has been much faster than what we thought,” he said. Because of this, Carraro had to prioritise OEM demand, which impacted savings, though he expects recovery as volumes rise.Also Read | IRB Infra reaffirms double-digit toll growth for FY26, eyes ₹4,000 crore construction revenue
Carraro is now focusing on higher-margin spare parts and has launched special campaigns along with two new service providers. On volumes, Gopalan said the outlook is stronger than earlier projected. The company had previously guided for €215 million in revenue, with an optimistic case of €220 million. “Today, we are revising it… 220 itself is realistic,” he said.Gopalan said the company is confident of maintaining its margin path. He expects 2025-26 (FY26) margins to come in close to 11%, possibly around 10.8–10.9%, before improving to 12% as product mix and localisation stabilise.

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On concerns around non-tractor emission norms being pushed beyond 2026-27, he said the impact on Carraro is indirect. “We are into gearbox and axle, so they don’t affect us,” he said. Higher emission standards may benefit OEMs entering developed markets, which could increase demand for Carraro transmissions, but he said the company’s growth is largely driven by new products and segments. Six prototypes were built last year, and three have already gone into production this year.

Carraro India, with a market capitalisation of ₹3,172 crore, has seen its shares fall more than 12% over the last year.

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