Divgi TorqTransfer Systems: Shifting into a Higher Orbit with Record Q2 FY26 Performance

Divgi TorqTransfer Systems Limited, a key player in the automotive drivetrain sector, has reported a stellar financial performance for the second quarter and first half of fiscal year 2026. The company achieved its highest-ever quarterly revenue, signaling robust growth and strategic execution. For Q2 FY26, Divgi recorded a total income of INR 88.3 crore, marking an impressive 49% year-on-year increase. The first half of the fiscal year (H1 FY26) saw total income reach INR 165.1 crore, a substantial 39% rise compared to H1 FY25. This strong top-line growth translated into healthy profitability, with EBITDA for H1 FY26 standing at INR 41.1 crore (up 35% YoY) and Profit After Tax (PAT) at INR 19.7 crore (a 43% YoY increase). The management highlighted that this performance reflects sustained momentum and effective operational strategies across its business segments.

The growth narrative was largely driven by the sustained performance of the transfer case volumes and a robust showing from the components business. The transfer case segment demonstrated a 42% year-on-year revenue growth in H1 FY26, benefiting from healthy volume offtake from major OEM customers such as Mahindra, Tata, and Force Motors. Monthly averages for transfer case volumes are now on par with FY24 levels, with expectations to surpass them in the coming quarters. The components segment, primarily export-driven, exhibited exceptional growth, surging by 113% year-on-year in H1 FY26. Exports contributed nearly 16% to the total income in H1 and more significantly, over 20% in Q2 FY26, pushing the company closer to its medium-term target of 20-25% export share. This strong export traction underscores the growing global acceptance of Divgi's high-precision components.

Here is a financial summary of Divgi TorqTransfer Systems Limited:

Strategic Milestones and Future Outlook

A significant highlight for Divgi is the recent nomination from a leading Japanese OEM to develop the transfer case for their iconic pickup truck platform, with SOP (Start of Production) slated for H1 FY28. This is a monumental achievement, as it marks the first time an Indian company with proprietary product technology has secured such an opportunity on a global platform. Divgi's innovative solution reduced the transfer case weight from 45 kilograms to 32 kilograms while maintaining electronic architecture, demonstrating its engineering prowess and cost-effectiveness. This partnership, facilitated by Toyota Tsusho, is expected to initially cater to the Indian market before expanding to regional markets around India, potentially opening doors to other global OEMs.

While the EV transmission segment experienced subdued volumes in H1 FY26, the company anticipates a strong ramp-up in H2 FY26. This will be driven by the commencement of production and supplies for the new Sigma platform to its key customer, Tata, and deeper integration across multiple EV platforms. Divgi expects a 20-25% improvement in EV transmission volumes in the second half. The company is also strategically pursuing the localization of 8-speed Dual Clutch Transmissions (DCT) for the Indian passenger vehicle segment, aiming to leapfrog older 6 or 7-speed technologies and bring advanced performance and fuel economy to consumers. Drive trials are currently underway, with a conclusion expected before March end 2026.

Operational Efficiency and Global Expansion

Divgi's enhanced operating efficiency, coupled with higher volumes, contributed to a strengthening of overall profitability. Gross margins remained healthy at over 60%, and EBITDA margins exceeded 24%. The company's disciplined approach to growth, favoring organic expansion and maintaining a healthy balance sheet, was reiterated. Management emphasized that investments are carefully chosen to ensure they align with long-term strategic goals and do not compromise profitability. This includes evaluating a manufacturing footprint in the U.S. market to support future growth and deepen its global presence, particularly leveraging the strong presence of Toyota and its group companies in pickup trucks.

Here is a segment comparison for Q2 FY26:

Conclusion: Sustained Momentum and Strategic Clarity

Divgi TorqTransfer Systems Limited is demonstrating sustained growth momentum, driven by strong performance in its core segments and strategic wins in international markets. The record quarterly revenue, significant export growth, and the landmark Japanese OEM contract underscore the company's engineering capabilities and global ambitions. While the EV segment faces market-driven challenges, Divgi's proactive approach to technology adoption and market diversification positions it well for future growth. The management's focus on disciplined execution, customer engagement, and expanding its presence across both domestic and global markets reinforces confidence in its long-term trajectory. Divgi is clearly navigating the evolving automotive landscape with strategic clarity, aiming to solidify its position as a leading drivetrain solution provider globally.