Divgi TorqTransfer Systems Q4 FY26: record revenue, steadier mix, and exports take a bigger role

Divgi TorqTransfer Systems Limited ended FY26 with a clear inflection point. Total income rose to ₹375.2 crore, up 56 percent year on year. EBITDA increased 58 percent to ₹92.3 crore, and profit after tax nearly doubled to ₹46.9 crore, up 92 percent. The numbers matter because they were not a one off quarter. FY26 showed consistent quarter on quarter improvement, culminating in a strong Q4.

In Q4 FY26, total income reached ₹113.8 crore, compared with ₹64.1 crore in Q4 FY25. EBITDA rose to ₹27.8 crore from ₹14.5 crore, while PAT increased to ₹15.5 crore from ₹5.4 crore. Margins held up as well. EBITDA margin was 24.5 percent in Q4 FY26, similar to 24.3 percent in Q3 FY26 and higher than 22.7 percent a year earlier. PAT margin improved to 13.6 percent, up from 8.4 percent in Q4 FY25.

Management described FY26 as the beginning of a growth recovery phase. The story across the year supports that framing: higher volumes, a richer segment mix led by components and exports, and tighter operating discipline on a largely debt free balance sheet.

A year where the run rate moved higher

The company’s quarterly progression in FY26 is the first clue that demand and execution improved through the year. Total income increased sequentially from ₹76.8 crore in Q1 to ₹88.3 crore in Q2, ₹96.3 crore in Q3, and ₹113.8 crore in Q4. EBITDA followed a similar pattern, rising from ₹19.1 crore in Q1 to ₹27.8 crore in Q4. PAT also climbed each quarter, from ₹8.9 crore in Q1 to ₹15.5 crore in Q4.

This matters for investors because it reduces the risk that FY26 was only a rebound from a weak prior base. The company also highlighted that the revenue run rate has nearly doubled from about ₹55 crore to about ₹100 crore per quarter, supported by stronger product acceptance, improved wallet share with existing customers, and expansion into new markets and platforms. Alongside this, Divgi emphasized cost optimization, operating efficiency, and quality consciousness as key levers supporting stable EBITDA performance.

A second signal of improving quality of earnings is the low finance cost. Interest expense for FY26 was ₹0.3 crore, and for Q4 FY26 it was ₹0.1 crore, helping operating improvement flow through to net profit.

Segments: transfer case recovered, components scaled, exports changed the mix

Divgi’s FY26 rebound was broad based, but the mix shift is what stands out. Transfer case remained the largest segment, but components and exports gained meaningful share.

In FY26, transfer case revenue increased to ₹183.0 crore from ₹110.5 crore in FY25, up 66 percent. E-gear drive rose to ₹28.5 crore from ₹25.8 crore, up 10 percent. Components grew sharply to ₹112.2 crore from ₹50.2 crore, up 124 percent. Exports revenue expanded to ₹66.9 crore from ₹10.8 crore, a 6.2x jump, taking exports share of total revenue to 18 percent in FY26 from 6 percent in FY25.

Q4 showed the same pattern, with a strong lift in transfer case and components. In the quarter, transfer case revenue rose to ₹54.1 crore from ₹29.0 crore in Q4 FY25, up 87 percent. E-gear drive increased to ₹8.3 crore from ₹7.5 crore, up 11 percent. Components and exports increased to ₹33.4 crore from ₹13.8 crore, up 142 percent.

The geographic mix underlines the change. In Q4 FY26, domestic contributed 81 percent and exports 19 percent. For the full year, domestic was 82 percent and exports 18 percent.

Management commentary provides context for why this mix matters. Components were described as benefiting from robust demand for high precision machined components and from Divgi’s in house transmission application knowledge, which supports industrialization wins. Exports were positioned as becoming a strategic pillar, with traction across components exports and driveline systems and deeper international customer engagement.

The company also highlighted product diversification progress. In FY26, components represented 30 percent of total income, up from 21 percent in FY25. Transfer case was 49 percent, up modestly from 46 percent, while e-gear drive was 8 percent.

Execution themes: technology upgrades, capacity use, and partnerships

A large part of Divgi’s FY26 narrative is about execution catching up with investments made earlier. Management said the year focused on scaling new opportunities and monetisation of strategic investments over the past few years.

Transfer case remains central to the strategy. The company pointed to new technology development with enhanced transfer case features, expected to support momentum into FY27. It also highlighted that the Indonesia project is progressing as planned and that business visibility from existing customers remains strong. The investor presentation also described a new generation offering aimed at customer demand for state of the art transfer case technology, including auto engagement, always active transfer case capability, and on road and off road use cases. A prototype for torque on demand with M-lock was tested on a customer vehicle.

The EV transmission effort sits alongside the ICE driveline franchise. Management noted continued investments in EV transmission technologies and capability building, and referenced a new vehicle launch with flawless quality and delivery execution at an Indian EV OEM. The presentation also stated that customer approval has been received for production supplies for a sigma prototype, with start of production expected in Q2 FY27.

Operating leverage is another piece of the execution story. The company said overall capacity utilisation improved to more than 70 percent, while EV business capacity utilisation improved to more than 40 percent as program activity increased. In a business with significant fixed costs, higher utilisation typically supports margin stability, and Divgi’s EBITDA margin holding around 25 percent across quarters is consistent with that.

Partnerships were positioned as a key growth catalyst, mainly for global technology access and market reach. Divgi referenced relationships and ecosystem access through BorgWarner, Toyota Tsusho, Mahindra and Tata Motors. The company described the Toyota Tsusho arrangement as entry into the Japanese ecosystem and access to customers across Japan, South Korea, Thailand, Indonesia, China and other markets. Separately, it highlighted Tata Motors as a strategic EV ecosystem partnership for a broad spectrum of EV transmission development and execution.

Balance sheet discipline and cash position

Divgi’s balance sheet remained conservatively positioned at the end of March 2026. Total assets were ₹731.4 crore, up from ₹660.5 crore a year earlier. Cash and cash equivalents increased to ₹31.5 crore from ₹15.4 crore. Bank balances other than cash were ₹263.0 crore, broadly stable versus ₹269.4 crore in March 2025.

Borrowings were minimal. Non current borrowings were nil in March 2026, and current borrowings were ₹0.1 crore. This helps explain why management pointed to a debt free balance sheet and negligible finance costs as drivers of stronger profitability.

Working capital showed some expansion in the balance sheet, with inventories increasing to ₹58.8 crore from ₹38.7 crore and trade receivables rising to ₹79.3 crore from ₹55.5 crore. But the company’s working capital days improved to 68 days in FY26 from 96 days in FY25, driven by lower inventory days and debtor days.

Cash flow from operations was ₹41.1 crore in FY26, compared with ₹35.2 crore in FY25. The company invested ₹16.1 crore during FY26 and used ₹8.9 crore in financing cash flows.

Divgi also communicated shareholder returns alongside growth. The board recommended a final dividend of ₹3.27 per equity share of face value ₹5.00, subject to member approval at the annual general meeting.

What to watch in FY27: exports scaling and new program execution

The near term outlook in the presentation is anchored around program ramps and export conversion. For EV transmission, management expects a ramp up in production with several models of a leading Indian EV manufacturer, with SOP expected in Q2 FY27 following customer approval.

For the components business, the company said it is focusing on exports and strengthening relationships with global Tier 1 North American manufacturers of transfer case by expanding its product portfolio. It also stated that final production approval has been received on all export parts, with additional revenue potential of ₹10 to ₹12 crore per month.

On core products, Divgi highlighted transfer case portfolio globalization and evaluation of manufacturing footprint in the US market. It also referenced automatic transmission work, including a customer proof contract to demonstrate proof of concept on a vehicle, targeted for completion by Q3 FY27, and a manual transmission feasibility effort for a commercial truck application.

A longer term framing was also shared. The company presented potential annual revenue opportunities across 4-wheel drive systems, manual transmissions and synchronizer systems, EV transmission, automatic and hybrid transmission, and exports, totaling more than ₹2,000 crore. This is not a forecast, but it shows where management believes the addressable opportunity could be if product and customer wins convert over time.

Technology development was reinforced by a collaborative initiative with BITS Pilani. The company signed an MoU to establish a Centre of Excellence for Automotive Transmission Engineering focused on next generation transmission technologies. Research programs include EV, automatic, manual and 4WD transmission systems, along with CAE analysis, durability testing, automation, AI driven manufacturing, and product innovation.

Takeaways for investors

Divgi’s FY26 numbers tell a simple story: growth returned, and it was supported by a broader base than in prior years. Total income grew 56 percent, EBITDA rose 58 percent with margins stable around 25 percent, and PAT climbed 92 percent as operating gains met a low interest cost structure.

The operating story is equally important. Transfer case recovery is visible in the data, while components and exports are now meaningful scale drivers. Exports at 18 percent of total revenue in FY26, up from 6 percent in FY25, changes the company’s risk and opportunity profile. It adds diversification, but it also increases the need for execution consistency across geographies and customers.

FY27 will likely be judged on three execution points. First is whether the export approvals translate into sustained monthly revenue conversion. Second is whether EV transmission SOP in Q2 FY27 scales smoothly. Third is whether the transfer case technology upgrades and Indonesia program stay on schedule.

If those elements progress as described, Divgi’s FY26 theme, preparing for the next orbit, will look less like a slogan and more like a durable operating trajectory.