/** blogpostTitle: Rico Auto FY26: Record revenue, margin reset, and a bigger FY27 bet blogpostSlug: rico-fy26 blogpostCoverImageUrl: null blogpostCoverImageDescription: Ultra-realistic corporate finance cover image showing a clean desk setup with a laptop displaying a dashboard of three charts: a five-year revenue trend rising to FY26, an EBITDA margin line with a dip in FY25 and recovery in FY26, and a pie chart showing revenue split of 88% aluminium casting and 12% ferrous casting. In the background, a blurred industrial factory floor with die-casting machines and CNC machining equipment, neutral lighting, professional financial aesthetic, no logos or text labels. blogpostShortTitle: Rico Auto FY26 results and FY27 outlook */

Rico Auto FY26: Record revenue, margin reset, and a bigger FY27 bet

Rico Auto Industries closed FY26 with its highest ever annual revenue, helped by a steady domestic market and a ramp-up in new programs. Consolidated revenue from operations rose to INR 2,477.7 crore in FY26 from INR 2,212.4 crore in FY25, a year-on-year growth of about 12%. EBITDA increased to INR 223.2 crore from INR 188.5 crore, with EBITDA margin improving to 9.0% from 8.5%. PAT rose sharply to INR 52.4 crore versus INR 19.2 crore last year, taking PAT margin to 2.1%.

The Q4 picture was more mixed. Revenue in Q4 FY26 came in at INR 677.5 crore compared with INR 545.3 crore in Q4 FY25. But EBITDA fell to INR 47.8 crore from INR 50.5 crore, with margins compressing to 7.1% from 9.3%. On the earnings call, management attributed the margin dip to two non-recurring factors: a Labour Code impact of around INR 3.6 crore in Q4 and a raw material lag settlement impact of about INR 11 crore in Q4. They indicated that after excluding these items, Q4 margins would have been materially higher.

What drove FY26 and what hurt Q4

Rico’s business remains dominated by aluminium castings. Management stated that aluminium business revenue was INR 2,155 crore in FY26, contributing around 88% to total revenue. Ferrous business revenue was INR 322 crore, contributing around 12%. The investor presentation positions the company as an integrated supplier spanning casting, machining, tooling, automation, and special purpose machine development, with capabilities that include high-pressure die casting and a large machining base.

The margin story, however, was shaped by mechanics rather than demand. Management explained that raw material settlement is commonly done on a quarterly basis with customers. When commodity prices rise within a quarter, suppliers end up catching up later, creating a lag that temporarily compresses margins. Rico called out this lag impact explicitly for FY26 and said it is working to convert settlement cycles to monthly. According to management, 75% of customers by value have already agreed to monthly settlements, which should help protect margins in FY27.

A second FY26 theme was cost inflation beyond raw materials. Management spoke about discussions with customers to renegotiate for conversion costs that have inflated, including imported consumables impacted by dollar movement and higher energy usage costs such as oil and gas.

Financial summary (Consolidated)

Capacity, programs, and the Hosur inflection point

The company’s near-term strategy is tightly linked to new OEM programs and capacity alignment for hybrid and EV platforms. The investor deck highlights incremental capex focused on EV and hybrid platforms and states that EV and hybrid contribute roughly 7% to 9% of the business mix. A key piece of this pivot is the greenfield Hosur facility.

Management stated that the Hosur plant is progressing as planned and is expected to become operational from September 2026 onwards. It will primarily cater to hybrid and EV-related programs for key OEM customers. In addition, management disclosed an approval from the Tamil Nadu government for a subsidy of around INR 39 crore, which is expected to start accruing from the current financial year and be available for the next 10 years.

The investor presentation also states that the company has new orders worth INR 2,500 crore over a program life of five years. On the call, management linked the FY27 growth ambition to these launches and stated there are around 40 launches underway. They said the impact should start showing up meaningfully toward the end of Q3 to Q4, and peak next year.

FY27: margin normalization and a push beyond auto

Management’s near-term guidance has two clear pillars: revenue growth and margin improvement. They stated that FY27 revenue is expected to cross INR 3,000 crore. They also guided that exports are expected to grow by 32% in FY27, primarily to Germany and the USA. This matters because the presentation explicitly notes that export business typically carries relatively higher margins compared to domestic operations, and that FY25 margin decline was driven by lower export mix.

On margins, management said FY26 EBITDA margin, excluding one-time impacts, would have been around 10.25%. They also stated they expect FY27 margins to improve beyond that level if conditions remain broadly stable, supported by monthly raw material settlements and ongoing pricing negotiations on low-margin products and conversion costs.

Beyond automotive, Rico is trying to scale railways and defence using existing infrastructure. Management said railways revenue in FY26 was only around INR 3 crore to INR 4 crore because approvals took longer than expected. With RDSO approvals now received and more components in the pipeline, they set an internal target to cross INR 100 crore in railways in FY27. Defence remains slower due to longer testing and clearances. Management said defence revenue is currently around INR 20 crore to INR 30 crore, with a FY27 target to cross INR 50 crore. They also suggested that margins in these verticals should be better than automotive, though they want a few quarters of stable supplies before quantifying the margin profile.

Takeaways

FY26 reinforced Rico Auto’s scale in aluminium-led castings and its ability to grow revenue even in a volatile input-cost environment. The sharp Q4 margin dip looks more like a settlement timing issue and a one-time cost impact than a demand problem, based on management’s explanation. The bigger monitorables for FY27 are execution of program ramp-ups, stabilization of monthly raw material settlements across the remaining customer base, and how quickly Hosur begins contributing.

If the company delivers on its stated intent to cross INR 3,000 crore revenue, restore margins above the adjusted FY26 level, and scale railways and defence meaningfully, FY27 could mark a shift from capacity build-out to operating leverage. At the same time, leverage remains elevated with net debt at INR 686 crore as of March 2026, making cash generation and working capital discipline important parts of the story.