/** Title: Tolins Tyres FY26: Revenue Up, Margins Down, Working Capital in Focus */

Tolins Tyres FY26: Revenue Up, Margins Down, Working Capital in Focus

Tolins Tyres Limited ended FY26 with steady top-line growth but a visible compression in operating margins. On a consolidated basis, revenue from operations rose to INR 327.12 crore in FY26 from INR 292.45 crore in FY25, an increase of 11.86 percent. Q4 FY26 revenue from operations also grew to INR 77.99 crore from INR 69.53 crore in Q4 FY25.

But the year was not only about revenue. EBITDA declined to INR 47.80 crore in FY26 from INR 57.91 crore in FY25, and EBITDA margin fell to 14.61 percent from 19.80 percent. PAT declined to INR 35.69 crore from INR 38.67 crore. In the earnings call, management attributed pressure to raw material volatility, higher inventory holding, and elongated receivable cycles amid geopolitical uncertainty.

Business mix: Trade rubber continues to dominate

Tolins operates across tyre retreading materials, tyres, and ancillary rubber products. The investor presentation shows the operational revenue split in FY26 as 61.98 percent from trade rubber and 38.02 percent from tyres. This matters because the company’s commentary repeatedly emphasized that a significant portion of its economics is tied to tread rubber and retreading materials.

Geographically, FY26 revenue remained predominantly domestic. The presentation disclosed FY26 split as 94.84 percent domestic and 5.16 percent exports. Export share dropped sharply in Q4 FY26 to 2.30 percent, indicating uneven export shipments or demand during the quarter.

Financial snapshot (consolidated)

Why margins fell: GST dynamics, raw materials, and market uncertainty

A key theme from the concall was a structural issue affecting retreading demand economics. Management stated that GST on new tyres was reduced from 28 percent to 18 percent for several categories, while retreading remained at 18 percent. Management also highlighted that agricultural tyres now carry 5 percent GST for new tyres, while retreading on agricultural tyres is still taxed at 18 percent. According to the company, this reduced the attractiveness of retreading for customers, pressured dealer off-take, and weighed on margins in the retread segment.

Beyond GST, Tolins also pointed to raw material volatility and the broader uncertainty from geopolitical conditions. The company said Q4 saw higher inventory holding and elongated receivable cycles, which affected cash flows and operating discipline.

This margin pressure is visible in the annual numbers. While revenue grew 11.86 percent, EBITDA declined 17.46 percent and margin compressed by 519 basis points. The quarterly picture also shows a 512 basis point decline in EBITDA margin in Q4 FY26 compared to Q4 FY25.

Working capital: inventory and receivables became the central discussion

The FY26 balance sheet shows a notable build-up in current assets and a sharp decline in cash. As of March 31, 2026, inventories stood at INR 180.88 crore (up from INR 139.35 crore), and trade receivables were INR 128.48 crore (up from INR 102.67 crore). Cash and cash equivalents dropped to INR 4.42 crore from INR 28.19 crore.

Management explained that extended credit cycles are an industry norm in the retread ecosystem. The CFO stated that three to four months credit is typical and said credit periods were extended by about another month during the year due to uncertainty. Management also said inventory needs are structurally higher because rubber is seasonal and the company carries a broad SKU range, including stocks across depots.

While the company framed this as a temporary stress that should normalize over the next few quarters, the disclosures make it clear that working capital is a critical variable to track alongside growth.

Capacity and utilization: meaningful headroom, but ramp-up is gradual

Tolins reported three manufacturing facilities: two in Kalady, Kerala and one in Ras Al Khaimah, UAE. The presentation disclosed annual capacities of tread rubber at 12,486 tons, tyres at 1.51 million units, and rubber compounds at 17,160 tons.

Utilization in FY26 remained moderate. For the standalone tyre capacity (in numbers), utilization averaged 45.34 percent for the year. In tonnes, tyre utilization averaged 55.29 percent. The UAE unit capacity is 1,200 metric tons annually, and management said utilization was below 50 percent.

In the concall, management indicated that the UAE unit offers better margins than India operations. However, they also said they are not aggressive in scaling volumes in UAE due to receivables risk and competitive credit terms in that market. This caution suggests that utilization improvement may not be linear, even if end-market demand returns.

Distribution, products, and cost programs: the levers management highlighted

The company outlined multiple operating and strategic levers:

First, distribution expansion. The presentation highlighted an 8-depot network and 3,737 dealers across India. A new Gujarat depot, launched in FY26, was positioned as an entry into Western India, intended to reduce lead times and capture demand in CV and agricultural tyres.

Second, product expansion in agriculture. Management emphasized a complete tractor tyre range and stated that newly introduced heavy-duty tractor rear tyres have begun seeing encouraging response through the dealer network.

Third, cost and efficiency improvements. Management stated they are pursuing automation across various areas and implementing AI tools for planning and inventory control. The CFO also said there is no major capex planned, though efficiency investments may continue.

Fourth, sustainability-linked recycling under Terra Rubber. The company said Terra Rubber has started manufacturing and that the initial goal is to integrate recycled output into Tolins Tyres operations to reduce material costs. Management described this as a potentially profitable vertical but stated their first priority is improving Tolins Tyres profitability.

Way forward: utilization target, cautious FY27 outlook

In the investor presentation, Tolins stated a goal to progressively increase utilization to 75 percent over the next few years. It also mentioned the intent to pursue inorganic growth through selective acquisitions in rubber and rubber-related products, and to expand export opportunities.

During the concall, management refrained from giving explicit FY27 growth guidance. The CFO said it is difficult to commit due to uncertainty but expects performance to be at least at FY26 levels for now, with a review after Q2 if market conditions improve. Management also expressed an expectation that current disruptions in India and West Asia could ease by the end of Q2, allowing normalization in pricing, shipments, and raw material availability.

On profitability, management indicated they try to maintain minimum 10 percent margin and foresee an acceptable range of 10 to 13 percent, with additional improvement driven by efficiency.

Takeaways

Tolins Tyres delivered double-digit revenue growth in FY26, supported by distribution reach, product breadth, and capacity headroom. The weaker part of the year was margin and cash conversion, with EBITDA compression, high inventory, and rising receivables becoming the key operational risks.

The next phase depends on execution in three areas: improving utilization without overextending credit, restoring retread economics amid GST changes, and converting efficiency initiatives, including Terra Rubber integration, into measurable profitability improvement.