/** blogpostTitle: "TVS Electronics FY26: Margins Improve as EMS Ramps Up" */

TVS Electronics FY26: Margins Improve as EMS Ramps Up

TVS Electronics closed FY26 with a clear operational headline: margins improved meaningfully, even as revenue growth stayed modest. For the full year, revenue from operations came in at INR 4,552 million, up 5.7% year on year. EBITDA rose to INR 195 million from INR 110 million, taking EBITDA margin to 4.28% versus 2.56% in FY25. Profit after tax turned positive at INR 13 million, compared with a loss of INR 39 million last year, though PAT margin remained slim at 0.29%.

The improvement was more visible in Q4. Revenue for Q4 FY26 was INR 1,174 million, EBITDA was INR 70 million, and PAT was INR 29 million. EBITDA margin in the quarter was 5.96% and PAT margin was 2.47%. Management attributed the margin expansion to a better product mix and cost initiatives undertaken during the year. At the same time, it cautioned that quarterly volatility can continue given industry dynamics.

Segment picture: CSS outgrows PSG

TVS Electronics reports two operating segments. Products and Solutions Group (PSG) remains the larger business, but Customer Support Services (CSS) is growing faster.

In FY26, PSG revenue was INR 3,164 million, up 3.0% versus FY25. In Q4 FY26, PSG revenue was INR 804 million, up 2.3% quarter on quarter. Management said the quarter benefited from higher volumes in existing products and traction in new offerings aimed at manufacturing and logistics.

CSS delivered INR 1,388 million in FY26, growing 12.7% year on year. Q4 FY26 CSS revenue was INR 370 million, up 5.7% quarter on quarter. On the call, management linked growth to higher volumes across CSS verticals and new customer onboarding. It also shared that the solar operations business expanded the base from 1 gigawatt to 3 gigawatt over the last year.

Below is a compact view of the period’s reported financials.

EMS and SMT lines: early ramp-up, more visibility needed

A recurring investor focus area was Electronics Manufacturing Services (EMS), supported by new Surface Mount Technology (SMT) lines at the Tumakuru facility. Management confirmed that a few customers have already been onboarded and that revenue from external EMS customers has started in FY26.

Utilisation of the new SMT lines was stated to be in the 30% to 40% range, with management expecting this to rise in FY27. It also noted an active pipeline, including prototype orders that may translate into larger business in FY27.

Sector priorities for EMS were discussed on the call. Management said the company is focusing on auto, power electronics, industrial electronics, and defence systems. It also clarified that its product preference is high-complexity, mid-volume manufacturing with better profitability.

However, one limitation for investors is disclosure granularity. The company does not provide sub-segment revenue within CSS, so EMS performance cannot be independently sized from reported numbers.

Working capital and customer concentration: issues to track

The FY26 balance sheet and management commentary point to working-capital pressure. Debt-to-equity increased to 0.43x in FY26. Management attributed the rise primarily to higher short-term borrowings needed to fund inventory and receivables.

It highlighted two drivers. First, supply-chain challenges and memory price increases led the company to carry higher inventory than originally planned. Second, collections stretched as customers took longer to pay compared to earlier periods. While better supplier payment terms helped to an extent, the net impact was a higher working-capital requirement.

Customer concentration is another explicit data point in the investor deck. Top-10 customer concentration increased over three years, reaching 40% in FY26 versus 36% in FY25 and 30% in FY24. This may reflect deeper relationships and larger account wins, but it also increases revenue sensitivity to a smaller set of customers.

Management commentary: profitability first, growth expected to return

When asked about the moderation in FY26 revenue growth relative to the prior year, management positioned it as a deliberate shift. It said the company is focused on sustainable and profitable growth and has let go of certain low-margin orders. It also referenced supply-chain disruptions and component price inflation as reasons why some customer orders were delayed.

On margins, management avoided giving a numeric target, stating that the company does not provide specific guidance. Still, it called the margin improvement structural, driven by operational efficiencies, volume growth, and disciplined execution. It also said quarterly volatility may continue.

On FY27 growth, management gave a directional view rather than a formal forecast. In response to a question on whether growth might remain in high single digits, it indicated the company is looking at double-digit growth and expects all three pillars, PSG, CSS, and EMS, to contribute through new customer acquisition and deeper selling to existing customers.

Takeaways

TVS Electronics’ FY26 results show a business moving out of a low-margin phase, with a clear improvement in EBITDA margin and a return to profitability. CSS continues to outgrow PSG, and EMS investments are beginning to translate into external revenues, with utilisation expected to rise in FY27.

At the same time, the quality of the turnaround will be judged by two operational realities: whether working-capital stress normalises as receivables and inventory stabilise, and whether the company can grow without further concentrating revenue in a small group of customers. If the planned SMT ramp-up progresses and the company sustains its cost discipline, FY27 should provide a clearer picture of how durable the margin reset is.