Viaz Tyres FY26: Rapid Growth in Tubes, and a High-Stakes Push Into Tyres

Viaz Tyres Limited ended FY26 with a sharp step-up in scale. Revenue from operations rose to INR 108.34 crore from INR 57.26 crore in FY25, a year-on-year increase of 89.2 percent. Profitability also improved in absolute terms, with EBITDA at INR 9.57 crore (up 31.5 percent) and profit after tax from operations at INR 5.27 crore (up 58.0 percent).

But the year also highlighted the trade-offs that come with growth in a commodity-linked category. EBITDA margin declined to 8.83 percent in FY26 from 12.71 percent in FY25. In the earnings call, management attributed margin pressure to a sharp increase in rubber and reclaim rubber prices from around October to March, and noted that pricing actions have a lag before they reflect in margins. The company also disclosed a fire incident in December which resulted in a shutdown of about one to one-and-a-half months, further weighing on profitability in the second half.

The strategic context is clear in the investor presentation and management commentary. Viaz has built itself as a large organised manufacturer of butyl inner tubes, and now wants to expand into tyre manufacturing across two-wheeler, three-wheeler, light commercial vehicle and agricultural and farm equipment categories. The company is positioning this as a shift from a lower realisation tube business into higher ticket-size tyre products.

FY26 financial performance in brief

The top line acceleration was concentrated in H2. H2FY26 revenue from operations stood at INR 65.74 crore versus INR 28.88 crore in H2FY25, a growth of 127.6 percent. EBITDA for H2FY26 increased to INR 5.35 crore from INR 4.27 crore, but the margin declined materially, reflecting the raw material inflation discussed by management.

PAT from operations for FY26 was INR 5.27 crore compared to INR 3.34 crore in FY25. The presentation also highlighted improvements in operating cash generation and working capital management, while showing higher investing cash outflows in FY26 tied to property, plant and equipment.

The tube base business: high utilisation, modest margins

Viaz describes itself as among India’s largest organised manufacturers of butyl tyre tubes, with an Ahmedabad facility manufacturing 1.56 crore tubes annually. In the concall, management stated that capacity utilisation in butyl tubes is about 90 to 95 percent. This suggests the legacy manufacturing base is already running near peak.

At the same time, management was candid about the structural margin profile of the tube category. In the concall, the company stated that the tube industry in India typically operates at 5 to 6 percent margins. It also said that entry into new mould segments could lift margins by 1 to 2 percent, but there was no segment-wise financial disclosure in the documents that allows investors to independently validate profitability by product line.

Exports are positioned as a meaningful lever. The presentation lists export markets including Libya, Oman, USA, UAE (Dubai), Turkey, Romania, Sudan, Egypt, Brazil and Colombia, and states that 15 to 20 percent of total product sales comes from exports. However, the documents do not provide an export revenue figure.

The tyre manufacturing bet: capex, commissioning and targets

The centerpiece of the growth plan is a new manufacturing facility in Mehsana district, Gujarat. The presentation states a 1,50,000 square feet plant with a 2 MW captive solar unit and indicates it will be operational by Q1FY27, manufacturing 2W, 3W, LCV, and Agri and Farm equipment tyres.

On the earnings call, management provided a more evolving timeline. It said the factory was started in December 2025, and the earlier target was to begin commercialisation by Q1FY27. Management then stated it is revising that plan, with a trial run expected by around November to December, and that meaningful numbers will largely reflect in the next year, with a revenue expectation of about INR 160 to 170 crore in that next year.

The planned capex for this expansion is stated as INR 50 to 55 crore. Management said the capex has been funded majorly through debt and equity. The presentation also discusses a preferential allotment: 11.86 lakh equity shares allotted at INR 70 and 35.11 lakh convertible warrants issued at INR 70, intended to support capex, distribution expansion and working capital.

Longer term, the company has articulated a scale ambition. The presentation targets revenue of INR 350 crore by FY29 from INR 108 crore in FY26, and aims to expand PAT margins from 6 percent to 8 to 10 percent. In the concall, management reiterated a similar INR 350 crore revenue target by 2029 and indicated that tyres, on average, could support 8 to 10 percent PAT margins once operations stabilise.

Margins, raw materials, and execution: what to monitor

Viaz’s documents describe a business that is operationally scaling, but still exposed to raw material swings. Management stated reclaim rubber and rubber prices rose sharply from October to March and that calibrated pricing actions typically take a quarter to pass through. The presentation also claims an inventory buffer of 3 to 4 months as a cushion against supply volatility.

Another factor raised in the concall was an operational disruption from a fire incident in December, which resulted in a shutdown for around one to one-and-a-half months. This is a key context point behind the H2 margin compression, but it also reinforces the operational risk that can come with manufacturing concentration.

The balance sheet reflects the investment cycle. As of FY26, long-term borrowings were INR 6.59 crore (up from INR 1.47 crore in FY25), while short-term borrowings were INR 13.17 crore. The presentation also shows capital work-in-progress of INR 11.63 crore and long-term loans and advances of INR 13.44 crore.

Takeaways

Viaz Tyres delivered strong FY26 growth in revenue and PAT, while margins compressed due to raw material inflation and a disclosed operational disruption. The company is using this period to build the platform for a larger shift into tyre manufacturing, supported by a stated INR 50 to 55 crore capex program and preferential capital raising.

The next phase depends on execution. Investors will likely track three things closely: commissioning and ramp-up progress at the new tyre facility versus the revised timeline, the sustainability of price pass-through in a volatile raw-material environment, and whether working capital and borrowings remain aligned with the company’s scale-up targets of INR 350 crore revenue by FY29.