VST Tillers Tractors: FY26 ends with record revenue, but profit optics stay noisy

V.S.T. Tillers Tractors Limited closed FY26 with its highest ever turnover, driven by a strong rebound in volumes across power tillers, weeders and domestic tractors. The company reported revenue of 1,240 crore in FY26 versus 994 crore in FY25, a 25% year-on-year increase. Operating profitability also improved materially: operational EBITDA margin (excluding other income and fair value gains or losses) rose to 13.4% from 11.2%.

The quarter, however, reminded investors that headline profit can be volatile when fair value movements on investments swing sharply. In Q4 FY26, PAT fell to 5 crore from 25 crore a year ago, but management emphasised that operational PAT excluding fair value effects was 39 crore versus 28 crore.

Volume-led growth across core products

VST’s FY26 performance was anchored by small farm mechanisation volumes. Power tillers remained the main growth engine, with FY26 sales reaching 50,332 units, up 34.9% from 37,297 units in FY25. Power weeders also scaled rapidly, rising 52.1% to 11,346 units from 7,458 units. Domestic tractor volumes moved back into growth territory, increasing 18.6% to 4,596 units.

The company also benefited from higher power reaper volumes in FY26, a product that is typically seasonal. Sales rose 44.2% to 3,464 units from 2,403 units. Tractor exports were the one area that weakened on a full-year basis, declining 6.7% to 1,316 units from 1,411 units, even though Q4 export tractor volumes grew strongly.

In Q4 FY26, revenue rose 9% to 328 crore. Product volumes showed a mixed picture: power tillers were marginally lower at 12,958 units versus 13,278 units, while domestic tractors grew 20.5% and export tractors rose 65.4% to 430 units.

Profitability improved, but fair value swings distort reported PAT

The company’s preferred profitability lens is operational EBITDA, which excludes other income and fair value gains or losses. Using this metric, FY26 operational EBITDA improved to 165.9 crore from 111.1 crore, while margins expanded by 220 basis points to 13.4%. Q4 operational EBITDA also rose to 46.8 crore, and margin improved to 14.2%.

The gap between reported PAT and operational PAT remained an important narrative point. Management said FY25 included a fair value gain of 24 crore, while FY26 saw a fair value loss of 6 crore, and they therefore compared PAT excluding fair value: 113 crore in FY26 versus 70 crore in FY25.

The cash flow picture was more straightforward. The investor presentation highlighted cash generated from operations of 132 crore in FY26 versus 76 crore in FY25. On the call, management added working capital context, citing inventory at about 36 days and receivables reduced to 51 days, down from about 75 days in FY25.

Strategy: distribution, finance and a measured electric roadmap

Management’s commentary was most detailed on execution levers rather than short-term growth forecasts. The CEO described a structural shift in how the company operates in the small and marginal farmer space through a program called Project Chatrapati. The company has appointed village level workers, opened more counters, and pushed retail finance to improve access and reduce dependency on subsidies.

The financing ramp-up was one of the clearer quantitative targets shared on the call. The CEO said the company was at 0% retail finance two years ago, ended FY26 at about 10%, and wants to take it to 20% in FY27.

On product strategy, VST discussed new launches in the SFM category, specifically front rotary and rear rotary weeders. The investor presentation referenced these as FENTM Red and FENTM Black variants.

The company also addressed questions on its earlier investment exposure to electric tractors through Zimeno Inc in the United States. Management said US subsidy removal and tariff-related disruption caused drivetrain exports to stop, and that the investment has already been provisioned. The more important takeaway from management’s perspective was capability building: they said the work over the last three to four years helped them gain expertise in electric tractor drivetrains, battery packaging and battery management systems.

Instead of moving directly into electric tractors in India, the company is prioritising electric weeders and electric tillers. Management said these products are already being tested with a few customers for real-world usage and the company intends an all-India launch in early Q2, after validating battery life cycle and duration.

Exports were discussed with a forward-looking operational step as well. Management said a Netherlands-based operation in Europe, previously indicated for launch in June or July, is progressing as per plan. The company expects this to support export growth after a weaker FY26 for tractor exports.

FY27 commentary: cautious on growth, clearer on margins and targets

Management was explicit about the difficulty of predicting FY27 demand, citing uncertainties that can change month by month, including monsoon distribution and timing. They noted the high base effect and said agricultural income is not rising meaningfully, which could limit industry growth.

Even while avoiding a revenue growth guidance number, the CEO reiterated an operational EBITDA margin band of 12% to 14%, stating that ongoing efficiency initiatives are pushing the company closer to 13% and above.

VST also spoke about pricing and inflation pressures. Commodity prices and fuel costs are rising, and management said it may be difficult to pass on the full inflation to consumers. The company implemented price increases toward the end of April across both power tillers and tractors, but acknowledged the need to monitor inflation closely.

Another on-ground risk flag mentioned was fertilizer availability, which management said could become a problem, though it was not quantified.

Takeaways

VST’s FY26 outcome looked strong on the variables that are most controllable: volume growth across core small farm mechanisation products, operational margin expansion, and improved operating cash generation. At the same time, reported profit can remain noisy due to fair value movements, particularly in quarters where losses are large.

For FY27, management’s tone stayed balanced. They avoided giving growth guidance in a fluid demand environment, but did provide actionable targets on execution levers such as retail finance penetration, export expansion initiatives, and operating margin ranges. The next few quarters are likely to test how much the company’s distribution and financing push can cushion cyclicality in farm demand while inflation remains elevated.