Tolins Tyres Ltd Q1FY26 FY25 – From Retreading Rubber to Retreading Investor Patience: Detective’s Case Notes
1. At a Glance
Tolins Tyres Ltd, a ₹696 Cr smallcap baby from Kerala, listed in September 2024 with a ₹230 Cr IPO, now trades at ₹176—down nearly 32% from its IPO high of ₹259. Three months gave investors a 9.2% sugar rush, but the one-year return is still a negative –8.8%. With a P/E of 17.8 (cheaper than industry’s 30.6, but don’t break into a Bharatnatyam yet), book value ₹82.1, ROE 18.2% and ROCE 21.3%, the numbers look disciplined. But detective sahab smells something: a company making tyres and tread rubber with capacity utilization at just 31–47% is either hoarding spare machinery for an apocalypse, or waiting for Apollo Tyres’ mercy.
2. Introduction
Imagine a Malayali detective in a mundu, sipping strong chai at Kalady, peering into a warehouse full of unused machines. “Why only 31% utilization, saar?” he asks.
Tolins Tyres is not your usual tyre stock story. It’s the tale of a company born in 2003, rebranded, merged, IPO’d, and now flexing a manufacturing empire that seems bigger than the demand curve allows. Its production facilities spread across 221,000+ sq ft in Kerala and Ras Al Khaimah (yes, they took our Malayali expat dream literally), with annual tyre capacity of 1.51 million units and PCTR at 12,486 tons. But FY24 actuals? Only 15.08 lakh tyres (31% utilization) and 11,286 tons of tread rubber (48%). That’s like owning an IPL team and benching half your players.
Yet the financials show growth: Sales at ₹306 Cr in FY25 (vs ₹227 Cr in FY24), PAT ₹39 Cr (vs ₹26 Cr), margins ~18%. The IPO cash helped them wipe debt down to ₹16.8 Cr—practically debt-free. Still, operating cash flow was negative ₹61 Cr in FY25. Sherlock would call it: “Sales are fine, profits are fine, but where’s the cash, Watson?”
3. Business Model – WTF Do They Even Do?
Tolins Tyres has a three-part business model that looks simple but hides layers:
Tyre Retreading – Their bread-and-butter. Precured Tread Rubber (PCTR) and conventional tread rubber. Think of it as “Jugaad Tyre Surgery” – instead of buying new tyres, customers retread old ones. Great for truckers, bad for Michelin’s ego.
Tyres – For light commercial vehicles, off-road/agri tractors, two-wheelers and three-wheelers. Basically, if it moves on Indian roads and honks unnecessarily, Tolins probably has a tyre for it.
Ancillary Products – Bonding gum, vulcanizing solution, rope rubber, flaps and tubes. Aka “tyre ke chillar items.”
Backward integration ensures they don’t depend on outsiders for gum or solutions. Their global reach spans 40 countries, though exports are just 17% of revenue. 83% comes from Indian roads—where potholes ensure sustainable demand.
A detective might quip: “So Tolins doesn’t just sell tyres, it sells jugaad to keep your tyre alive longer. Investors, don’t confuse that with keeping your portfolio alive longer.”
4. Financials Overview
Quarterly Numbers
Source table
Metric
Latest Qtr (Q1FY26)
YoY Qtr (Q1FY25)
Prev Qtr (Q4FY25)
YoY %
QoQ %
Revenue
₹89.7 Cr
₹76.3 Cr
₹69.5 Cr
17.6%
29.0%
EBITDA
₹13.4 Cr
₹14.8 Cr
₹13.6 Cr
–9.5%
–1.1%
PAT
₹9.3 Cr
₹8.9 Cr
₹9.3 Cr
4.3%
0%
EPS (₹)
2.35
2.91
2.35
–19.2%
0%
Annualised EPS ≈ ₹9.4. CMP ₹176 → P/E ~18.7.
Commentary: Revenue’s racing, but EBITDA is braking. PAT flat QoQ. EPS shrunk YoY. Sherlock verdict: Growth visible, but operating leverage is missing.
5. Valuation Discussion – Fair Value Range
Let’s calculate like a detective with a magnifying glass:
P/E Method Annualised EPS ~₹9.4. Industry PE ~30. Tolins trades at ~18. Fair PE band for smallcap tyre player: 15–22. → Value range: ₹140 – ₹207.
EV/EBITDA Method FY25 EBITDA ~₹54 Cr. EV ~₹657 Cr. EV/EBITDA = 12.2x. Industry avg ~15x. Fair range (10–14x): EV ~₹540 – 756 Cr → Equity value ~₹167 – 233/share.
