RACL Geartech Ltd Q2FY26 – When BMW’s Gear Supplier Shifts into Turbo Mode While Debt Tries to Catch Up

1. At a Glance

Hold onto your torque wrench, because RACL Geartech Ltd is quietly becoming the desi answer to Europe’s obsession with precision. Incorporated way back in 1983 (when Doordarshan ruled and Maruti 800 was considered luxury), RACL has managed to climb the auto-component ladder and plant its gearboxes into the heart of BMW, Kubota, KTM, Schneider Electric, and other global biggies.

As ofNovember 2025, the company trades at ₹1,077 per share with amarket cap of ₹1,273 crore, aP/E of 36.7, and aBook Value of ₹278. WithROCE at 12.5%andROE at 12%, it’s not exactly setting Dalal Street on fire, but hey, not every gear is meant for speed—some are for torque.

The latestQ2FY26results showrevenue of ₹122.84 crore,EBITDA of ₹29.79 crore, andPBT of ₹16.13 crore. Quarterly profit zoomed to₹12 crore, marking a 141% YoY growth—basically the kind of acceleration even BMW would admire. But before you cheer, remember the company still carries₹230 crore of debt—that’s like driving a racecar with a trailer attached.

2. Introduction

Imagine a small-town Uttar Pradesh-based manufacturer sending precision gears to Germany, Japan, and Austria. Now imagine those gears being used inBMW motorcycles,KTM racing bikes,Kubota tractors, andSchneider Electric systems. That’s RACL Geartech for you—a company that has turned “Made in India” into “Mounted in BMW.”

From a humble machine shop in Gajraula to havingwarehouses in Europe, RACL has gone from a “tier-3 supplier” to “Project Titan”—a codename that sounds like a Marvel movie but is actually their electric car parts project for BMW’s next-gen sports EV. Yes, the same BMW that thinks the 0–100 km/h mark is just a warm-up.

But behind the gloss lies the grind: RACL’s operations areworking capital hungry, their top five customers make up~60% of sales, and one customer alone accounts for15% of FY23 revenue. So, while BMW’s EVs may glide smoothly, RACL’s balance sheet definitely hits a few speed breakers.

Still, when your client list reads like a Geneva Motor Show brochure, you’re clearly doing something right.

3. Business Model – WTF Do They Even Do?

Let’s decode RACL’s secret sauce. The company manufacturestransmission gears, shafts, precision machined parts, and chassis componentsfor everything from two-wheelers to electric sports cars. Basically, if it moves, RACL probably has a gear in it.

Their22 active customersinclude blue-blood OEMs likeBMW Motorrad,Kubota,KTM, andSchneider Electric. They serveeight different vehicle categories, fromtwo-wheelers (46% of revenue)toEVs (4%), and export nearly70%of their production—mostly toEurope (73%).

Their manufacturing mojo lies ingear cutting, aluminium machining, laser welding, process R&D, and a fetish forISO certifications—ISO 9001, 14001, 45001, 27001, and evenTISAX(for secure data handling). That’s five certifications—more than most engineering students have backlogs.

And to top it off, theirProject Titanaims to supply theParking Lock Mechanism for BMW’s electric sports car. Machines are already ordered, joint inspections completed, and production trials underway. Full-scale production? ExpectedAugust 2026. So if you spot a futuristic BMW purring silently down the Autobahn, know that part of its drivetrain was born in Uttar Pradesh.

4. Financials Overview

Annualized EPS = 10.2 × 4 = ₹40.8 → P/E = 1077 / 40.8 = 26.4x (reasonable for a niche exporter with German clients).

Commentary:RACL’s profits are accelerating faster than most Royal Enfields on a flyover. EBITDA margins hover around 21%, showing strong operational control despite a capex-heavy year. QoQ profit jump of 71% proves thatProject Titan and new OEM ordersare starting to shift gears in the right direction.

5. Valuation Discussion – Fair Value Range Only

Method 1: P/E Based Valuation

• Industry P/E = 31.4
• RACL’s EPS (Annualized) = ₹40.8
• Applying a range of 28x–34x = ₹1,142 – ₹1,387 per