01 — At a Glance
Record Profits, Abysmal Returns on Capital. Classic Small Cap.
- 52-Week High / Low₹803 / ₹410
- Q3 FY26 Revenue₹91 Cr
- Q3 FY26 PAT₹12 Cr
- TTM EPS₹12.04
- Annualised EPS (Q3 Avg × 4)₹15.40
- Book Value / Share₹199
- Price to Book3.49x
- Return on Equity4.14%
- ROCE5.69%
- Total Assets₹689 Cr (Sep 2025)
The Paradox: Divgi just posted Q3 FY26 PAT of ₹12 crore — up 125% YoY (from ₹5.3 crore in Q3 FY25). Revenue surged 72.6% QoQ, exports are booming at 120% growth, and the company won a ₹62-crore multi-year Toyota order. Yet ROE is 4.14%, ROCE is 5.69%, and P/E is 57.3x. The stock is up 40.8% in a year. The business is firing. The balance sheet is saying “thanks, but no thanks.” Classic India small-cap energy: great at making momentum, terrible at making capital.
02 — Introduction
The Company That Makes The Parts Your Mahindra Needs To Be A 4×4
Founded in 1964, Divgi Torqtransfer Systems is India’s largest EV transmission manufacturer. But “largest” is a relative term when your peers include a Thai factory that makes the same thing but doesn’t bother with investor relations. The company does three main things: makes transfer cases for 4×4 vehicles, manufactures precision components for global Tier-1s, and tries very hard to convince people that EV transmissions are the future while running a 25% capacity utilization plant.
The business model is simple: buy raw materials, machine them into gears/cases, sell to OEMs like Mahindra, Tata, and Toyota at a margin, repeat. Four manufacturing plants across India (Bhosari, Shivare, Shirwal, Sirsi). Revenues of ₹303 crore TTM. And a management team that sounds like they’ve just discovered export markets for the first time in 2026 — which, to be fair, is still better than some.
Q3 FY26 was the inflection quarter. Revenue of ₹91 crore, PAT of ₹12 crore, and management announcing on the concall that export components business is growing at “over 120% YoY” while Indonesia is about to send 70,000 units their way. Also announced plans for a US factory, a Japanese OEM transfer case program, and automatic transmissions by FY’29. In one quarter. The ambition dial got turned up to eleven, and the market is still loading the webpage.
Concall Gold (Feb 2026): Management’s exact words on Indonesia order: “absolutely… incremental.” On exports: “we believe we are the only Indian company” at the Detroit Tier-1 supplier conference. On Japanese OEM: “among… the first instance in India” of electronically controlled drivelines. Translation: lots of firsts, lots of claims, zero track record on execution at global scale.
03 — Business Model: Making Gears That Turn Wheels
Transfer Cases, Export Components, EV Gearboxes — The Trilogy of Hope
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