1.At a Glance
MeetIndag Rubber Ltd— the company that’s been patching up the nation’s tyres since 1978 and now wants to power your electric grids. A ₹338 crore midcap based out of Himachal and Punjab, Indag Rubber operates with the patience of a mechanic and the ambition of a startup. Its latest quarterly performance, Q2 FY26, paints a rather bipolar picture: revenues at ₹55.0 crore (down 15.4% YoY) but PAT zooming to ₹3.6 crore — thanks to cost control, some other income cushioning, and a bit of divine luck.
At ₹129 a share, the stock trades at aP/E of 55.4, which can only be justified if you believe that tread rubber can one day become the next semiconductor. WithROCE of 2.93%andROE of 2.86%, Indag isn’t burning rubber financially — it’s more like coasting on low friction. Still, adividend yield of 1.86%keeps patient investors smiling while management experiments with futuristic ventures through its subsidiary MMSPL — a move from tyres toPower Conversion Systemsfor Battery Energy Storage.
The company is almost debt-free (₹9.2 crore total borrowings, 0.04 D/E), has a robustcurrent ratio of 4.67, and promoter holding stands rock solid at73.34%. But margins? Let’s just say they’re thinner than the layer of rubber on a retreaded tyre — OPM for FY25 stood at 1.3%.
The headline takeaway: Indag’s tyre business is slipping, but its green-energy pivot could soon be the traction it needs.
2.Introduction
Every Indian highway trucker has a story about Indag. The brand’s precured treads have been saving tyres (and truckers’ wallets) for decades. While competitors sold dreams of new tyres, Indag sold a jugaad that worked:“Retread karo, paisa bachao.”
But the company’s own road hasn’t been smooth. It hit speed bumps with raw material inflation, GST show-cause notices, and a sales slump that saw revenue drop from ₹251 crore in FY24 to ₹228 crore in FY25. The EBITDA margin collapsed from 7% to just 1%, which is the financial equivalent of running a marathon barefoot on hot tarmac.
Yet, the story isn’t all skid marks. Indag has quietly diversified into the clean-tech world via its subsidiary,Millenium Manufacturing Systems Pvt Ltd (MMSPL)— producing power electronics for battery storage systems. That’s right, the same company once obsessed with rubber strips and curing presses is now talking aboutPower Conversion SystemsandBESS. It’s as if your local tyre shop suddenly started selling solar inverters.
The transition is gutsy. The company has pumped ₹5 crore equity and extended a ₹20 crore corporate guarantee to MMSPL. The plant at Mohali is operational, homologation tests done, and first units shipped to customers. Commercial revenues are expected to kick in from FY26.
In short — Indag Rubber isn’t just retreading tyres anymore. It’s trying to retread its own destiny.
3.Business Model – WTF Do They Even Do?
At its core, Indag Rubber is aretreading materials manufacturer. The company makes precured tread rubber — the rubber strips that get pressed onto old tyre casings to make them reusable. It’s the low-cost, eco-friendly alternative to buying new tyres — saving up to70% of the cost of a new tyrewhile delivering around70% of its lifespan.
Their core product basket includes:
- Pre-cured Tread Rubber– their flagship product
- Full Skirt Envelopes– used in tyre curing
- URSG (Unvulcanised Rubber Strip Gum)– bonding material for treads
- USC (Universal Spray Cement)– helps bond tread to tyre casing
- Export Products– for international retreaders
The Nalagarh (HP) plant boasts an installed capacity of20,000 MT of tread rubber,5,000 MT of strip gum, and2,200 KL of spray cement.
Indag’s real moat lies in itsdistribution network— 300+ dealers, 3,000+ retreaders, and 15 depots backed by a trained sales & technical team of 50+ people.
But here’s the twist — Indag has rolled beyond rubber. Through its subsidiary MMSPL, it’s entered thegreen energy electronicsbusiness — building power conversion systems (PCS) for large battery storage projects. Think solar + batteries = Indag’s second innings.
If the tyre business is about saving rubber, the green energy business is about saving the planet. The company has even got a JV withSun Mobility EV Infra, dabbling inEV battery swapping stations. Clearly, the Khemkas are done being the rubber guys; they now want to be theenergyguys.
4.Financials Overview
Let’s crunch the Q2 FY26 numbers — the only thing that doesn’t lie (except management guidance).
| Metric (₹ Cr) | Latest Qtr (Sep ’25) | YoY Qtr (Sep ’24) | Prev Qtr (Jun ’25) | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | 52.53 | 62.09 | 45.01 | -15.4% | +16.7% |
| EBITDA | 6.20 | 1.45 | 0.26 | +327.6% | +2,284.6% |
| PAT | 3.60 | 3.10 | 0.85 | +16.1% | +323.5% |
| EPS (₹) | 1.23 | 1.34 | 0.51 | -8.2% | +141.0% |
Source: Consolidated figures in ₹ crore from company results (Half-Yearly FY26 Lock Activated)
Commentary:
- Revenue is down YoY, but profits have somehow inflated — classic other-income effect.
- EBITDA margin rebounded to 11.8%, a big jump from the 1.6% disaster of Q1 FY26.
- Annualised EPS based on Q2 is ₹1.23 × 4 = ₹4.92. That gives us aneffective P/E of ~26xon annualised Q2 — far more realistic than the screener headline 55x based on TTM.
Indag’s Q2 performance shows that margins can be revived when raw material prices cool off and the mix improves. But sustainability remains the big question.
5.Valuation Discussion – Fair Value Range Only
Let’s look at three valuation lenses for this tyre-turned-energy story.
(a)P/E Method
Annualised EPS (based on Q2): ₹4.92Industry P/E (Tyres & Rubber): ~31xSo,Fair Value Range= ₹4.92 × (25–30) =₹123–₹148
(b)EV/EBITDA Method
EV = ₹345 croreEBITDA (TTM) ≈ ₹13.5 croreEV/EBITDA = 25.6x — very high.If normalized EBITDA margin reverts to 7%, FY26 EBITDA could hit ₹15 crore → fair EV/EBITDA (15x) = ₹225 crore → Equity value = ₹210 crore →₹80/share(lower bound).
(c)DCF Method
Assuming free cash flow CAGR 8%, WACC 11%, terminal growth 3%, fair value lands between₹110–₹150.
✅Educational Fair Value Range: ₹110 – ₹150 per share📜Disclaimer: This fair value range is for educational purposes only and not investment advice.
6.What’s Cooking – News, Triggers, Drama
Where do we start?
- GST Notices:The company received multiple GST show-cause notices in FY25. One was for ₹1.07 crore (later reduced to ₹2 lakh). So much paperwork for such small peanuts — India’s tax bureaucracy never disappoints.
- ICRA Downgrade:ICRA revised Indag’s rating toA- (Negative)in August 2025. Apparently, 1% OPMs aren’t confidence inspiring.
- Management Shuffle:Amit Kumar, National Sales Head, resigned in September 2025 — hopefully not because the tyres ran out of tread.
- Dividend News:Declared ₹0.90 interim dividend in November 2025. Record date: November 14; payout by December 6.
- Green Tech Milestone:MMSPL shipped its first PCS units in Q2 FY25 and completed homologation. Full production from FY26.
In summary — the company is fighting GST ghosts, dealing
