V.S.T. Tillers Tractors Limited (531266) Earnings Call Transcript
August 11, 2025
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to V.S.T. Tillers Tractors Limited 1Q FY '26 Post Results Conference Call hosted by B&K Securities. From V.S.T. Tillers Tractors Limited management, we have with us today Mr. V. T. Ravindra, Managing Director; Mr. Antony Cherukara, Chief Executive Officer; Mr. Nitin Agrawal, Chief Financial Officer. [Operator Instructions] Over to you, sir.
Good afternoon, everyone. My name is Nitin Agarwal. I welcome you all to the call for the Q1 results. This is the safe harbor statement. These are the agenda for the discussion today. We'll touch base on macroeconomic situation, key highlights, sales volume of the company for the quarter 1, financial performance and then outlook and some of the product launches. So as you all know, the monsoon season has been good this year and there's a rise in the rural consumption, which has led to the increase of the farm equipment sales. GDP is expected, as per the RBI growth estimate, 6.5% for FY '26 and inflation has been forecasted at 3.1%. On the international trade side, softening of economic growth in Europe and logistic -- international logistics-related challenges continue to pose in the international trade environment. Here are the key highlights for the performance for the quarter. So we have achieved highest ever turnover for the quarter 1, which is INR 282 crores. We have also registered highest ever Power Tiller sales in this quarter, which is 92% growth. We have done 11,700 number of tiller sales. There's a good growth in the Power Weeder segment as well. Our Distribution business has also grown. The Precision Component division continues to focus on the external sales. And also during the quarter, we have launched FENTM Series of tractors in the domestic market, which is fuel-efficient and high torque models. I'll talk about the sales volume now. So first for the Power Tillers. In the current quarter, we have registered sales of 11,701 tillers, which was -- which has registered a very healthy growth of 92%. Power Weeder sale volume is 2,349 in the current quarter, which is a growth of 63%. Tractor domestic has a single-digit growth of 5%. However, export market, we have sold 312 tractors, which is degrowth of around 20%, mainly relating to the European economic situations. This slide is about the financial performance. So the company has registered a revenue of INR 282.5 crores, which is 48% strong growth. In terms of operational EBITDA, as a percentage, we are 13.3% against 7% in the same quarter last year. In terms of revenue rupees crores, operational EBITDA is INR 37.5 crores against INR 13.5 crores last year. Operational EBITDA is basically EBITDA excluding other income, and the net gain or loss on the fair value changes in the investment. This reflects the true business performance. At a PAT level, we are INR 44.6 crores in the current quarter, which was INR 22.8 crores in the Q1 last year. This slide talks about the outlook. So considering the July volume, we expect Q2 also indication -- Q2 also indicate that we'll -- Q2 indications are good considering the July '25 sales volume. Overall outlook is positive and operational EBITDA is expected to remain in the range of 11% to 13%. We have launched new FENTM Series tractors in the 18.5 horsepower to 29 horsepower series. There's a news in the media as well. For more details, you can refer to that. In case of SFM product during the quarter, we have launched Ranger 50, which is India-made weeder. We have also launched Ranger 80, which is for front rotary as well as rear rotary. There are 2 separate models. Also in case of reaper, there's a reaper for maize. So these are the 4 new models under the SFM business, which is launched in the current quarter. So with this, thank you for joining. We'll open up now for the question and answers.
Yes. We'll now begin the question-and-answer session. [Operator Instructions] Yes. Mr. Arjun, you can unmute and ask your question. Arjun?
We are not able to hear him, Jayaraj.
Yes, that's what. I'm just checking, sir. Okay, I'll go to the next caller. Probably he may join later. Mr. Kaushik, you can unmute and ask your question.
Hello? Am I audible?
Yes, yes, yes.
Yes.
Sorry, this is Arjun, sir, and not Kaushik.
Yes, yes. Okay, okay. We were not able to hear you earlier. Okay, you can go ahead.
Sure. Congratulations on a very good set of numbers. I think just to move on from an earlier PPT, you all had indicated a good quarter for first quarter, which we have seen play out. For second quarter, just want to get some further granularity on your guidance. We have said the quarter will be good. Is it possible to quantify some of the metrics, what we expect from the second quarter?
Arjun, it is extremely difficult to quantify because we can't give a number per se. But I would say it is -- July numbers have been good, but the peak season is June and July. But August is also looking good. September should be tapering down as the cropping season changes. But I think overall, it should be better. But to get a exact figure on how much it will be -- but it looks very good.
Sure. Fair enough. Sir, secondly, just to understand what's really changing. So you've obviously grown well. You talked of expansion in the North. There have been changes we have done in the South. So effectively, if you could just quantify 2 aspects, one, in terms of geographical expansion for power tillers; and secondly, in terms of financing, how important is it a role? And how do we see it scale up from these levels going forward?
Yes. Like I've always said, there is tremendous potential in this segment, the Small Farm Machines. The small and marginal farmer needs mechanization. They can't afford tractors. It's always been a question of capital availability for them. Retail finance is growing. From 0% retail finance 2 years back, we are close to 10% retail finance now. I hope we are able to grow it further. Last year, we had done about 6%, 7%, 8%. Previous year before that was about 3%. This year, we should be close to 10% plus. We have had a lot of new age banks coming into financing power tillers. We have Cholamandalam Finance, which is into financing. A lot of nationalized banks have started financing. We have Shriram Finance, which is financing. We have Bajaj Finserv which has come into power tiller finance. So I think there is a good movement of retail finance that is happening, and I think it will only get better as we go on. I would say in the next 2 years if we are able to get to about 30% to 40% retail financing, that will be great.
Sir, do we provide subvention?
There is some delinquency arrangements with these players, but very happy to say last 6 to 8 months that we have worked with Cholamandalam -- Bajaj Finserv has just started, so I won't comment on that. But Cholamandalam, we have worked about 6 to 8 months and not a single case of delinquency has happened.
Sure. Fair enough. That's good to hear. Sir, on the second bit, on the geographical distribution, how are we expanding, sir?
Yes. The northern market, we have started focusing. We have a project called One VST, which I've spoken to you before. That is progressing very well. We are going as per plan and we are getting the expected results from that market. But it's a very, very large market. UP is a very large market. So these are initial days. And I would say in the next 2, 3 years, tremendous numbers are going to come out from these markets.
So in the previous call, we mentioned 900 units for the northern markets. What would it be for this quarter, sir?
Let me check and come back. Arjun, on that exact numbers on that particular geography, I'll come back to you.
Sure. Sir, my second question, based on the exports piece -- so on tractors, we are gaining share in India very well. We've actually seen a 5% growth. You've given the breakup. Thank you for that. On the export side, there's obviously a pressure what we are seeing. So if you could help us geographically. Is this largely Europe which has slowed down for us? And what is the view...
Yes, it is Europe, Arjun. Yes. So it is Europe, Arjun. And U.S., as we said, we still have time. We have said we will be launching only in 2027. And that too, given the tariff, I hope it settles down to a more sensible level by that time. I'm sure it will. So these numbers are definitely nothing to do with U.S. This is purely Europe. And I would say more than the economic issue -- see, the bigger issue that we are dealing with in Europe is the logistics. Because what used to take about 25 to 30 days for inventory to reach Europe, it is getting to 60 to 90 days. So the real issue is rotation of funds for the distributors that we have. So that is the real concern and that is what is affecting our volumes. I would say we are working towards resolving that and we are working towards setting up our first base in Europe towards the end of this year.
Sure. Sir, just 2 follow-ups on this. Then I'll get back in the queue. One, won't the U.S. tariffs be at 25% and not that potential 50% since auto and auto components are in that 25% band. Is that the right understanding?
See, U.S. trade tariffs at 25% definitely would create margin pressure definitely. But definitely, that will be a -- as a compact tractor geography, I think 25% is also something we can look at the U.S. market and be present in that market. But 50% is definitely a no, no. And also it is relative -- it is relative. If Korea gets 15%, we will be outpriced, isn't it?
Sure. And the second bit, in terms of our export piece, so we also were looking at the Monarch bid given that now tariffs have potentially increased just for the chassis. Have they...
Arjun, Monarch is at a standstill at this point in time considering the tariffs.
Perfect. So no revenues would have been booked in the first quarter, sir?
No, no revenue at all.
[Operator Instructions] Next Mr. Naushad, you can unmute and ask your question.
Hello?
Yes, yes, I could hear you.
Yes. So you had a vision for around INR 3,000 crores in 1 or 2 years. Can you comment on that as to where does that thing stand?
Yes, we will definitely chase down that vision. Like I've said before, we have -- we are delayed, but definitely we'll be chasing it down. We are looking towards 2029 and 2030 to achieve it.
'29, '30 financial year?
Yes.
Okay. And you think the road map is pretty clear to achieve this delayed time line?
We have reworked the plans. We have done all the plan As and revised plans. We are confident about executing it. But we are living in uncertain times. That is the reality of what -- where we are today. I hope the entry plans of the U.S. that we have goes through and –- yes. So there will be certain uncertainties which we cannot completely count out, but I can definitely tell you we are working towards that.
And how is the progress on Zetor?
Zetor, the first year of seeding is completed. This is the year that we will scale up, and it is going as per plan.
So any -- what's the feedback from the market, from the distributors, et cetera?
Yes, we had some issues from the market. We had to redraw the plans. We had to do some improvement on the product. That work is completed now. And so that -- anyway, that was the intent of the seeding as well. So that is done. Now this will be the year of ramp-up.
And you expect good numbers this year, this financial year from Zetor?
Yes, good means relative to our earlier numbers, definitely, yes. But related to the industry, we will still be very small.
Okay. And any comments on the land monetization?
At this point, there is no decision taken.
Yes. Next Mr. [ Shreyans ], you can unmute and ask your question.
So I had a couple of questions. So if you could elaborate a little bit more on the new launch of the FENTM Series that you have in terms of differentiation with the Classic Series in performance and price point? And how do you see like the market size? Is there going to be like any cannibalization there or it's operating in a different segment as such?
Yes, I'll talk about it. FENTM Series gives in performance max, that is the tagline, performance max. Now what does that mean? What that means is the torque is maximum, the compactness is maximum. In fact, the whole length of the tractor has been further reduced. The fuel efficiency is maximum. So it is a much, much more productive tool than what we have had earlier. That is the need of the farmers that has been completely understood, especially from the vineyard belt, the sugarcane belt. So it is a perfect product for these particular applications. And the whole focus has been to increase the performance for these particular application in these markets, which again are the largest market for compact tractors.
Got it. Got it. So is this now like -- hello?
Yes, I'm listening. Please carry on.
So is this basically like the only product that's there in the market? Like are we like the first movers for this specifications? Or are there products available?
Specification-wise, probably we could be rated as the best in the segment today. But are there other compact tractors? Definitely, there are other compact tractors. All the players have compact tractors. VST were the pioneers in compact tractors. A lot of competition came in. Now we have again changed the game, I would say, with a technology defining product, I think. And this is not the end. There will be -- in the next 24 months, we will be launching more than 20 products into the market. So the compact game is our forte and we want to play that globally. And like I've said, this is the segment we are vying for global leadership. And hence, it is not only about the Indian market. It's also about addressing needs in Europe. It's also about addressing needs of the newer markets that we want to enter.
Got it. Got it. That's very helpful. My second question is on the reapers and the weeders. Like if you -- like we've grown really well in the last few months that we've -- last few years that we've introduced the product. But if you could give like a market size and what our share is and what kind of competition is there from China or other competitors as such?
Yes. So we started the weeder business 2 years back and we are growing rapidly. The industry size is still about -- I would say, last year, we had estimated a size of about 250,000. It could be anywhere between 250,000 to 300,000 because it is not an organized segment. We have to take figures from the imports and then we kind of aggregate it and see where it is. But it's a very healthy growth and it's a large industry it is emerging to be, and we want to be a major player. We started only 2 years back, and we will continue with this exponential growth and create leadership in this segment as well.
Got it. That's very helpful. Sir, last question on the Zetor again. Like have you launched the revamped product? And what kind of sales do you expect for this year overall on the tractor side, if you don't want to comment on Zetor specifically? But just wanted to get a sense on that.
No, we have not launched the revamped product yet. That will happen in Diwali. So we want to launch a revamped product during Diwali. And no, I'm not giving specific numbers for Zetor, like I said to the previous speaker. For us, it will be a large volume in the high HP segment. But industry-wise, it is very small. But we intend to grow it in the years to come.
Okay. So we should see some growth, over like the 400, 500 number sales that we are seeing for overall tractors for like -- which has been stagnant for a while now.
It will grow.
[Operator Instructions] Next in the queue will be Mr. [ Nihaar Shah ]. Please unmute and ask your question.
Congrats on a good set of numbers. Sir, I just wanted to touch on the Tiller segment. After a long time, we've seen 6,000 monthly numbers come across. If you can just touch upon in the performance that you show in June and July, is it a function of financing being more available? Is it a function of distribution getting to wider areas, product acceptance? If you can just help us understand what has led to this performance in the last couple of months?
Yes, definitely. See, the potential has always been there in the segment. And let me also add one more point. The team has done -- the Small Farm Machine team has done -- out of the last 5 months, 3 months we have crossed the number 6,000. So that shows there is continuous demand in this segment. But however, having said that, the numbers that you see right now has definitely a seasonality effect. Because of the monsoon and because of the cropping season, there is definitely a seasonality effect. But I would say the potential for this segment is huge and the growth will continue. But of course, that seasonal variances will always be there.
Sure. Sir, but anything specifically that led to the performance for the last couple of months that you would like to share.
No. Like I said, the demand is there. The retail finance is there. One of the other things I had said in the earlier calls is the government also has kind of worked on the utilization mechanism of subsidies. That flow is now happening on time. So there are several factors that has helped. It is not just one. But inherently, what I want to convey is this segment has huge demand. Small and marginal farmers constitute 80%, 90%, and they need the machine because labor is expensive. And once the capital accrual happens, once the retail penetration of finance goes deeper, I would say, the demand will only continue to grow.
Got it. Got it. And the second question, you mentioned that you are looking at about 20 new product launches across the next couple of years. If you can just throw some light on the segments, how these launches are going to be shaped across in weeders, tillers, tractors...
Yes. I'll give you a complete -- so we have already announced our launch of range of power weeders. So there are some more products coming in the Power Weeder segment. There is also an electric platform that we have already announced that we will be launching. That will happen in the next few months. So there will be an electric tiller, electric weeder coming from the segment. And the good news is that we are able to give at least a 5-hour run ability on our power weeders and power tillers. And with fast charging, they will be able to use it for at least 7 hours a day. That is our expectation. And that is the second thing, a major thing. Third, I have also said that we are looking at a product between power tillers and tractors, which will also be launched this year. And that will come in both the IC engine as well as the electric platform. So this creates a range of products that is being launched in the Small Farm Mechanization segment in this year itself. Then there is the tractor series, wherein we have already launched the FENTM Series, which is starting from 18-horsepower going all the way up to 29-horsepower. We are also working on a FENTM Plus series, which will come out with better ergonomics and better -- more improved transmission. We are also looking at hydrostatic transmission. That will happen in the next year. And there is also 3 other platforms that is working on, which is meant for a global launch, which will again be launched between this year and the next year. So it encompasses a range of products in the Small Farm Machines and the Compact Tractor segment. There is also a new -- 3 models that will be launched from the VST Zetor range as well. So this all comprises more than 20 products in the next 24 months.
Got it. Got it. That's very detailed, sir. And lastly, you had earlier spoken about considering an inorganic opportunity. Just wondering if there's been any development on that front.
Right now, there is no potential or a strong prospect on our hands, but I can tell you this, that the company has formed a team for this particular work and a Chief Growth Officer has been appointed, which will look into this particular area of inorganic growth.
I will go through some questions on the chat box. Some 2, 3 are there. One is, somebody has said that they have missed the INR 3,000 crore guidance time line. Can we please reshare? That is the one.
'29-'30. 2029-'30. That is 4 years from now. Yes.
Okay. And then there is a question on Zetor sales. That you touched upon it. And then there is a question on, any thought given to Bangalore land?
Definitely, thoughts are there, but nothing conclusive at this point.
Okay, sir. Arjun, you can unmute and ask your question.
Sir, could you give the breakup of our revenues, because you talked about distribution doing better? So if you could give us the breakup for this quarter?
Yes. Arjun, Nitin Agarwal here. So breakup of revenue is, for SFM business, it is INR 186 crores; Tractors, it's INR 55 crores; Distribution Business, INR 34 crores; and balance is others.
Sure. Very helpful, sir. Sir, just to understand this distribution piece, because earlier, we were INR 10 crores, INR 15 crores, we have scaled up this quarter. What has led to this growth? Is it just the solar pumps we were looking at? Or are there some other products here? And two, if you could talk about the margin? Since it's a trading business, it will have higher ROCE, but lower margin profile. So obviously, the company level margins would get impacted. So if you could throw some color on this, sir?
Yes. See, there is no solar pumps, Arjun. We are working on electric pumps. But definitely, that is a huge opportunity in itself. But of course, future, it could be solar as well. I mean I'm not counting that out. But then, right now, we are not into solar.
Right. Electric pumps. Sure.
The margins are good. I would say, it has got decent margins. And considering that we are using TOC methodology of supply chains to handle the whole business, the working capital is also minimal. And I would say, it is getting us very good returns, above average, I would say.
Compared to company level EBITDA margins, would it be higher margins than group...
Considering company level as the average, it is above average.
Okay. Sure, sure. Sir, the second question is, in terms of the TAM, so in the FENTM range, essentially, does it increase our total addressable market in the compact space? Or it is just another product adding to the suite of products like VST SHAKTI, et cetera, that we already have? If you could...
Addressable product doesn't change -- sorry, addressable market doesn't change. But what I would say is the relevance increases, because the more you make it suitable for the farmer and kind of create benchmark product, you will become the benchmark than you following some other benchmark.
Sure. And in terms of pricing, given that we are launching more features, do we see the price per tractor being higher in this range versus existing range?
Slightly higher, but we will remain competitive.
Sure.
Next in the line will be Jyoti Singh. You can unmute and ask your question.
Yes. I'm audible now?
Yes, yes, now audible. Yes.
Yes. So sorry if I'm repeating anything because I joined a little bit later. So like, overall, we are doing very well. So how are global geopolitical and logistic challenges impacting your export supply chain and pricing strategy? If you can comment on that. And then another on the tractor export. That has declined 20% year-on-year. So what were the main challenges? And what's your strategy to revive export growth in the coming quarter? And also last on the EBITDA guidance side, like 11% to 13%. What are the key levers you are focusing on to maintain margin amid issue of the input costs and currency volatility?
Okay. So on exports, I had already explained. I think you might have missed that conversation. However, like I said, the challenge is more in logistics, wherein the freight takes more time to reach the distributors, and hence, we need -- and hence, the rotation of capital becomes a problem for the distributor. That is affecting our business. I think the demand for our products in all the Western European markets kind of remains stable. So I don't see an issue in demand at this point in time. But the issue really is logistics. And as I said earlier, we will be putting up an operations base in a suitable location in Europe very soon. And that should be -- that should enable our distributors to rotate their funds faster, and hence, kind of regain on the volume that they are finding it difficult to do at this point in time. The supply chain is largely India for us, and hence, it really doesn't -- the global conflicts or the issues have not really affected us. And in the Tractor segment, there is hardly any chip that goes in except for the Stage-V tractors, which is minimal in volume now because we export only a certain amount of Stage-V tractors to Europe at this point. So it really doesn't affect us either. And the third question you asked is on the margins. The margins -- also since we are not in the U.S. market today, it has not hit us in terms of tariffs, so we are totally unaffected. But we definitely have plans to enter the U.S. market. So we're keeping fingers crossed that the tariff is settled and at a more sensible level.
Yes. Arjun, you have any more questions? I'm not sure. You have raised your hand. Arjun, do you have any more questions or -- you can unmute if you have.
No, I'm good.
Okay. Okay. Because it was there actually -- yes. Mr. [ Romil ] Jain, you can unmute and ask your question. Mr. [ Romil ] Jain, you can unmute and ask your question. I'm not sure whether -- yes, there are –anybody wants, you can raise your hand, please.
Also for everybody, the presentation is also uploaded at our website. So anybody who has missed the numbers or -- you just need to access our website, which is vsttractors.com, www.vsttractors.com.
Okay, then, I think -- the questions are all over, I think. Nobody is there. Do you want to make any closing comments, sir?
Thank you, and look forward to meeting you again in the next quarter...
Sorry, sir. One more question is there.
Okay.
Mr. [ Shreyans ], you can unmute and ask your question.
Yes. So just wanted to get some flavor on how do we see the reapers and the weeders growing this year and the next year? As you mentioned that it's a 250,000 unit market, and like the market share for us will be quite small. So do we see us penetrating more and more?
Definitely, yes. So like quarter 1, we have grown at 60%, 70%. So I think that growth will continue for some time. And I don't see that slowing down in the next few quarters. So that will continue. And I think, like I said before, the market is large, the potential is large and our network is also large, and we intend to capture that market. Easier said than done because it's a totally unorganized segment at this point in time. And we would also look at opportunities of consolidation as we move forward.
Got it. So just trying to understand what is helping us penetrate -- get a higher market share. Is it like price point? Or what's helping us to grow this quickly?
So in this segment, there are 5 aspects which we are working on. One is the awareness. Second is the availability. Third is accessibility. And the fourth is affordability. And the fifth one is making the customers confident in using it. We call it ability. So all the 5 A's we are working on continuously, and that is enabling the growth.
Okay. Okay. So like just trying to understand. Like in terms of price point and specifications, does our product stand out in any way? Or...
We are -- the product is much better than the Chinese. We offer warranty on them, service on them unlike the imports from China, which is traded. And many of the traders, once the container is empty, is gone. So that doesn't happen in our case. So the 2 years warranty. All that we provide -- definitely, we are not as cheap as the Chinese, but the product is extremely good.
Sir, there is a question in the chat box.
Yes.
So can you help us with the tiller industry expectation for the next 2, 3 years?
Yes, it is a rough guess I can say, because what I believe is in the next 2 years, maybe 3 years -- 2 to 3 years, let's say, we will hit 100k. This year, let us say, it should be anywhere between 60,000 to 70,000.
Okay. Okay. I think that's all on the question, sir. If you want to make any closing comments, you can do that, sir.
Yes, thank you. Thank you so much for turning up for this call, and look forward to meeting you in the next quarter. Thank you once again.
Okay, sir. On behalf of B&K Securities, we thank all the participants for joining the call. And special thanks to V.S.T. Tillers management for taking time out of the call. Thanks. Have a good day.
Thank you.
Thank you.
Thank you.
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