This Small-Cap Stock, engaged in manufacturing precision gears, shafts, transmission components, chassis parts and sub-assemblies for automotive, agricultural and industrial applications, is in focus after ICICI Direct gave a Buy target of Rs. 2,000, which has an upside potential of 30.28 percent.
With a market capitalization of Rs. 1,809.59 crore, the shares of RACL Geartech Limited closed at a price of Rs. 1,535.10 per equity share, down nearly 0.05 percent from its previous day’s close price of Rs. 1,535.90.
What is the News?
ICICI Direct, a prominent brokerage firm, has recommended a “Buy” call on RACL Geartech Limited with a target price of Rs. 2000 per share, indicating an upside potential of 30.28 percent from its current price of Rs. 1,535.10 per share
ICICI Direct maintained its “Buy” rating on RACL Geartech, highlighting strong multi-year growth visibility from new programme ramp-ups. KTM volumes have recovered to pre-COVID levels, while the BMW Project Venus is nearing commercialisation, with supplies expected from October-November 2026.
The Royal Enfield programme is already ramping up at around 7,500-8,000 sets per month, while the ZF electric power steering programme could begin commercial supplies by late FY27 or mid-FY28.
RACL’s strong export business remains a key advantage, contributing around 75 percent of sales, with Europe accounting for nearly 69 percent. Its components are often single-sourced by global OEMs, providing strong customer stickiness. The company plans Rs. 77 crore of capex in FY27, including Rs. 40 crore for modernisation and Rs. 30-35 crore for capacity expansion.
ICICI Direct expects the company to benefit from new programme launches, customer recovery and capacity expansion. Management targets 15-20 percent sustainable annual growth and aims to potentially double revenue over the next 3-4 years. The brokerage estimates an 18 percent sales CAGR over FY26-28E, supporting its positive long-term outlook.
Product Portfolio:
RACL Geartech Limited serves a wide range of industries, including two-wheelers, three-wheelers, passenger cars, commercial trucks, ATVs, agricultural equipment, and industrial gears. The company has 29 active customers and offers more than 1,600 SKUs, showing its broad customer base and product variety.
Its product range includes transmission gears and shafts, sub-assemblies, precision-machined parts, chassis parts, and industrial gears. These products are designed for different automotive and industrial applications. The wide product portfolio allows RACL Geartech to meet varied customer requirements and strengthens its position across multiple sectors.
Sales Updates (Q1 FY26-27):
In Q1 FY 2026-27, RACL Geartech Limited generated 66 percent of its net sales from exports, while domestic sales contributed 34 percent. This shows that the company has a strong presence in international markets and remains largely export-oriented.
Among export markets, Europe was the largest contributor at 59 percent, followed by India & Asia Pacific at 36 percent. North America contributed 5 percent. Overall, the company’s sales were mainly driven by overseas markets, with Europe playing the most important role. The strong export share indicates good international demand for RACL Geartech’s products and highlights its growing global business presence.
Company Overview:
RACL Geartech Limited is an engineering firm based in India that specializes in the production of high-precision gears, shafts, and transmission components. Some of the key sectors that the company serves include two-wheelers, three-wheelers, cars, trucks, farm machinery, and industrial machinery. The company produces various products like transmission gears, shafts, sub-assemblies, machined components, chassis components, and industrial gears.
Recent Quarter Results:
Looking at the company’s financial highlights, RACL Geartech Limited’s revenue has increased from Rs. 100.65 crore in Q1 FY26 to Rs. 132.35 crore in Q1 FY27, which has grown by 31.50 percent. The net profit has also grown by 7.75 percent from Rs. 8.26 crore in Q1 FY26 to Rs. 8.90 crore in Q1 FY27.
RACL Geartech Limited’s revenue and net profit have grown at a CAGR of 19 percent and 16 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 16.9 percent and 17 percent, respectively. RACL Geartech Limited has an earnings per share (EPS) of Rs. 42.1, and its debt-to-equity ratio is 0.67x.