Force Motors Limited – FY2025‑26 Financial Results & Key Updates

Date: 29 April 2026 | Source: Board of Directors announcement

1. Financial Highlights

• Operating profit rose to ₹1.73 bn, but net cash from operations fell to ₹1.30 bn (down from ₹1.55 bn) due to higher working‑capital outflows.
• Investing activities continued to be cash‑negative, mainly for PPE and intangible asset development.
• Financing cash flow turned modestly positive (‑₹7.3 bn) after a sharp reduction in borrowings.

2. Strategic Moves

• Acquisition of Veera Tannaries Private Ltd (VTPL) – Completed on 23 April 2026 for ₹16,196 lakhs. VTPL becomes a wholly‑owned subsidiary; no immediate impact on FY2025‑26 numbers but expected to add capacity and product portfolio.
• Dividend Recommendation – Board proposes a cash dividend of ₹50 per share (500% of face value). Subject to AGM approval, this will provide a strong cash return to shareholders.

3. Regulatory & Tax Developments

• ELV (End‑of‑Life Vehicles) Rules 2025 – New EPR obligations for vehicle scrappage. Company has provisioned ₹260 lakhs; implementation details are still evolving, potentially affecting future cash outflows.
• New Labour Codes – Recognised a liability of ₹7,739 lakhs for past‑period employee benefits.
• Tax Regime Shift – Adopted the new tax regime (Section 115BAA) from FY2025‑26, resulting in a write‑off of MAT credit (₹559 lakhs) and reversal of a large deferred tax liability.

4. Risk Factors

1. Regulatory cost pressure from ELV compliance and labour code adjustments.
2. Integration risk of the VTPL acquisition – synergies may take time to materialise.
3. Liquidity pressure – Operating cash flow decline and higher current borrowings require close monitoring.
4. Market exposure – Single‑segment (automotive) concentration makes the company vulnerable to sector cycles.

5. Opportunities

• Growth from acquisition – VTPL could open new market segments or enhance existing product lines.
• Improved profitability – Margin expansion evident from profit growth outpacing revenue.
• Strong dividend – Attractive yield for income‑focused investors.
• Tax benefits – Lower statutory tax rate under the new regime may improve net margins in coming years.

Bottom Line: Force Motors delivered a solid earnings rebound, a generous dividend proposal, and a strategic acquisition that could fuel future growth. While regulatory and integration risks exist, the overall financial trajectory is positive, supporting a moderately positive outlook (score 7/10). Investors should watch the AGM dividend approval, progress on VTPL integration, and the impact of new ELV regulations on cash flows.