EMKAYTOOLS - Emkay Taps & Cut

📊 NSE: EMKAYTOOLS 🏢 Engineering 📅 Last Updated: 12/13/2025 21:51

💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations for H1 FY26 was INR 32.13 Cr, representing a 23.2% decline compared to the restated H1 FY25 revenue of INR 41.87 Cr. The Windmill segment generated INR 0.91 Cr in H1 FY26, a 101.1% increase from INR 0.45 Cr in H1 FY25. The Trading segment revenue was not separately itemized in the H1 FY26 segment report but is the primary driver of the INR 32.13 Cr operational revenue.

Geographic Revenue Split

The company operates from a single location in Nagpur, Maharashtra. Consequently, 100% of revenue is domestic, and the company reports no separate geographical segments.

Profitability Margins

Net Profit Margin for H1 FY26 stood at 7.27% (PAT of INR 2.34 Cr on Revenue of INR 32.13 Cr). This is a significant shift from the pre-demerger FY24 PAT margin of 66.73%, reflecting the transition from a high-margin manufacturing model to a lower-margin trading and power generation model.

EBITDA Margin

Operating margins were historically robust between 40-50% during the four years ended fiscal 2024. Post-demerger, the H1 FY26 operating profit (before other income and tax) was INR 3.18 Cr, representing an operating margin of approximately 9.9%.

Capital Expenditure

As of September 30, 2025, the company holds Tangible Assets (Property, Plant, and Equipment) valued at INR 2.07 Cr. Significant capital was previously tied to the manufacturing business which has been transferred to Emkay Tools Limited (ETL).

Credit Rating & Borrowing

CRISIL Ratings last rated the company at CRISIL A-/Watch Developing and CRISIL A2+/Watch Developing in December 2024. These ratings were withdrawn in March 2025 following the company's request and receipt of a 'No Due Certificate' from the banker. Historical interest coverage was exceptionally high at 195.51x in FY24.

⚙️ Operational Drivers

Raw Materials

Post-demerger, the primary cost driver is 'Purchase of Stock-in-Trade' (threading taps and cutting tools), which accounted for INR 31.21 Cr or 97.1% of revenue from operations in H1 FY26.

Import Sources

Not disclosed in available documents; however, the company maintains established relationships with suppliers for its trading segment.

Capacity Expansion

The company operates a windmill for power generation which generates minimal annual revenue of approximately INR 2 Cr. Manufacturing capacity for threading taps has been transferred to the resulting company, ETL.

Raw Material Costs

Purchase of stock-in-trade costs were INR 31.21 Cr in H1 FY26. In the restated H1 FY25, these costs were INR 37.14 Cr, reflecting a 15.9% decrease in procurement spending aligned with lower trading volumes.

Manufacturing Efficiency

Manufacturing operations have been shifted to ETL. Current efficiency is measured by trading turnover and windmill uptime.

📈 Strategic Growth

Expected Growth Rate

19.60%

Growth Strategy

The company completed a demerger to separate its manufacturing business into Emkay Tools Limited (ETL) to allow for specialized focus. The strategy involves listing ETL on the NSE Emerge SME platform (1:1 share swap) while ETCTL continues to focus on trading threading taps and expanding its wind power generation revenue, which grew 101% YoY.

Products & Services

Threading taps, cutting tools, and wind power electricity.

Brand Portfolio

EMKAYTOOLS

New Products/Services

The company is focusing on the 'Production of Power through Windmill' as a distinct segment, contributing INR 91.23 Lakhs in H1 FY26.

Market Expansion

The management is in the process of listing the resulting company, ETL, on the NSE Emerge SME platform to unlock value for shareholders.

Market Share & Ranking

The company maintains an established market position in the threading taps segment of the cutting tools industry in India.

Strategic Alliances

The company underwent a Scheme of Arrangement for Demerger with Emkay Tools Limited (ETL), effective November 19, 2024.

🌍 External Factors

Industry Trends

The cutting tools industry is evolving with the automobile sector's shift toward more precise and durable components. The company is positioning itself by separating manufacturing (ETL) from trading (ETCTL) to optimize capital allocation.

Competitive Landscape

Operates in a specialized niche of threading taps with competition from both domestic manufacturers and international tool brands.

Competitive Moat

The company's moat is built on 40+ years of promoter experience and established relationships with auto-ancillary clients. This provides a durable advantage in a segment requiring high technical understanding and reliability.

Macro Economic Sensitivity

Highly sensitive to the cyclical nature of the Indian automobile industry and general industrial production growth.

Consumer Behavior

Demand is driven by B2B industrial requirements rather than individual consumer trends.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to standard industrial manufacturing norms and SEBI Listing Obligations (LODR) for SME-listed entities.

Environmental Compliance

The company contributes to green energy through its windmill power generation segment.

Taxation Policy Impact

Tax expenses for H1 FY26 were INR 0.87 Cr (Current Tax) and a credit of INR 0.02 Cr (Deferred Tax), resulting in an effective tax rate of approximately 26.6% on PBT of INR 3.18 Cr.

Legal Contingencies

The company received NCLT Mumbai approval for its demerger scheme in 2024. No other major pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the successful listing and independent performance of the demerged entity (ETL) and the sustainability of trading margins for ETCTL.