💰 Financial Performance

Revenue Growth by Segment

The Manufacturing of Taps & Cutting Tools segment generated INR 11,688.80 lakh in FY 2024-25. For the half-year ended September 30, 2025, segment revenue reached INR 6,266.88 lakh, representing a 15.91% growth compared to INR 5,406.91 lakh in the same period of the previous year.

Geographic Revenue Split

The company operates from a single location in Nagpur, Maharashtra. As per the segment reporting, there are no separate geographical segments, meaning 100% of revenue is derived from its domestic operations in India.

Profitability Margins

ETL maintained high profitability in FY 2024-25 with a Net Profit Margin of 38.17% (INR 4,448.64 lakh PAT on INR 11,654.99 lakh gross revenue). For H1 FY26, the PAT margin stood at 38.81% (INR 2,435.66 lakh PAT on INR 6,275.00 lakh total income), showing a slight improvement in efficiency.

EBITDA Margin

The EBITDA margin for FY 2024-25 was 52.88%, with a PBDIT of INR 6,162.74 lakh. This high margin reflects strong value-add in the specialized cutting tools manufacturing process.

Capital Expenditure

As of March 31, 2025, the company held segment assets of INR 8,624.46 lakh in its manufacturing division. Total assets grew from INR 7,797.49 lakh in September 2024 to INR 11,044.93 lakh by March 2025, indicating significant asset allocation following the demerger.

Credit Rating & Borrowing

Finance costs are minimal at INR 9.16 lakh for FY 2024-25, representing only 0.08% of revenue. Interest costs for H1 FY26 further decreased to INR 0.71 lakh from INR 5.97 lakh YoY, suggesting the company is largely debt-free or utilizing internal accruals.

⚙️ Operational Drivers

Raw Materials

The documents specify 'Cost of materials consumed' which accounted for INR 1,224.40 lakh (10.5% of revenue) in FY 2024-25 and INR 1,003.41 lakh in H1 FY26.

Import Sources

Not explicitly disclosed in the provided documents; however, operations are centralized at the Nagpur, Maharashtra facility.

Capacity Expansion

Current segment assets for manufacturing are valued at INR 8,624.46 lakh. While specific unit capacity is not listed, the 15.9% YoY revenue growth in H1 FY26 indicates an increase in production throughput.

Raw Material Costs

Raw material costs were INR 1,224.40 lakh for FY 2024-25. In H1 FY26, material costs were INR 1,003.41 lakh, which is 16% of total income, compared to 18.5% in H1 FY25, indicating improved procurement efficiency or better product pricing.

Manufacturing Efficiency

Manufacturing expenses as a percentage of revenue were 21.2% in H1 FY26. The company achieved a 23.45% YoY increase in Profit Before Tax (INR 3,310.48 lakh vs INR 2,681.71 lakh), outpacing revenue growth and indicating high operational leverage.

Logistics & Distribution

Other expenses, which include distribution, were INR 295.03 lakh in H1 FY26, representing 4.7% of total income.

📈 Strategic Growth

Expected Growth Rate

16%

Growth Strategy

Growth is being driven by the successful demerger of the 'Tools Business' from Emkay Taps and Cutting Tools Limited (effective Nov 19, 2024). This allows ETL to operate as a specialized entity focused solely on high-margin Taps and Cutting Tools. The strategy involves leveraging the existing Nagpur manufacturing base to increase market penetration, as evidenced by the 15.9% YoY revenue increase in the first half of FY26.

Products & Services

Manufacturing and sale of industrial Taps and Cutting Tools used in precision engineering and machining.

Brand Portfolio

Emkay Tools.

New Products/Services

Not specifically detailed, though the company is focused on the 'Manufacturing of Taps & Cutting Tools' segment.

Market Expansion

The company is currently consolidating its position following the demerger, focusing on its primary manufacturing line in Nagpur.

Strategic Alliances

The company underwent a Scheme of Arrangement for Demerger with Emkay Taps and Cutting Tools Limited, which was approved by the NCLT on October 28, 2024.

🌍 External Factors

Industry Trends

The industry is shifting toward high-precision and automated manufacturing, which increases demand for high-quality cutting tools. ETL's 53.24% Return on Net Worth indicates it is well-positioned to capture this high-value demand.

Competitive Landscape

The company competes in the industrial tools market, specifically in the taps and cutting tools sub-segment.

Competitive Moat

ETL's moat is built on specialized manufacturing expertise in the Taps and Cutting Tools niche, evidenced by its 38% net margins. This is sustainable due to the technical precision required in tool manufacturing and the established infrastructure in Nagpur.

Macro Economic Sensitivity

The company is sensitive to industrial GDP growth; the 23.45% growth in PBT suggests high sensitivity to manufacturing sector demand.

Consumer Behavior

Industrial customers are increasingly seeking tools that offer higher durability and precision to reduce downtime in automated production lines.

Geopolitical Risks

Trade barriers on specialized steel or high-speed steel imports could impact raw material costs, as these are essential for cutting tool production.

⚖️ Regulatory & Governance

Industry Regulations

The company operates under the Companies Act, 2013 and follows Accounting Standard 17 for segment reporting and IND AS for measurement principles. It must comply with industrial manufacturing standards and MIDC regulations in Nagpur.

Taxation Policy Impact

The effective tax rate for FY 2024-25 was 25.19% (INR 1,501.00 lakh tax on INR 5,958.35 lakh PBT).

Legal Contingencies

The company disclosed the impact of pending litigations on its financial position in its Standalone Financial Statements, though specific case values were not detailed in the summary reports.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the transition period following the demerger from the parent company. Any failure to maintain the historical client base of the demerged entity could impact revenue by up to 100% as it is the sole business line.

Geographic Concentration Risk

100% of manufacturing is concentrated in Nagpur, Maharashtra, creating a high risk of localized operational disruption.

Third Party Dependencies

The company relies on third-party suppliers for raw materials (10.5% of revenue cost), though specific vendor names are not disclosed.

Technology Obsolescence Risk

The cutting tools industry is subject to changes in metallurgy and coating technologies; failure to upgrade manufacturing processes could lead to loss of market share.

Credit & Counterparty Risk

Trade receivables stood at INR 2,862.49 lakh as of March 31, 2025, representing 24.5% of annual revenue, indicating a significant credit exposure to industrial clients.