YUKEN - Yuken India

📊 NSE: YUKEN 🏢 Engineering 📅 Last Updated: 12/14/2025 15:21

💰 Financial Performance

Revenue Growth by Segment

Net segment revenue for H1 FY26 was INR 217.08 Cr, a decline of 3.89% compared to INR 225.86 Cr in H1 FY25. The Hydraulic business segment revenue was INR 188.02 Cr in H1 FY26, down 3.9% YoY from INR 195.73 Cr. The Foundry business segment revenue was INR 45.96 Cr in H1 FY26, a slight decrease of 0.9% from INR 46.40 Cr in H1 FY25.

Geographic Revenue Split

Not disclosed in available documents, though export sales are identified as a key growth driver for future PBILDT margin improvement.

Profitability Margins

The company's PBILDT margin has improved consistently over the last three years, rising from 9.12% in FY23 to 10.75% in FY24, and reaching 12.14% in FY25. This improvement is attributed to reduced raw material costs and enhanced manufacturing efficiency.

EBITDA Margin

PBILDT margin stood at 12.14% for FY25, representing a YoY increase of 139 basis points from 10.75% in FY24. Core profitability is being driven by a significant reduction in casting rejection levels from 30-35% to 12-15%.

Capital Expenditure

The company has a total group-level capital expenditure plan of INR 162.55 Cr. As of June 30, 2024, approximately 28-30% (INR 45.51 Cr to INR 48.77 Cr) of this capex has been incurred. The expansion is funded by cash accruals and a prior equity infusion of INR 62.90 Cr from the parent company.

Credit Rating & Borrowing

The company maintains a comfortable capital structure with an overall gearing of 0.34x as of March 31, 2025, compared to 0.29x in FY24. Total borrowings as of September 30, 2025, stood at INR 111.82 Cr (INR 31.20 Cr non-current and INR 80.62 Cr current).

⚙️ Operational Drivers

Raw Materials

Specific raw material names are not listed, but the foundry business relies heavily on iron castings and related inputs. Raw material cost reductions were a primary driver for the margin expansion to 12.14% in FY25.

Capacity Expansion

The ongoing INR 162.55 Cr capex plan is designed to expand capacity for both domestic and export markets, specifically targeting products for the construction and agriculture segments. 28-30% of the project was completed by mid-2024.

Raw Material Costs

Raw material costs have trended downwards, contributing to the PBILDT margin improvement to 12.14%. The company is focused on reducing waste, specifically lowering foundry rejection rates from historical highs of 35% down to 12-15%.

Manufacturing Efficiency

Manufacturing efficiency is measured by the foundry rejection rate, which has been successfully reduced from 30-35% to 12-15%, directly translating to higher margins.

📈 Strategic Growth

Expected Growth Rate

Not disclosed

Growth Strategy

Growth will be achieved through a group-level capex of INR 162.55 Cr to manufacture export-oriented products and meet domestic demand in the construction and agriculture sectors. The strategy is supported by a preferential allotment of 5,84,000 shares to the promoter, Yuken Kogyo Company Limited, at a premium of INR 1,016 per share (totaling ~INR 59.92 Cr) on July 31, 2025.

Products & Services

The company sells hydraulic equipment including pumps, valves, and power packs (Hydraulic business) and iron castings (Foundry business).

Brand Portfolio

Yuken.

New Products/Services

The company is developing new products suitable for export markets as part of its INR 162.55 Cr capex plan.

Market Expansion

Targeting increased export sales and deeper penetration into the Indian construction and agriculture machinery segments.

Strategic Alliances

The company maintains a strong strategic alliance with its promoter and technical collaborator, Yuken Kogyo Company Limited, Japan, which recently increased its stake via preferential allotment.

🌍 External Factors

Industry Trends

The industry is seeing a shift toward higher efficiency hydraulic systems and increased demand for high-quality castings in global supply chains, which Yuken is positioning for through its export-oriented capex.

Competitive Moat

The company's moat is built on its technical collaboration with Yuken Kogyo (Japan), providing access to advanced hydraulic technology and a global brand reputation, which is sustainable given the parent's ongoing financial and technical support.

Macro Economic Sensitivity

The company is highly sensitive to the growth of the domestic construction and agriculture sectors, which drive the demand for hydraulic systems.

⚖️ Regulatory & Governance

Industry Regulations

The company must comply with manufacturing standards for hydraulic equipment and foundry emissions, though specific regulatory costs are not detailed.

Taxation Policy Impact

The company reported a deferred tax liability of INR 11.10 Cr as of September 30, 2025.

Legal Contingencies

The company has disclosed the impact of pending litigations on its financial position in Note 37 of its standalone financial statements for the year ended March 31, 2025. Specific case values were not provided in the summary.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timely completion and stabilization of the INR 162.55 Cr capex project, which is currently in a nascent stage (28-30% complete).