Yasho Industries Limited

Yasho Industries reported a stable Q4 FY25 with revenue from operations growing 8% YoY to ₹182.8 crores, driven by a 20% YoY volume improvement. The company achieved an EBITDA of ₹35.6 crores, resulting in a 19% EBITDA margin for the quarter, supported by a significant gross margin improvement to 43.1% from 36.9% in the prior year. For the full year FY25, revenue increased over 13% YoY to ₹668 crores, with an EBITDA of ₹118 crores and a 17% margin. However, PAT for FY25 was ₹6 crores, impacted by depreciation and interest from the new Pakhajan plant.

The new Pakhajan production facility has commenced operations and is currently running at approximately 50% capacity utilization, having successfully achieved breakeven. Management is confident in increasing this to 65-70% utilization for the entire FY26, which is a key factor underpinning the projected 40-50% revenue growth. The company has secured certain large, long-term supply orders and sees business interest converting into actual orders, supporting the confidence in future utilization.

The company is currently holding higher-than-usual inventory levels, primarily consisting of finished goods and work-in-process. This buildup is attributed to the need to produce specific quantities for customer approvals and manufacturing data validation. Management expects these inventory levels to normalize by the September quarter, targeting 110-115 days by the end of FY26, which is anticipated to release approximately ₹40 crores of cash and improve working capital efficiency.

Yasho Industries plans a CAPEX outlay of ₹75-100 crores for FY26. This investment will primarily be directed towards capacity expansion at the Pakhajan plant, with 30-40% allocated to R&D initiatives. The company's current gross debt stands at approximately ₹470 crores, and it aims to reduce this to around ₹450 crores by FY26, targeting a debt-to-EBITDA ratio of 3.5. For FY27, the gross debt is projected to further decrease to approximately ₹400 crores.

Despite global economic uncertainties, geopolitical tensions, and resulting price volatility in the chemical industry, Yasho Industries is optimistic about achieving 40-50% revenue growth in FY26. This growth is expected to be driven by increased capacity utilization, improved logistics, and a continued focus on high-margin, value-added products. The company also notes India's favorable position in the global supply chain, which is creating significant opportunities. Management anticipates this growth momentum to extend into FY27.

For the Pakhajan facility, raw material sourcing is largely domestic (70%), with 30% imported, of which 10-15% originates from China. The company's new US warehouse, operational since March '25, is a strategic move to localize supply and improve customer responsiveness in the US market, which currently contributes 20-22% of revenue. Management highlighted their ability to pass on cost changes to customers and effectively manage FOREX volatility through natural hedges and active oversight.