YUKEN INDIA Ltd

Market Capitalisation 660.06Cr

522108
BSE Code

Business Domain Hydraulics & Pumps

52 Week Low-High 486-1247

Holding Period 3-4 years

Rating BUY

OUTVIEW
 Loss making subsidiaries, which provides major revenue, becoming turnaround
 JV with Brigade to pour 160cr of cash for 3 years (this year 50cr) which will improve
the cash flow and make company debt free.
 Capex done since last 5 years lead to capacity expansion by 20% and will drastically
increase the revenue and PAT of the company, operating leverage will play here
Yuken India Ltd. Is a classic story if a turnaround co. Yuken India was founded by
Mr C P Rangachar in 1971. Its main business deals with manufacture of
Hydraulics,pumps,coils,valves,precious castings. The Co has three 100% owned

Subsidries Grotek enterprisesLtd, Yuflow Engineering Ltd, Coretek Engineering

India Ltd and three associate Cos SAI india ltd, Bourton Engineering ltd, Kolben
hydraulics Ltd.
KEY TRIGGERS WHICH MAY LEAD TO RERATING OF THE STOCK

 Turn around of the loss making subsidiaries

Two of Yuken’s subsidiaries were at losses since couple of
years and they were affecting the Cash flow . Management has taken
actions to recover them
 Foundry was earlier located at WhiteField, Bangalore it was built-up
a 6 acre land, but since last couple of years foundry has been
performing poorly and disturbing the co’s PAT,now it has been
made standalone and the plant has been shifted it to Malur, it is
showing good growth and turnover is much better. This FY it should
be in Profit
 Yuflow Engineering Ltd was earlier located in Chennai and had to
be shifted to Bangalore due to facilities issue and labour problem
at Chennai. After shifting to Bangalore its operating as Vertek and
sales have increased and hoping good progress this FY. Yuflow
has a PAT margin of 35% which will add some good amount in
FY19 PAT

 Joint Venture with Brigade

The Co. has a 6 acre land parcel in Whitefield, Bangalore which

is being monetized .The company has entered in a joint venture
with Brigade to develop the property into residential project , Yuken
is supposed to get 40% of total revenue in this deal (160 Cr) for
three years , the Company will use these funds to reduce the debt
and to make cash cycles more better thus making company debt
free and ensure growth
  CAPEX

Capacity utilization is almost at optimum level and company is going to

invest on increasing the capacity. (50 cr over next 3 years)
- As of now majority (97%) revenue comes from Industrial Hydraulics
where company has market share of 80 %. However there is a very big
market for Mobile applications for e.g. Cranes, Earth Movers,
bulldozers, ships, tractors etc. Company has developed technology for
this market and is making efforts to grow revenue from this stream.
Company has already been exporting such products for Mobile
applications to US and been doing well. This can be a major growth
driver going forward.

Q1 ANALYSIS

Q1 f19. Q1 f18. Growth

Sales. 62.43. 47.03. 32.75 %
Ebidta. 5.93. 3.37. 75.96 %
EbidtaPercentage. 9.50 %. 7.15 %.
PBT. 3.63. 1.02. 355%
PAT. 2.55. 0.75. 340 %
EPS. 8.51. 2.51

I believe company has a lot of potential pertaining to present economic

conditions, its fantastic fundamentals and its future growth, i believe the
stock will give more than 5x returns in 3-4 years .

Twitter: @zalimkhajoor
Email: madhuasopa@gmail.com