Thejo Engineering FY26: A Company Building Rubber to Riches, But Hitting Its Own Margins
General information and entertainment, not investment advice. The author is not a SEBI-registered adviser or research analyst. No recommendation, no promised returns. Markets carry risk including loss of capital. Figures may not be current. Consult a registered adviser before acting.
1. At a Glance
Thejo Engineering closed FY26 with ₹632 Cr in revenue and ₹49 Cr in PAT—growth that keeps the headline tidy, but margins that are whispering a story the stock price seems not to have heard yet.
The company sits at 32.7x forward P/E on ₹1,546 per share (referenced 5 June 2026), against a peer median of 29.9x. That’s a 10% premium for a company whose ROE (16%) and ROCE (19%) are respectable but hardly exceptional for the machinery and material-handling space.
The elephant in the room is what happened to operating margins. FY24 saw 18% OPM; FY26 handed in 13%. Orders remain healthy at ₹326 Cr as of December 2025, but a ₹40 Cr capex expansion (approved August 2025) is eating into working capital, and Thejo Australia (now 100% owned post-March 2025) is still dragging on profitability after the mining slowdown. The company is burning cash—₹10 Cr net cash outflow in FY26, the first negative year since FY20.
The valuation is asking investors to pay for growth and geographic expansion. The market will decide whether that’s a down payment on a turnaround or a premium on caution.
2. Introduction
Thejo Engineering, founded in 1986, has spent four decades building itself from a conveyor-belt service shop into an integrated engineering solutions company. The evolution is genuine: today, 57% of revenue comes from integrated services (installation, O&M, consulting) and 43% from engineered products (rubber liners, mill components, specialty machinery).
The model works in boom times. Mining, cement, steel, and ports all buy what Thejo makes—dust suppressors, rubber liners for mills, conveyor monitoring kits, and bespoke autoclaves. The company serves 600+ customers across six countries. India is the bread-and-butter; exports now account for ₹189 Cr (30% of FY26 revenue).
But FY26 was a test of that model. Australia entered a mining slowdown; India’s cement sector slowed in H2FY26; and Thejo’s own expansion pushed hiring and capex spend forward. The result: revenue growth of 14% year-on-year, but PAT growth of just 2%. Margins compressed 500 basis points from the operating line.
The company has no debt stress—net cash of ₹61 Cr as of December 2025, gearing below 0.1x, and interest coverage above 12x. But the cash burn in FY26 is the first warning sign in a decade that Thejo’s leverage of asset-light services may not scale as seamlessly as hoped when capex picks up.
3. Business Model: WTF Do They Even Do?
Think of Thejo as solving three problems for mining, cement, and power plants: (1) How do we move bulk material without it jamming or wearing out equipment? (2) How do we protect vessels and pipes from corrosion and abrasion? (3) How do we keep all of it running 24/7 without a shutdown?
Bulk Material Handling (roughly 35–40% of revenue): Thejo sells conveyor components—belting repair kits, wear liners, skirting, dust suppressors. It audits client systems, splices belts on-site, and runs O&M contracts that pay out annually. A mining client might sign a rate contract for ₹5–10 Cr a year; Thejo staffs a site and keeps the conveyor fed.
Mineral Processing & Corrosion Protection (35–40% of revenue): Mill liners for grinding circuits, screen panels, rubber membranes, and hoses go into the product mix; lining services—applying rubber to tanks and pipes to stop acid and abrasion—drive recurring work. A large steelworks might spend ₹2–3 Cr annually on liner replacement and maintenance.
Specialty Products & Machinery (10% of revenue): Custom autoclaves, curing presses, hose-building machines. High-ticket, long lead, import-substitution plays. A tire maker or rubber processor becomes a captive client for life.
The business is sticky. Once installed, a conveyor system or a lined reactor vessel needs Thejo’s teams to keep it breathing. That creates a revenue floor and a renewal window every 3–5 years.
The competitive moat, however, is narrower than it looks. Raw materials are commodity rubber and steel; the IP sits in application engineering and service networks. A well-funded player with local teams (or a Bridgestone) can enter. Thejo’s edge is scale, 25+ patents, and the DSIR-approved R&D center that lets it claim import substitution.
The margin squeeze, however, hints at the real problem: Thejo is moving up the value chain (into specialty machinery and O&M contracts), which sounds good until you realize it also means longer project cycles, higher headcount costs, and longer receivables. FY25 debtor days were 89; FY26 hit 100. The company is lending out money to clients and calling it working capital.
4. Financials Overview
Figures are consolidated, in ₹ crore, annualized basis.
Q3 FY26 posted ₹162 Cr sales (reported Q3FY26) and ₹8 Cr PAT, a drop-off from Q3FY25 (₹135 Cr sales, ₹12 Cr PAT). Operating margin compressed to 11% from 18%. The culprit: Thejo Australia’s ongoing weakness (mining slowdown in Western Australia) and a step-up in depreciation from the new asset base coming online.
9M FY26 revenue landed at ₹451 Cr (versus ₹400 Cr in 9M FY25, per CRISIL note), but PAT fell to ₹32 Cr from ₹36 Cr. The trajectory into FY26 Q4 is upward (the capex is activating), but the company telegraphed that FY26 will show a 3% revenue contraction at consolidated level, primarily due to Thejo Australia’s drag.
From the Investor Presentation (February 2026):
Thejo Australia was acquired 100% by March 2025, ending Bridgestone’s 10% stake. The subsidiary accounted for ₹50–60 Cr of revenue pre-slowdown. It is now a margin sink; the order book rebuild is underway. Management guided that once Australia stabilizes, group EBITDA margins will recover to 16–17%.
5. Valuation Discussion: Fair Value Range (Educational Only)
What follows is a walkthrough of how three valuation methods work, using this company’s numbers as the example — not a target, not a forecast, not advice.
Method 1 (P/E Multiple): Annualized FY26 EPS stands at ₹45.4 (full-year, no Q4 multiplication needed). Peers in the industrial products and machinery space trade a range of 29x to 73x. Thejo’s peer set includes Honeywell Auto (57x), Syrma SGS (74x), Jyoti CNC (43x), and Tega Industries (97x). A band of 35–50x applied to ₹45.4 EPS produces a range of ₹1,589–₹2,270.
