Neetu Yoshi Ltd Management Discussions

1. Economic overview

Global economy

The global economy continued to expand at a moderate pace during 2025, against a backdrop of easing but still-elevated interest rates, softening inflation in most major economies, and heightened trade and geopolitical uncertainty. Multilateral agencies, including the International Monetary

Fund, have consistently characterised global growth as steady but sub-trend, with emerging-market economies — and India in particular — remaining the principal engines of expansion. For a domestically focused manufacturer such as Neetu

Yoshi Limited, the more material influences were input-cost movements (steel, alloys and energy) and global supply-chain conditions, both of which remained broadly manageable through the year.

Indian economy

India retained its position as the fastest-growing major economy. According to the National Statistical Office(NSO, Second Advance Estimates released in February 2026, on the revised 2022-23 base), real gross domestic product is estimated to have grown by 7.6% in FY2025-26, up from 7.1% in the time railway revenue is previous year, with nominal GDP growth of 8.6%. The First Advance Estimates released in January 2026 had placed real growth at 7.4%. Growth was led by a resilient services sector and a recovery in manufacturing, which recorded double-digit expansion, supported by government capital expenditure, softening inflation and firm domestic demand. India is now among the largest economies in the world by nominal output and the third largest by purchasing-power parity.

The policy environment remained decisively pro-manufacturing and pro-infrastructure. Sustained public capital outlay, the "Make in

India" and "Aatmanirbhar Bharat" initiatives, and a continued emphasis on the indigenisation of critical components created a supportive setting for domestic engineering suppliers. This macroeconomic backdrop strong growth, an infrastructure-led public-investment cycle and a policy push towards import substitution aligns closely with Neetu Yoshis positioning as a domestic manufacturer of safety-critical railway components.

2. Industry structure and developments

Indian Railways — scale and modernisation

Indian Railways is the fourth-largest railway network in the world, after the United States, Russia and China, and is the backbone of the countrys mobility and logistics. According to the India Brand

Equity Foundation (IBEF), the network spans over

68,000 route kilometres and runs around 25,000 trains a day. FY2026 was a record year on several operating measures: IBEF reports that the network carried a record 741 crore passengers and achieved all-time-high freight loading of about 1.67 billion tonnes in FY2026, while broad-gauge electrification reached 99.6% as at March 2026. The Railways has also set a freight-loading target of 1,765 million tonnes for FY2027, consistent with its longer-term

"Mission 3000 MT" ambition for 2030.

The sector is in the midst of a multi-year investment and modernisation super-cycle. The Union Budget

2025-26 provided gross budgetary support of 2.52 lakh crore to the Ministry of Railways, taking total planned capital expenditure to about 2.62 lakh crore, with a projected total revenue of 3.02 lakh expected crore the first to cross 3 lakh crore (Ministry of Railways / PIB).

The Budget also set out the induction of 200 Vande Bharat trains, 100 Amrit Bharat trains, 50 Namo

Bharat rapid-rail services and 17,500 general non-AC coaches over the following years. Momentum has since continued: the Union Budget 2026-27 announced a record capital outlay of 2.78 lakh crore for railways, together with seven new high-speed corridors (IBEF / PIB). Flagship programmes such as the National Rail Plan (a future-ready network by

2030), the Eastern and Western Dedicated Freight

Corridors, station redevelopment, the Kavach safety system and rolling-stock indigenisation under "Make in India" continue to drive demand for certified, high-precision components.

Rolling-stock manufacturing is scaling in step.

IBEF notes that India now produces of the order of 30,000 wagons and 1,500 locomotives a year and is increasingly exporting coaches, bogies, locomotives and propulsion systems to more than 16 countries.

This expansion of wagon, coach and locomotive production directly enlarges the addressable market for the castings, machined parts and assemblies that Neetu Yoshi supplies.

Metal castings and railway components

Neetu Yoshi operates within the specialised, regulated segment of the metal-castings and precision-engineering industry that serves railway safety and rolling-stock applications. India is the worlds second-largest producer of castings: according to the Institute of Indian Foundrymen (IIF) and the "Bharat Foundry 360? Insight 2025–2047" report (February 2026), the country produces approximately 12 million tonnes of castings a year close to 11% of global output with ferrous castings accounting for roughly 84% of the total.

The same report values the Indian foundry market at about USD 23.6 billion in 2024, projected to reach around USD 42.5 billion by 2029 (a compound annual growth rate of about 9.4%). Growth is being propelled by automotive demand, infrastructure and, increasingly, railways.

Within this broad industry, the railway-components niche is distinguished by stringent qualification requirements. Approval from the Research Designs and Standards Organisation (RDSO), together with the qualification vendor- processes of the production units such as the Integral Coach Factory (ICF) and the Rail Coach Factory (RCF), acts as a powerful entry barrier: it is time-consuming to obtain, product-specific and inspection-intensive. For an established,certifiedsupplier, however, it translates into durable relationships, repeat orders and pricing that reflectsthe criticality of the components. This structure favours quality-focused, well-capitalised players and works to Neetu Yoshis advantage.

3. Company overview

Neetu Yoshi Limited is a precision-engineering company specialising in the manufacture of critical, safety-rated components and assemblies for Indian

Railways. From its origins in 2020 as a trader in railway-grade raw materials, the Company has progressed through machining and then casting into an RDSO-certified, ISO-accredited manufacturer with an established, fully integrated production base at Bhagwanpur, Uttarakhand, spanning melting, moulding, machining, heat treatment, fabrication and finishing. The Company produces customised ferrous castings and machined assemblies in mild steel, spheroidal graphite (SG) iron, cast iron and manganese steel, from 0.2 kg to 1,000 kg, serving the braking, suspension, propulsion and coupling systems of wagons, coaches and locomotives. As disclosed in the Companys FY2026 investor presentation, operations are now conducted from two units in the Bhagwanpur area the principal Class "A" RDSO-certified plant at Fakkarhedi a second facility at Chudiyala, Mohanpur — taking total installed capacity to 21,287 MTPA. The

Company holds RDSO approval for more than 25 railway safety components and is certified 9001:2015, ISO 14001:2015 and ISO 45001:2018.

During FY2026 it broadened its franchise beyond wagon components into the coach, track and locomotive segments, a shift discussed further below.

4. Business and product-segment review

The Companys addressable market is best understood through the rolling-stock systems it supplies. Historically concentrated on wagon components, the franchise was consciously broadened during FY2026, and four segments now define the business. This diversification reduces dependence on any single product line, improves the quality of the order book and opens larger, higher-value opportunities within Indian Railways.

• Wagon components — the founding segment and the basis of the Companys early RDSO approvals; castings and machined parts for the braking, suspension and coupling systems of freight wagons remain a core, repeat-order business.

• Coach components a new and fast-growing segment. During the year the Company received approval from the Integral Coach Factory, Chennai for its Buffer Assembly for coaches and was included in the ICF vendor directory as a developmental vendor, marking its entry into passenger rolling stock.

• Track components new-generation, precision-engineered track parts aligned with railway-infrastructure modernisation; the Company also secured fresh RDSO registration for Silico-Manganese and Manganese Steel Liners and Wear Plates during the year.

Locomotive components cast and machined parts for locomotives, extending the Companys reach to the propulsion end of the value chain.

The strategic shift is producing measurable results. As disclosed in the Companys FY2026 half-year results and earnings-call commentary, direct sales to Indian Railways rose sharply to 13.24 crore in the first half of FY2026, from 1.83 crore in the corresponding period of the previous year, as the newer coach, track and locomotive lines began to contribute. During the year the Company also received an additional qualification from the Rail

Coach Factory, Kapurthala — a Capacity-cum-Capability Assessment for the Brake Support of the

FIAT bogie, valid until April 2030. Managements stated ambition is to evolve from a component manufacturer into a complete railway-engineering partner, ultimately supplying complete bogies and couplers from its new facility, and, over time, to explore the defence and broader engineering sectors.

5. Financial performance review

FY2026 was a record year. On a consolidated basis, revenue from operations rose 39.3% to 98.35 crore and total income rose 43.5% to 101.59 crore, taking the Company past the 100 crore mark for the first depreciation and amortisation (EBITDA) increased

44.6% to 33.87 crore, with the EBITDA margin firm at 33.34% of total income. Profit before tax grew 49.5% to 30.16 crore and profit after tax grew 52.0% to 25.01 crore, lifting the net-profit margin to 24.63%. Diluted earnings per share stood at

6.91. Momentum strengthened through the year: as disclosed in the results, second-half total income rose 56.61% to 55.63 crore and second-half profit after tax rose 58.61% to 13.47 crore.

Statement of profit and loss (consolidated, crore)

Particulars	FY24	FY25	FY26	YoY %
Revenue from operations	47.33	70.59	98.35	+39.3%
Other income	0.12	0.22	3.24	+1,373%
Total income	47.45	70.81	101.59	+43.5%
Raw material expenses	24.27	33.81	49.15	+45.4%
Employee costs	1.68	3.76	5.72	+52.1%

 

Particulars	FY24	FY25	FY26	YoY %
Other expenses	4.32	9.81	12.85	+31.0%
Total expenditure	30.27	47.38	67.70	+42.9%
EBITDA	17.19	23.43	33.87	+44.6%
EBITDA margin (%)	36.22	33.09	33.34	—
Depreciation	0.80	1.52	2.16	+42.1%
Finance cost	1.20	1.73	1.55	-10.4%
Profit before tax	15.19	20.18	30.16	+49.5%
Tax expense	2.61	3.73	5.15	+38.1%
Profit after tax	12.58	16.45	25.01	+52.0%
PAT margin (%)	26.50	23.25	24.63	—
EPS ( )	7.39	5.84	6.91	+18.3%

The quality of the result is notable. Revenue growth was broad-based, drawn from both a deeper relationship with Indian Railways and an expanding private-sector order book, while the EBITDA margin was sustained above 33% despite the costs of time. Earnings before interest, scaling. Raw-material cost as a share of revenue remained broadly stable, and finance absolute terms as borrowings were repaid during the year. The Company attributes its industry-leading margins to a disciplined focus on the bottom line, supported by structural cost advantages discussed in Section 7.

Balance sheet (consolidated, crore)

</tr>

Particulars	FY24	FY25	FY26
Shareholders funds	19.74	44.60	137.25
Non-current liabilities	8.32	6.22	0.02
Current liabilities	9.07	7.43	3.86
Total equity & liabilities	38.50	63.51	147.68
Non-current assets	23.88	40.16	90.35
Current assets	14.61	23.35	57.33
Total assets	38.50	63.51	147.68

The balance sheet was transformed during the year by the July 2025 initial public offering, which raised

77.04 crore. Shareholders funds rose from 44.60 crore to 137.25 crore, and total assets expanded from 63.51 crore to 147.68 crore. Non-current liabilities fell to just 0.02 crore as borrowings were repaid, leaving the Company effectively debt-free at year-end. As disclosed in the FY2026 results, approximately 57.67 crore of the IPO proceeds had been utilised by 31 March 2026, principally towards the new manufacturing facility, with the balance held in deposits pending deployment.

Cash flow (consolidated, crore)

Particulars	FY24	FY25	FY26
Net cash from operating activities	7.67	12.10	4.03
Net cash used in investing activities	(16.22)	(16.94)	(58.81)
Net cash from financing activities	9.57	3.36	56.11

Operating cash flow of 4.03 crore was lower than the reported profit, reflecting the working-capital investment that typically accompanies rapid growth higher inventories and receivables as volumes scaled. Investing outflows of 58.81 crore comprised capital expenditure on the new facility together with the placement of unutilised IPO proceeds in term deposits, while financing inflows of 56.11 crore reflect the net IPO proceeds less the repayment of borrowings. Managements stated priority for the coming year is to convert the enlarged asset base into operating cash as the new capacity is commissioned and utilisation rises.

6. Key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the key financial ratios are set out below, with explanations for movements of 25% or more. Several ratios moved materially in FY2026 for a common reason: the mid-year infusion of 77.04 crore of IPO equity, which enlarged the capital base well ahead of the full deployment of proceeds and the repayment of debt.

Ratio	FY25	FY26	Change	Explanation (where change 25%)
EBITDA / operating margin (%)	33.09	33.34	+0.8%	Broadly stable; sustained cost discipline.
Net profit margin (%)	23.25	24.63	+5.9%	Margin expansion from operating leverage and cost efficiency; within threshold.
Return on net worth / RoE (%)	36.89	18.22	-50.6%	Net worth rose from 44.60 cr to 137.25 cr on the IPO, while proceeds were only partly deployed during the year; PAT nonetheless grew 52%.
Return on capital employed (%)	37.62	22.47	-40.3%	Capital employed expanded sharply post-IPO and after near-elimination of debt, ahead of full deployment into the new facility. profitability; the procurement
Current ratio (times)	1.96	5.96	+372%	Unutilised IPO proceeds held as current investments/ deposits raised current assets, while current liabilities fell as borrowings were repaid.
Debt-equity ratio (times)	0.31	0.03	Debt repaid	Borrowings repaid from IPO proceeds and internal accruals; Company effectively debt-free at year-end.
Interest coverage (times)	12.63	20.5	+62%	Higher operating profit combined with lower finance cost.

7. Operational review and cost structure

The Company operates from an established, fully integrated manufacturing base in Uttarakhand, now comprising two units with combined installed capacity of 21,287 MTPA. The integration of melting, moulding,CNCmachining,heattreatment,fabrication and in-house testing under one roof allows end-to-end production of complete metallurgical products with minimal external dependence, and the value-addedstagesofmachining,assemblyandfabrication support premium customer engagement and higher margins. Investment from the IPO proceeds is being directed towards further automation high-capacity CNC and vertical machining centres, in-house heat treatment and ladle pre-heating systems — to lift capacity and build operational redundancy.

The most significant capacity development of the year is the new bogie-manufacturing facility. After review, the Board relocated the proposed plant from Kanpur (Uttar Pradesh) to Haridwar (Uttarakhand) a larger, dedicated site close to the existing operations to benefit from better inspection logistics with RDSO, lower power costs and reduced logistics outlay. As disclosed by the Company, the new facility is scheduled to commence operations in

June 2026 and is central to the plan to manufacture complete bogies and couplers.

A distinctive feature of the Companys performance is its cost structure, which underpins its profitability. As set out in its FY2026 investor communication, the Company manages the business with a relentless focus on the bottom line and benefits structural cost advantages: fiscal available to its manufacturing operations, which supportpost-tax of raw material as steel scrap from Indian Railways, securing quality-assured input at competitive cost; competitive electricity tariffs in Uttarakhand, an important advantage for an energy-intensive melting-and-casting operation; and low inbound freight on key inputs such as moulding sand. Together with the operating leverage that comes with scale, these factors have enabled the Company to sustain profit-after-tax margins of around 25% while investing in new capacity.

8. Opportunities and threats

Opportunities

• Railway capital-expenditure super-cycle — record and rising budgetary allocations ( 2.78 lakh crore in the Union Budget 2026-27, per PIB), the National Rail Plan, dedicated freight corridors and station redevelopment sustain multi-year demand for certified components.

• Indigenisation and Make in India — a clear policy preference for domestic sourcing of safety-critical parts favours RDSO-approved manufacturers.

• Product and segment diversification the move into coach, track and locomotive components, and the planned entry into complete bogies and couplers, materially enlarges the addressable market and lifts value per unit.

• Capacity headroom the new Haridwar facility and expanded installed capacity position the Company to convert its order pipeline into revenue.

• Adjacent and export markets over time, opportunities in the defence and broader engineering sectors, and in railway-component exports, offer additional avenues for growth.

Threats

Customer concentration Indian Railways and its ecosystem account for the overwhelming majority of revenue; changes in tendering, procurement policy or offtake could affect the fromseveral order book and cash flows.

• Sector and policy dependence — the Companys fortunes are tied to railway capital spending and its timely execution.

• Input-cost volatility movements in steel, alloys, scrap and energy prices can affect margins, notwithstanding the Companys cost advantages.

• Execution and ramp-up risk — scaling capacity, commissioning the new facility on schedule and obtaining approvals for new products all carry execution risk.

• Competition and qualification while RDSO approval is a barrier, competition from other qualified vendors and the time required to certify new products can constrain growth.

9. Risks, concerns and mitigation

The Company operates a risk-management approach appropriate to a fast-growing, specialised manufacturer. The principal risks, and the

Companys responses, are summarised below.

• Customer-concentration risk — addressed by diversifying products across the wagon, coach, track and locomotive segments, deepening direct relationships with Indian Railways, and expanding the private-sector order book.

• Raw-material and cost risk — mitigated by cost-efficient scrap procurement (including from Indian Railways), locational advantages in power and freight, and disciplined cost control.

• Execution and capacity risk — managed through phased capital expenditure, the choice of a site close to existing operations, and investment in automation and in-house testing.

• Regulatory and quality risk — addressed by a process-driven approach to RDSO and production-unit approvals and by maintaining ISO 9001, ISO 14001 and ISO 45001 certifications.

• Capital-allocation and liquidity risk — mitigated by a debt-free balance sheet, prudent deployment of IPO proceeds and a focus on converting the asset base into operating cash.

10. Internal control systems and their adequacy

The Company maintains an internal control system commensurate with the size, scale and nature of its operations, comprising clearly defined policies, delegated authorities and documented processes designed to safeguard assets, ensure the accuracy and completeness of accounting records, prevent and detect fraud and error, and ensure compliance with applicable laws and regulations. Internal controls are supported by periodic internal audits, management reviews and a continuing programme of process improvement, and their adequacy is reviewed by the Audit Committee of the Board. Following the Companys transition to a listed entity, controls and compliance processes have been further strengthened, including the appointment of a Company Secretary and Compliance Officer during the year.

11. Human resources and industrial relations

The Company regards its people as central to its success. It invests in structured training, skill development and workplace-safety initiatives, and fosters a culture of teamwork, continuous learning and accountability. This has helped the Company attract and retain skilled professionals across metallurgy, machining, quality and management functions, supporting its rapid growth. Industrial relations remained cordial throughout the year. The Companys headcount and related disclosures are set out in the Boards Report and the financial statements.

12. Environment, health, safety and sustainability

Environmental stewardship and occupational health and safety are integral to the Companys operations, reflected in its ISO 14001:2015 (environmental management) and ISO 45001:2018 (occupational health and . The Companys certifications safety) location in Uttarakhand, with access to competitive and increasingly cleaner power, supports energy-efficient operations, and its investment in modern furnaces, in-house heat treatment and process controls is intended to improve material yield and reduce waste. The Company remains committed to responsible manufacturing, the safety of its workforce and continuous improvement in its environmental performance as it scales.

13. Outlook

The Company enters FY2027 with strong momentum and clear visibility. As disclosed in its FY2026 results and earnings call, management has guided to revenue of approximately 210 crore to 220 crore for FY2027, with profit-after-tax margins expected to remain around 25% as the new Haridwar bogie facility ramps up from June 2026, and has indicated a peak revenue potential of approximately 340 crore to 350 crore across the existing and new plants combined. This outlook is underpinned by a strong order book (in excess of 160 crore, per the Company), an expanding set of RDSO and production-unit approvals, and a supportive policy and investment environment for Indian Railways. The Companys priorities are to expand capacity in a disciplined way, deepen its partnership with Indian Railways and broaden its private-sector, defence and engineering opportunities, continue developing critical, high-value products, and embed strong governance, quality and environmental practices across the organisation.

Material developments after the reporting date

For completeness, and as disclosed to the stock exchange, developments after 31 March 2026 include the Boards approval of a preferential issue of convertible warrants aggregating up to approximately 274.89 crore (of which an initial tranche of approximately 27.48 crore was received) and fresh orders, including a cast-steel-block order of approximately 14.76 crore and a domestic order for cast-steel bearing plates of approximately 7.39 crore. These are subsequent events; their terms and amounts, and their treatment in the financial statements, should be confirmed against the relevant intimations and the audited accounts.

Cautionary statement

Statements in this Management Discussion &

Analysis describing the Companys objectives, projections, estimates, expectations or outlook may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, as they depend on economic conditions, government policy, demand and supply, input-cost movements, execution and other factors, several of which are beyond the

Companys control. The Company undertakes no obligation to publicly update or revise any forward-looking statement on the basis of subsequent developments, information or events. Financial figures cited are from the Companys audited results for FY2026 and prior years; macroeconomic and industry data is from the sources named in the text, and while believed to be reliable, has not been independently verified by the Company.