Delta Investment Advisors

Hy-Tech Engineers Limited

Incorporated in 1978, Hy-Tech Engineers manufactures hydraulic fittings, & precision steel connectors that join hoses and pipes in high-pressure oil circuits. It supplies over 11,000 SKUs across DIN, JIC and ORFS standards to OEMs in construction machinery (23%), farming (23%) and automotive (9%). Of its six plants in Maharashtra and Madhya Pradesh, the Nashik unit captively forges steel blanks for the other five. Exports were 29% of FY26 revenue, with 189 cr. Promoter Hemant Mondkar, an IIT Bombay engineer, has been with the company since 1979 and the family holds 98% pre-offer.

Auditor : G. M. Kapadia & Co. BRLM : New Berry Capitals Private Limited

Disclaimer - Delta Partners (public market division under Dexter Capital) is not a SEBI registered Investment Advisor and this report does not constitute a recommendation but is only prepared for educational purposes. We (our team members including our directors) may or may not apply to IPO. Queries: shubham@deltainvest.in

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Hy-Tech makes hydraulic fittings for OEMs in a market where over 90% sits with unorganised MSMEs and the designs are open international standards, leaving little edge beyond its backward integration into forging. Revenue growth over the last 4 years had been just ~9% CAGR with the recent growth largely due to volumes possibly led by transitory end-industry push. The company barely has any pricing power in this market and there are no exciting capex plans to pull growth in near term. Promoter Hemant Mondkar is already 78 and the company might have to evaluate succession planning post his term ending in 2031. At 10.9x EV/EBITDA and 22.3x P/E the IPO valuation is not demanding, but a business with a limited competitive edge and growth outlook, does not offer enough to warrant it.

One can expect good listing gains as per current GMP ~72% (26 Aug 2026), provided the GMP sustains.

Hy-Tech makes hydraulic fittings and sells mainly to OEMs. The CARE Report places over 90% of the industry with unorganised and MSME players. The designs are published international standards (DIN 2353, JIC, ORFS, SAE J514), there is no process IP, and entry needs little more than a couple of CNC lathes. It also competes with global integrated players like Parker Hannifin, Eaton, Bosch Rexroth and Manuli, which sell fittings bundled into the pumps, valve blocks and hose assemblies they supply. When an OEM buys a complete hydraulic system from one of them, the fittings come specified inside that package and Hy-Tech never gets to quote for them.

The company grew 17% in FY25 and 17% in FY26 but the growth prior to that was flat. Its 4 yr growth has been just 9%. Growth of other unlisted industry players has also been in single digits. Mercury fittings grew at 2.4% CAGR, Hyloc Hydrotechnic at 7.4% and Hydrokrimp at 7.7% over FY22-25.

Growth came from capacity and volume. Production rose from 248 lakh pieces in FY24 to 327 lakh in FY26 as capacity went from 366 to 483 lakh, while realisation moved only from 53.26 to 55.86 of rupees a piece. The farming segment was strong in FY26, up 42.7% to 43.2 cr and 22.83% of revenue, helped by domestic tractor sales rising from 9.40 lakh units in FY25 to a record 11.60 lakh in FY26 (TMA). That record owes much to the September 2025 GST cut on tractors from 12% to 5%, an above-normal monsoon and state subsidy schemes, so FY27 growth will be measured against a base the industry itself does not expect to repeat.

The market splits into OEM supply and aftermarket replacement, where the aftermarket sizes around 35-40% demand globally (Global Growth Insights and Facts and Factor). India likely sits at the higher end given how long equipment stays in service here. Hy-tech and other organized players are barely present in it and it is generally hard for an organised manufacturer to enter. A mechanic with a machine down buys whatever is in stock nearby, so winning requires a large number of local stocking points, freight is material on a part selling this cheap, and small workshops also buy on informal credit from local suppliers. Hy-Tech reaches it through 7 distributors across 4 states, generating 15.2 cr or 11.4% of domestic revenue. None of the fresh issues are allocated to building distribution.

The customer base is OEM-led, with the company listing Dynapac, Eicher, Hyundai Engineering and Construction, Escorts, Mahindra, TAFE, ASB, Sonalika, JCB and Wirtgen among its clients. Direct customers grew from 144 in FY24 to 170 in FY26. Revenue from repeat customers rose from 91.20% in FY24 to 95.20% (FY25) and 95.10% (FY26). Its top 10 customers have been associated with the company for an average of more than 3 years, against an operating history of 48 years.

Margins sit at the upper end of the peer group. Hy-Tech is backward integrated through its Nashik unit, which forges steel blanks for all five fitting plants at 3,120 MTPA, with utilisation rising from 49.85% in FY24 to 67.53% in FY26. Its gross margin of 65% in FY25 compares with Mercury Fittings at 49% and Hydrokrimp at 51%, and its EBITDA margin of 22% against their 14% and 9%. Hyloc Hydrotechnic is the one peer that keeps pace, matching on gross margin and earning 24% at EBITDA, on revenue of 45 cr against Hy-Tech's 161 cr.

Hy-Tech was incorporated in December 1978 by two other families. Hemant Mondkar, an IIT Bombay mechanical engineer who trained in Just-In-Time methods at AOTS Osaka in Japan, joined as a director a month later and took his first shares in December 1980. He bought the founding families out in stages between 1987 and 2004 and his own brother in December 2020, taking the family to 97.99%. Managing Director pay was raised 35% to 2.00 cr and Surekha Mondkar's by 99% to 0.75 cr from April 2026, against FY26 profit of 22.6 cr. He now sells 16.6% of his holding for 47.6 cr, cutting his stake from 64.81% to 47.61%, with family holding falling to 71.23%.

Hemant Mondkar, 78, is Chairman and Managing Director on a fresh five-year term running to 2031, and Surekha Mondkar, also 78, is a Whole-time Director on the same term. The RHP discloses no succession plan. Son Ashwin, 51, is a Non-Executive Director with a background in technology and financial services at Capital One and IBM Global Services. He lives in Virginia, draws no pay from the Indian entity and sells nothing in the offer. The other son was bought out by the company in September 2020 for 4.91 cr and holds nothing today. The operating layer has instead been hired from outside, with the COO and CFO both elevated in December 2024.

The US market, 21.42% of FY26 revenue, is worked through Hy-Tech USA Inc., a promoter group entity where Ashwin Mondkar is a director, which has held exclusive rights for North America, Canada and Brazil since April 2022. Most of it is not a related party sale: Hy-Tech invoices the end customers directly for 33.9 cr and pays Hy-Tech USA a commission of 1.86 cr for sourcing them. Only 3.54% of revenue is billed to Hy-Tech USA itself.

Capex was 28.6 cr in FY24, 15.4 cr in FY25 and 11.5 cr in FY26, an average of 18.5 cr a year. Of the 60.0 cr fresh issue, 30.0 cr goes to machinery, largely CNC turning centres, thread rolling machines and CNC vertical machining centres across three plants, taking capacity from 483 to 670 lakh pieces, a 39% increase. The spend is spread over two years at 5.0 cr in FY27 and 25.0 cr in FY28, which sits within its historical capex range rather than being a step up.

At an IPO ask valuation of 10.9x EV/EBITDA and 22.3x P/E, the valuation is not very demanding, but a business with a limited competitive edge, growing 9% over four years, does not offer enough to warrant it.

Business

Hy-Tech manufactures hydraulic fittings, the precision steel connectors that join hoses and pipes in high-pressure oil circuits. These go into excavators, tractors, commercial vehicles and injection moulding machines, where a leak means downtime. It has been in this single line of work since 1978 and reported FY26 revenue of 189.4 cr against 137.7 cr in FY24. Its accounts carry one reportable segment.

The portfolio runs to over 11,000 SKUs across four standards. DIN metric fittings follow the German standard used across European and most Indian equipment, JIC flared and flareless follow the American standard, ORFS uses a flat face and rubber O-ring preferred where vibration is high, and conversion fittings adapt one thread standard to another. Realisation works out to 55.86 of rupees per piece, so catalogue breadth matters more than any single product.

End use is led by construction machinery at 22.94% of FY26 revenue and farming at 22.83%, followed by automotive at 9.05%, hydraulic systems at 5.09% and injection moulding machines at 3.98%. Railways and defence, entered on the back of an IRIS certification and DRDO approval, contributed 1.45%. A further 34.37% sits in an unidentified bucket the RHP attributes to distributors, though distributors account for only 11.58% of revenue.

Sales run through 170 direct customers and 7 distributors, with direct sales at 88.42% of revenue. Repeat customers generated 95.10% of FY26 revenue and the top 10 contribute 45.32%, down from 48.72% in FY24, with an average relationship of more than 3 years against 48 years of operating history. Domestic markets are 70.63% of revenue and exports 29.37%, of which the USA alone is 21.42% and Belgium 6.14%.

Hy-Tech USA Inc. has held exclusive distribution rights for North America, Canada and Brazil since April 2022. Direct sales to it were 3.54% of FY26 revenue and customers it sourced added 33.9 cr, together making up the full 40.6 cr of USA revenue. Commission paid was 1.86 cr in FY26, up 32% over two years, and the rate is not disclosed.

Production runs across six plants, four in Maharashtra and two in Madhya Pradesh, with installed capacity of 483 lakh pieces a year for fittings and 3,120 MT for forgings. The Nashik unit forges blanks for all five fitting plants, which removes a supplier layer but also makes every other plant dependent on it. Output was 327 lakh pieces in FY26, a weighted utilisation of 67.7%. Shirwal and Kavathe are owned; the rest run on long industrial leases.

Promoters and Leadership

Hy-Tech is first generation and family controlled. Hemant Mondkar, 78, an IIT Bombay mechanical engineer who trained in Just-In-Time methods at AOTS Osaka, became a director in January 1979 and took his first shares in December 1980. He bought the founding Patel, Botadra and Gangardiwala families out between 1987 and 2004 and his brother in 2020. The family holds 97.99% pre-offer, falling to 71.23% after the issue.

The senior management layer is professional and recent. The CFO, COO and marketing head were all elevated in December 2024, with the COO bringing prior experience at Caterpillar India, Eaton, MAHLE and Mahindra CIE. None of them is related to the promoters.

Succession is undisclosed. Hemant Mondkar's new term runs to 2031, when he will be 83, and Surekha Mondkar is also 78 on a five-year term. Son Ashwin, 51, is Non-Executive, lives in Virginia, holds an MBA from the University of Georgia and worked at Capital One and IBM Global Services, with no manufacturing background and no pay from the Indian entity. The second son was bought out by the company in September 2020 and holds nothing today.

Shareholding Pattern

Three promoters hold 97.99% and ten individuals the remaining 2.01%. There has never been an institutional, private equity or venture investor, and the company has never run a funding round.

Post offer, promoter holding falls to 71.23% and public float lands at 28.77%. Promoter contribution equal to 20% of post-offer capital is locked in for three years from allotment, and all other pre-offer shares for one year.

Issue Details

Fresh issue size - Amount → 60.0 cr ; To be utilized in -

Purchase of machinery and equipment at Kavathe, Shirwal and Pithampur Unit-I → 30.0 cr
Repayment or pre-payment of certain borrowings with TJSB Sahakari Bank → 16.0 cr
General Corporate Purposes & Others

Offer For Sale size - Amount → 75.7 cr ;

The company's promoter Hemant Tukaram Mondkar will sell 8,980,961 shares, 16.6% of his pre-IPO shareholding, resulting in post-IPO stake of 47.61%.
Promoter Surekha Hemant Mondkar, jointly with Hemant Mondkar, will sell 5,308,489 shares, 25.6% of her pre-IPO shareholding, resulting in post-IPO stake of 16.27%.
Promoter Ashwin Hemant Mondkar does not sell in the offer; his stake moves from 8.35% to 7.35% on dilution alone.

Financials

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