ENVALITH
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TSUGAMI CORPORATION

6101・Prime Market・Machinery

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株式会社ツガミ logo
TSUGAMI CORPORATION6101

Business

Tsugami Corporation is a precision machine tool specialist founded in 1937, with CNC automatic lathes, grinding machines, machining centers, and rolling machines as its core products. The company has built a vertically integrated global structure in which Japan (Nagaoka Plant) handles R&D and manufacturing, China (Zhejiang and Anhui) serves as the core of mass production, and India functions as a manufacturing base for emerging markets. Its main customers are manufacturers of automotive parts, IT equipment, medical devices, and precision components, with overseas sales accounting for 94.9% of total sales (FY2026 (ending March 2026)). The company is listed on the Prime Market of the Tokyo Stock Exchange.

Business Model

Under this division-of-labor structure, the Japan head office is responsible for developing high-precision, high-speed, and high-rigidity products, while Chinese subsidiaries (Tsugami Precision Machine Tools (Zhejiang) Co., Ltd., etc.) serve as the main hub for mass production and sales. Internal revenue is secured through paid supply of components from Japan to China and India (inter-segment transactions), while the Chinese bases achieve high profit margins by selling directly to external customers. The China segment's profit margin is expected to reach 28.1% in FY2026 (ending March 2026).

Company Strengths

The China segment achieved revenue of ¥111,039 million and segment profit of ¥31,155 million (profit margin of 28.1%) in FY2026 (ending March 2026). Vertical integration combining in-house casting production (Zhejiang Shinagawa Precision Machinery) with a paid-supply system for materials has enabled simultaneous cost competitiveness and profitability.

R&D expenses totaled ¥2,615 million in FY2026 (ending March 2026), primarily conducted at the Japan headquarters. New products such as the BW389ZJ, M08J-Ⅲ, and P034-Ⅲ have been developed, and ultra-precision machining equipment for automotive EV components, mobile devices, in-vehicle cameras, and medical components continues to be launched into the market. The accumulation of precision machining technology built up over 87 years since the company's founding serves as a barrier to competitor entry.

The India segment achieved revenue of ¥6,848 million (up 46.6% year on year) and segment profit of ¥347 million in FY2026 (ending March 2026), turning profitable from a loss of ¥310 million in the previous fiscal year. A new plant was completed in December 2025, expanding production capacity. This demonstrates a system capable of capturing demand in emerging markets while diversifying risk from over-concentration in China.

ENVALITH's Perspective

In FY2026 (ending March 2025), revenue reached ¥129,140 million (up 20.2% year on year), operating profit reached ¥36,102 million (up 54.9% year on year), and profit attributable to owners of parent reached ¥16,745 million (up 53.6% year on year), setting new record highs across all metrics. The operating profit margin improved by 6.3 percentage points, from 21.7% to 28.0%, reflecting a marked acceleration in profitability. While expanding demand for machine tools in the China and India markets served as an external tailwind, the company's own efforts—reducing selling, general and administrative expenses (from ¥14,302 million to ¥13,979 million)—also contributed to the margin improvement.

The structure in which the China business accounts for approximately 80% of revenue and the majority of segment profit remains unchanged, leaving performance highly exposed to risks such as US-China trade friction, geopolitical risk, and fluctuations in the Chinese economy. The full-year forecast for FY2027 (ending March 2027) calls for revenue of ¥145,000 million (up 12.3% year on year) and operating profit of ¥36,500 million (up 1.1% year on year), indicating a slowdown in profit growth despite continued revenue growth; management itself has noted that "uncertainty across the overall market is increasing." The high sensitivity of the China business to a deteriorating external environment is a risk that investors should keep in mind.

The India segment achieved a swing to profitability in FY2026 (ending March 2025), with revenue of ¥6,848 million (up 46.6% year on year) and segment profit of ¥347 million (versus a loss of ¥310 million in the previous period), signaling a transition out of the growth-investment phase. On the other hand, the full-year operating profit forecast for FY2027 (ending March 2027) stands at ¥36,500 million, representing only a 1.1% increase year on year, suggesting a plateau following the sharp rise seen in FY2026 (ending March 2025). While shareholder returns are set to continue, with the annual dividend planned to increase to ¥98 (from ¥85 in the previous period) and a payout ratio of 26.5%, a cautious view is warranted regarding the reproducibility of accelerated profit growth going forward.

Growth Strategy

A three-pronged growth strategy combining new product introductions in growth fields, deeper penetration of Asian markets, and expansion of production capacity

The China segment achieved external revenue of ¥103,476 million and segment profit of ¥31,155 million in FY2026 (ending March 2026). Demand from the automotive, IT, and medical sectors was captured, centered on CNC Automatic Lathes, and manufacturing efficiency through a vertically integrated production structure achieved a profit margin of 30.1%. The China market is expected to remain the primary driver of growth in FY2027 (ending March 2027) as well.

In FY2026 (ending March 2026), the India segment achieved revenue of ¥6,848 million (up 46.6% year on year) and turned profitable with a segment profit of ¥347 million. The effects of the capacity expansion from the previous fiscal year's large-scale capital investment (¥1,212 million) became apparent. In addition to CNC Automatic Lathes, product diversification into Grinding Machines and Machining Centers is progressing, and a framework is being established to capture the mid- to long-term growth of the India market.

The annual dividend for FY2026 (ending March 2026) was increased to ¥85 (from ¥59 in the previous fiscal year), achieving a dividend payout ratio of 23.5% and total dividends of ¥3,972 million. For FY2027 (ending March 2027), a further increase to an annual dividend of ¥98 (interim ¥49, year-end ¥49) is planned, with a projected dividend payout ratio of 26.5%. Share buybacks were also conducted (¥2,002 million in FY2026 (ending March 2026)), continuing comprehensive shareholder returns.

Last updated: July 19, 2026