Toyo Drilube Co., Ltd. (4976) AI Stock Analysis

• Market Cap: ¥5.91B
• Dividend Yield: 2.32%
• Average Volume (3M): 836.00
• Price to Earnings (P/E): 2.8
• Beta (1Y): 0.52
• Revenue Growth: 8.90%
• EPS Growth: 5.69%
• Country: JP
• Employees: 509
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Chemicals - Specialty
• EPS (TTM): N/A
• Shares Outstanding: 4,065,000
• 10 Day Avg. Volume: 520
• 30 Day Avg. Volume: 836
• PEG Ratio: 0.54
• Price to Book (P/B): 0.51
• Price to Sales (P/S): 1.01
• P/FCF Ratio: 20.14
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: ¥1,734.00 ▲(16.45% Upside)
• Action: Reiterated Date: 10/11/25
• Date: Action: Reiterated 10/11/25

Toyo Drilube Co., Ltd. has a strong financial foundation with consistent growth and profitability, contributing significantly to its overall score. The stock's attractive valuation further enhances its appeal. However, technical indicators suggest caution due to bearish momentum, which tempers the overall score.

Positive Factors

Conservative balance sheet

A very low debt-to-equity ratio (0.076) gives durable financial flexibility: it reduces refinancing risk, supports capital allocation through cycles, and preserves capacity for targeted capex or R&D in the specialty chemicals space, strengthening long-term resilience.

High gross and net margins

Sustained gross margin (37.47%) and net margin (13.52%) reflect durable pricing power and a higher-value product mix in specialty lubricants. These margins provide internal funds for reinvestment, buffer against input cost swings, and support long-term profit sustainability.

Improving cash generation

A material recovery in free cash flow (reported as 'Infinity' growth from a negative base) signals structural improvement in cash conversion. Combined with a solid operating cash flow to net income ratio (0.67), this supports durable liquidity and funds for operations, capex, or dividends.

Negative Factors

Low free cash flow conversion

Free cash flow converts only 28% of reported net income into discretionary cash. This persistent conversion gap constrains the company’s ability to self-fund growth, increase shareholder distributions, or build reserves without improving working capital or capex efficiency.

Operating margin pressure

A decline in EBIT and EBITDA margins indicates rising cost pressures or competitive pricing stress. If structural, margin erosion can reduce reinvestable cash and weaken the firm’s ability to sustain R&D and premium product positioning in the medium term absent cost control or pricing actions.

Moderate return on equity

ROE of 6.77% is modest for a specialty chemicals manufacturer. This suggests limited capital efficiency and may indicate slower profit leverage on equity, which can restrain long-term shareholder returns unless management boosts margins, deployment of capital, or operational scaling.

Toyo Drilube Co., Ltd. Business Overview & Revenue Model

Company Description

Toyo Drilube Co., Ltd. engages in the research and development, manufacture, coating processing, and sale of solid film lubricants and function film coating agents in Japan and internationally. Its solid film lubricants are formulated with solid lubricants, such as molybdenum disulfide, fluorine resin, or graphite; and dispersed in binders. The company also exports lube products. It serves automobile, optical, electric/electronic, and office automation equipment. Toyo Drilube Co., Ltd. was incorporated in 1962 and is headquartered in Tokyo, Japan.

How the Company Makes Money

Toyo Drilube generates revenue primarily through the sale of its specialized lubricants and drilling fluids to companies in the construction and drilling industries. The company has established key revenue streams through direct sales to end-users, as well as partnerships with distributors and resellers who extend its market reach. Additionally, Toyo Drilube may engage in research and development collaborations with industry partners to create customized solutions, further enhancing its product offerings and driving sales. The company's earnings are also supported by its reputation for quality and reliability, which fosters customer loyalty and repeat business.

Toyo Drilube Co., Ltd. Financial Statement Overview

Summary

Toyo Drilube Co., Ltd. exhibits strong financial health with consistent revenue growth and solid profitability margins. The company maintains a conservative balance sheet with low leverage and effective equity utilization. While cash flow metrics show improvement, there is potential for further enhancement in free cash flow generation.

Income Statement

Toyo Drilube Co., Ltd. has demonstrated consistent revenue growth over the years, with a notable increase of 2.91% in the most recent period. The company maintains strong profitability with a gross profit margin of 37.47% and a net profit margin of 13.52%. However, there is a slight decline in EBIT and EBITDA margins compared to previous years, indicating potential cost pressures.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.076, indicating prudent leverage management. The return on equity is stable at 6.77%, showcasing effective use of equity to generate profits. The equity ratio is strong, highlighting a robust capital structure.

Cash Flow

Cash flow analysis reveals a significant improvement in free cash flow, with a growth rate of 'Infinity' due to a previous negative base. The operating cash flow to net income ratio is healthy at 0.67, though slightly lower than past performance. The free cash flow to net income ratio of 0.28 suggests room for improvement in converting profits into free cash flow.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	5.19B	4.70B	3.87B	3.67B	6.38B
Gross Profit	1.95B	1.78B	1.37B	1.41B	1.41B
EBITDA	1.17B	1.19B	730.19M	965.10M	887.16M
Net Income	702.00M	617.00M	332.59M	575.98M	453.00M
Balance Sheet
Total Assets	12.82B	12.01B	11.19B	10.69B	9.82B
Cash, Cash Equivalents and Short-Term Investments	4.24B	4.61B	4.38B	5.11B	4.91B
Total Debt	787.50M	775.50M	846.62M	723.44M	702.61M
Total Liabilities	2.45B	2.41B	2.29B	2.18B	2.04B
Stockholders Equity	10.36B	9.60B	8.89B	8.50B	7.78B
Cash Flow
Free Cash Flow	261.00M	517.92M	-585.07M	190.84M	453.12M
Operating Cash Flow	942.00M	1.40B	399.77M	726.26M	690.77M
Investing Cash Flow	-2.02B	-1.08B	-1.23B	-517.62M	235.43M
Financing Cash Flow	-75.00M	-138.68M	-7.74M	-37.39M	-141.20M

Toyo Drilube Co., Ltd. Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 1489.00
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4976, the sentiment is Neutral. The current price of 1489 is below the 20-day moving average (MA) of 1508.95, below the 50-day MA of 1517.20, and above the 200-day MA of 1404.21, indicating a neutral trend. The MACD of -19.71 indicates Positive momentum. The RSI at 41.67 is Neutral, neither overbought nor oversold. The STOCH value of 60.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4976.

Toyo Drilube Co., Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4095	75 Outperform	¥171.96B	10.40	―	3.50%	3.85%	-1.53%
4611	74 Outperform	¥36.35B	15.61	―	3.70%	14.83%	51.42%
4221	73 Outperform	¥55.89B	14.51	―	2.81%	8.28%	0.70%
4976	72 Outperform	¥5.91B	2.83	―	2.32%	8.90%	5.69%
4410	66 Neutral	¥23.66B	5.80	―	4.62%	7.19%	―
4968	62 Neutral	¥26.13B	9.97	―	4.27%	5.72%	28.92%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%