Nitto Boseki operates through six reportable segments including Electronic Materials (39.9% of Q1 26 net sales), Medical (12.7%), Composite Materials (11.7%), Material Solutions (8.1%), Insulation Materials (12.4%), and Others (15.2%). In addition, the company is geographically segmented into five regions: Japan (56.8% of FY 25 net sales), Asia (31.7%), North America (5.2%), Europe (5.9%), and Others (0.4%).

Electronic Materials led Q1 26 top-line

Nitto Boseki Co., Ltd. released its Q1 26 results on August 1, 2025, posting an 8.4% y/y increase in revenue, reaching JPY28.2bn, driven by strong sales of high-value-added products, led by Electronics Materials business, with 17.7% y/y growth, fueled by robust demand for AI servers, Special Glass with low-dielectric properties and low thermal expansion properties, followed by Medical business, with 5.3% y/y growth, driven by steady sale of vitro diagnostic reagents.

Operating income experienced a 10% y/y increase, reaching JPY4.3bn and net income was JPY3.1bn, with EPS of JPY86.5. The company reported net assets of JPY133.7bn and equity-to-asset ratio of 57.9%

Glass powers innovation

Nitto Boseki Co., Ltd. is undertaking a strategic expansion of its glass cloth production capacity at the Fukushima Enterprise Center. The company's specialized T-glass cloth is highly valued for its ability to address thermal and structural challenges in advanced semiconductor packaging, particularly in high-performance AI servers. This move reflects Nitto Boseki's proactive response to technological advancements, including the adoption of chip-to-chip communication and larger package substrates.

With production set to triple for cutting-edge logic IC applications, this initiative aligns with Nitto Boseki's long-term strategy of establishing a global niche in electronic materials. The expansion positions Nitto Boseki to meet growing market demands while enhancing its competitive edge in the semiconductor supply chain. Overall, this development marks a significant milestone in Nitto Boseki's evolution as a key enabler of next-generation electronics and AI infrastructure.

Robust FCF growth

Nitto Boseki has posted a revenue CAGR of 9.1% over FY 22-25, reaching JPY109bn, driven by robust demand for high-performance materials in automotive, electronics, and healthcare sectors. In addition, strategic investments in innovative and sustainable solutions led to robust growth.

Operating income rose at a CAGR of 31.3% over the same period, reaching JPY16.4bn, with margin expanding from 8.7% to 15.1% over the same period. Net income increased with a CAGR of 25.3% to JPY12.8bn, with margin expanding from 7.8% to 11.8%.

Consistent growth in net income led to an increase in FCF over FY 22-25, reaching JPY4.5bn from minus JPY13.1bn, supported by rise in cash and cash equivalent, growing from JPY18.5bn to JPY28.6bn and cash inflow from operations, increasing from JPY7bn to JPY19.1bn. Consequently, ROA doubled from 2.4% to 4.7% and gearing improved from 41.8% in FY 22 to 38.8% in FY 25.

In comparison, Saint-Gobain, a global peer, reported a revenue CAGR of 1.8% to reach €46.6bn over FY 21-24. EBIT rose at a CAGR of 7% to €5.2bn, with margins expanding from 9.5% to 11.1%. Net income increased at 4.1% CAGR, reaching €2.8bn.

Strong stock returns

Over the past year, the company's stock has delivered robust returns of approximately 28.2%. In comparison, Saint-Gobain’s stock delivered returns of 17.4% over the same period. In addition, the company declared dividend of JPY106, with a rate of return of 2.6% in FY 25.

Nitto Boseki is currently trading at a P/E of 19.9x, based on the FY 26 estimated EPS of JPY372, which is lower than its 3-year historical average of 23x but higher than that of Saint-Gobain’s P/E of 14.6x. In terms of EV/EBIT, the company is currently trading at 16.2x, based on the FY 26 estimated EBIT of JPY18.4bn, which is lower than its 3-year historical average of 20x but higher than that of Saint-Gobain (11.4x).

Nitto Boseki is monitored by eight analysts, with five having ‘Buy’ ratings and three having ‘Hold’ ratings, with an average target price of JPY7,182.9. However, as the stock has already reached its target, any near-term correction in the share's price could create a buy opportunity for investors.

These views are supported by an anticipated revenue CAGR of 8.6% over FY 25-28, reaching JPY139.6bn in FY 28. In addition, analysts expect EBIT CAGR of 14.6% to JPY24.8bn, with margin of 17.7%. Net income is estimated to rise at a CAGR of 12.2% to JPY18.1bn. Likewise, analysts estimate an EBIT CAGR of 4.2% and a net profit CAGR of 9.7% for Saint-Gobain over FY 24-27.

Overall, Nitto Boseki has demonstrated an exceptional ability to identify and capitalize on specialized, high-growth opportunities within the broader technology materials sector. Its past performance is marked by robust revenue growth, expanding margins, and strong cash generation. Strategic investments in capacity and innovation have not only solidified its market position but also created a visible pipeline for future growth.

However, the company faces risks of raw material price volatility and supply chain disruptions impacting production efficiency. Delays in subsidy approvals or facility expansion could also hinder its capacity to meet demand. In addition, the dynamic semiconductor technologies may challenge the relevance of existing product offerings.

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