Sansera Engineering Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 B R Preetham, Hari Krishnan, Rahul Kale, Vikas Goel

Analysts

10 Anirudh Shetty, Chandramouli Muthiya, Mahesh Pendre, Mumuksh Mandlesha, Sajal Kapoor, Shashank Kanodia, Siddhartha Bera, Sridhar Kalyani, Suraj Malu, Varinder Bansal

Financials & KPIs

Geographic & Segment Commentary

• Auto Segment (Traditional ICE): Revenue ₹627.5 crores, +20.8% YoY. Record quarterly performance across passenger vehicles, commercial vehicles, and scooters. Domestic OEMs reporting hypergrowth with strong demand visibility extending through Q2 and festival season Q3; exports tracing recovery with traction in PV, premium two-wheelers, and off-road vehicles. US customers increasingly sourcing from India as stopgap while Sansera's US facility plans remain on hold due to tariff uncertainty.

• Non-Auto (ADS - Aerospace, Defense & Semiconductor): Revenue ₹199.8 crores, +129.9% YoY, with ADS contributing ₹145.4 crores (3x YoY). Order book expanded post-quarter to ₹5,750 crores executable by FY31, including a significant semiconductor equipment order worth ~$75M annual revenue (≈₹1,250 crores over 5 years). Management expects significant revenue ramp beginning CY27, peaking CY29, with capacity being created to support ₹3,500 crores annual revenue by FY31.

• Auto-Tech Agnostic & XCV (EV-focused): Revenue ₹131.6 crores, +22.2% YoY, reflecting accelerated EV adoption, particularly in two-wheelers. EV transition progressing ahead of plan, with capacity additions at Bangalore Plant 2 (multi-story machining) and the Sansera JV for cold/warm forged precision components.

Company-Specific & Strategic Commentary

• ADS Order Book Momentum: Cumulative unexecuted 5-year order book at ₹5,750 crores executable by FY31, driven by outsourcing targets from aerospace and SEM customers. New order from existing semiconductor equipment customer pushes engagement to ~$75M annual business. Revenue run-rate of ~₹600 crores annually currently; ramp expected from CY27 with peak in CY29, translating to ~₹3,500 crores ADS capacity by FY31.

• Capacity Expansion (ADS): Inaugurated surface treatment facility (Nadcap validation in progress) enabling single-facility production for larger structural parts; 80,000 sq ft hangar for Aero/SEM commissioning within 1-2 months with line validation underway; defense business relocating to dedicated facility; new build-to-suit 100,000 sq ft facility expected ready in ~10 months (500m from existing plant). Existing ADS facility to support ₹1,400-1,500 crores revenue capacity.

• Auto Capacity Expansion: Panchanagar Plant 6 and Manesar Plant 4 adding forging/machining for crankshafts (two-wheeler and PV) and connecting rods; driven by OEM outsourcing of crankshaft facilities, particularly from South-based two-wheeler manufacturers. Strong wallet share with Maruti (~75% of components volumes). Capacity additions coming on stream from Q3 FY27, completed within a year.

• Defense Strategy: Shifting to dedicated defense facility with focus on export opportunities (primarily Europe) and entry into sheet metal capabilities, which management believes will significantly tilt RFQ packages in their favor. Expects significant headway in current fiscal on facility creation and order wins, targeting ~₹500 crores revenue capacity over next 5 years.

• Margin Philosophy: Management maintains 19% FY27 EBITDA margin guidance (vs 18.1% FY26 actual), with exports and ADS delivering 25-30% margins vs domestic. Q1 FY27 margin of 19.2% was elevated due to ~40% international revenue mix, favorable currency, and operating leverage, including the ₹12.6 crore US import duty provision.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

ADS Order Book & Revenue Trajectory

• Question: Confirming the INR 57 billion order book and segment revenue trajectory over next 3-4 years (Siddhartha Bera, Nomura)
• Answer: Post-cutoff order from existing semiconductor equipment customer worth $75M annual (₹1,250 crores over 5 years). Order book executable by FY31. Revenue ramp will be gradual - not reaching ₹1,500 crores next year, but significant progression expected from CY27, peaking CY29 (Hari Krishnan, B R Preetham, Vikas Goel)

FY27 Growth Guidance Breakdown

• Question: If ADS doubles, does guidance imply only 7-8% growth in remaining business? (Chandramouli Muthiya, Goldman Sachs)
• Answer: Non-ADS should deliver mid-teens growth easily given sustained two-wheeler/PV momentum. Overall company can achieve high-teens to 20% - guidance range revised upward from initial "high teens" plan. Management acknowledged potential for >20% if trends sustain (B R Preetham)

Material Costs & Pricing

• Question: Material cost impact and pricing pass-through status; gross margin expansion driver (Suraj Malu, Catamaran)
• Answer: Aluminum and consumables saw inflation (not substantial); steel pass-through negotiations in process, not yet reflected in P&L. Q1 gross margin expansion driven by mix (international ~40% revenue) plus forex gains, not pricing. Tooling and labor (northern plants) compensation pending with customers (Vikas Goel, B R Preetham)

EBITDA Margin Outlook & ADS Margins

• Question: With 20.4% margin ex-provision, is 22-25% new benchmark? What margins does ADS earn? (Shashank Kanodia, ICICI Securities)
• Answer: Q1 elevated due to favorable mix/currency; FY27 guidance maintains ~19% with potential slight overachievement. Exports and ADS businesses operate at 25-30% margins; as utilization improves, ADS margins trend toward high-20s. Management's philosophy: "sustain margins while focusing on growth" (B R Preetham, Vikas Goel)

Motorcycle Revenue vs Industry Growth Disconnect

• Question: Motorcycle revenue growth 7-10% trailing vs industry volume 17-18% - wallet share loss? Maruti share status? (Suraj Malu, Catamaran)
• Answer: No wallet share loss; share gains with TVS, Yamaha, Suzuki. Revenue vs volume comparison has inherent gaps. Motorcycle business grew ~12.5% in quarter. With Maruti, ~75% of component volumes supplied; projections for next 2 years strong. Management offered offline reconciliation (B R Preetham)

Defense Business Strategy & Capex

• Question: Defense segment approach, CapEx plans, timeline, tier positioning (Mumuksh Mandlesha, Anand Rathi)
• Answer: Moving from precision machined components (ISRO, HAL, Israel exports) to larger defense orders from European customers; entering sheet metal capability (for defense and aerospace). Dedicated facility will expand machining offerings and enable sheet metal entry. Significant facility creation and order wins expected this fiscal (Hari Krishnan)

Long-Term Targets & Capital Requirements

• Question: 8,000-9,000 crore revenue target status; fundraise needed for capacity? (Varinder Bansal, Omkara Capital)
• Answer: By-FY31 target maintained; driven primarily by ADS plus export auto outsourcing. No capital raise required currently - strong cash flows, low leverage, organic funding sufficient. M&A opportunities in non-auto being evaluated opportunistically (B R Preetham, Vikas Goel)

ADS Risk Assessment

• Question: What could derail the ₹3,000 crore ADS ambition by 2030? Any product end-of-life risk? (Anirudh Shetty, Solidarity Investment Managers)
• Answer: Aerospace risk limited - ultimate customers are Boeing/Airbus with growing backlogs; absent catastrophic events, outlook solid. Semiconductor risk tied to AI-driven demand - customers forecast supply constraints through FY29-FY30, but AI demand slowdown would be the key risk. No material end-of-life products in production today (B R Preetham)

Component Complexities & Learning Curve

• Question: Reusability of learning across complex ADS programs; capital allocation framework (Sajal Kapoor, Antifragile Thinking)
• Answer: Auto: progressive learning across crankshaft/connecting rod platforms. ADS: learning transferable conceptually (e.g., turbine blisk machining knowledge, monocrystalline components) though each package differs. Capital decisions governed by return ratios and long-term strategy - strategic fit can take precedence over near-term returns when justified (B R Preetham)

Turbine Blisk Progress

• Question: Progress on turbine blisk order announced last quarter - any confirmations? (Sridhar Kalyani, Antique Stock Broking)
• Answer: Significant progress on machining readiness; first samples expected ready for customer within one month. New special process facility (up to 4-meter components) commissioned with Nadcap and customer approvals expected within current quarter; expanding into structural aero parts (door assemblies, fuselage, seating) (Hari Krishnan, B R Preetham)

Key Takeaway

Sansera Engineering delivered its highest-ever quarterly revenue of ₹1,021.3 crores (+33% YoY) in Q1 FY27, with EBITDA margins expanding 200 bps to 19.2% (including a ₹12.6 crore US tariff provision) and PAT up 39% to ₹87.4 crores. Growth was broad-based: auto segment +20.8% YoY on record PV/CV/scooter performance, while the ADS non-auto segment nearly tripled to ₹199.8 crores (20.8% of mix). Management raised FY27 revenue guidance from high-teens to potentially ~20%, citing sustained domestic OEM hypergrowth through festival season and non-ADS business trending at mid-teens. Strategic focus centers on scaling ADS capacity - the executable order book now stands at ₹5,750 crores by FY31 (including a post-quarter ₹1,250 crore semiconductor order, taking customer engagement to ~$75M annually), supported by a new surface treatment facility, 80,000 sq ft hangar, and a planned 100,000 sq ft build-to-suit facility. Defense is being restructured with a dedicated facility targeting European export orders and sheet metal entry. Key watch points: material cost pass-through negotiations remain pending, US tariff recovery is in process with a provision booked, semiconductor demand cyclicality tied to AI capex, and execution risk across multiple concurrent capacity programs. Management maintains its FY31 ₹8,000-9,000 crore revenue ambition, funding growth organically with balance sheet leverage "at a very low level," and expects no capital raise.