This article first appeared on GuruFocus .
Release Date: November 06, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Sansera Engineering Ltd ( BOM:543358 ) reported its highest-ever quarterly revenue of INR10,915 million, up 32% year-on-year, with broad-based growth across all business segments.
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Profitability improved significantly, with EBITDA growing 48% to INR2,112 million and PAT rising 52% to INR1,086 million, as margins expanded despite cost headwinds.
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The non-automotive ADS business is scaling rapidly, with its order backlog rising to INR58.7 billion, providing strong revenue visibility and diversifying the company's revenue base.
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The core automotive business remains robust, with record quarterly sales in passenger vehicles, two-wheelers, and scooters, supported by strong domestic demand and export tailwinds.
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The company maintains a conservative balance sheet with low leverage (0.3x annualized EBITDA), providing ample headroom to fund future growth initiatives and capacity expansion.
Negative Points
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Sansera Engineering Ltd ( BOM:543358 ) faced significant cost pressures from rising input costs (cutting tools, freight, logistics) due to geopolitical conflict and a mandated ~30% increase in minimum wages in Karnataka, which is not a one-off.
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The company's net debt increased substantially to INR2,612 million from INR604 million in March, driven by higher capital expenditure and working capital requirements, leading to higher finance costs.
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The ADS business, a key growth driver, is still highly dependent on a single customer in the semiconductor segment, although efforts are underway to add new clients.
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The company has not yet added a second customer in the semiconductor space, with management hoping to achieve this in Q3, indicating a potential concentration risk.
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The company's operations in Sweden are facing cost disadvantages, limiting growth prospects there, with a strategy to maintain a steady state rather than pursue significant expansion.
Q & A Highlights
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Q: Can you provide color on the sharp increase in the ADS order book this quarter, including which segments and any new customers added? A: In the ADS segment, we have added a couple of new customers in the aerospace business, but in the semiconductor business, we still have only one customer, though we are making good progress toward adding a second customer. (CEO of ADS Division)
Q: The ADS backlog has risen significantly but is still described as executable over five years. Does this mean the new orders will start contributing to revenue immediately rather than being backended? A: This is confirmed business to be executed over the next five years, not the limit of what we will achieve. Unlike auto, we get a fairly decent spread across the next one to four years, so when we book a new order, revenues in the following years will also rise. (CEO of ADS Division / Joint Managing Director and Group CEO)
Q: Where do you see the ADS revenue run rate by FY31, and what share of overall Sansera revenue will ADS contribute? A: ADS is currently about 15% of our business, and we are targeting 35% to 40% of overall Sansera revenue by the end of this decade. We will come out with a formal vision statement toward the end of this year. (Joint Managing Director and Group CEO)
Q: You previously aspired to reach INR8,000 crore of revenue by FY30. Does that number go up given the momentum? A: We continue to aspire to that number and believe it is becoming more realistic as we cut through each segment. Whether it is 8, 9, or 10 thousand crore by FY31, we expect 35% to 40% to come from ADS, and we will likely freeze the number by the end of the year. (Joint Managing Director and Group CEO)
Q: CapEx has increased meaningfully this year. Can you break out how much is being invested in semiconductor and aerospace, and will this run rate sustain? A: We raised our FY27 CapEx forecast from around INR500 crore to INR800 crore to accommodate faster-kickstarting programs across new sectors. Close to INR400 crore, about 50%, will be invested in ADS, including filling the second bay of the existing plant with machines for the current order book. (Joint Managing Director and Group CEO)
Q: What is the nature of the new SKUs entering full production in H2 FY27 in the ADS business, and what is the complexity upgrade? A: In semiconductor, we have received validation for two more supercritical parts, taking our bucket of the most critical parts to almost everything required. Other wins this year are in avionics, which are very critical parts at the upper end of precision machining. (CEO of ADS Division)
Q: What is the status of the Rolls-Royce engine blade development, and would it require incremental CapEx beyond the current plan? A: The size of the opportunity is still not known as we demonstrate capability across multiple material classes. The customer is happy with progress, and we hope to finish development in Q3. The CapEx we have factored in does not include potential business from this, as we only invest when we have confirmed business. (CEO of ADS Division)
Q: Should the Karnataka minimum wage provision continue in future quarters, or was it a one-off? A: This is not a one-off. The Karnataka government has revised minimum wages, with approximately a 30% increase in base wages for those worker categories. The exact quantum is still provisional as some organizations have challenged it in court, but with no stay, we have provided for the entire amount from the effective date in mid-May. (CFO)
Q: What is the outlook for the Sweden plant utilization and European volumes after the Q-on-Q decline? A: The Q2 drop in Europe is normal due to the summer shutdown. Sweden is operating at around 80% to 85% efficiency, and we expect a steady state with a stronger second half. We do not plan anything big in Sweden given unfavorable manufacturing costs, and we aim to stay healthy at around 10% to 12% EBITDA. (Joint Managing Director and Group CEO / CEO of ADS Division)
Q: With ADS share rising, where do you see core operating margins stabilizing over the years? A: If you add back the minimum wage hit in Q2, we have well passed Q1 margins. Higher exports in automotive and greater ADS contribution have helped absorb cost pressures, and we hope this margin profile will continue to be steady as we improve efficiencies and reduce inventory. (Joint Managing Director and Group CEO)
Q: What is the status of the defense plant starting in Q3, and what is the CapEx involved? A: We are moving existing defense machines to a new facility and adding capacity for a couple of new orders in final stages, with CapEx of about INR15 to 20 crore if the business materializes. We are also contemplating sheet metal forming under the defense vertical to increase ticket size on aerospace RFQs. (CEO of ADS Division)
Q: Have you initiated discussions with OEMs for the Nichidai JV's near-net-shape components, particularly for humanoid robots? A: One of our customers is a pioneer in humanoid manufacturing, and very active, interesting discussions are ongoing. Beyond the JV, we see a larger opportunity for Sansera in complex aluminum forged and machined components, and we are actively developing some very intricate parts for a North American customer. (CEO of ADS Division / Joint Managing Director and Group CEO)
Q: What is the status of the aerospace engine blade order qualification, and is there traction with Safran? A: On the engine blade, we have not received validation yet, but we have ticked all pre-agreed milestones, and we expect to conclude development in Q3. On Safran, we have already won our first business from them this quarter, though it is engine parts and not the rotating blade component. (CEO of ADS Division)
Q: On semiconductors, will the next leg of order book growth come from adding new clients or mining more wallet share with the existing one? A: We intend to do bothmine
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
