OBSC Perfection

OBSC Perfection achieved a monumental FY25, reporting its highest-ever total revenue of Rs.145 crores with approximately 19% EBITDA margins. Key milestones included a successful IPO, the commencement of new facilities, and the foray into hot and cold forging capabilities. The company also initiated revenue flow from the defense sector, marking a strategic diversification and growth.

The company boasts a strong order book of Rs.750 crores as of May 19, 2025, providing revenue visibility for the next six to seven years, a significant increase from Rs.290 crores at FY24 March end. This includes an automotive order book of Rs.460 crores and a non-automotive book of Rs.250 crores, with Rs.130 crores specifically from defense over a 10-year period. Management emphasized these are 'confirmed nominated orders,' indicating binding commitments from customers.

OBSC Perfection opened its fifth facility in Pune in April '25, focusing on in-house forging capabilities to be introduced within three months. The company plans to utilize Rs.20 crores from IPO proceeds for CAPEX, allocating Rs.15 crores to its Chennai facility and Rs.5 crores to a fourth Pune facility. This expansion aims to integrate processes like casting, forging, and machining, enhancing efficiency and margins by becoming a 'precision engineering Company' rather than just a machining one.

Management guided for a 2 percentage point expansion in gross and EBITDA margins for FY26, with an aspiration for 4-5% EBITDA margin expansion over the next three to four years. This improvement is expected from a strategic shift in revenue mix, with non-automotive segments (defense, marine, aerospace) projected to grow at a 45-50% CAGR and contribute ~25% of revenue in FY26, eventually reaching ~35% in 2-3 years, while automotive share reduces to below 70% in FY26 and ~65% in 2-3 years.

OBSC Perfection is actively developing multiple new products, particularly in Marine, EV (cold plates, heat sinks), and Defense (ammunition, Artillery Fuze parts), some of Israeli origin or for PSUs. The company has invested in an in-house R&D wing, equipped with software for simulating machining, casting, and forging processes, which helps in faster turnaround times and cost reduction. This focus on precision engineering allows for development of safety-critical components controlled within microns of tolerances.

The company's value proposition includes efficient operations, quick response times, and a strong legacy from its 50-year-old parent group, enabling access to elite automotive manufacturers like ZF and Tenneco. OBSC Perfection is actively engaging with US-based marine component companies and has seen strong traction from American customers due to geopolitical shifts, leading to increased order inflows. The company also recently started AS9100D certification for the aerospace sector.

Tata AutoComp is poised to become one of OBSC Perfection's largest customers. A Rs.250 crore order from Tata Toyo Radiator for aluminum precision milled EV parts is expected to generate Rs.50 crores in annual revenue. The company is also developing samples for another significant Tata business, indicating a rapidly growing partnership in the EV segment and a strong trickle-down effect from Tata's aggressive growth.