OBSC Perfection

OBSC Perfection Limited delivered a robust financial performance for FY26, achieving 54% revenue growth and 19.5% EBITDA margins. This significantly surpassed the company's previous guidance of 40% revenue growth and 2% gross margin improvement. The company's export revenue share reached 20%, driven by a 50% increase in export sales, while non-automotive revenue surged by 150% in the fiscal year.

The company has secured a strong order book exceeding INR1,200 crores, which includes approximately INR980 crores from the automotive segment and INR230 crores from non-automotive sectors. This order book provides significant revenue visibility for the next five to six years, with an anticipated annual conversion of INR100-200 crores. Management expects most of this revenue to begin contributing from FY27.

OBSC Perfection is actively expanding its manufacturing capabilities and diversifying its process portfolio. The company acquired new processes such as Cold Forging, Hot Forging, and Stamping, supported by a preferential issue of INR43.3 crores for mega factory investments. New plants are being established in Sanand, dedicated to Tenneco's shock absorber rods with an expected INR40 crores revenue, and a large 11-acre giga factory in Supa, which has a peak revenue potential of INR700-800 crores.

The company is making significant inroads into high-value, non-automotive segments. In defence, OBSC is producing medium and low caliber ammunition casings, ignition primers (now in mass production), and fins for MK-84 bombs. For the medical sector, they are supplying cast orthopedic surgical implants. Additionally, over 4,000 aluminum parts for humanoid cold plates were supplied during the trial phase, with this segment expected to become a very large part of the business in FY27.

Despite geopolitical tensions and rising commodity prices, management anticipates sustaining current EBITDA margins and growing them by 1 percentage point in FY27. This improvement is expected to be driven by a higher export mix, which is targeted to reach over 30-35% of the business in FY27. The depreciation of the INR is viewed as beneficial for OBSC, a net exporter, and the company has strategically shifted its export focus to the thriving US and Mexico markets, away from the slowing European auto industry.

OBSC Perfection is committed to continuous capital investment to support its rapid growth trajectory, currently exceeding 50% year-on-year. While this strategy ensures sufficient capacity for the next 3-5 years, it also implies that free cash flow will likely remain negative as generated cash is consistently reinvested back into the business. The company plans an incremental capex of INR15-20 crores for FY27.

The company is in the final stages of obtaining its AS9100D certification, expected within two months, which is crucial for entering the aerospace sector. OBSC has received RFQs from 3-4 aerospace customers and is developing capabilities for precise metal engineering, similar to specialized players. This certification will enable the company to pursue lucrative opportunities in this high-value segment.

Tata AutoComp has become OBSC's second-largest customer, demonstrating rapid growth and a focus on bringing niche businesses to India. OBSC is an approved machining supplier for Tesla's automotive business through Tata AutoComp. Management confirmed that dedicated capacity for large projects with Tata AutoComp is 'certain' and 'will happen,' indicating strong future growth from this strategic partnership.