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    Sandhar Technologies Limited

    SANDHAR
    Automobile and Auto Components·8 Aug 2025
    Management Summary

    Sandhar Technologies reported a 21% consolidated revenue growth in Q1 FY26, driven by a 22% growth in its India business. However, consolidated EBITDA declined to 9.18% from 9.85% YoY, primarily due to one-time costs, foreign currency translation losses, and customer supply issues. The company's EV segment is gaining traction, and all its joint ventures remain profitable, while overseas operations are undergoing a turnaround strategy.

    Highlights

    4

    • Consolidated revenue grew 21% YoY, with India business growing 22% at a consolidated level.

    • All 5 joint ventures are profitable, contributing ₹37 crores in revenue with a 10.72% EBITDA margin and 5.15% PAT in Q1 FY26.

    • EV foray shows positive response, generating just under ₹2 crores in Q1 FY26, with commercial production of battery chargers, motor controllers, and DC-DC converters.

    • Company has taken steps to reduce costs, increase operational efficiency, and expand customer/product base in overseas operations, aiming for profitability in FY26.

    Concerns

    5

    • Consolidated EBITDA stood at 9.18% in Q1 FY26, down from 9.85% in Q1 FY25.

    • Impacted by notional foreign currency translation loss of ₹4.5 crores and commodity price impact of ₹3 crores.

    • One-time old lag of power change costs in Mexico amounted to ₹2 crores.

    • Lost approximately ₹20 crores in business due to supply issues from two customers.

    • Overseas subsidiaries registered a loss of EUR1.06 million, including EUR0.46 million from foreign exchange translation loss.

    What Changed2

    vs Q2 FY26

    Guidance items10 → 7 (-3)Risks discussed4 → 6 (+2)
    Key financials

    Metrics

    10

    Periods

    2

    Headline

    9
    • Consolidated Revenue Growth
      21%
    • India Business Revenue Growth
      22%
    • Consolidated EBITDA Margin
      9.2%
    • Foreign Currency Translation Loss (notional)
      ₹4.5 Cr
    • Commodity Price Impact
      ₹3 Cr

    Q1 FY25

    1
    • Consolidated EBITDA Margin
      9.8%

    Segment breakdown

    • Sundaram Acquisition₹103 Cr73.6%
    • Joint Ventures (Sandhar's Share)₹37 Cr26.4%
    Donut· Share of Revenue

    Capital allocation

    5
    high confidence
    CategoryHeadline
    Capex

    ₹101 crores this quarter · ₹250 crores (FY26) planned

    Debt

    Gross ₹862 crores · Net ₹825 crores

    M&A

    Jinyoung Sandhar Mechatronics

    divestment · closed

    M&A

    Kwangsung Sandhar Technologies

    divestment · closed

    M&A

    Future Acquisitions (QIP)

    acquisition · announced · Consideration ₹NaN (cash)

    Guidance & targets

    7
    CategoryTargetPriority
    Revenue Growth
    Consolidated Revenue Growth
    Continue growth momentum over last year's numbers
    		Medium
    Profitability
    EBITDA Margin Improvement
    0.5%
    		High
    Profitability
    Sundaram Acquisition EBITDA
    Breakeven
    		Medium
    Debt
    Gross Debt Range
    INR850-900 crores
    		High
    Smart Locks Volume
    Expected Volumes (Customer 1)
    60,000 to 70,000 numbers
    		Medium
    Q2 Outlook
    Q2 Performance
    Considerably better than Q1
    		Medium
    Acquisition Strategy
    ROCE Target for Acquisitions
    Above 18% post tax
    		High

    Sundaram Acquisition Profitability

    by close of FY26 year-end
    CurrentEBITDA at 4%, PBT level losses in Q1 FY26
    TargetBreakeven at EBITDA level

    Why it matters

    To assess the successful integration and turnaround of the acquired business, impacting overall profitability.

    But yes, from next year onwards, It will be back to the normal margins that we expect from our die-casting business. ... So might be this year, it would be at a breakeven level by close the year-end.

    How to verify

    key_financials.segment_breakdown[name='Sundaram Acquisition'].metrics[label='EBITDA Margin']

    Risks & concerns

    6
    RiskSeverity

    Geopolitical situation and tariffs

    Overall sentiment, growth in auto and OHV sector, and related events could be affected by geopolitical situation and tariffs. — Management acknowledged

    medium

    Foreign currency translation loss

    Notional loss of ₹4.5 crores impacted Q1 EBITDA, with overseas operations registering EUR0.46 million FX translation loss. — Management acknowledged

    medium

    Commodity price impact

    ₹3 crores impact on Q1 results, expected to be covered in the next quarter. — Management acknowledged

    medium

    Customer supply issues and lost business

    Two customers' supply issues led to a loss of almost ₹20 crores in business for Q1. — Management acknowledged

    high

    Construction sector changeover (BS IV to BS V)

    Changeover from BS IV to BS V impacted sales in the construction sector for Q1, with sales expected to normalize from next month. — Management acknowledged

    medium

    Overseas market degrowth and slowdown

    European and other global markets experienced severe degrowth, slowdown, and increased costs, leading to a loss of EUR1.06 million in overseas operations. — Management acknowledged

    high

    Q&A highlights

    8

    “So we have put up a proposal to borrow up to sorry, to raise up to INR50 crores. And largely, we are focusing on some more acquisitions, which may come up during the year. ... Coming to the debt portion, we had a gross debt of INR862 crores as of June and a net debt of INR825 crores. ... we'll try to rationalize it between INR850 crores to INR900 crores at the maximum side.”

    Clarifies the purpose of the QIP for future acquisitions and provides specific current and target debt figures.

    asked by Aditya Kondawar

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 FY26 Performance Overview and Challenges

    Sandhar Technologies reported a consolidated revenue growth of 21% in Q1 FY26, with its India business contributing 22% to this growth. However, the consolidated EBITDA margin saw a decline to 9.18% from 9.85% in Q1 FY25. This dip was attributed to several factors, including a notional foreign currency translation loss of ₹4.5 crores, a commodity price impact of ₹3 crores, and one-time📎 power change costs in Mexico amounting to ₹2 crores. Additionally, the company lost approximately ₹20 crores in business due to supply chain issues faced by two key customers.

    02

    Impact of Construction Sector Transition and Overseas Operations

    The transition in the construction sector from BS IV to BS V engine norms also temporarily impacted sales for the quarter, though management expects sales to normalize from the next month. Overseas subsidiaries faced significant headwinds, registering a loss of EUR1.06 million, which included EUR0.46 million from foreign exchange translation loss. This was due to severe degrowth, unstable geopolitical conditions, and a slowdown in European markets. The company is actively implementing cost reduction and operational efficiency measures to restore profitability in its international operations.

    03

    Strategic Verticalization and Joint Ventures

    Sandhar is undergoing a strategic verticalization, consolidating its businesses into larger, more focused entities like aluminum casting, sheet metal, automotive proprietary, and construction equipment. This aims to provide autonomy and accelerate growth in each vertical. The company has also reviewed its JV strategy, selling stakes in Jinyoung Sandhar Mechatronics and Kwangsung Sandhar Technologies. The remaining five JVs are all profitable, contributing ₹37 crores in revenue with a 10.72% EBITDA margin and 5.15% PAT in Q1 FY26.

    04

    EV Foray and Future Growth Drivers

    The company's foray into the Electric Vehicle (EV) segment is showing positive traction, with commercial production of battery chargers, motor controllers, and DC-DC converters. The EV segment generated just under ₹2 crores in revenue in Q1 FY26. Total investment in EV products, including operational development costs, stands at approximately ₹21 crores. Management anticipates significant volume ramp-up for smart locks, with expected first-year volumes of 60,000 to 70,000 units for one customer, with overall impact expected in the second half of FY26.

    05

    Capital Allocation and Acquisition Strategy

    Capital expenditure for Q1 FY26 was ₹101 crores, which included the balance payment of ₹50 crores for the Sundaram-Clayton acquisition. The total FY26 capex plan for expansion and maintenance is approximately ₹250 crores. The company's gross debt stood at ₹862 crores and net debt at ₹825 crores as of June, with a target to keep debt between ₹850-900 crores. Sandhar plans to raise up to ₹500 crores through a QIP for future acquisitions, targeting businesses with a post-tax ROCE above 18% within 2-3 years.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.