Sandhar Tech

Sandhar Technologies delivered a robust performance in FY26, with consolidated revenue reaching an all-time high of INR 4,852 crores, representing a 25% year-on-year growth. EBITDA also saw a significant increase of 28% to INR 513 crores, achieving a margin of 10.6%. The company's PAT grew 40% year-on-year to INR 199 crores, demonstrating strong profitability. The India business was a key driver, growing 28% against an industry average of 12.7%, with the two-wheeler segment showing exceptional growth of 35.1%.

While overseas subsidiaries reported an annual EBT loss of €2.56 million (INR 26.19 crores) for FY26, Q4 marked a significant turnaround, achieving break-even at the EBT level with an EBITDA of 14.6%. Management expects continued improvement, although Q1 FY27 might see a temporary dip due to recent aluminum price increases and the lag in pass-through mechanisms. The strategic rationale for overseas presence is to support Indian operations and customer relationships, with a re-evaluation of the business model planned post-stabilization.

Sandhar has invested INR 342 crores in five new units, which have already generated INR 468 crores in revenue, exceeding initial expectations. However, these projects have specific timelines for profitability. The Sundaram-Clayton acquisition is expected to turn around from Q3 FY27, while the Khed City aluminum die-casting project and Pune cabins/fabrication unit are projected to generate EBT margins or turn around from Q2 FY27 and end of Q2 FY27, respectively. The EV business is slated for profitability by FY28.

The company provided a conservative revenue growth guidance of over 15% for FY27, excluding potential price re-triggers. Management aims to double revenues every three to four years. For existing projects, an EBITDA margin improvement of 0.25% is targeted. Overall consolidated EBITDA margin is expected to grow from 10.57% to a band of 0.25-0.5% due to new projects and cost optimization efforts. On a revenue base of INR 10,000 crores, the company anticipates a PAT of around INR 450 crores, targeting a post-tax return on capital employed of 15-20%.

Sandhar maintains a healthy debt-equity ratio, with gross debt at INR 948 crores and net debt at INR 897 crores. Working capital debt, amounting to INR 564 crores, is directly linked to revenue size. The company has a repayment commitment of INR 103 crores for term loans in FY27. CapEx for FY27 is projected to be between INR 275-310 crores, representing 5-7% of estimated revenues, allocated for growth, maintenance, and upgradation. The company prioritizes preserving cash reserves and maintaining a healthy liquidity position.

The company faced significant operational challenges in April 2026, including shortages of gas, raw materials (especially aluminum), and manpower. Absenteeism reached 20% due to holidays and elections, compounded by state governments increasing minimum wages by 30-50%. These factors led to an estimated industry-wide loss of 200,000-300,000 vehicles. However, management noted improvements in May and expects operations to return to normal by June, highlighting robust underlying demand.

Sandhar highlighted its competitive advantages in the casting business, including expertise in thin-walled, machine-less castings from its international operations. Through the acquisition of Sundaram-Clayton and TVS machining business, it has become an integrated player offering high-pressure, low-pressure die casting, and machining for components ranging from small to large engine blocks. The company is also a unique provider of high-pressure zinc and magnesium castings. In telematics, Sandhar is pursuing technology transfer and collaborations on a royalty basis, aiming to lock in suitable technology within 12 months.