SEDEMAC Mechatronics Limited — Q4 FY26 earnings call

Call held 18 May 2026

Management summary

SEDEMAC delivered a robust Q4 and full FY26, achieving record revenue of ₹1,058 crore with strong profitability and RoCE, driven by high ECU volumes and broad-based growth across mobility and industrial segments. The company is expanding manufacturing capacity and diversifying its product portfolio, while acknowledging potential mild margin pressures from commodity costs and supply chain issues, and the impact of El Nino.

Highlights

  • FY26 Revenue of ₹1,058 crore, up 61% YoY from FY25, crossing the ₹1,000 crore mark for the first time.

  • Q4 FY26 revenue growth exceeded 60% YoY, with even higher growth in EBITDA and PAT.

  • FY26 EBITDA was more than ₹200 crore, achieving a 21% EBITDA percentage.

  • FY26 PAT was more than ₹100 crore, with an excellent RoCE of 40%.

  • Sold over 3.9 million control intensive ECUs in FY26, representing more than 60% growth compared to FY25.

  • ISG penetration in 2W/3W reached 8.4 million units in FY26, up from 5.1 million three years prior, with SEDEMAC contributing over 80% of this incremental volume.

  • New manufacturing plants (MF3 for ECUs, MF4 for electric machines) are being set up, with shipments expected from Q2 and Q3 FY27 respectively.

  • Customer concentration risk has been decreasing over the last three financial years.

Concerns

  • Commodity price inflation and semiconductor supply chain tightening are expected to put mild pressure on EBITDA percentage in FY27.

  • Potential negative impact of a strong El Nino in CY26 on Indian monsoon (affecting 2W market) and US hurricane season (affecting genset market).

  • Management explicitly stated they will not provide quantitative guidance for future CapEx, product-level margins, or future revenue/volume numbers.

Key financials

  1. Revenue ₹1,058 Cr +61%YoY
  2. EBITDA ₹200 Cr
  3. EBITDA Margin 21%
  4. PAT ₹100 Cr
  5. RoCE 40%
  6. Control Intensive ECUs Sold 3.9 Mn +60%YoY

What they filed

Q1 FY27: revenue up 72.2%, net profit up 266.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ4 FY25Q1 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue180 217 267 288 310 +72%
EBITDA28 43 51 60 59 +111%
Net profit9 17 24 32 33 +267%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex Capex disclosed Debt, internal accruals, and equity capital
    • Cumulative Plant CapEx till March 2025 ₹227 Cr
    • Product Development Investment ₹256 Cr
    • New ECU manufacturing plant (MF3) - 3x current size
    • New electric machine/motor manufacturing plant (MF4)
    • Land acquisition in Shoolagiri for future shipments to southern India customers
    So we have debt, then the internal accruals and the equity capital, these three.

What to watch in Q1 FY27

MF3 plant ECU shipments

Q2 FY27
Current Under construction/setup
Target Shipments starting

Why it matters

Indicates progress on capacity expansion and potential for 3x growth in ECU production, directly impacting future revenue.

And the shipment of ECUs from this plant is expected to happen from Q2 of this financial year.

Risks & concerns

  • Commodity price inflation and semiconductor supply chain tightening

    medium

    Significant inflation of commodity prices and tightening of the semiconductor supply chain are likely to put mild pressure on EBITDA percentage in FY27, though not expected to be dramatic.

    Management acknowledged

  • Impact of strong El Nino in CY26

    medium

    A strong El Nino could negatively impact the Indian monsoon (affecting the 2W market) and the US hurricane season (affecting the genset market), but the impact is not expected to be significant.

    Management acknowledged

  • R&D efforts not yielding future solutions

    medium

    New technology development is inherently high-risk and uncertain, though the company's track record in R&D has been good so far.

    Management acknowledged

  • Customer concentration

    low

    The metric for customer concentration has been decreasing over the last three financial years, and it is natural to have some concentration in the early stages of market adoption in the automotive industry.

    Management downplayed

Q&A highlights

7 direct, 1 evasive
Capacity expansion and product focus for new plants (MF3, MF4, Shoolgiri) Direct
MF3 will produce ECUs, things that we are selling today. It will effectively become our mother plant for ECUs and it will provide the 3x opportunity to grow. So our current mother plant is 40,000 square foot. This is 120,000 square foot... MF4, we have already mentioned to you that we'll produce electric machines, which are motor specific. So we will start selling electric machines for the two-wheeler industry soon.

Clarifies the strategic purpose and scale of new manufacturing facilities, indicating future growth areas in ECUs and electric machines.

Asked by Priyansh Miri

Evolution of ISG penetration in 2W/3W market Direct
India produced about 27 million two, three wheelers, including exports... 8.6 million kind of ISGs that the industry has already seen. So we are at about 35 to 37 percent penetration... we think all ICE 2 wheelers will have ISG eventually.

Provides context on current ISG market penetration and management's long-term view on its widespread adoption, highlighting significant growth potential.

Asked by Mukesh Saraf

SEDEMAC's competitive advantage and 'right to win' in EV MCUs Direct
The right to win is not only on this technology, but it is also that we are already one of the largest makers of motor controllers in the country. We produce more than 3 million motor controllers a year already. There is nobody else except Shindengen maybe who produces that as many for mobility application.

Explains the company's strong competitive position in the EV MCU market, emphasizing its unique sensorless technology and established production scale.

Asked by Nisarg Shah

Applicability of sensorless ECU technology in premium 2-wheelers and elimination of physical sensors Direct
400 CC, et cetera, is not one that is going to give us big revenue. But there is nothing fundamentally that prevents us from utilising that... in two sensorless, that is motor control, we are the only one... one set of sensors that completely gets eliminated... running on 10, 12 million vehicles. So there is no question of high temperature and blah, blah being an issue.

Addresses the versatility and robustness of their sensorless technology, confirming its applicability beyond mass-market vehicles and its proven reliability.

Asked by Radha

Supply chain risks for imported semiconductors, especially in light of geopolitical tensions Direct
Yes, we import all our... All semiconductors are imported... During COVID, there was a big shortage... So that sort of thing we are not immune to... we are very, very well equipped to deal with that because we have the ability to conjure up new designs and we have complete control over what we are doing based on available components, etc.

Acknowledges the inherent supply chain risk due to import reliance but reassures investors about the company's preparedness and mitigation strategies based on past experience.

Asked by Ameet Joshi

ISG starter generator manufacturing and OEM sourcing Direct
The MF4 plant that you saw there will start shipping the electric machine also, which is what you are calling as a starter generator. So the electric machine plus the controller, the ISG ECU, that becomes the starter generator together. So the electric machine will also, to some extent, start getting shipped from our facilities beginning Q3 is our expectation.

Indicates a strategic move towards vertical integration for the ISG system, potentially offering OEMs a more complete solution and capturing more value.

Asked by Deep Gandhi

Competition in the ISG market and maintaining market share Direct
Nobody maintains a monopoly forever... some of the more technically competent people may solve it and there may be some competition, but we will have our own improvements. We are in Gen 4 right now. We'll keep doing something to maintain a good share is our hope.

Addresses concerns about potential future competition in a market where SEDEMAC currently holds a dominant position, outlining their strategy to innovate and retain market share.

Asked by Deep Gandhi

Management's long-term vision/aspiration for SEDEMAC (3-5 years) Evasive
Oh, no response to this. Sorry... The only aspiration since the beginning of the company has been the same. We want to produce fresh control technologies and see widespread adoption. That will never change and that will continue to remain.

While not providing specific financial targets, it reiterates the company's core mission of technological innovation and widespread adoption, which is fundamental to its long-term strategy.

Asked by Shreya Ruia

3 min read 7 chapters

Detailed narrative

Q4 & FY26 Financial Performance Overview

SEDEMAC reported a strong Q4 FY26 with revenue growth exceeding 60% YoY, accompanied by even higher growth in profitability (EBITDA and PAT). For the full fiscal year 2026, revenue reached an all-time high of ₹1,058 crore, marking a 61% increase over FY25. The company achieved a three-year revenue CAGR of 36% and an impressive RoCE of 40% for FY26. FY26 EBITDA surpassed ₹200 crore, with an EBITDA percentage of 21%, and PAT exceeded ₹100 crore.

Business Segments & Product Portfolio

The company's growth in FY26 was broad-based, stemming from both mobility and industrial segments. Key products include control-intensive ECUs, with over 3.9 million units sold in FY26, representing more than 60% growth from FY25. The product portfolio spans motor controllers (ISG ECU, ISG + EFI, MCUs for EVs), engine controllers (EFI ECU), and genset controllers. SEDEMAC's revenue is primarily driven by these critical control-intensive ECUs, with 85% to 90% of revenue coming from these products.

Key Product Updates & Market Penetration

SEDEMAC saw a significant ramp-up in its ISG ECU for ICE 3-wheelers in FY26, driven by OBD 2B norm changes, leading to widespread adoption in the domestic market. The company's e3W MCU, launched in Q4 FY25, and e2W MCU, with SOP in FY26, also saw substantial ramp-up, contributing decent volumes from the EV segment. The ISG + EFI ECU, combining both functionalities, gained traction due to integration cost benefits. SEDEMAC's sensorless ISG technology is now used by three out of the top four 2-wheeler OEMs in India, with ISG penetration reaching 8.4 million units in FY26, up from 5.1 million three years prior.

Capacity Expansion & Funding Strategy

To support strong revenue growth and high capacity utilization, SEDEMAC is investing in new manufacturing plants. MF3, a new mother plant for ECUs, is three times the size of the current plant (120,000 sq ft vs 40,000 sq ft) and is expected to begin ECU shipments from Q2 FY27. MF4, dedicated to electric machines/motors, will start shipments from Q3 FY27, enabling the company to sell electric machines for the 2-wheeler industry. Funding for growth comes from debt, internal accruals, and equity capital. The cumulative plant CapEx till March 2025 was ₹227 crore, which supported ₹1,058 crore in revenue, with an additional ₹135 crore in working capital investment.

Risk Assessment & Mitigation

A risk assessment survey conducted with 20 investment professionals indicated overall risks (customer concentration, ISG penetration, product quality, EV relevance) are perceived as between low and medium. Customer concentration, a key risk, has been declining over the last three financial years. While acknowledging potential mild pressure on FY27 EBITDA from commodity price inflation and semiconductor supply chain tightening, management expressed confidence in their ability to manage these, citing past experience during COVID-19. The company also noted potential impacts from El Nino on the 2W and genset markets but does not expect them to be significant.

FY27 Outlook & Growth Drivers

The outlook for FY27 remains positive, driven by the introduction of SEDEMAC ISG on three popular motorcycle models from top OEMs, with two launches in Q1 and one in Q4 FY27. Continued ramp-up of e2W MCUs is also expected. The company anticipates starting production of after-treatment controllers for commercial vehicles in H2 FY27 and has secured its first business win for motor controllers in the power tools market, with SOP expected in the next four to five quarters. Exports of ISG ECUs for 3-wheelers have also commenced and are in a ramp-up phase.

Technological Edge & Competitive Landscape

SEDEMAC emphasizes its unique sensorless motor control technology (SLC), which is critical for reliability, especially in EVs, rather than just cost savings. The company is a leading manufacturer of motor controllers, producing over 3 million units annually, with few global competitors in this specific application. They are also developing rare-earth free electric machines integrated with controllers, which are currently undergoing internal and customer testing. Management believes their ability to produce fresh technology and achieve widespread adoption differentiates them from traditional auto ancillary companies.

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