SEDEMAC

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.

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.

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.

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.

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.

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.

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.