Sansera's Outlook: Diversified Growth, Resilient Margins

• Outlook for Sales: Overall double-digit growth for FY26 is uncertain due to geopolitical volatility and tariffs; however, the Swedish subsidiary expects 20%+ full-year growth. The ADS segment targets INR280-300 crore revenue for FY26, aiming for INR1,000 crore in 3 years. The long-term order book is projected to reach INR5,000 crore by FY28.
• Outlook for Margins: The company maintains a mid-to-long term EBITDA target of 20%, aiming for a 50-75 basis points improvement once market conditions normalize. Q1 FY26 saw a healthy EBITDA of 17.2% and PAT margin of 8.2%, with the Swedish business expected to maintain double-digit margins.

Sansera Engineering Limited's Q1 FY26 earnings call, held on August 12, 2025, provided a detailed look into the company's performance amidst market headwinds and its forward-looking guidance. Despite facing global uncertainties and domestic slowdowns in certain segments, Sansera demonstrated resilient profitability and a clear strategic vision for sustainable growth. The management emphasized its diversified portfolio, cost optimization efforts, and aggressive expansion into high-growth areas like Aerospace and Defense Solutions (ADS) and aluminum forgings. The call underscored Sansera’s commitment to outperforming the industry and leveraging its engineering capabilities to navigate the evolving market landscape, focusing on both near-term stability and long-term expansion goals.

Strategic Diversification Fuels Growth Trajectory

Sansera's growth strategy centers on diversification across segments and geographies. While domestic revenue grew by approximately 4%, primarily driven by PV, CV, ADS, agriculture, and industrial applications, 2-wheelers showed muted performance. International exports, excluding ADS, declined by 20.6% due to global uncertainties, though the Swedish business grew by an exceptional 80% year-on-year from a low base, with full-year growth expected to be 20% to 25%. The ADS segment remains a primary growth driver:

“We would want to double our revenue from the past year and try and reach about INR280 crores to INR300 crores [for FY26].”

The total order book stands at INR20,243 million, with new orders worth INR1,732 million added this quarter, predominantly from ADS. Over the long term, Sansera aims for a INR5,000 crore revenue by FY28, bolstered by a strong order book and strategic investments in aluminum forging, targeting INR500 crore from this portfolio.

Margin Resilience and Operational Efficiency

Despite difficult market circumstances, Sansera maintained a healthy margin structure in Q1 FY26, with EBITDA at 17.2% and PAT margin at 8.2%. This was attributed to various factors, including volume increases, better capacity utilization, and ongoing automation in its Swedish operations, which are expected to contribute to double-digit margins on a full-year basis. The company has successfully passed on the impact of US tariffs to most customers, minimizing negative effects on profitability. Management stated its commitment to cost optimization:

“We remain committed to cost optimization in this environment when the macro environment is very volatile and beyond our control. So we remain focused in terms of managing our profitability in a manner which is more sustainable.”

The mid-to-long term EBITDA margin target remains at 20%, with a projected 50-75 basis points improvement as conditions normalize and the product portfolio shifts further towards non-automotive and xEV segments. Initiatives like raw material yield improvements and optimized manpower utilization also support margin stability.

Conclusion

Sansera Engineering Limited's Q1 FY26 earnings call paints a picture of a company prudently navigating a complex market while strategically investing for future growth. The focus on diversifying revenue streams, particularly in ADS and aluminum forging, alongside a strong emphasis on operational efficiency and cost management, positions Sansera for sustained profitability. While geopolitical factors introduce near-term uncertainties for overall growth targets, the company's clear vision and segment-specific ambitions highlight a robust strategy aimed at delivering long-term value and outperforming industry trends.