Sansera Engineering Limited (SANSERA) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Sancera Engineering Limited Q3FY26 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. This conference may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Mr. B.R. Pritham, the Executive Director and Group CEO. Thank you, and over to you, sir.

Thank you. Good morning and welcome, everyone. Sorry for making you to join so early in the day. Thanks for joining this call. On this call, I am joined by our CFO, Vikas, our CEO, ADS Division, Hari, Hari Krishnan, Head of Corporate Strategy, Mr. Praveen Johan, our CEO, Rahul Kale, and And our investor relations advisor is GA. The results and the presentations were uploaded on the stock exchange and the company websites. I hope everybody has had a chance to look at them. I am delighted to connect with you all from our newly inaugurated Pantanagar facility, a state-of-the-art plant dedicated to serving domestic two-wheeler OEMs. We will be primarily producing cramps in this plant, which would help in increasing our content per vehicle for the ICE segment, which is having a very good current demand in this segment. In the quarter gone by, Santera reported its highest ever quarterly figures for sales of INR 9077 million as well as EBITDA of INR 1639 million. Fat after exceptional item of Rs. 162 million pertaining to the revised labour code laws stood at INR 694 million. The performance reflects an improvement in EBITDA margins at 18.1%, whereas PAC margin remained healthy at 7.6%. To highlight this momentum, let me outline a few revenue cuts that we achieved our best-ever quarterly performance milestones during this quarter. Geographically, revenues from Europe grew by 27% year-on-year, while the sales from our other foreign countries more than doubled on a small base, together driving our best-ever international sales force on Sera. Segment-wise, ADS revenue stood more than 4x on a year-on-year basis and more than 2x on a quarter-on-quarter basis. This is in line with our expectations and guidance and sets a new benchmark for us in the non-automotive performance. Following the interim US-India trade deal and EU-FTA, we expect a positive impact on both current exports and new opportunities. From a domestic market perspective, the post-GST momentum in the auto segment remains strong, driven by new model launches. This is reflected in the solid auto sales figures for the month of January as well, reported by the OEMs. Production schedules for us for the coming months indicate sustained robust growth. Further, we see long-term benefits in semi-con space with government's upcoming launch of India's Semiconductor Mission 2.0, which is aimed at supporting equipment and material manufacturing, develop full-stack Indian IP, and strengthening supply chains, and we are strongly present in the equipment space in this case. Zooming our performance for the quarter. Seasonally, this is a weak quarter for the auto segment due to annual maintenance-related shutdown and yearly model change. However, on a year-on-year growth of 13% in the auto-I space led by PVs, HCVs, and motorcycle components. At the same time, Auto Tech Agnostic and HCV recorded about 26% year-on-year growth. For the non-auto business, revenues more than doubled during this quarter. As of December 2025, our peak annual revenues for new business stood at INR 24.1 billion. If we look at the cumulative unexecuted lifetime order book of backlog till FI30, specifically for the ADS business, it stood at INR 38.7 billion rupees. As we look forward, from here our pipeline remains robust and the outlook along with the market backdrop and the client sentiment continues to be upbeat. Based on our current order execution and customer schedules, we remain confident that we will close the year with teens to mid-teens top-line growth while comfortably maintaining our current margin profile. With our 9-month ADS revenue crossing Rs.2150 million, we are on track with respect to ADS, our ADS target for the FY26. Lastly, as we mentioned in our previous earning calls, that we are also exploring new geographies in east of Asia, especially Japan, to engage with a new set of customers, primarily in the auto space. Towards this, we have recently signed a joint venture agreement with Niche Dye Corporation of Japan. Our JV partners expertise in manufacturing of tools, dyes, and precision components in cold and warm poached categories. And these are manufactured across operations in Japan and Thailand. With the range of tech agnostic components under this JV, we will be, we are well aligned with our diversification strategy. Santera will be investing rupees 500 million towards this JV for a stake of 60% over a couple of years. With this, I would like to hand over the call to our CFO, Mr. Vikas Goyal.

Thank you, Pritam. Good morning, everyone. Let me take you through our consolidated financial performance for the third quarter of 526. Our revenue from operations increased by 25% on a year-on-year basis and stood at INR 9077 million, marking it the highest by the company. Due to a positive product shift, we have witnessed margin expansion during this quarter leading to a 60 basis points increase in the operating margins. This is after making provision for the development cost, which is a one-time year-on-year growth of 9% and 18% cost for the quarter stood at INR 79 billion, which is significantly lower, owing to the last one year. We recorded Profit after tax stood at Rs. 694 million, with an increase of 24.2% on a year-on-year basis, at a margin of 7.6%. This is after a one-time exceptional cost pertaining to a revised labour code amounting to Rs. 162 million. Doing this, our PAT number stood at 857. Nine-month performance, we reported revenue from operations of INR 24992 million. Year-year EBITDA for the periods stood at 1 million, 0.2%. And open the floor for questions and comments. Thank you.

Thank you. We will now begin the question and answer session. If anyone wishes to ask a question, you may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Participants are also requested to restrict themselves to two questions. If you have any more questions, you may be requested to rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Mukesh Saraf from Evendus Park. Please go ahead.

Sir, good morning. Thank you for the opportunity, and congrats on a good set of numbers, especially the ADS division. My first question is on this new plant in Pantanagar. Could you kind of give some more sense around this, especially talking about the content per vehicle increase? So we know that, you know, you're quite strong in terms of wallet share on the connecting rod and the other parts, But is this, or could you give some sense on how we are on wallet shares, on crankshafts, and crankshaft assemblies, and hence how this new plant can kind of help us probably increase content, or is it, say, a new customer? Some more sense around this will help.

Yeah, thanks, Mukesh. Yeah, see, we already have quite a big plant in Panthanagar, which caters to primarily to the two-wheeler sector, where we have both machining and forging components. But as you are aware that Bangalore or Karnataka plants are almost full, except that now we have got a new place in Biddi. It will take some time for us to develop, and all the growth now needs to be focused on this. So with that intent, we have bought this second plant in Pansanagar, which we bought it about a year back. So, we had to do up the plant to bring it up to our required standards, which we have done over the last 8-9 months. Now, we have put up, to begin with, there are two manufacturing sheds here, approximately about 2 lakhs square feet. One of them, we have started activating it, and then we have put up a couple of crankshaft lines. And here the intent is that we are now going to build this with significantly high amount of automation with IoT and all the data capturing and analytics and all these things. So, the first two lines have been put, and also, this would be predominantly operated by women employees. As we speak today, we are close to 60% of the employees who have been employed here are women, but over the time, we want to take it to 100%. This plan, primarily, is for focusing on our domestic two-wheeler segment. So, we will consolidate our operations here. So, having said that, there is a lot of opportunity now we see where companies are looking at more and more outsourcing. There are quite a few of leading two-wheeler OEMs who still manufacture crankshaft assemblies in-house. So, I would say more than, still more than 60% of Indian automotive two-wheeler industry still manufactures these crankshaft assemblies now. There is an interest shown by all of them to gradually outsource these components, so we also stand a good chance to participate in this drive. So, keeping all this in view, so we have put up this place, and we expect that over the next couple of years, we should be fully utilizing this space.

Okay, great. That makes sense. Any number that you have in mind, sir, what kind of revenues, say, once the second shed also is operational, this plant can generate over, say, next three years or so?

No, I think, see, potentially the kind of square foot that we have put, if it is fully occupied, this can actually generate close to about 500 crores per annum. I mean, that depends again on what kind of product mix we are going to port and what kind of thing, but that is what is the intent.

Understood. And second question is on the tech agnostic and the XEV order book. It's around that 400, 430 crore mark. Notice that this number has been around the same, say, over the last three, four years in terms of the outstanding order book there. While I know that this is going to get executed over the next three years, I mean, the order books staying the same probably will result in the growth tapering of, say, second year, third year from now. So, how are we looking at this order book? Is it largely export-driven, and hence, now these trade deals can help in curing up that order book there, some kind of that will help?

Yeah, see, there are two things. Techagnostic mainly pertains to the aluminum forging kind of component that we have taken, and we have taken a pause in taking the newer orders because we are also establishing our technology there, and then we are also, you know, stabilizing what we have taken. We have taken a lot of components in the beginning of the year. So that is why you see that specifically it is an intended pause that we have taken on the segment. I hope by towards the end of this financial year, our learnings would have got stabilized and we would really look at, go approach our customers with all the learnings that we have had and start looking at more opportunities, both in passenger vehicle and two-wheeler space. So, you are right when you have seen that last one, one and a half years, we have not added too much of, this was not, this is not that there is no interest, there is very clear decision that we had taken, which I had also communicated in my previous calls. As far as the XEV components are concerned, definitely there is a large scope going forward, both in hybrid space, we are working with multiple, with our leading OEM, Japanese OEM, who are the world leaders in this technology. We are there on Gen 4, Gen 4.5, Gen 5 programs. We are also looking at building the similar capabilities with another Japanese OEM and also leading North American OEM. So I see that over next couple of quarters or over next one year, there is a lot of order buildup can happen in this category. Apart from that, we are also looking at, you know, through our JV. So we will now focus on more of what is common between, which can be common between ICE and EV segments. So I see a lot of, at least in passenger vehicle kind of components, a lot of potential to expand in XEV. Of course, two-wheelers depends on, we are already there with all the major players, and then it also depends on how well the market expands in the XEV segment.

Got it. Great, sir. All the very best. I'll get back with you. Thanks.

Thank you.

Thank you. The next question comes from the line of Arjun Khanna from Kotak Mutual Fund. Please go ahead.

Congratulations to the entire team for a great set of numbers. Sir, my first question is on the expansion of CAPEX. We were planning a plant maybe in the U.S. based on post-tariff negotiations. Given that there is some clarity at this point in time, could you call out what kind of KPEX we envisage for a U.S. unit?

Hi, Arjun. How are you? So, thanks again. Yeah, I mean, Arjun, I think while the news has come and it's very positive, we expect that there will be momentum and traction that will build up in the decision-making process Because while there were a lot of discussions that was happening, the decision-making was not happening. So we expect that now, while there are still, because we really don't know yet whether our component falls under 0 or under 18. Right. I mean, 0 would really be a huge potential. Of course, 18 is also not bad. So, I expect that, you know, towards the end of this month or maybe middle of this next month, we may plan a visit to, you know, conclude what we are discussing with our customers and come up with it. The numbers are quite huge in terms of what is the potential, but I really can't put a figure because I really don't know whether it will be 3 million or 8 million or 10 million connecting loads. So, depending upon what numbers comes out, only we can really put the figures. But, you know, with the reduced tariff, I would only concern now would be the RVC. So, we need to only look at that as to how the residual value content. So, that only would be the driving force in decision making for them. So, that we'll have to work it out around what final tariff will come and then see whether we qualify to the current 65% norms that are there and then later on be also ready that if it has to go up to 70 or 75 in coming years. So, with that in mind, we will distribute our value addition once the order gets finalized.

Continuation, in the second quarter call, we had said that the tariffs were causing some pressure on sales offtake, especially in U.S. and European markets, and also impacting margins in some cases. Given that we have had a successful third quarter, given that now at least the tariff rate seems to have come off, so should we expect a significantly stronger uplift in margins and exports to these regions in the latter half of fourth quarter or first quarter FI27?

Except for one or two customers, we have had a decent third quarter in exports as well. If you see, we have had better quarters this year, so that is already there. Of course, there is some capacity utilization. Still, we are not at our optimum capacity utilization. See, all these things only make sense beyond a certain capacity utilization. While my product margins may be very good to exports, But if I'm not using capacities, at least up to 70%, those get diluted. So I expect that going forward in the fourth quarter onwards, definitely there should be larger momentum leading to better offtake. And having said that, one of our most premium customers who are the leading North American-based EV manufacturer, we are down by 50% on last year's numbers and down by almost 60% on our own projections. So, I expect that once that also comes in place, because we are also adding a lot of business from them, including in energy sector, and we are looking at participation even in, you know, the other upcoming sector. So, that is the reason that we are also very optimistic on the coming quarters in terms of both sales and margins from exports on our continents.

Perfect. Sir, the second question is on the ADS. So, obviously, I think we've been talking of 300 crores, and we are on track of meeting or beating that guidance, so congratulations. We've also given a stiff target for FY27. Given you've mentioned in the press release that the capex of maybe 250 crore rupees for further expansions post that, we should probably be fully utilized by FY27. So, when do we expect the new capacities to come in?

Arjun, I'll take this and then pass it on to Hari. Hari will expand on that. Yes, we have had a... So this year, we had kept ourselves a target of between 275 and 300, and I hope that we should cross 300 comfortably this year. And in this first building, we had also said that we can go up to between 600 and 650 crores of revenue annually, which is what we are looking at for the next year. Between 550 to 600 is what we look at, and then for which the entire facility is the thing. But we have also started construction. Hari will take you through what we are looking at beyond 600 and what is the status of both our new plant as well as the...

Good morning, this is Hari here. And, you know, as we have been updating, you know, the community, the current CAPEX, what we have already committed and already installed, The call is adequate for us to reach our FY27 numbers, which, as Picham just said, is between 500, 550 to 600 is our expectation and guidance. And the construction of the new facility adjacent to the current one is underway. Construction is going on in full swing. We expect that to be ready by June, July of this year in another five to six months' time, and that is about 80,000 square foot of manufacturing space. For the FY27 revenues, what we are targeting, see, we also have to look at this in conjunction with the lifetime order, what we are holding currently, which is about 3,800 crores to the FY30, So, which means there is going to be a steep ramp in revenues going forward from FY28 to FY30. So, we are getting ready with a new facility. The equipment for that facility, based on current order wins, is already on order. To start getting operational with a substantial footprint.

If you could just give some color in terms of each of these segments. Have we had new clients and new order wins?

Well, we've had new clients in the aerospace division. On the semiconductor division, while we have one very active client right now, a customer, discussions are, I would say, progressing well with other players in this space, and the conversion, in my opinion, will happen pretty soon.

Arjun, having said that, this is the first year of execution for us in terms of Semicon. So, there has also been a lot of, you know, FAA is converted to production and the requirements are pretty stiff. So, we are taking, you know, we are just now establishing ourselves. We really did not go, because the facility was also full, we could not actually take it and not satisfy the customer. I think towards the second half, we will focus more on, you know, marketing it properly and getting a few more clients into the...

Yeah, and I would say what we look at it internally, yes, it's always important to have new clients, but the existing customer is also looking at much, much bigger things from Sancera. So, he is going to definitely keep us busy for the next one year. More the better. So, if more discussions convert earlier, we are ready resources-wise to attend to them also.

And also, with this, the second phase also, we expect that in next one, one and a half years, we should be full with the second phase. So, management actually have started, you know, we have started looking at additional space for aerospace in either Aeropark 1 or 2 or the new STTR which has come for semiconductor where Foxconn and all the new facilities have come up in that region. So, we are looking at some more, because long term, we would require some larger space for aerospace and defense, given the way the order built up and the interest shown from both aerospace, because the last year has been quite, the thing dominated by Semicon, but aerospace also, we see a lot stronger growth here.

Sure, and the asset term for this 250 crore should be 1.5x to 2x?

No, see, the first portion of our investment, which is like about 350 crore, including our special process investment, should give us about 600-650, which is about 2, okay? Right. But then going forward, the incremental investment in the second phase of this building should give us about 3x, the thing. But then overall, if you see, it is better to take about 2x.

Perfect. Thank you, Pritam and Hari, for patiently answering and wishing you all the best in the future. Thank you.

The next question comes from the line of Siddharth Beira from Nomura Holdings. Please go ahead.

Yeah, thanks for the opportunity, sir. Again, congrats on a great set of numbers. Sir, first question is on this Europe and US deals, you talked about a good traction in the exports and potentially new opportunities as well. So can you just elaborate a bit on where do we see some of these areas, given that exports currently, which I believe is mostly led by your aerospace, and how do we look at other opportunities and segments like PV, which has got impacted in the past?

Yeah, I think, Siddharth, thank you. So, see, there were, we have seen significant increase in terms of the discussion, the RFQs, the interest, everything was there in the last six to nine months. There have been both from U.S. and from Europe, automotive customers have engaged with us in various platforms of theirs in looking at larger programs in terms of what we want to do on the connecting rod especially. And we expect that with this trade deal out of the way now, for both Europe and the thing, that the decision-making will start happening. So our expectation, see, the biggest challenge for us when these things happen, it gets packed up. I mean, a couple of big orders, which means that we are talking about 3 to 4 million from each customer. And then that has to end-to-end, Santera is a fully integrated facility. So we need to create end-to-end capacities. So we have already started looking at long-term capex that needs to be done, which is mainly on forging pressy. We are currently manufacturing close to about 110 million components every year. And this requires a lot of planning and capacity in terms of, Raul and his team have been now working on for the next two years and beyond. How do we have to add? So, a lot of planning is going on in the forging capacity augmentation and the thing, because that takes the longest lead time. I think that Abhito party should be here. So, I think we have a lot of traction and I think we are in a good space now.

All right, sir. On this Nichidai baby, can you talk about the potential you see?

Sorry, I'm sorry you're breaking. Can you come again, please? Siddharth, we couldn't hear you. Siddharth, you're still not audible.

Sorry to interrupt. Siddharth, you're still not audible.

We got the question. It probably meant that what is the potential of NICHDAI and what kind of components? Hari will take that question. No, but I think I heard it differently.

Sinat, can you again, sorry, can you repeat the question?

No, sir. According to NICHDAI, how do we look about the potential on SQEs on the revenue side, and is the margin rate better than our current business?

We have got into this joint venture mainly to get into two areas of forging where our presence has been practicing forging automatically mean high-position parts, near-net-shaped parts. So the applications are varied, totally different segments, and in transmission, we're talking about differential driveline. So, we also rent the margin profile of the products what we are targeting in the JV will be…

Thanks a lot. I will come up with the queue.

Thank you. Thank you. A reminder to all participants, please restrict yourselves to two questions. If you have any more questions, you may be requested to rejoin the queue. Our next question comes from the line of Kashyap Javeri from MK Investment Managers. Please go ahead.

Thank you so much, sir, for the opportunity, and congratulations for such a great set of numbers. My compliments also to Vikasji and his team. The presentation this time gives disclosures, which are probably at par or better than some of the best in the industry. So, you know, congratulations on that to Vikasji also. My question first is on the order flow. While in the earlier question, you mentioned about the Semicon part, if you can throw some light on the passenger vehicle order flow also, I understand you give the numbers yearly, but if any orders have now gone into production from the order book, and what's the kind of order flow there? Second question is on the ADS division. Now, that forms 24% of our overall order book. And in past, we have seen that, you know, at times it can be significantly volatile also. So, you know, what are we doing to sort of stabilize that volatility in that segment? Also, a connected question there. Recently, we heard about 80-220 doors or door friends being supplied by one of the Tier 1 suppliers, and we were supposed to be part of that. Is that now already part of the revenue flow? Is that been part of the production schedule now?

Yeah, just your question of volatility was in aerospace, is it? Yes, ADS. Okay, okay. So, let me first come to our international order wins on passenger vehicles. We have been quite active, as I said, that last, except for the ICE manufacturers, where there was a pause in decision making, but a lot of large potential opportunities are available. You would see in the next couple of quarters, provided the entire clarity on the FTA comes through, you will see a lot of conversion of these opportunities into orders. But, of course, as we said that for all these things, there has to be a backup by a U.S. manufacturing facility. So that would come. Meanwhile, we have also been working with expanding our XEV plus non-automotive segments. So, we have now got an entry into energy with this, you know, the largest EV producer of North America. They have also got energy segment they have got into, and we have got a very good first big order from them, amounting to about 70 crores per annum, which we will be executing it starting from NICS financial year itself. We are also working on a few other segments of connected things, could be on humanoids, could be on other autonomous cars and all that. So, that is something that we have focused upon, which will also be part of both Kansera as well as our upcoming JV, because some of these components would go into our JV segment. In terms of aerospace... But in PV ice,

the order flow is still sort of modest, right?

I mean, is that exactly what I said, that is because in terms of PVIs, both in Europe and in US, there has been a lot of discussion and interest, but the decisions have not happened because of the tariff issue that was there. I expect that in a couple of quarters this would come through. The volatility in the aerospace was mainly because of, you know, Boeing, one incident, couple of incidents of Boeing that was not very, because the regulator came heavily on them and there was a lot of inspection and checks before the dispatcher. So, they went now, but they are now, I think, as we understand, they are almost normalized now, and there is a lot of demand and focus even on getting more and more supplies, because not because of anything else, but because of availability of resources, especially trained manpower in India, where we also have challenges, but our challenges are probably much lesser compared to the other countries. So, that we don't expect too much of volatility. In terms of what was the other question? The other one is on the door.

A220.

Yeah, on the volatility, I want to add a couple of points. Even today, the two big aircraft manufacturers are booking orders more than what they are delivering. The backlog is continuously increasing, and they expect this trend to continue for the next long, long time. I mean, for years to come. So, barring something very untoward, like something which is very catastrophic, God forbid nothing happens like that, I think there is no much of volatility we see in this industry at all. And the last question on the company in the news recently which delivered the first ship set of doors for the A-220 aircraft, we are very much present in that. We had a large number of parts going into that first ship set, and also happy to inform you that our production has been ramped up, and we are now aligning our production to meet the requirement of our customer.

Just to squeeze in one small question here on the JV, the size is about 200 crore market cap and about 600-700 crore standout revenue. In the future, can it be like a meaningful part of Sunsera as well as their own journey, given their size is too small, probably just the tech which is probably useful to us?

You just said it. It is the tech. It is not the size. In fact, they have a combination of high technology, which we leverage into a low-cost manufacturing country like India. And also important to note that for some very critical components, they also have production lines established in their company. A few of the customers in Japan, where they started developing and supplying the tooling. So, it is a combination of tech and also high production volume ability for certain very key differentiating products.

See, Santera has a very strong mass manufacturing capability and well-established processor. So, it has a huge technology advantage. So, we think that combining this, we can address a very large section of non-IC components, which we were not there at all. So, we really want to focus on this segment and take it. This opportunity can be as big as our current automotive business.

The speed to market is going to be the differentiator. Okay. Hello. Sir, you were saying speed to market and then probably...

You are developing such critical components with new technology. The speed to market, especially considering somebody has the technology which is proven And they are a very, very well-known, respected name in the country. You know, with the relationships with all the major OEMs, I think that's going to be a very key differentiator. Okay.

Thank you so much. And again, hearty congratulations on a great set of numbers. Thank you.

Thank you. The next question comes from the line of Yash Agrawal from Nirmal Bank Securities. Please go ahead.

Hi, good morning. Congratulations on the great set of results. My first question is on gross margin. As you see, it's obvious that the gross margin has declined 190 bits, Y on Y, 100 bits, Q on Q. Could you help us break down the key drivers of this contraction? And how could you think about margin trajectory in Q4, F816, and F817?

Thank you, Yash, for the question. As I explained during my opening remarks, we had one exceptional or rather one-time adjustment this quarter when we basically provided for a development cost of about 100 million rupees, which is not in the ordinary course, but since we have been developing a lot of components off late, we made this actually impacting the margin for this quarter and also on a year-to-date basis. Ignore that our margin are more or less in line. Marginal variation we will always see because of the product mix changes, but on our overall trajectory, a gross margin, we expect to be stable in this territory.

And my second question is on sales mix trend. The share of other foreign countries in the revenue mix has increased in decent quarters. So could you elaborate which geographies are driving this growth and whether this effect any new customer will win?

No, this is basically because our other countries, the Semicon deliveries primarily happened to Malaysia. So, that is where you would see all the Semicon getting loaded onto the other countries. So, that is why the significant increase has happened.

Okay, sir. Thank you for my thanks. Congratulations for the QB.

Thank you, yes. Thanks.

The next question comes from the line of Divyansh Gupta from Latent PMS. Please go ahead.

Hi, sir. A couple of questions on the aerospace and defense segment. I understand that aerospace is right now, let's say, not fully utilized. But, let's say, when we hit the revenue of 600 crores, what would be the EBITDA margin for this business and similarly for defense? And also, what would be the working capital days requirement for this business? How does it differ from our current auto business?

Yeah, I mean, see, as we said that the first building would be fully utilized next year, but the second building would have started and we would have upfront invested. So there is always, you know, catching up in terms of utilization that happens, but then a significant portion of our investment would start getting used in the next year. So, we should see, you know, we are definitely towards, we had said that aerospace would give us about 25 to 30% margin. We think that once we fully utilize this, we would surpass that number of 30%. So, it could be, you know, very close to 30 or 30 plus.

Got it. And on the working capital?

So, the working capital in ADS business is approximately twice as high, or in terms of number of days, as against the automotive business. So, on an average, we have about 80 days of working capital cycle. In aerospace and defense, sorry, ADS business, we should be seeing about 170, 180 days.

Got it.

Understood.

And the second question was also on the ADS. So, from 600 to 3,900 crores of business that we have in hand, and is taking a two-time last and over, as you had mentioned. So, it implies about 1,600 crores of capex that needs to be done. What would be the timeline of it? Because I'm guessing you will establish the facility and some testing and acceptance-like line.

It's like this. Now, 3,800 crores is my order. Yeah, yeah.

First is, it is not EME 3,800. It is a cumulative, unexecuted order group of 3,800 till FI30.

So, I have to execute 3,800 crores of backlog orders in the next four years, approximately, okay? 2,700, cumulatively, totally. So, which means I expect in the last year, FY30, to be around 1,200, 1,300. So, today, if I'm already, I have a visibility for 600 revenue, which I mentioned a little earlier. So, my capex requirement for the differential 650, 700 would be, assuming 1 is to 2, about 300 to 325 crores, which I would do again in a phased manner year on year. Ending, definitely, by FY28, you know, somewhere, end of FY28, because I'll have to start realizing it in FY30.

Having said that, this is the current position, so any addition would attract additional, so we expect a lot of traction in areas, and that is the reason that in my commentary, I said that we are looking at an additional new space to look at some 10 or 15 acres of land in either phase 1, phase 2 of Vero Park or STTR, which is very close to the Devanali Airport. So, we don't expect that this is to be stagnant. This is the current position of 3000. We expect a lot of uplift in this order book also over the next couple of quarters and in next year.

Yeah, in the sense that, you know, we are 100% looking at new order wins in the next one year, where we have to start execution before it winds up. So, this is only a situation as on date.

Question comes from the line of Momoksh Mandalesha from Anand Rati Institutional Equities. Please go ahead.

Yeah, congrats on the strong result and with over 80% margin and very good positive commentary across so many segments. Sir, firstly, I just want to understand on the CapEx side, what is the CapEx plan for this year and maybe for next year? What are the plans? And also, sir, I just want to understand, if we go ahead for the U.S. plan, what kind of capex requirement would be required for that?

See, we had given about, while in the beginning of the year, we had said that it could be about 450 crores are this year's capex plan. We were willing to, I mean, we were looking at anywhere between 350 to 375. That's what more or less we will spend maybe towards closer or close towards 400 because we want to be aggressively. Now, we have started putting up a few more buildings, especially one fourth shop in our existing facility in Pantanagar. There is another building that we are starting in one of the Bangalore auto plants. So, all these things would mean that, you know, we see a larger momentum. So, we are a growing company, and we aspire to grow about 10% at least faster than the market growth, which means that the CAPEX would also be happening. And this year, if I say that between 375 and 400, a similar number could be for the next year as well.

And so, this would include the upcoming new ADIUS plan as well?

ADS is part of our overall capex. This does not include anything currently on U.S. U.S., as I said, that it can only be, you know, visibility will only come once we have certain orders confirmed and if customer wants us to put up facilities there, if they want us to do it from here, if the tariff is zero, we would also be very happy to do it from here.

Got it soon. So, on the Sweden side, how was the performance this quarter and how that is going, sir?

Sweden has grown very well. I think Sweden has grown year on year close to about 70%, 62.5% to be precise. Or no, about 70%, I think. Yeah. And we expect the momentum to continue. Of course, the cost Our structures in Sweden are different. From the beginning, we have said that this is a very strategic investment for us. One is for getting into large connecting rods. So, we do connecting rods up to 19-litre engine there, starting from 9-litre up to 19-litre, including for marine segment, including for, you know, large earth-moving equipment, large trucks, and all those things. So, it's a segment which we were not present, and it has given up a lot of opportunity for us through Indian plants as well. So, we would like to continue to operate as long as, you know, this EBITDA margins are between 10% and 12%. That is what we have been aspiring, and that is what we are doing. So, it will continue to deliver that kind of thing. Next year, the growth will get stabilized. Guys, I think next year, we are looking at about 20% growth, probably the range of 20%. Yeah, 20% in Sweden.

Just to possibly share, what was the Q3 revenue and margin, sir, for Sweden?

Q3 revenue was about 736 million rupees, I mean, converted to rupees, and the margin was about 14%.

Got it. And possible, what was the Q2, sir, for Sweden?

The numbers have...

No more. Thank you for this.

Q2 would have been lower because Q2 was one month off there, one month off, 591

million and 16% margin.

Got it. Got it, sir. Great, sir. And Congress on the strong resistance.

Thank you so much.

Thank you, Mahmoud.

Thank you. The next question comes from the line of Nikhil Rao from I Thought PMS. Please go ahead.

Yeah, thanks. A couple of questions from my side. On this JV with Nishida, I just wanted to understand the overall scope. Is it beyond automotive? Like, are you planning to enter into any new industries through their filter business? Could you provide some insights on that?

No, filters are not as part of the first phase of joint venture. We are focused on what we want to do, which is forged and machine category of components. Primarily, it would start with automotive, but there are opportunities in non-automotive. I said that there are opportunities in, you know, energy segment. There are opportunities in humanoids. We are looking at a lot of such things where cold and warm-forged high-precision components are required on a mass scale. So they have the technology. We will be co-working with them to get these orders executed from the market.

And my next question is on the commercial vehicle segment. So given that the industry looks like it's about to enter into an upcycle, are there any new order bins? Have you seen any new orders coming in the past few months?

See, we are not present very strongly in the Indian commercial vehicle industry. We only cater to a couple of players like Daimler and Olo Aishar. On this, we are seeing good demand increase, but we are not with Tata Motors, we are not with Ashukla and we are not much with Mahindra. So, for us, domestic commercial vehicle industry is not a very big part of our business.

Okay. And one last question, is there any new development on the MMRFIC side?

There's a lot of developments on MMRFIC, a lot of which I can't even say it, unfortunately, on the public forum. So, if there is an opportunity for you to visit, so you would see what all things that we are doing. On a public forum, because a lot of that is connected to defense, and it is connected to government organizations, both production and development, we are restricted to give too many details on this product.

Are your questions answered, Nikhil? Okay, okay. Yeah, yeah. Thank you. That's all for my time. Thank you. The next question comes from the line of Ashraf Patel from Molecule Ventures PMS. Please go ahead.

Thank you for the opportunity. Congratulations to the entire team for a phenomenal set of numbers. So, sir, my first question is regarding the qualitative aspects within Semicon division. So, we have seen excellent ramp-up in the numbers now. So, how are we able to hit at this scale in this segment so fast? What sort of caliber do we have in this space? How do we compare with our domestic and global peers in this segment? And in terms of skill set and know-how, value addition, etc., if you can throw some light on the qualitative aspects of the thing.

We have, thank you for the question. We have demonstrated last quarter that we are up there with the best in the world as far as execution is concerned. This ramp of what we have, you know, demonstrated has been very well received and accepted by the customers. And I think it's all due to the excellent team. We are a very, very focused engineering company. In the DNA, it only has to translate into different components because engineering is our core strength. And more complex the part, I think more welcome. So, I think we are very well placed, and the satisfaction level with the customer is pretty high. We are confident this will translate into more opportunities with the existing customer, and as I said earlier, with new customers also.

In fact, to add to what Hari has said, Sunset has been restricted to about one and a half, two meters kind of components in the previous years. Now, both in EDS as well as in, I mean, both in aerospace and defense and also in Semicon, we have developed and demonstrated and upped our capacities up to four meter components. So we can, including the special process capabilities we have set up, of course, special process is yet to start. It is in the final stages of commissioning. It would be mainly for aerospace, not for Semicon to begin with. But then, we have multiple different kinds of 5-axis missions, different capabilities. So, the strength of Santera is to identify exact kind of components, which are very, very complex in nature, put it in a variety of missions, which can handle this. Very few of such facilities can be seen in India today, where 5-axis missions, everyone will have. But, you know, different configurations and to handle a job of about 4 meters, consistently producing mass production is our engineering skill.

Got it, sir. So, a follow-up to that would be that within the surface treatment which you mentioned, is that exclusively for aerospace? We are not targeting anything on the Semicon side because what we see, it is an industry phenomenon that even surface treatment is a crucial value addition in the value chain.

See, it's like this, that we initially set about investing in surface treatment for our aerospace requirements. Subsequently, when we started ramping up in the semiconductor space, there have been discussions. There is also a requirement for the semiconductor components that goes through a totally different, you know, level of surface treatment. The requirements are far more stringent, but at this point of time, we are restricting ourselves to only the aerospace surface treatment, mainly for the reason that there are people in the vicinity who have created capacity and are creating capacity, and with this, we have enough conviction that our requirements can be met.

Got it, sir. What do you aspire, the growth rate which you aspire for ICE segment, specifically considering all the trade deals and everything?

See, domestic ICE would grow between, you know, high single digit to low double digit kind of growth. That is what is the expectation from the market given post the GST, which we think that for the next couple of years at least will continue in the trend. In the export segment, just to give you some flavor on Connecting Rod, like see Connecting Rod worldwide, approximately, this is the study that we had got it done for a few years back. You know, we are one of the largest players outside the OEMs in connecting rod. Could be about top five, top seven players in the world. The overall volume of connecting rod post all the 25 percent, you know, electrification considered, 50 percent hybridization considered, could be about 280 million connecting rods per annum ex-China. And we are doing about 5-7% of share of business. So there is a huge upside potential that is available, given the fact that a lot of European and US companies want to outsource all the newer programs. And the forging as an industry in the West, people are not there. Financially, it is not that conducive for them to invest. So there is an opportunity for countries like India, and specifically companies like Sunsera, who has demonstrated consistently over the years to take these kind of opportunities forward. So we expect in the next three years, especially in the export segment, we should see a very healthy 20-25% growth, given everything to be normal. So that is what we aspire to do. Of course, it depends on how many order wins that we have. I feel that the potential is there, and if the environment will be conducive, we should be able to catch that.

On console basis, the ice segment would easily be able to grow beyond 15%, right, considering both domestic and export? I think so. And so, my next question is that, so this quarter, we were able to see the potential of, you know, untapped operating leverage within our ecosystem for the first time as our margins improved from 17% to 18% because most of our investments, as you rightly explained in the past, is front-loaded and the ROCs get impacted in the initial years and stuff. So, do you feel next year, given the ramp-up, because most of this H1 was flat for the ICE business, so given the ramp-up in H2 and next year F527 itself with support of ICE as well as EDS segment doubling down, we can see a case of 20% operating margin on a console numbers?

Yeah, our target remains to be that we should be 20% EBITDA, 20% GROWER, 20% ROC. That is what is the core objective with which the entire company is working on. Of course, with added advantage of EDS doing well and also exports coming back, we should be able to improve our current margin profile. I would not say that we will reach 20% next year. We will definitely do better than what we have done this year. In fact, this quarter, we have taken a couple of things which should have actually otherwise our margin should have been 18.25% because 0.15% was due to grossing up of revenue because a couple of our orders in the US where we pay the duty and collected, our auditors were of the opinion that we should gross it. And one time we have done some correction for development components, which has also resulted in about 0.1% margin. So we have actually started realizing that this one. So if we continue to do similar numbers, please understand that we have also signed up a labor agreement which will ensure seamless continuity of all our plants except one plant for the next three years. But this also comes with little cost because generally when we sign the labor agreements, the first year gets loaded up front. So, considering all these things, we would probably be better than this year in this thing. I don't want to, at the current stage, I don't want to put what number we will have, but our margin profile will continue to be better than the current year.

Thank you. Ladies and gentlemen, due to time constraints, we would take that as the last question for today. I would now like to hand the conference over to the management for their closing remarks.

Thank you very much, and it was a pleasure interacting with all of you. We would continue to put our efforts to deliver, you know, like in the beginning of the year, we had said that we would like to end the year with mid-teens to high-teens. So our objective while the first two quarters were very, very weak, but we have put all our efforts to make sure that we live up to what we have said. So we would still hope that we will end this year towards mid-teens and the next year would be much stronger. Thank you for all for joining this call and patiently hearing what we had to say. Thank you very much. You're all welcome to visit our facilities to see further progress. You could contact either us directly or our investment partners, SGA. Thank you again.

Thank you, gentlemen. Ladies and gentlemen, on behalf of Sansara Engineering Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.