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ADS-led diversification drives record performance:

SANSERA delivered its highest-ever revenue of INR 10,915 Mn in Q2FY27, up 32.3% YoY, while EBITDA and PAT increased 47.6% and 50.6%, respectively. EBITDA margin expanded 201 bps YoY to 19.4%, supported by favourable product mix and operating leverage, despite wage, freight and logistics pressure. Growth remained broadbased, with Auto ICE revenue rising 18.2% YoY, while Auto Tech-Agnostic and xEV businesses grew 21.9%/36.0% YoY, respectively. Non-auto revenue more than doubled to INR 2,135 Mn, contributing 20.9% of sales.

ADS order pipeline fortifies growth visibility:

The ADS business remained the key growth driver within Non-Auto, with sales increasing 206.5% YoY (more than 3x) and its contribution standing at 14.9% in this quarter. The unexecuted ADS backlog increased to INR 58.7 Bn, executable over five years, supported by a semiconductor order. Peak annual revenue potential from new business wins excluding ADS rose to INR 22.4 Bn, expected to mature over the next three years. These opportunities strengthen visibility across aerospace, semiconductor, defence and automotive technologies.

Strong medium-term outlook:

The management expects automotive momentum to sustain, supported by domestic demand, premiumisation, electrification and global supply-chain diversification. The company guided for FY27E ADS revenue of INR 5,500–6,000 Mn, with new SKUs supporting H2FY27E performance and the defence facility expected to commence operations towards Q3-end. FY27E capex is planned at INR 8,000 Mn, including ADS investment. We believe the expanding order pipeline, capacity additions and rising contribution from high-value businesses position the company for sustained growth and portfolio diversification, while execution, working capital and input-cost pressure remain key monitorables.

Q2FY27: Revenue outperformed, while earnings missed our estimate

* Revenue was up 32.3% YoY and 6.9% QoQ to INR 10,915 Mn (vs CIE est. of INR 10,586 Mn).

* EBITDA was up 47.6% YoY and 7.7% QoQ to INR 2,112 Mn (vs CIE est. of INR 2,043 Mn). EBITDA margin was up 201 bps YoY and 15 bps QoQ to 19.4% (vs CIE est. of 19.3%).

* APAT was up 50.6% YoY and 4.4% QoQ to INR 1,080 Mn (vs CIE est. of INR 1,137 Mn)

View and Valuation:

We maintain our FY27E estimate, while increasing our 28E EPS estimate, factoring in stronger order inflows, improved revenue visibility and higher contribution from the ADS business. We value the company at a multiple of 42x (maintained) on average FY28/29E EPS. Accordingly, we revise our target price to INR 4,450 (earlier: INR 3,380) and retain our ‘ADD’ rating, supported by accelerating ADS and semiconductor growth, a robust order pipeline and scope for sustained margin improvement

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SEBI Registration no.: INZ 000160131