Buy Sansera Engineering Ltd For Target Rs.1,775 by Axis Securities
Recommendation Rationale
* ADS Segment Demonstrates Strong Momentum and Visibility: Sansera’s Aerospace, Defence and Semiconductor (ADS) segment continues to exhibit strong performance, reaffirming its position as a key growth engine for the company. Revenue stood at Rs 49.6 Cr in Q2FY26, taking H1FY26 sales to Rs 86.4 Cr, with management maintaining its full-year guidance of ~Rs 300 Cr, supported by consistent QoQ growth visibility. Segment margins remain significantly above the company average, estimated at 25–30%, and are currently trending toward the higher end of the range. The ADS business holds a robust cumulative order backlog exceeding Rs 3,950 Cr (lifetime value through FY30), ensuring strong multi-year revenue visibility. To support this growth trajectory, Sansera is expanding capacity with a new 70,000 sq. ft. facility, to be operationalised by H1FY27. Within verticals, it continues to deepen its presence in aerospace through complex machining solutions for Tier 1/2 customers such as Boeing and Airbus, while the semiconductor segment, backed by a state-of-the-art Class 1000 cleanroom, offers strong scaling potential. The defence business remains in its early stages, with a disciplined and selective approach toward customer acquisition.
* Diversified Orderbook: Sansera’s order book totals Rs 2,146 Cr, diversified across ADS (24%), xEV (7%), auto components (10%), ICE PV+CV (31%), and two-wheelers (17%). In H1FY26, it secured Rs 1,168 Cr in new orders, highlighting strong execution amid market challenges. Key order wins included xEV programs from North American OEMs, new business from an American tractor OEM, and incremental orders from Collins Aerospace. This healthy order inflow enhances medium-term revenue visibility and further strengthens Sansera’s position in premium, high-value segments expected to drive sustained margin accretion.
* EBITDA Margins: The company reported an EBITDA margin of 17.3% in Q2FY26, supported by strong scale-up in Sweden operations (79% YoY revenue growth), improved raw material yields, and a higher contribution from the ADS segment. Continued efforts toward manpower optimisation and enhanced capacity utilisation also contributed positively to profitability. The impact of US tariffs has been largely passed on to customers, thereby mitigating margin pressures and limiting downside risks.
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