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We interacted with the management of Sansera Engineering and visited the company’s Forgings as well as Aerospace & Defence plants in Bengaluru. By leveraging the advantages (of cost, time-to-market and agility) afforded by its end-to-end integrated engineering capabilities, Sansera expects to benefit from increased outsourcing across its traditional as well as newer product lines to clock ~20% revenue CAGR in coming years (2x the underlying industry); this would help execute its strong order book (peak annual revenue run-rate of Rs17bn to be achieved in 3 years, majorly driven by tech agnostic/EV and nonAuto segments), with EBITDA margin also expected to touch 20% by FY27 (vs ~16% in FY23). Based on Mgmt’s growth & profitability estimates, Sansera currently trades at ~7.5x FY26E EV/EBITDA (~60% discount to BHFC).

Higher outsourcing, vendor consolidation to drive growth in Auto-ICE Sansera aims to leverage time-to-market and cost-based advantages afforded by its control over the entire value chain for availing opportunities arising from: i) higher outsourcing by OEMs (incl. under ‘China +1’/’Europe +1’); ii) faster vendor consolidation — to emerge as the ‘last man standing’ in its traditional portfolio of connecting rods, rocker arms and crankshafts — translating into strengthened positioning (targets ~10% global connecting rod mkt share ahead vs 2-3% as of CY20) and higher profitability.

Non-ICE, Non-Auto to contribute 40% of sales in FY26 vs. 23% in FY23 Sansera expects the ‘Auto-tech agnostic/xEV’ and ‘Non-Auto’ segments to contribute ~20% each to FY26 sales (vs ~10%/~12%, resp. in FY23), driven by: i) contribution upturn from aluminium forgings (to ~10% of revenue in 5 years vs. the low single-digit now), amid increasing sourcing by global OEMs for electrification/lightweighting; Sansera has order wins from the likes of Tesla, BMW and JLR; ii) >50% revenue CAGR from the FY23 base (Rs0.9bn) in Aerospace, riding on greater sourcing by global aerospace giants (incl. for higher value-additive parts), in tandem with Company’s cost-competitiveness (~20% cost advantage vs. global competition) and attempts to move up the value chain (currently supplies parts with kit value of up to USD2,000); iii) indigenization initiative in Defence. The combined order book for Aerospace and Defence stands at ~Rs1bn.

Guides for 20% revenue CAGR, 20% EBITDA margin and 20% RoCE Sansera aims for 20% revenue CAGR (growing at 2x the underlying industry), on a strong order book, addition of newer customers/technologies, and higher content per vehicle. Company targets 20% margin by FY27 on the back of revenue growth, better mix (63% order book from exports; exports typically have ~600bps higher margin) and higher utilization levels (2W utilization now at 60-65%). RoCE is expected to improve to 20% in coming years vs. ~14% as of FY23. Based on Management’s growth and profitability estimates, Sansera trades at ~7.5x FY26E EV/EBITDA