SANDHAR - Sandhar Tech

📊 NSE: SANDHAR 🏢 Auto Ancillaries 📅 Last Updated: 12/14/2025 12:46

💰 Financial Performance

Revenue Growth by Segment

The India business revenue grew 33% YoY to INR 1,153.02 Cr in Q2 FY26. Consolidated revenue grew 29% YoY. The overseas business revenue grew 2% on a quarter-to-quarter basis, while the Sundaram-Clayton (SCL) business contributed INR 198 Cr in revenue. Standalone revenue from operations grew 8.70% YoY to INR 805.03 Cr.

Geographic Revenue Split

India business is the primary driver, contributing the bulk of revenue with 33% growth. Overseas operations reported revenue of 11.47 Mn (USD/Euro mix) in Q2 FY26, representing a slight decline of 5.74% for the H1 period compared to the previous year.

Profitability Margins

Operational EBITDA for the India business was 9.47% in Q2 FY26, down from 10.16% YoY. However, normalized margins (excluding new projects) improved to 10.44% from 10.16%. The Sundaram-Clayton business operated at a lower margin of 4.48% for H1 FY26, which diluted overall profitability.

EBITDA Margin

Consolidated operational EBITDA grew by 19% YoY. Standalone operational EBITDA margin was impacted by exceptional items totaling INR 11.21 Cr, including INR 8.07 Cr from lower margins in new projects (ADC Pune & South India) and INR 3.14 Cr due to high input costs and lower volumes.

Capital Expenditure

The company is investing in two new machines and a new plant facility expected to be operational by April 2026. Gross block including CWIP for overseas operations stood at 75.82 Mn (USD/Euro) as of September 30, 2025.

Credit Rating & Borrowing

Overseas outstanding borrowings stood at 43.05 Mn (USD/Euro) as of Q2 FY26, an increase of 18.35% from 36.38 Mn in the previous year. The company is undergoing financial re-engineering of borrowings to reduce interest impact.

⚙️ Operational Drivers

Raw Materials

Aluminum and other metals for Die Casting (ADC) and CFD components. Standalone cost of materials was INR 558.10 Cr in Q2 FY26, representing 69.3% of standalone revenue.

Import Sources

Not specifically disclosed in available documents, though overseas operations in Europe and the US suggest international sourcing for those regions.

Capacity Expansion

New Aluminum Die Casting (ADC) lines are being expanded in Pune and South India. A new facility is planned for completion by April 2026 to house two new machines and improve operational efficiency.

Raw Material Costs

Material costs increased 11.85% YoY to INR 558.10 Cr on a standalone basis. High input costs had a specific profit impact of INR 3.14 Cr in the India business during Q2 FY26.

Manufacturing Efficiency

The company is focusing on operational efficiency to turn around overseas losses, which were halved in Q1. New projects in Pune and South India are currently in a ramp-up phase, dragging down immediate margins until volumes stabilize.

📈 Strategic Growth

Expected Growth Rate

11%

Growth Strategy

Growth will be driven by the integration of the Sundaram-Clayton acquisition, ramp-up of new ADC plants in Pune and South India, and a turnaround of overseas operations by April 2026. The company aims for a 10-50 bps margin improvement annually to reach an 11% target within two years.

Products & Services

Aluminum Die Casting (ADC) components, battery chargers, motor controllers for EVs, and traditional automotive components like locks and mirrors.

Brand Portfolio

Sandhar, Sundaram-Clayton (acquired business).

New Products/Services

Commercial invoicing has commenced for EV components, specifically battery chargers and motor controllers, which are expected to be significant growth drivers.

Market Expansion

Expansion into the EV segment and increasing the customer base for the ADC business in South India and Pune.

Strategic Alliances

The company has 5 Joint Ventures (JVs), all of which are now PAT positive and registered a revenue growth of 68.57% (calculated on a 50% partnership basis).

🌍 External Factors

Industry Trends

The industry is shifting toward Electric Vehicles (EVs); Sandhar is positioning itself by starting commercial production of battery chargers and motor controllers. The overall auto component industry grew by 7.4% while PVs lagged.

Competitive Landscape

The company competes in the die-casting and auto-component space, facing pressure from high input costs and sector-specific degrowth in passenger vehicles.

Competitive Moat

Sandhar's moat is built on its diversified product portfolio (ADC, EV components, JVs) and its ability to turn around acquisitions like Sundaram-Clayton. The 5 PAT-positive JVs provide a stable profit cushion.

Macro Economic Sensitivity

The company noted a 1.5% degrowth in the passenger vehicle segment, indicating sensitivity to domestic auto industry cycles.

Consumer Behavior

Shift toward EVs is driving the company's R&D and production focus toward battery-related electronics.

Geopolitical Risks

Management is monitoring the final arrangements between the European Union and US markets, which may impact overseas revenue stability.

⚖️ Regulatory & Governance

Industry Regulations

The company operates under a Risk Management Committee (RMC) that monitors operational, technological, and cyber security risks in accordance with SEBI Listing Regulations.

Legal Contingencies

The company reported NIL investor complaints pending at the end of FY 2024-25.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for the overseas business turnaround, currently projected for April 2026. Any delay in volume ramp-up at the Pune and South India ADC plants could further dilute margins.