Big targets are easy to announce, the hard part is delivering them without breaking the balance sheet. In auto parts, sales can jump fast when vehicle demand is strong, but what matters more is how much profit is left after costs, and how well the money invested in factories is working. One auto component maker has now put numbers on both.
Sandhar Technologies shares were trading at ₹578.80, down ₹13.45 or 2.27% from the previous close of ₹592.25. The company has a market cap of ₹3,473 crore, and it’s trading at a P/E of 16.76.
Doubling Sales, Lifting Returns: What Management Has Laid Out
Sandhar Technologies says it wants to double its revenue every three to four years. Last year’s consolidated revenue was ₹4,852 crore, so getting to ₹10,000 crore is basically that one doubling. At that size, management said the company could make a net profit (PAT) of around ₹450 crore, against ₹199 crore last year.
The other half of the plan is ROCE, short for return on capital employed. It tells you how much profit a company earns on every ₹100 locked in plants, machines and working capital. The target is a post-tax ROCE starting at 15% and reaching a peak of 20%.
What’s interesting is how it plans to get there. Management expects EBITDA margin, which is operating profit before interest, depreciation and tax as a share of sales, to stay around 11%. So higher returns aren’t coming from fatter margins, they’re coming from volume. At ₹10,000 crore of sales, that means roughly ₹1,100 crore of EBITDA.
For this year, guidance is revenue growth of over 15%, not counting price hikes. Customers can reset prices when input costs rise, which management calls a price retrigger, and with wages, power and aluminium all costlier it expects that to kick in. On the established business, the aim is to add roughly 0.25% to half a percent of margin each year, though new plants will drag on that for now.
Capex is kept to 5% to 7% of revenue, so ₹275 crore to ₹310 crore this year. Gross debt is ₹948 crore and net debt ₹897 crore. Of the gross number, ₹564 crore is working capital debt that moves with sales, and ₹384 crore is term loans, with about ₹103 crore due for repayment this year. Management calls its debt-to-equity healthy versus peers.
The confidence comes from beating the industry. In the India business, management says revenue grew 28% last year against 12.7% for the industry, and two-wheelers grew 35.1% against 12.9%. Being an integrated casting player also helps win work, it says, as customers trim their supplier lists.
Latest Quarter: Sales Ahead, Margins Behind
The latest numbers show sales moving faster than the plan. Consolidated revenue was ₹1,382 crore, up 27% from ₹1,090 crore and the highest ever for a quarter, well ahead of the 15% guided for the year. EBITDA rose 15% to ₹117 crore and net profit went up 33% to ₹37 crore.
The catch is margin. EBITDA margin slipped to 8.49% from 9.34%, and it’s below the 10.57% of the full last year, so quite a distance from that 11% talk. Higher minimum wages in Haryana and Uttarakhand cost ₹5.84 crore, and energy added ₹7.50 crore.
New Plants and Overseas Units
About ₹341 crore has gone into four new India projects, which brought ₹130 crore of revenue but are still loss-making before tax as volumes build up. Turnaround is now pegged for the third quarter for the Pune cabins unit, the fourth for Hosur casting, and next year for Chennai sheet metal and EV powertrain. Earlier commentary had Pune and Hosur turning around a quarter sooner, so the dates have slipped a bit.
Overseas units are improving slowly, with loss before tax down to ₹4.08 crore from ₹11.52 crore. Management says it will relook at that business once losses are behind it.
What Could Slow Things Down
There’s a few things that can hurt. Two-wheelers are 69.5% of sales, so a slowdown there would be felt. Management said absenteeism touched around 20% at one point, and some states raised minimum wages by 30% to 40%. Aluminium price hikes also take about three months to pass on in India, longer overseas. This isn’t a recommendation, just what the numbers and management show.
Bottom Line
The plan is clear enough, ₹10,000 crore of sales, ROCE up to 20% and margin held near 11%. Sales are already moving faster than promised, which helps. What’s missing for now is margin, sitting well under 11%, and that depends on wages, power and aluminium costs settling down, plus new plants turning profitable on schedule, and those dates have already moved out once. Two-wheelers being nearly 70% of sales adds one more thing to keep an eye on. This is not a recommendation.
About the Company
Sandhar Technologies makes auto components for two-wheelers, three-wheelers, passenger vehicles and off-highway vehicles. Its range covers locking and vision systems, aluminium and zinc die castings, sheet metal parts, and cabins and fabricated parts. It runs 34 plants in India and 4 overseas, in Spain, Mexico, Romania and Poland, plus 6 through joint ventures with partners from India, South Korea and Taiwan. The company is listed on BSE and NSE, has one R&D centre, and its corporate office is in Gurugram.