India’s GDP growth for FY24-25 was initially projected at 6.5%-7% but revised to 6.4% ( slowest in four years), below the government’s initial lower-end estimate.
Factors include a weaker manufacturing sector (projected to grow at 5.3% vs. 9.9% last year) and slower corporate investments.
The RBI also lowered its forecast to 6.6% from 7.2% after a disappointing 5.4% growth in the July-September quarter, citing low growth, high inflation, erratic capital flows, and a record trade gap.
Sandhar’s Performance:
Revenue Growth: Despite the challenging economic environment, Sandhar achieved a consolidated total income growth of 9.27% in Q3 and 10.34% for the 9 months, outperforming peers who struggled to grow.
EBITDA Growth: Consolidated EBITDA grew by 0.5%, with margins improving by 500 basis points to 10.34% for 9 months (vs. 9.6% last year and 10.1% in Q3 last year).
Segment Performance:
Two-Wheeler: Industry grew by 13%, Sandhar outperformed with 17.58% growth (9M YoY).
Four-Wheeler: Industry grew by 2.72%, but Sandhar saw a decline.
Off-Highway Vehicles (OHV): Industry grew by 5.3%, Sandhar grew by 6.9% (9M YoY).
Outlook: Management anticipates sustaining and growing this momentum, subject to geopolitical conditions and market demand.
Joint Ventures (JVs):
All JVs are PAT-positive in Q3 and 9M FY25, driven by cost control, localization, and business synergies.
Collective revenue of ₹270 crores with an average EBITDA of 12.5%.
Confidence in continued growth trajectory.
Overseas Business:
A drag on performance due to low demand and a slowdown in Europe, resulting in losses in Q3 and 9M.
Preliminary indicators suggest volume growth in FY26, with close monitoring of the situation.
Expansion and New Ventures:
Pune projects (cabins, fabrication, die-casting) are on track for commercial production by March 2025.
EV segment: Commercial production of battery chargers has started, receiving positive market response and an expanding customer base.
CSR and Sustainability:
Focus on healthcare, education (e.g., ‘Sandhar Ki Beti’), skilling (‘Swabhiman Program’), senior care (‘Adopt a Gram’), and environmental initiatives (Peenya Industrial Park).
Future emphasis on ESG and Sustainable Development Goals (SDGs) to achieve carbon neutrality.
Strategic Priorities:
Diversification of product portfolio, expanding customer base, increasing content per vehicle.
Improving ROCE and ROI, consolidating operations, generating free cash flows, and deleveraging the balance sheet.
Question-and-Answer Session
1. Aditya Kondawar (Complete Circle) – Debt and Smart Locks
Debt Situation:
Yashpal Jain: Net debt at ₹673 crores, within sustainable levels. Temporary ups and downs due to CAPEX outflows (e.g., Pune projects), with remaining payments in Q4. On track with prior guidance.
Jayant Davar: Supplies started to two major clients (e.g., Suzuki Motorcycle), with volumes ramping up to 20,000/month from March 2025, promising higher margins due to 10x higher product value.
2. Siddharth (Individual Investor) – Growth Guidance and Tariffs
Long-Term Growth (+25% over 3-5 years):
Jayant Davar: Lower growth in recent quarters is an exception due to economic and geopolitical factors. The company continues to build pipelines to achieve the forecasted growth, expecting acceleration.
US Tariffs Impact:
Jayant Davar: Mexico plant supplies to Bosch and TRW locally, so no direct impact unless customers face US sales issues. Customers remain optimistic, but the situation is under watch.
3. Jay Betai (Dolat Capital) – Debt Breakup
Debt Details:
Yashpal Jain: Gross debt ₹708 crores (₹284 crores standalone, ₹100 crores Indian subsidiaries, ₹324 crores overseas). Net debt at ₹673 crores after ₹35 crores cash balance.
4. Saket Kapoor (Kapoor and Co.) – Debt, EBITDA, EV Outlook
Deleveraging and CAPEX:
Yashpal Jain: 9M CAPEX at ₹173 crores. Q4 may see a debt increase to complete projects, but FY26 will see repayments of ~₹100 crores annually, with potential for higher repayments if surplus cash is generated.
EBITDA and Revenue Targets:
Yashpal Jain: Corrected prior guidance—EBITDA margin target for FY25 is 10.45% (50 bps improvement), FY26 at 10.95% (another 50 bps). Revenue target of ₹4,500 crores for FY25-26 remains achievable. FY25 revenue projected at ₹4,000 crores with improved Q4 margins.
Overseas Losses:
Yashpal Jain: EBIT loss of ₹17.35 crores (9M) and ₹10.78 crores (Q3). Q4 expected to improve as volumes rebound.
New Lines and EV Outlook:
Yashpal Jain: New lines ready, but volumes delayed to Q1 FY26 due to customer testing.
Jayant Davar: EV growth intact due to localized solutions (less China dependence), though global EV adoption faces uncertainties (e.g., hydrogen focus by BMW).
5. Jyoti Singh (Arihant Capital Markets) – Sheet Metal and Industry Recovery
Sheet Metal:
Yashpal Jain: Operating at 80%-85% capacity, with 14%-15% revenue share in Q3. No major CAPEX planned, only routine additions.
Jayant Davar: Growth to continue, optimizing existing facilities.
Product Pipeline:
Yashpal Jain: 18-20 new sheet metal parts in development, adding to revenue in Q4 and Q1 FY26.
Jayant Davar: Includes large parts like bodies and frames.
Industry Recovery:
Jayant Davar: No order shortage; Sandhar outperforms despite industry slowdown due to wallet share gains. Recovery expected as industry picks up.
Hyundai Update:
Jayant Davar: Mirrors for Hyundai delayed, now in testing, with SOP in July/August 2025.
Yashpal Jain: Standard rate at 25.17%, with swings due to deferred tax and overseas consolidation. Overall, stable at 25%.
JV Performance:
Yashpal Jain: All JVs profitable. Sandhar Amkin and others (e.g., Winnercom) show consistent improvement. Q3 revenue: Sandhar Amkin ₹34 crores, Sandhar Whetron ₹11 crores, others detailed in presentation.
8. Pritesh Chheda (Lucky Investment Managers) – Revenue and Sheet Metal Investment
Two-Wheeler OE Growth:
Yashpal Jain: Two-wheeler OE revenue share rose to 33% (9M FY25) from 30% (9M FY24), implying ~20% growth.
Sheet Metal Investment:
Yashpal Jain: ₹280-290 crores invested in four plants over three years, with a 2.5x asset turnover.
Closing Remarks
Jayant Davar: Optimistic about Q4 improvement and achieving FY25 business plan targets. Open to individual investor queries. Considered suggestion for afternoon calls.
Key Takeaways
Growth: Sandhar outperformed industry peers with strong revenue growth (9.27% Q3, 10.34% 9M) and margin improvement (10.34% 9M), driven by two-wheeler and OHV segments, despite overseas challenges.
Outlook: Positive, with sustained momentum expected in FY26, supported by JVs, EV traction, and new projects (Pune, smart locks). Revenue target of ₹4,500 crores and EBITDA of 10.95% for FY25-26 remain in sight.
Q&A Insights: Management addressed debt (stable at ₹673 crores, deleveraging in FY26), smart locks (margin booster), overseas recovery (Q4 improvement), and industry resilience (outperformance despite slowdown).
