Sandhar Technologies: Navigating Growth and Turnarounds in Q3 FY26

Sandhar Technologies Limited, a prominent manufacturer of automotive components, has released its consolidated financial results for the third quarter and nine months ended December 31, 2025 (9M FY26). The company's performance reflects a robust growth trajectory in its existing India operations, coupled with strategic initiatives aimed at turning around new projects and overseas businesses. Overall, Sandhar reported a consolidated revenue growth of 23.5% to INR 3,545.10 crores for 9M FY26, demonstrating resilience and strategic execution in a dynamic market environment. EBITDA increased by 26.7%, with margins remaining stable at 10.4%, while Profit Before Tax (EBT) surged by 42.4%, indicating improved profitability.

The company's operations are broadly categorized into existing India business, new projects in India, and overseas business. The existing India business has been the primary growth engine, with revenue expanding by 14.5% to INR 2,893.38 crores and EBITDA growing by 28.8%. This segment also saw a significant improvement in Return on Capital Employed (ROCE), which rose from 16.3% to 21.1%, highlighting enhanced capital efficiency. In contrast, new projects, while showing substantial revenue growth from INR 2.74 crores to INR 305.05 crores, are still in their initial stages and contributed negative margins, resulting in a loss of INR 24.98 crores. However, the EBITDA for these new projects turned positive, signaling a gradual operational recovery. The overseas business faced headwinds due to a global slowdown, leading to a 2.0% revenue growth to INR 346.67 crores but a 22.8% decline in EBITDA and a cumulative loss of INR 25.81 crores for 9M FY26.

Strategic Initiatives and Turnaround Efforts

Sandhar Technologies is actively pursuing several strategic initiatives to drive future growth and improve profitability across all segments. A significant focus is on the Aluminum Die Casting (ADC) business, with the acquisition of operations from Sundaram Clayton at Hosur and the establishment of a new facility at Khed City, Pune. Management anticipates these new ADC projects to achieve a 7-7.5% EBITDA margin in FY27, scaling up to 9.5% within three years, with a revenue run rate of INR 500 crores. The switchover of the Sundaram plant to the company's own premises is expected by April/early May 2026.

The company's foray into the Electric Vehicle (EV) segment is gaining momentum, with commercial invoicing for battery chargers and motor controllers already underway. This new vertical has generated revenue multiple times higher than the previous year, and management expects a dramatic improvement in performance for the next full financial year. Additionally, Sandhar has secured a significant order for electronic mirrors from Hyundai, with supplies commencing on April 1, 2026, further diversifying its product offerings and customer base.

Addressing Overseas Challenges and Future Outlook

The overseas business, which includes operations in Barcelona (Mexico, Romania, Poland), has been a key area of focus for operational restructuring. Despite a slight decline in revenue for Q3 FY26, the company has implemented aggressive cost reduction measures, efficiency improvements, and customer expansion strategies. Management is confident that these efforts, coupled with financial restructuring, will lead to a turnaround, with the overseas business expected to become positive and achieve 9-10% operating margins starting April 2026. The increase in overseas debt is attributed to currency translation and a strategic shift from costly bill discounting to more favorable clean debt, a move aimed at long-term cost savings.

Sandhar Technologies maintains a bullish outlook for the coming financial year. The Indian auto industry is experiencing a landmark year, with passenger vehicles, two-wheelers, three-wheelers, and commercial vehicles posting record sales in Q3 FY26. This positive industry sentiment is expected to benefit Sandhar's domestic operations. The company anticipates its existing India business to sustain its current growth rate, with overall margins improving further. The off-highway vehicle segment is also projected to grow by 15-16% in the coming financial year. While the adoption of smart locks has been slower than expected due to high prices, the company continues to evaluate new opportunities for acquisitions that align with its internal financial and operational parameters.

Concluding Thoughts

Sandhar Technologies Limited's Q3 FY26 performance underscores a clear strategic focus on leveraging its strong domestic base while diligently addressing challenges in new projects and overseas markets. The management's proactive approach to operational restructuring, coupled with strategic investments in high-growth areas like EV components, positions the company for sustained long-term growth. The commitment to improving capital efficiency and profitability, despite external headwinds, reflects a disciplined execution strategy. As the company moves into the next financial year, the anticipated turnarounds in its new and overseas ventures, alongside continued strength in India, paint a promising picture for Sandhar Technologies.