OBSC Perfection Ltd Q1 FY27 Earnings Analysis

- The company targets a revenue growth of 40%-45% for FY27, building on over 50% growth achieved last year. (Page 13) - Export revenue is expected to increase, potentially exceeding 30%-35% of the business this year, which should be margin accretive due to higher pricing on exports. (Page 13) - The new plant in Supa could generate revenues of INR 700-800 crores at peak efficiencies, though this will take time to achieve. (Page 12) - Incremental capex of INR 15-20 crores is planned to support growth, expected to sustain business expansion for the next two years. (Page 12) - New product lines like shock absorber rods, solar fasteners, and humanoid parts are expected to scale up, contributing to revenue growth. (Pages 21, 9, 10) - Export orders are expected to surge particularly in the US and Mexico markets, supported by a favorable rupee and India’s China Plus One advantage. (Pages 8-9)

- OBSC Perfection expects continued strong revenue growth, targeting 40%-45% revenue growth for FY27, similar to FY26’s 54% growth. - The company is in a scale-up phase with significant capex ongoing, impacting free cash flow which is not expected to turn positive soon. - EBITDA margins are expected to be sustained or improve slightly (~1% margin growth) due to growing exports and diversification into defence and non-automotive sectors. - Export revenue is increasing, expected to be 30-35% of total business, yielding better margins (10%+ over domestic pricing). - New plants (e.g., Sanand shock absorber plant) and expansions like Supa plant have significant revenue potential (Supa alone could reach INR700-800 crores at peak). - The company is investing INR15-20 crores incremental capex in FY27 to support growth and capacity. - Long-term vision includes moving up value chain with higher specification, assemblies, and IP-driven products, potentially boosting profitability and EPS over 5 years.

- Ongoing capex on the stamping project is about 70% complete, with total investment around INR 9 crores including tools and fixtures. (Page 21) - In FY27, incremental capex planned is INR 15-20 crores to sustain growth for the next two years. (Page 13) - Acquisition of a stamping company is near completion, adding capabilities for welded assemblies and moving up the value chain. (Page 13) - Large-scale expansion includes building mega factories such as the Supa plant, capable of generating INR 700-800 crores revenue, developed in a phased and frugal manner to keep overheads minimal. (Pages 4, 12) - Continuous investments are made in automation and new processes like Cold Forging and Hot Forging to remain competitive and scalable. (Pages 5,14) - Strategic investments also include land acquisition (e.g., 11 acres at INR 17-18 crores) to support expansion plans. (Page 21)

- The company has raised funds recently through a preferential issue of INR 43.3 crores to support growth and build mega factories. - They are continuously deploying cash generated from operations and have also raised funds through debt. - There is an ongoing and continuous need for capital investment due to rapid growth (50%+ growth rate). - Management indicated that multiple expansions and capital investments are planned, with incremental capex of INR 15-20 crores planned for FY27. - Due to these expansions and investments, it is difficult to specify when free cash flow will turn positive as generated cash is being reinvested. - No specific new fundraising initiatives (debt or equity) beyond current plans were explicitly mentioned for the near future.

- OBSC Perfection has a strong order book of over INR 1,200 crores providing revenue visibility beyond current customers and sales. - Automotive order book accounts for approximately INR 980 crores. - Non-automotive order book stands at around INR 230 crores. - These orders are expected to be executed over a period of six to seven years. - Short-term confirmed orders are around INR 200-300 crores. - The remainder consists of nominated orders and scheduling agreements, which are legally binding with volumes subject to ±20% variation. - Most export orders, especially to the U.S., are set to start within the next two to three months, potentially causing a surge in export revenues.