Sahasra Electronic Solutions Ltd Q3 FY26 Earnings Analysis

- Sahasra Electronic Solutions expects growth driven by both domestic and export markets. - ESMT business aims to maintain healthy EBITDA margins (~16%) and sustain PAT margins around 15-16%. - Semiconductor business EBITDA expected at 16-18%, with potential rise above 20% as volumes increase. - eSIM manufacturing contract signed; mass production starting March-April next year with estimated 5-10 million units annually, revenue potential INR 20-25 crores. - Memory business growth driven by AI demand causing price increase; packaging volumes being ramped up. - New SMT lines (high-speed) being installed with modular capacity of 150,000 and 100,000 CPH to meet large volume projects. - Merger of group companies expected to drive integrated growth and improve margins. - Revenue guidance for FY26 is INR 130 crores, with H1 achieving INR 58.16 crores and expectation of stronger H2. - Targeting balanced export share of 50%+ to capitalize on better margins internationally. - Capex of INR 200 crores planned under India Semiconductor Mission 2.0 with 50% govt grant and balance funding via promoter contribution and debt.

- EBITDA margins for the semiconductor business are expected initially at 16%-18%, potentially rising to 20% or more as volume increases. - PAT margins for the semiconductor business anticipated around 8%-10% in the initial years. - EMS (SMT) business maintains a healthy EBITDA margin of around 15%-16%, with PAT margin close to 15%. - Growth in EMS business profitability is expected with export focus, targeting over 50% export share to mitigate lower domestic margins. - Semiconductor subsidiary revenues projected to rise to around INR 50 crores in FY27 with ramp-up in production, particularly in eSIM and memory segments. - Long-term capex plans (INR 200 crores) supported by government grants (India Semiconductor Mission Scheme 2.0), expected to boost future earnings. - Overall, management expects steady revenue growth and profitability improvement with integration of group companies and new high-volume projects.

- Phase two capex for semiconductor business is planned at around INR 200 crores. - Funding plan: INR 100 crores expected as a grant under the India Semiconductor Mission (ISM) Scheme 2.0 (50% grant for packaging and advanced packaging), INR 50 crores from internal accruals, and INR 50 crores from debt financing. - ISM 2.0 scheme details and approvals expected by end December or early next financial year; activities projected to start in the second or third quarter of next calendar year. - Investment includes two new high-speed SMT lines with five modules (total capacity: 250,000 CPH) and a fully automated conformal coating line. - Capex is aligned with plans for scaling semiconductor packaging, eSIM, memory, and LED verticals.

- No further equity dilution is planned; the company intends to avoid raising funds through equity at this stage. - For planned capex of INR200 crores (Phase Two of the ATM project), funding is expected through: - INR100 crores grant from the upcoming India Semiconductor Mission Scheme 2.0 (pending government approval). - INR50 crores from internal accruals of the listed company (promoter contribution). - INR50 crores through bank debt financing. - The company is currently reviewing funding and investment decisions in line with business conditions and government scheme approvals; no immediate fundraising activity has been committed.

- The order book currently appears healthy enough to maintain momentum in the business. - Focus is on executing existing orders, with new projects such as opto sensor assemblies for a UK company, Solstor, underway. - Projected revenue for FY26 is INR130 crores, with INR58.16 crores achieved in H1, indicating expectation of better performance in H2. - Semiconductor business for FY26 expected revenue is around INR50 crores. - Mass production for eSIM business expected to start from March-April 2026, potentially increasing order volume. - Large volume projects targeted in the EMS (SMT) business with capacity expansion planned. - Export orders expected to maintain a healthy share of 50% and above, contributing to order stability and growth.