Sedemac Mechatronics Ltd Q2 FY27 Earnings Call: Record Revenue Grows 40%+ YoY, EBITDA Under Raw-Material Pressure

Sedemac Mechatronics Ltd held its Q2 FY27 earnings call on November 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Growth, But EBITDA Under Raw-Material Pressure

• Q2 FY 2026-2027 revenue of ~Rs.400 crore — implying an annualized run-rate of ~Rs.1,600 crore; Q2 and H1 FY 2026-2027 were the highest-ever periods with 40%+ YoY revenue growth, following ~60% growth in FY 2025-2026.
• TTM control-intensive ECU sales of 4.6 million units — up 44% YoY from 3.2 million (TTM Q2 FY 2026-2027); management says this metric correlates strongly with revenue. TTM revenue shows ~38% three-year CAGR and 48% YoY growth, with profitability CAGRs even higher on operating leverage.
• EBITDA% dipped in Q2/H1 FY 2026-2027 — driven by raw-material cost inflation (some commodities at a "hyperinflation" stage), partly offset by operating leverage; PAT unevenness reflects the switch to the new tax regime in FY 2026-2027 from the old regime in FY 2025-2026.
• ROC dipped — due to aggressive capex on two new plants (MF3, MF5) not yet operational.
• H1 revenue growth beat management's own start-of-year expectation — while EBITDA is expected to hold in H2 FY 2026-2027 vs H1 FY 2026-2027.

ISG+EFI Crosses 1 Million Units; European Magneto Kit Win

• ISG+EFI ECUs crossed 1 million units shipped — within two years of first introduction, with close to 500k units shipped over the trailing 8 months as of the Q2 FY 2026-2027 call; management declined to disclose incremental monthly volumes.
• Two of three targeted top-10 motorcycle ISG models launched and fully ramped in FY 2026-2027 — one of these two is expected to shift to ISG+EFI in FY 2027-2028.
• New win: IHG ECU and electric motor ("Magneto kit") from a European two/three-wheeler OEM — start of production likely in H1 FY 2027-2028; management clarified magneto business has already been won with Indian OEMs and will be supplied to multiple OEMs, not just one.
• H1 FY 2026-2027 mobility ramps complete — ISG ECU for export ICE three-wheelers (launched FY 2025-2026) and electric two-wheeler MCU (launched FY 2025-2026) both fully ramped.
• ~9.5-10 million vehicles adopted IAC over the trailing 12 months (as of the Q2 FY 2026-2027 call), from Sedemac and Honda primarily; management stated there is no specific inflection point for motorcycle adoption.
• Industrial headwind: weaker 2025 Atlantic hurricane season — reduced North American home standby generator demand and hence EFI ECU demand; early signs of recovery already visible.
• Pipeline: commercial vehicle after-treatment controllers, EFI ECUs and MCUs (engine-powered and electric) expected into production over the coming few quarters; electric power-tool motor controller with sensorless technology expected into production in H1 FY 2027-2028 — a low-volume entry into a market of hundreds of millions of power tools.

Patented Sensorless Control Aims at Tens of Millions of Units

• Sensorless rotor position estimation is a patented in-house invention — Joint MD Amit confirmed it is not based on existing published techniques (analyst cited high-frequency injection as an example); the technology is being taken to a scale of tens of millions of units (period unspecified).
• Power tools engagement at a very early stage — management is getting attention from the biggest players; a tool may go into production with Sedemac's motor control unit with SLC, with no timeline disclosed. Management likened the position to ISG in 2017 — pre-marketplace introduction, with ISG reaching the marketplace in 2018 — and explicitly stated it does not know whether or to what extent it will succeed.
• Key uncertainties in power tools — competition from existing players already supplying motor control units and OEM plans on their own product introduction timelines; management committed to inform shareholders if progress stalls, and currently the outlook "looks pretty good."
• Sensorless EV MCU adoption expected "at some point" — engagements ongoing with OEMs, no specific timeline provided; management is "pretty confident" adoption will take off but offered no quantified adoption target.
• MD Shashikant drew a parallel with ISG — in 2018 many OEMs said they would not adopt ISG, and the success visible in 2026 came only after the proposition proved itself; he argued sensorless MCU for EVs is on a "much stronger wicket" because it eliminates sensor failures, and called the SLC case for EVs "far sharper" than SLC for ICE vehicles when first introduced in 2018-2019.
• Patent strategy is technology-focused, not market-specific — patents protect "a way of doing something"; the portfolio includes several patents unrelated to motor control, and filing is a continuous, "never-ending" process.

MF3 Pilot Production Started; ~Rs.240-250 Cr H1 Investment

• Capex rose from Rs.333 crore (March-end) to Rs.450 crore (September-end) — ~Rs.117 crore added during H1 FY 2026-2027, mainly the MF3 plant expansion plus some work on the future MF5 plant (explicitly not the Shulgiri land acquisition cost).
• MF3 plant (~3x the built-up area of existing MF1) has started pilot production — full production over the next few quarters; management expects production substantially shifted to MF3 by end of FY 2026-2027, stressing the timeline is flexible ("not a hard time").
• MF1 running at 90% or higher utilization (per the RHP); over Q3–Q4 FY 2026-2027, if the new plant is fully populated at current revenue levels, utilization is expected at about 65 to 70%.
• Land bought in Shulagiri, Tamil Nadu for MF5 — substantially bigger than MF3, to come up over the next one or two years; H2 FY 2026-2027 capex will be lower than H1, primarily as MF3 capex winds down. No capex figure was provided for FY 2027-2028 despite the analyst's question.
• Working capital rose from Rs.135 crore (FY 2025-2026 end) to Rs.250-258 crore — ~15-16% of annualized H1 FY 2026-2027 revenue of Rs.1,600 crore, consistent with the company's 13-15% guidance; raw-material inventory buildup equates to ~60 days of sales as of Q2 FY 2026-2027. Management does not see the situation substantially changing over H2 FY 2026-2027.
• Total H1 FY 2026-2027 investment sized at ~Rs.240-250 crore — funded via internal accruals and debt without needing equity; H1 borrowings rose ~Rs.110 crore, largely short-term and working-capital linked. Management said reducing borrowings is not the aim — the goal is a healthy debt-to-equity ratio.

No RM Pass-Through; Multi-Sourcing After COVID Crunch

• No raw-material pass-through in Sedemac's contracts — MD Shashikant said pricing is negotiated rather than cost-plus (unlike typical auto ancillary contracts), with forex exposure insulated through adjustment formulae; an ongoing negotiation with customers to increase prices is underway in FY 2026-2027.
• Further H2 FY 2026-2027 EBITDA pressure expected from PCB cost increases — sharp over the last 2-3 months, partly offset by price corrections and introduction of the newer-generation IC controller; the raw-material pressure flagged in the May 2026 outlook has transpired.
• Not dependent on a single chip supplier ("a big no") — Joint MD Amit cited robust multi-sourcing strategies, including for non-obvious cases, built after navigating the COVID-related semiconductor supply crunch.
• India chip localization not yet material — on the analyst's premise that local chip manufacturing may pick up from FY 2027-2028 or FY 2028-2029, management said they do not yet see this happening in a big way and have no existing relationship with local suppliers.
• Supplier leverage: a 2x volume increase over the next 2-3 years (by ~FY 2028-2029–FY 2029-2030) would not by itself dramatically change supplier equations — management declined ballpark guidance for the FY 2029-2030–FY 2031-2032 horizon; bigger sourcing levers would open only if Sedemac makes headway into the power tool market, with the benefit unquantified.
• China direct access remains difficult — management described direct selling there as "a very difficult sell"; some sales to China currently occur only indirectly, with the future approach left open-ended.

BS7 Optionality, Hybrid Pathway, and Program-Timeline Risk

• BS7 opportunity: Sedemac "would be one of the candidates" for market share — analyst framed BS7 as ~4 years down the line (around FY 2030-2031); the main challenge is that this business is dominated by big global tier-1 suppliers, and creating a compelling enough proposition to move customers away from them is the key hurdle.
• ISG as a hybrid pathway — management confirmed ISG is "the first step towards hybrid" and, with appropriate changes to battery and motor/controller power rating, can potentially be used as a mild hybrid; Shashikant added it is a direct lever to address CAFE norms, which the analyst flagged as a potential two-wheeler requirement roughly 2-3 years out. Several programs are running at various stages with this in mind.
• CV ACU launch expectations shifted from H2 FY 2026-2027 to H1 FY 2027-2028 — Joint MD Amit called it a routine OEM-supplier program timeline shift ("happens all the time... not a big deal") and declined to specify whether the delay is OEM-led, approval-related, or R&D-related MD Shashikant added this is why the company avoids sharing such program timelines with investors.
• After-treatment controller win is for M&HCV, not LCV — the referenced EFI ECU is also entirely for M&HCV; flexibility was the main driver of the win (the custom ECU model lets the customer own part of the application software). Management declined to confirm the analyst's cited ASP range of Rs.15,000–Rs.50,000, saying the range itself may not be fully accurate.
• EBITDA framed as "primarily a function of long-term competitive advantage" — MD Shashikant noted no constant EBITDA applies across the portfolio; if existing products see no significant erosion of competitive advantage, profitability will only increase as the company scales. Management declined to commit to any specific future PAT level (period unspecified), stating profitability will depend on the product mix prevailing at that point in time.
• EV share of two/three-wheeler revenue reached 11.4% in H1 FY 2026-2027 — broadly in line with EV penetration in the two/three-wheeler market; management views itself as agnostic to electrification, which increases per-unit revenue. R&D innovation risk acknowledged as inherent to all innovative companies, with track record "pretty good" so far.
• Sequential QoQ volume growth over Q1–Q2 FY 2026-2027 — attributed to a couple of launches made in FY 2025-2026 that have now fully ramped, along with new launches; management did not separately quantify the contribution of the two new ECU-equipped model launches the analyst cited.