Synopsis: A global brokerage has turned bullish on a set of Indian precision engineering firms, betting that their expansion into aerospace, semiconductors and data centre components could reshape how the sector is valued.
Auto component makers in India have long been seen as steady but unglamorous businesses, tied closely to vehicle sales cycles. That perception may be changing. A fresh round of coverage from a leading global brokerage argues that a handful of manufacturers
Goldman Sachs Turns Bullish On Precision Engineering Play
Goldman Sachs has started coverage on four Indian auto component manufacturers, arguing that the industry is moving into a new phase where growth will come from more than just automotive demand. The brokerage picked Sansera Engineering and Craftsman Automation as its top picks with ‘Buy’ ratings, while placing Samvardhana Motherson and Bharat Forge under ‘Neutral’ ratings.
The thesis rests on a few themes: companies adding more content per vehicle, reinvesting profits into new capabilities, staying agnostic to whether the industry moves towards EVs or continues with combustion engines, disciplined capital allocation, and steady margins. Goldman believes firms that score well across these areas are best placed to benefit from the sector’s next leg of growth.
Looking at the industry as a whole, the brokerage expects revenue to grow at a 10% compounded annual rate between FY26 and FY30, with EBITDA growing faster at 15% a year. The drivers include rising exports, the electrification wave, the upcoming 8th Pay Commission, companies across the world looking to diversify their supply chains away from China, and fresh opportunities opening up in defence, aerospace and semiconductors.
Goldman’s broader argument is that the market has historically priced these companies as cyclical, low-margin businesses with little pricing power. That view, it believes, undersells a smaller group of manufacturers that are now moving into precision engineering work with better economics and steadier earnings.
Sansera Engineering: Betting On Its Semiconductor And Aerospace Push
For Sansera Engineering, Goldman has set a 12-month target price of Rs 4,130, implying an upside of 27% from current levels, and has initiated coverage with a ‘Buy’ rating.
The brokerage’s view is that Sansera is entering what it calls a “harvesting phase” after spending close to a decade investing in new capabilities outside its traditional automotive business – particularly in equipment used in semiconductor wafer fabrication and in aerospace parts, including engine blisks that are still under development.
Goldman expects this shift to pay off in two ways: first, as global semiconductor equipment makers increasingly look to source from India, Sansera’s addressable market should widen. Second, as automakers such as Hero and Honda, along with other global manufacturers, continue outsourcing legacy components, the company’s export business and margins should get a lift.
On the numbers, Goldman projects Sansera’s earnings per share to rise 39% in FY27, 29% in FY28 and 34% in FY29. EBITDA margin is expected to expand from 18.1% in FY26 to 21.6% by FY29, while return on equity is seen improving from 11% to 18% over the same stretch. The brokerage’s earnings estimates for FY27 and FY28 run about 8% ahead of Bloomberg consensus.
New customer wins in semiconductor equipment, stronger auto exports and tighter emission rules for global trucking are seen as the key positives to watch. On the flip side, softer semiconductor demand, quicker-than-expected EV adoption and weaker domestic auto sales remain the main risks to the thesis.
Sansera’s own numbers back some of this optimism. The company reported its highest-ever quarterly and annual performance in FY26, with consolidated revenue rising 28% year-on-year in the March quarter to Rs 998.7 crore, EBITDA up 52% to Rs 192.9 crore, and profit after tax more than doubling, up 108% to Rs 123.1 crore. For the full year, revenue grew 16% to Rs 3,497.9 crore, EBITDA rose 23% to Rs 632.1 crore, and PAT climbed 51% to Rs 326.9 crore.
Craftsman Automation: Riding The Data Centre Wave
Goldman has also initiated coverage on Craftsman Automation with a ‘Buy’ rating and a target price of Rs 11,600, pointing to a possible 23% upside. The brokerage’s case here centres on Craftsman’s heavy-horsepower engine block business, which it expects to benefit from the global build-out of AI-focused data centres. Beyond that, rising aluminium content in vehicles, growing export opportunities, and a push into industrial applications are seen as additional growth levers. The recent acquisitions of DR Axion and Sunbeam Lightweighting are also expected to add capabilities and support margins over time.
Describing Craftsman as an “engine block specialist” positioned to gain from data centre expansion, Goldman expects the company’s shift towards a higher-value product mix to translate into strong operating leverage. Its forecast calls for a 17% revenue CAGR, 25% EBITDA CAGR and a sharp 43% EPS CAGR between FY26 and FY29, powered by engine blocks, aluminium die-casting, industrial storage and exports.
Craftsman’s consolidated results for FY26 show the scale of the momentum already visible: full-year revenue rose 42% to Rs 8,069 crore, EBITDA grew 51% to Rs 1,300 crore, and PAT jumped 91% to Rs 384 crore. In the fourth quarter alone, revenue was up 27% year-on-year at Rs 2,226 crore, EBITDA rose 51% to Rs 378 crore, and PAT climbed 73% to Rs 116 crore.
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