Shares of Sansera Engineering rose 6% during trading hours on Monday, July 20, following Goldman Sachs' positive coverage initiation. According to reports from NDTV Profit, the stock advanced 5.86% intraday to ₹3,408.9 per share. The scrip was trading 5.8% higher by 10:50 am, significantly outperforming the benchmark Nifty 50 index which was down 0.43% during the same period.
Goldman Sachs initiated coverage on four Indian auto ancillary companies, turning bullish on Sansera Engineering and Craftsman Automation while assigning Neutral ratings to Bharat Forge and Samvardhana Motherson. The brokerage initiated Sansera Engineering with a 'Buy' rating and a target price of ₹4,130, representing nearly 21% upside from the current price. As reported by The Financial Express, Goldman Sachs believes Sansera is entering the 'harvesting phase' after nearly a decade of investments to diversify beyond conventional automotive components into semiconductor wafer fabrication equipment and aerospace precision machining. The brokerage expects the company's increasing exposure to complex precision-engineered products to improve both earnings quality and profitability.
According to Goldman Sachs' analysis, the brokerage expects the Indian precision machining and auto parts industry to deliver a 10% revenue CAGR and 15% EBITDA CAGR between FY26 and FY30, driven by electrification, exports, the upcoming 8th Pay Commission, global supply-chain diversification and opportunities in defence, aerospace and semiconductors. For Sansera Engineering, Goldman Sachs forecasts earnings per share to grow 39% in FY27, 29% in FY28 and 34% in FY29. The brokerage expects EBITDA margin to improve to 21.6% in FY29 from 18.1% in FY26, while return on equity is projected to increase to 18% from 11% over the same period. Goldman Sachs' FY27 and FY28 earnings estimates are 8% above Bloomberg consensus, with key catalysts including new semiconductor wafer fabrication equipment customer additions and stronger legacy automotive exports.
Goldman Sachs believes these manufacturers are undergoing a product mix shift that could make their business models more resilient to industry cycles while expanding into larger profit pools by leveraging their core manufacturing capabilities. The brokerage highlighted that semiconductor wafer fabrication equipment manufacturers require precision engineering suppliers, while the wafer fabrication equipment manufacturing supply chain in Southeast Asia presents an opportunity. Goldman Sachs identified four key drivers that can help auto ancillary companies outperform OEMs: product expansion, segment expansion, geographic expansion and inorganic expansion. The brokerage prefers companies that score well on content addition, business reinvestment, powertrain-agnostic exposure, capital allocation, margin stability and expansion into new growth adjacencies beyond traditional automotive markets.
Contrary to market perception, Goldman Sachs expects the shift towards precision engineering, aerospace, defence, semiconductors and EV-related opportunities to drive long-term growth and improve margins for these companies. The brokerage noted that the market continues to view many of these companies as cyclical auto parts manufacturers with limited pricing power and recurring capital expenditure requirements, creating potential for significant upside as these transformations materialize. Goldman Sachs believes India's auto component industry is entering a new growth cycle as manufacturers diversify into precision engineering for semiconductors, aerospace, defence, electric vehicles and data centre infrastructure, with Sansera Engineering and Craftsman Automation positioned to benefit from these structural opportunities.
