OBSC Perfection Ltd - Perfection Not Just in Name, but in Business DNA

[Pankaj_Motwani]

About

• Established in 2017, OBSC Perfection is a manufacturer of precision engineered metal products
• Part of the machining industry, with a key focus on the auto sector
• Not a direct OEM supplier but a Tier II/III one
• It operates in four industries: auto (91%), defence (4%), marine (4%), telecom & renewables
• Part of the 55+ years old Anglian Omega Group which has presence in Bright Bar Steel, Electric Mobility & Auto Components Industries

Products

• Manufactures small products where Precision and quality
• Product portfolio spanning over 26 products (encompassing over 500 individual part numbers.)
• Top 3 categories by revenue:
  o Sensor Boss – Precision turned parts used in exhaust systems; exported to Europe, the US,
  and used by Indian truck/passenger vehicle OEMs.
  o Shock Absorber Rods – OBSC is among the largest shock absorber rod manufacturers in India;
  strong client base among top OEMs.
  o Defense Parts – Includes ammunition and artillery fuze components, forming a growing third
  category.
  o The top 2 SKUs (Sensor Boss and Shock Absorber Rods) contribute approximately 40% of
  OBSC’s automotive revenue.

Customers

• Top three customers as of May 2025 are: ZF Group (German €50 billion MNC), Tenneco Inc (American OEM manufacturing exhaust systems, suspension products, etc.), JTEKT (JTKT) (sparing system manufacturer)
  
  

Growth Strategy:

• Value Chain Up-Move : Addition of Hot and Cold Forging capability to move up the value chain; enabling them to make complex and larger parts
• New Industries: Strong focus on defense, marine and renewables. Under active discussions with multiple potential customers within these industries
• Exports: Increasing exports revenue exponentially; targeting to maintain 50%+ CAGR over next 3-4 years
• Advanced Machineries: Continue to invest in high-end machineries enabling to meet high level of quality to serve global MNC

Order book
Highest ever Order wins (~4,380 mn) in a 6-months period- H2FY25
Order book more than doubled during the FY25
Execution Timeline:

• 130 crore defense order to be executed over 10 years.
• Remaining ₹690 crore to be executed over next 5 years
  
  
  
  
  

Industry Diversification

• Historically served Automotive Sector; rapidly expanding in Non Automotive such as Defense, Marine, Renewables sector
• Increasing order flow from non-automotive; contributing 54% of new orders received in last 6 months
• FY26 Revenue Split (Guidance):
o Automotive: ~80–85%
EVs: ~25%
Non-EVs: ~60%
o Defense & Marine: ~13–14%
o Others: ~3–4%

• Shift towards non-automotive expected to accelerate over 3-5 years
• Over the next two to three years, automotive revenue is expected to be around 65%, with non-automotive contributing 35%.
• Defense and marine are foreseen to grow at a CAGR of at least 45% to 50%. This could jump much faster if pipeline discussions convert into real orders.

Automotive:
• Order Book: 467cr + 97.5 cr = 565 cr
• For a particular Tata AutoComp (TACO - a significant supplier to Tesla ), OBSC Perfection is the single source supplier from India for parts being developed for the first time in India. Tata AutoComp is expected to become one of the largest customers very soon

Marine:
• Order book: 60 cr
• Actively in talks with multiple US-based marine component manufacturers.

Marine:
• Order book: 60 cr
• Actively in talks with multiple US-based marine component manufacturers.
• These companies are looking to outsource patented production processes to India due to Tariff-driven
supply chain realignments between US and China and Need for a trustworthy and proven Indian partner
• OBSC is at an advanced negotiation and relationship-building stage with these clients

Aerospace
• For the aerospace sector, the company recently started the AS9100D certification, which is required to enter this sector
• Parts under development and validation; no confirmed orders yet, but RFQs received and expressions of interest are high.

Defense
• Order book: 133 cr
• They are manufacturing some Defence products for PSUs in India and some are of Israeli origins
• Revenue from defense segment up from ₹0.28 crore in FY24 to ₹5.55 crore in FY25
• Defense order book: ₹130 crores (10-year horizon). Implies ~₹13 crores/year revenue visibility from defense
• The Defence segment is expected to grow significantly, potentially at a CAGR of at least 45%-50%
• Defense segment to drive margin expansion and profitability

Capacity / Capex:
• It has five plants, four in Pune and one in Chennai. A plant is coming up in Gujarat.
• In-house manufacturing capabilities across machining, turning, investment casting, fabrication
• OBSC identifies itself as a precision engineering company. Now within that broad spectrum of precision engineering, they have different processes like CNC machining (which includes Swiss machining, grinding), Investment casting, Cold & Hot Forging
• ₹20 crores of unutilized IPO funds remain: ₹15 crores earmarked for CAPEX in third facility (Chennai) & ₹5 crores for Unit -4 in Pune. Utilization timeline: Majority in H1 FY26, balance in H2 FY26.
• 3 out of 5 plants operating at 80-90% machine utilization
• The Chennai plant (third facility) and the Pune plant (fourth facility) are yet to come to full capacity.
• There is space to add new machines, and teams are ready for expansion. Future growth will see massive revenue coming from these plants.
• Value Chain Up-move with Forging Capability:
o Addition of Hot and Cold Forging capability to move up the value chain; enabling them to
make complex and larger parts
o 5th Facility being commenced in Pune – this plant will bring our in-house forging capability
o Status:
Facility inaugurated in Apr’25
Hot and Cold Forging press machines have been ordered
Expect to be operational in 3 months – Mid August 2025
Eventually, this facility will have both Machining & Forging under a single roof
Expected to convert into revenue from the end of the second half of FY26

• A dedicated facility in Sanand, Gujarat is being planned for a long-standing customer to produce shock absorber rods for commercial vehicles and electric vehicles. A confirmed letter of intent has been received, and the project will be worked on over the next six months. This planned Gujarat facility is not included in the current Rs. 700+ crores order book.

• The company plans to get into stamping and sub-assemblies very soon. The goal is to become a company that owns multiple processes and can make any metal part in the long-term

Outlook
• The management expects margin tailwinds from growth in the ASP and change in the export mix. It is targeting a margin expansion of more than 400bp in the medium term
• Focus is on higher profitable sectors of defence & increase in export mix (defence/exports:
~INR133cr/~INR181cr)
• In terms of capacity, with the current installed capacity, the company expects revenue to grow to around Rs. 200+ crores in FY26
• Company expects >40% revenue growth in FY26
• The company expects margin expansion. Immediate target is to improve EBITDA margins by at least 200 basis points for FY26

[sameernics]

Please add risk factors and the disclosures to your post, that would help the community. Thanks

[Girish_Kolari]

Thanks for detailed post on OBSC Perfection.

I had few questions would love your thought on

• Order book - how come company has such growth in ordered book (nomination letters-based order book) any pointer how to study it? Is it only its group company relation driving or something else is driving it?
• Marine Components - you mentioned 60 cr order book, could you share pointer to source just to study bit more
• Yashdeep Automotive - is also a subsidiaries of Anglian Omega Group which works in components for the automotive sector, if I am not wrong they too work in Defense and marine components Any idea how group will treat future business – will it move more to its privet subsidiaries or to public listed OBSC?

[Pankaj_Motwani]

1. The order book consists of nomination letters, which are considered binding documents. The company makes investments based on these nominations, and customers are liable to cover losses if the parts are not picked up with serious deviation from the nomination. The company views these as confirmed orders

Also there is no major related party transaction except for the purchase of carbon steel purchase from the group company and they even didnt mention group coas their customer in their ppt:

Top three customers are : ZF Group (German €50 billion MNC), Tenneco Inc (American OEM manufacturing exhaust systems, suspension products, etc.), JTEKT (JTKT) (sparing system manufacturer)
Latest order received from:
Tenneco Automotive Operating Company : 160 cr
Tenneco Automotive Operating Company : 97.5 cr

2. the 60 cr order was mentioned in their order book mix, i have already shared the snippet of the same

3. Yashdeep focuses on manufacturing high-quality machine components for engines, power-trains, and safety parts for clutch assemblies, supplying to leading automotive OEMs, including a prominent Japanese clutch manufacturer.
   I am not able to find out about their work in defense & marine components. Will be helpful if you can share the source of that.

[Girish_Kolari]

Thanks for replay, appreciate your time.

I understand Order book is based on nomination letters and customer can cancel by paying out the cost (or not based on contract). I am trying to understand why Order book/nomination letters growing is such fast rate post DRHP, is this something industry phenomena or company doing to enjoy this phenomenal growth in the order book.

Thanks for pointing out the marine order book reference in its PPT. I am looking for more detail on the order book of marine as its revenue from marine division is keep reducing but I could not find any reference to provide any pointer what is happening. In case there is some pointers please do let me know. (Please note that I tried to try to find relation of marine revenue order book in FY25 and FY26Q1 info but no luck)

As per DRHP “We have not entered into any non-compete agreements with such our Promoters or promoter group entities”

Please note that official website has no much information. This [link](https://www.indiamart. com/yashdeep/profile.html) has listed “Indian Defence, Kolkata” as its clientele. Just wondering do Yashdeep Automotive has any overlap.

[Chandragupta]

This is the correct website

OBSC Perfection Limited

[satishwe]

[satishwe]

Another 39 cr order per year for 8 years. total 230 cr.
Starts from August 2026.

[avneesh]

Q1 FY26 update:

[ukdube]

50% tariff wef 27 Auf 2025.And it is not going to go away .Most order from US due 50% tariff are on hold or being cancelled.

[Pankaj_Motwani]

They have very less dependency on US

[Prdnt_investor]

Session recording from Alpha Ideas Meet 2025

[satishwe]

OBSC 2025 AGM notes:
Updates for this year from MD speech,

• Started the new forging plant in Pune, it will be catering to hot and cold forged products.
• This is the first time company company has setup forging, this will augment the current machining and casting process.
• Company already has good set of orders for hot and cold forging from defence and auto industry.
• Hot forging machines have arrived and cold forging machines are on the way , expect large revenues form this plant from this year.
• Company was purely into auto 3 years back, as of date it has good set of orders from auto, defence, marine, renewable energy.

QnA updates,

• 20 crores capex this year, Expect to increase for the future years.
• Order book stands at 1200 crores. Orders are typically nominated in Auto industry and risk of cancellation is low and these are legally binding documents
• Hinted at 40% top-line growth for fy26 over fy25.
• Deeper relationship with BEL, the only Company to develop mechanical parts for the ammunition fuse category products.
• Working with Israel based companies and received small initial orders to manufacture ammunition parts and bullet casings. Expect to hit large orders here.
• “Regarding large RFQs in the US and a similar strategy for Europe: OBSC Perfection is already engaged with Europe, working with the largest tier 1 OEM, the ZF Group, for three or four years. We recognise there has been a slowdown in Europe, so we have created opportunities in the US, Mexico, and South America. However, Europe, particularly Germany, continues to be a hub of innovation, so our relationships with players like ZF and Bosch are critical. We are focusing on new businesses like EV and hydrogen mobility, developing parts for hydrogen storage in vehicles, mostly for European manufacturers.” - MD
• This year company is getting into laser cutting in the Chennai plant. So Company will have CnC Machining, investment casting , forging and laser cutting in the Process portfolio. Stamping could as well be added in future.
• Tariffs have had not much impact as of now, but needs to be monitored as Tariffs are being changed frequently by USA and other countries and not reached a steady state yet.

[manpritaurora]

Pushed by @nirvana_laha, I did a peer analysis of OBSC against other “precision engineering” players, RACL and Sansera. What was intriguing was how OBSC was able to do 18% operating margins, similar to Sansera, even though Sansera’s gross margins were much higher. I looked at the bridge to OPM down from Sales and it’s captured below (Data from screener):

	Mar-25
	OBSC	Sansera	RACL
Sales	100%	100%	100%
Raw material Expenses	54.0%	42.6%	29.8%
Power and fuel cost	3.4%	4.1%	6.3%
Other Mfr. Exp	20.8%	14.7%	25.2%
Employee Cost	4.0%	14.7%	11.2%
Selling and admin	3.0%	7.9%	6.1%
Other Expenses	-0.1%	0.3%	1.2%
OPM	17.8%	17.13%	20.45%

From the above, it appears that OBSC’s employee cost as % of sales is significantly lower than Sansera and RACL.

Looking at the employee remuneration data from the 2025 Annual Report, I captured the following data:

	Mar-25
No. of Employees	OBSC	Sansera	RACL
Total	912	10319	1528
Permanent	103	2534	752
%	11%	25%	49%
Contractors	809	7785	776
%	89%	75%	51%
Median Remuneration	48202	240000	Not available for contractors

It appears that OBSC has a large percentage of contract workers. What is surprising though is that the median remuneration is just 48202 per annum (~4000 per month). This means that 50% of the workforce gets less than Rs. 48202 as salary/wages ! 4000 per month looks way too low and is much below the minimum wages for unskilled/skilled labour in Maharashtra and Tamil Nadu (where their plants are located). The only explanation I can think of is that these contract workers are working less than 50% of the time. Do you have any insights into this @Pankaj_Motwani @satishwe?

Out of the 7 KMPs, 4 of them take zero remuneration. Only Saksham Leekha takes a meaningful remuneration of 36 lakhs. This may be normal for an SME but it would be interesting to see how this evolves as OBSC scales.

[raj1968]

@manpritaurora

Sansera

Since I am invested in OBSC, I am tempted to respond although I wasn’t asked to .

1. In my view the product profile is much different for all of them, so they aren’t the right peer in my view. RACL does much more intricate and critical parts which are gears and Sansera is a in a different league. OBSC doesn’t do much of the complex work as of now in my view.
2. Salary of Rs.4000 is not at all possible as it will be much below the minimum wages. It might have happened because of some data mismatch somewhere,
3. I invested in OBSC not because of the auto-component business, but because defense and aerospace(non-existent now) can scale up over a period of time.
4. OBSC’s parent is well connected with big auto component giants for decades and that’s helping them.
5. Company has scaled up well in the past and have a very strong order book.
6. I did meet the management and was quite happy with the energy and vision MD has.

Regards,
Raj

Disc: Invested. It’s one of the lowest allocation(3%) for me. I will scale up if the execution continues .

[manpritaurora]

Thanks @raj1968 for responding.
I like the confidence and fire in the belly of the management too. An order book of 1200 crore for a 140 crore revenue company with a product mix shifting towards defense/marine definitely looks exciting.
I also agree that Sansera may not be a like-to-like peer. However, the whole point of the exercise was to figure out how OBSC was able to make 18% operating margins that is same as Sansera. This is despite Sansera having better gross margins and a better product mix. I felt that if OBSC, as primarily an auto component supplier, is making 18% margins, it must be doing something different. Hence, I tried to dig deeper into the drivers of margins.

And that is where the anomaly of employee expense as % of sales turned up. Here is a snapshot from page 56 of the 2025 AR:

It is possible that there is a data mismatch and I will reach out to the IR of the company. However, other data points from AR also seem to triangulate well with this data. The company spent 4.36 crores on salaries/wages to staff and officers. Dividing this by 900 employees (excluding KMP) gives an average salary/employee of ~48400 per year.

Disclosure: I am currently not invested. I am studying this as it looks promising. This exercise was to figure out the drivers of company’s margins.

[raj1968]

In my meeting with them they clearly said that their auto business margins are 10-15%. It’s marine/defense which pulls up their margin higher. They are trying to get to 50% auto in next 3-5 years which is much higher now.

The salary part IR should be able to clarify better..

Regards,
Raj

[Marathondreams]

Since there RM cost as % are higher and power and fuel as well as manpower costs are lower , it seems they are outsourcing more of their work to subcontractors (rough machining etc) and may be doing only finishing and or assembly work inhouse. Just a guess

[Chandragupta]

Hi @manpritaurora

Thanks for this analysis. It prompted me to probe a little further. Here is a possible explanation for this low labor cost:

You are right that the company mentions number of contractors as of March 25 as 809. From the DRHP, we get the corresponding figure for Sep 24 as 644. However, the company also states “Although we do not engage these contract workers directly, we are responsible for any wage payments to be made to such labourers in the event of default by their respective independent contractors.” (Emphasis mine).

This means company hires agencies who provide this labour to OBSC, and their salaries are paid by those agencies and do not form part of OBSC’s wage bill. Only if those agencies default, OBSC would pay. This means normally their cost to OBSC would be included under job work charges, and in FY25 OBSC paid Rs.22.29 crore as job work charges.

If we divide OBSC’s employee expense cost (Rs.5.71 crore) only with the permanent employee count (103), we get average cost of Rs.5.54 lac per head which is okay for this kind of company.
Still, it may be a good idea to recheck this with the company itself.

(Disc.: No positions)

[manpritaurora]

Thanks @Chandragupta, @Marathondreams and @raj1968 for pitching in and offering possible explanations.
I will reach out to the IR and update here once I hear back.