Sahasra Electronic Solutions Ltd Management Discussions

GLOBAL ECONOMIC OUTLOOK

The global economy demonstrated resilience during 2025 despite heightened trade policy uncertainty and geopolitical tensions. However, the outbreak of conflict in the Middle East has introduced new risks to global growth, inflation, and financial stability. Rising energy prices, supply chain disruptions, and elevated uncertainty are expected to weigh on economic activity across regions.

According to the International Monetary Fund (IMF), global growth is projected at 3.1% in 2026 and 3.2% in 2027 under its reference forecast. While technological innovation, continued investment activity, and resilient labour markets support growth prospects, geopolitical developments and commodity price volatility remain key risks to the outlook.

Inflation is expected to remain elevated in the near term due to energy-related pressures, while financial markets continue to monitor developments in global trade and geopolitical conditions. Policymakers across major economies are expected to focus on maintaining macroeconomic stability while supporting sustainable long-term growth.

KEY GLOBAL THEMES

Geopolitical uncertainty and energy market volatility

Resilient labour markets across major economies

Moderating but persistent inflationary pressures

Continued investment in technology and digital transformation

Ongoing global supply chain realignment

INDIAN ECONOMIC OUTLOOK

India remained the fastest-growing major economy in FY26, supported by strong domestic demand, stable macroeconomic fundamentals, and sustained policy support. Despite global trade disruptions and geopolitical uncertainties, economic growth accelerated to 7.6% in FY26 compared with 7.1% in FY25.

Growth was driven by robust performance across manufacturing and services sectors, supported by accommodative monetary conditions, moderating inflation, and continued public investment. Strong domestic consumption, infrastructure development, and formal employment generation continue to reinforce Indias long-term growth trajectory.

The World Bank projects Indias growth at 6.6% in FY27, reflecting temporary external headwinds arising from global geopolitical developments and higher energy prices. Over the medium term, favourable demographics, expanding urbanisation, rising incomes, and ongoing structural reforms are expected to sustain Indias position among the worlds fastest-growing major economies.

KEY GROWTH DRIVERS

Strong domestic consumption and private demand

Continued infrastructure and capital expenditure investments

Expansion of manufacturing and services sectors

Rising urbanisation and formalisation of the economy

Supportive policy framework and structural reforms

INDIA OUTLOOK HIGHLIGHTS

Fastest-growing major economy globally in FY26

Inflation moderated significantly during FY26

Formal employment creation remained strong

Fiscal consolidation continued while supporting growth

Long-term outlook supported by demographics and urbanisation

GLOBAL EMS INDUSTRY

The global Electronics Manufacturing Services (EMS) industry continues to be a critical part of the electronics value chain, supporting OEMs through manufacturing, assembly, testing, logistics, and product lifecycle services. The global EMS market is estimated at over USD 700 billion and is expected to approach USD 1 trillion by 2030, driven by increasing electronics consumption, digitalisation, AI, IoT, 5G infrastructure, electric vehicles, and industrial automation.

China remains the dominant manufacturing hub, accounting for nearly half of global EMS output. However, supply chain diversification and the adoption of China+1 strategies are creating opportunities for emerging manufacturing destinations such as India. As OEMs increasingly outsource manufacturing and focus on innovation and branding, EMS providers are expanding into higher value-added services including product design, engineering, and integrated supply chain solutions, supporting long-term industry growth.

INDIAN EMS INDUSTRY

Indias EMS industry is witnessing rapid growth, supported by rising domestic electronics consumption, favourable government policies, and increasing participation in global supply chains. The Indian EMS market is expected to grow from approximately Rs.2.1 trillion in FY23 to nearly Rs.9 trillion by FY28, representing a CAGR of around 34%.

The sector is benefiting from initiatives such as the Production Linked Incentive (PLI) Scheme, National Policy on Electronics, and increasing localisation of manufacturing. Mobile phones remain the largest segment, while automotive electronics, IT hardware, telecom equipment, medical devices, and defence electronics are emerging as high-growth categories. As global manufacturers diversify sourcing beyond China, India is steadily strengthening its position as a preferred electronics manufacturing destination, creating significant opportunities for domestic EMS companies.

GLOBAL SEMICONDUCTOR INDUSTRY

The global semiconductor industry remains the backbone of the digital economy, powering applications across consumer electronics, automotive, telecommunications, healthcare, industrial automation, cloud computing, and artificial intelligence. The industry surpassed USD 700 billion in 2025 and is projected to approach USD 1 trillion by the end of the decade.

Demand is being driven by rapid adoption of AI, high-performance computing, data centres, 5G networks, electric vehicles, and connected devices. Governments worldwide are investing heavily in semiconductor manufacturing and supply chain resilience to reduce dependence on concentrated production hubs. Despite geopolitical and supply chain challenges, long-term growth prospects remain strong as semiconductor content continues to increase across industries and technologies.

INDIAN SEMICONDUCTOR INDUSTRY

Indias semiconductor industry is entering a transformative phase, supported by strong policy initiatives and growing domestic demand. The Indian semiconductor market is estimated at around USD 55-60 billion and is expected to exceed USD 100 billion by 2030.

To strengthen domestic capabilities, the Government of India launched the India Semiconductor Mission with an outlay of Rs.76,000 crore, aimed at developing fabrication, assembly, testing, packaging, and design capabilities. India already possesses a strong semiconductor design ecosystem and is now witnessing investments in semiconductor packaging and manufacturing infrastructure. Rising demand from smartphones, consumer electronics, automotive electronics, telecom equipment, AI applications, and industrial automation is expected to drive sustained growth, positioning India as an emerging participant in the global semiconductor value chain.

BUSINESS PERFORMANCE AND OUTLOOK

COMPANY OVERVIEW

Sahasra Electronic Solutions Limited continued to strengthen its position in India?s rapidly evolving Electronics System Design and Manufacturing (ESDM) ecosystem during FY26. As an integrated electronics manufacturing company, the Company offers end-to-end solutions across Electronics Manufacturing Services (EMS), Memory Products, Semiconductor Packaging, and IT Hardware, serving a diversified customer base across domestic and international markets.

Backed by over two decades of industry expertise through the Sahasra Group, the Company has steadily expanded its capabilities across the electronics value chain, supported by advanced manufacturing infrastructure, in-house engineering and R&D capabilities, and a growing global footprint. During the year, Sahasra further enhanced its operational scale, customer reach, and product portfolio while strengthening its presence in high-growth segments such as memory solutions, semiconductor packaging, consumer electronics, industrial electronics, and strategic electronics.

The Company remains focused on building a differentiated technology-led platform, supported by investments in manufacturing capacity, research and development, and product innovation. Its strategic objective of transitioning from an Original Equipment Manufacturer (OEM) to an Original Design Manufacturer (ODM) marks an important step towards enhancing value addition, strengthening customer engagement, and improving long-term competitiveness.

BUSINESS PERFORMANCE

FY26 was a year of strong operational and financial progress for Sahasra Electronic Solutions Limited. Consolidated revenue from operations increased by 45% year-on-year to Rs.138.8 crore, driven by healthy demand across core business segments, expansion of the customer base, and increasing contribution from memory solutions and semiconductor-related activities.

The Company reported EBITDA of Rs.18.2 crore during the year, representing a growth of 141% over the previous year. EBITDA margin improved significantly by 523 basis points to 13.1%, reflecting improved operating leverage, a better product mix, and continued focus on operational efficiencies. Profit after tax stood at Rs.12.1 crore, registering a growth of 617% year-on-year, while PAT margin expanded to 8.7%.

The Company?s order book strengthened to Rs.68.5 crore at the end of FY26, providing healthy near-term revenue visibility. Customer diversification continued to improve, with the active customer base increasing to 140 customers, while repeat business remained robust at 84.1%, underscoring strong customer relationships and execution capabilities.

The Company?s order book strengthened to Rs.68.5 crore at the end of FY26, providing healthy near-term revenue visibility. Customer diversification continued to improve, with the active customer base increasing to 140 customers, while repeat business remained robust at 84.1%, underscoring strong customer relationships and execution capabilities.

Operationally, Sahasra continued to scale its manufacturing footprint and technology capabilities. The Company maintained an installed manufacturing capacity of approximately 18 million units annually with capacity utilization of around 55%, providing sufficient headroom to support future growth. During the year, management continued to invest in advanced testing, reliability infrastructure, memory manufacturing capabilities, and semiconductor packaging operations to strengthen its position in emerging opportunities across the electronics value chain.

OUTLOOK

The outlook for Sahasra Electronic Solutions Limited remains positive, supported by favourable industry dynamics, increasing localisation of electronics manufacturing, rising global supply chain diversification, and continued policy support from the Government of India for semiconductor and electronics manufacturing.

The growing demand for memory products, semiconductor packaging services, IT hardware, consumer electronics, industrial electronics, and strategic electronics is expected to create meaningful opportunities for the Company. Increasing adoption of artificial intelligence, cloud computing, edge devices, and digital infrastructure is driving demand for advanced memory solutions, while the global push towards supply chain diversification continues to benefit Indian manufacturing companies.

Sahasra is strategically positioned to capitalize on these opportunities through its integrated ESDM platform, expanding semiconductor packaging capabilities, and growing portfolio of value-added products. The Company remains focused on strengthening its memory solutions business, expanding semiconductor packaging operations, broadening its ODM capabilities, and enhancing customer penetration across domestic and export markets.

Management continues to invest in future-ready capabilities, including planned investments in semiconductor infrastructure, research and development, and product engineering. The Company is also pursuing opportunities under various government-led semiconductor and electronics manufacturing initiatives, which could further accelerate growth over the medium term.

Looking ahead, Sahasra remains committed to sustainable and profitable growth, supported by technology leadership, operational excellence, customer-centric innovation, and prudent financial management. With a diversified business model, expanding customer base, and strengthening manufacturing ecosystem, the Company is well positioned to participate in Indias emergence as a global electronics manufacturing and semiconductor hub.

SWOT ANALYSIS

STRENGTHS AND WEAKNESSES

The company has established itself as an integrated electronics system design and manufacturing (ESDM) company with capabilities spanning electronics manufacturing services (EMS), memory solutions, semiconductor packaging, and IT hardware. The company benefits from over two decades of industry experience through the Sahasra group and serves a diversified customer base across domestic and international markets. During FY26, the company reported revenue from operations of Rs.138.8 crore and expanded its customer base to 140 active customers, while maintaining a repeat business ratio of 84.1%, reflecting strong customer relationships and execution capabilities. Its manufacturing infrastructure comprising 8 SMT lines, annual installed capacity of 18 million units, DSIR-recognized R&D capabilities, and growing presence in semiconductor packaging and memory solutions position the company favourably to capitalize on emerging opportunities in Indias rapidly evolving electronics and semiconductor ecosystem. The Companys export presence, which contributed 56% of FY26 revenue, further strengthens its market diversification and global competitiveness.

The company has established itself as an integrated electronics system design and manufacturing (ESDM) company with capabilities spanning electronics manufacturing services (EMS), memory solutions, semiconductor packaging, and IT hardware. The company benefits from over two decades of industry experience through the Sahasra group and serves a diversified customer base across domestic and international markets. During FY26, the company reported revenue from operations of Rs.138.8 crore and expanded its customer base to 140 active customers, while maintaining a repeat business ratio of 84.1%, reflecting strong customer relationships and execution capabilities. Its manufacturing infrastructure comprising 8 SMT lines, annual installed capacity of 18 million units, DSIR-recognized R&D capabilities, and growing presence in semiconductor packaging and memory solutions position the company favourably to capitalize on emerging opportunities in Indias rapidly evolving electronics and semiconductor ecosystem. The Companys export presence, which contributed 56% of FY26 revenue, further strengthens its market diversification and global competitiveness.

OPPORTUNITIES & THREATS

The Indian electronics manufacturing industry is undergoing a structural transformation, supported by increasing digital adoption, favourable government policies, rising domestic consumption, and global supply chain diversification initiatives. Government-led programs focused on electronics manufacturing, semiconductor development, and domestic value addition are creating significant opportunities across the Electronics System Design and Manufacturing (ESDM) ecosystem. Growing demand for memory products, semiconductor packaging, IT hardware, consumer electronics, industrial electronics, automotive electronics, and strategic electronics is expected to drive long-term industry growth. Furthermore, increasing adoption of artificial intelligence (AI), cloud computing, edge devices, and data- intensive applications is accelerating demand for advanced memory and semiconductor solutions, creating new growth avenues for companies operating across the electronics value chain. With its integrated presence across EMS, Memory Solutions, Semiconductor Packaging, and IT Hardware, Sahasra Electronic Solutions Limited is well positioned to benefit from these emerging opportunities and expand its participation in high-growth segments.

At the same time, the industry remains exposed to several external risks and uncertainties. Global supply chain disruptions, fluctuations in semiconductor availability, foreign exchange volatility, changing trade policies, and geopolitical developments can impact procurement costs, component availability, and operational planning. The industry is also characterized by rapid technological advancements, shorter product lifecycles, and increasing competitive intensity, requiring continuous investments in innovation, manufacturing capabilities, and talent development. Additionally, pricing pressures, evolving customer requirements, and dependence on imported electronic components remain key challenges across the sector. The Company continues to mitigate these risks through customer diversification, expansion into highervalue product categories, strengthening of domestic and export markets, investments in research and development, and ongoing enhancement of manufacturing and quality capabilities.

SEGMENT-WISE PERFORMANCE

The Electronics Manufacturing Services (EMS) segment remained the largest contributor to revenue, accounting for approximately 66.0% of consolidated revenue during FY26. Revenue from the segment increased by 51% year-on-year to Rs.91.6 crore, driven by increasing customer engagements, higher production volumes, and growing demand from consumer electronics, industrial electronics, telecommunications, healthcare, and strategic electronics sectors. The Company continued to leverage its manufacturing infrastructure, quality systems, and engineering capabilities to support customer requirements across domestic and export markets.

The Memory Solutions business emerged as one of the fastest-growing segments during the year, with revenue increasing by 110% year-on-year to Rs.26.3 crore and contributing 18.9% of consolidated revenue. Growth was supported by increasing demand for memory products, favourable industry dynamics, and expanding opportunities arising from data storage, artificial intelligence applications, cloud infrastructure, and digital transformation initiatives. The Company continues to focus on strengthening its position in this high-growth segment through product innovation, customer expansion, and enhanced manufacturing capabilities.

The Semiconductor Packaging business delivered strong growth momentum during FY26, with revenue increasing by 71% year-on-year to Rs.15.7 crore, contributing 11.3% of consolidated revenue. The segment benefited from growing demand for domestic semiconductor packaging capabilities and increasing adoption of locally packaged semiconductor products. Through Sahasra Semiconductors Private Limited, the Company continued to expand its capabilities in memory semiconductor packaging and related advanced packaging solutions, supporting its long-term strategy of participating in Indias developing semiconductor ecosystem.

Revenue from the Computer and IT Accessories segment stood at Rs.5.2 crore during FY26, contributing 3.8% of the consolidated revenue. While the segment witnessed moderation during the year as the Company optimized its product mix and focused on higher-value opportunities, it continues to represent a strategic growth area. The Company remains focused on expanding its presence in IT hardware and progressing towards its long-term objective of building Original Design Manufacturing (ODM) capabilities supported by in-house engineering and research and development expertise.

FINANCIAL PERFORMANCE & OPERATIONAL PERFORMANCE

During FY26, Sahasra Electronic Solutions Limited delivered a strong financial and operational performance. Consolidated revenue from operations increased by 45% year-on-year to Rs.138.8 crore, while EBITDA grew by 141% to Rs.18.2 crore with EBITDA margin improving to 13.1%. The Company reported a profit after tax of Rs.12.1 crore compared to a loss in the previous year, reflecting improved operational efficiency and a favourable business mix. The order book stood at Rs.68.5 crore as on March 31, 2026, providing healthy revenue visibility. Operationally, the Company continued to strengthen its presence across EMS, Memory Solutions, Semiconductor Packaging, and IT Hardware while expanding its customer base to 140 active customers and maintaining a repeat business ratio of 84.1%.

FINANCIAL PERFORMANCE & OPERATIONAL PERFORMANCE

The Company firmly believes that its employees are its most valuable asset and key drivers of long-term growth. As on March 31, 2026, Sahasra had a workforce of 246 employees across its operations. The Company continues to focus on talent development, employee engagement, skill enhancement, and fostering an inclusive work environment. Industrial relations remained cordial throughout the year, and the Company maintained a positive and collaborative workplace culture aligned with its growth aspirations.

Particulars	FY26	FY25	Change	Explanations
Return on Equity (ROE) (%)	4.9%	-1.0%	590 bps	Improvement driven by a return to profitability during FY26, supported by strong revenue growth, margin expansion, and improved earnings performance.
Return on Capital Employed (ROCE) (%)	3.0%	0.4%	260 bps	Increase reflects higher operating profitability and improved utilization of capital employed following significant growth in revenue and EBITDA.
Debtor Days	93	103	-9.7%	Improvement attributable to better receivables management and enhanced collection efficiency, resulting in faster realization of customer payments.
Cash Conversion Cycle (Days)	140	115	21.7%	Increase primarily due to higher inventory levels maintained to support business growth, customer commitments, and expansion across business segments.
Net Debt to Equity (x)	0.2	0.2	0.0%	Ratio remained stable, reflecting prudent financial management and a balanced capital structure despite ongoing growth investments.
EBITDA Margin (%)	13.1%	7.9%	520 bps	Significant improvement driven by operating leverage, favourable product mix, improved capacity utilization, and stronger contribution from higher-margin business segments.
PAT Margin (%)	8.7%	-2.4%	1110 bps	Margin improvement reflects strong operational performance, better cost management, and the Companys successful transition from a net loss position in FY25 to profitability in FY26.