Accumulate Harsha Engineers International; target of Rs 520: Prabhudas Lilladher

Key Investment Pillars

• India Engineering business segment growth of 24.1% YoY, driven by domestic demand, with operating EBITDA margin expansion of 277 bps
• Advantek's expected profitability in H2 FY27, with revenue guidance of INR 1.4bn, and initiatives to reduce losses in Romania
• Bushings and stampings revenue growth of 42.5% and 109% YoY, respectively, with long-term revenue potential of INR 3bn each
• Large cages revenue growth expected to be at least 20% in FY27, driven by supportive demand across domestic industrial and automotive markets

Thesis Validation Checklist

• Monitor Advantek's profitability and operational downsizing in Romania
• Track performance in China and progress on new product development pipeline
• Watch for signals of margin improvement trajectory of subsidiaries
• Observe demand trends across industrial, automotive, and other applications
• Keep an eye on the company's ability to achieve its long-term blended EBITDA margin guidance of above 20%
• Monitor the impact of capacity expansion and greenfield projects on the company's growth and profitability