Nuvama Sees 90% Upside in High-Momentum SME Star
OBSC Perfection (OBSCP) is shaping up to be one of the most compelling small-cap stories on Dalal Street. In its latest H2FY25 result update, Nuvama Wealth and Investment has reiterated a strong ‘BUY’ recommendation, setting a target price of INR 360—a staggering 90% upside from its report day market price of INR 188. The call comes on the back of a robust earnings performance, aggressive capacity expansion, order book visibility, and debt reduction.
Earnings Snapshot: The Numbers That Turn Heads
OBSC Perfection FY25 Performance Highlights:
- Revenue: INR 143 crore, up 24% YoY
- EBITDA: INR 25 crore, up 22% YoY
- PAT: INR 17 crore, up 37% YoY
- PAT Margin: Improved to 11.7% from 10.6%
- Debt Reduction: Net debt down from INR 40 crore to INR 10 crore
These numbers alone would turn heads, but the most compelling part is: this is just the beginning.
Capacity Expansion
In Q4FY25, OBSC Perfection added ~70 lakh units of incremental capacity, which only became operational in January–February. The full earnings potential of this investment will unfold over FY26–FY27. With INR 20 crore of IPO proceeds still unutilized, management has headroom to expand even further without raising new capital.
And it’s not just about volume. The company is pivoting to higher-complexity, higher-margin components, particularly in defence and marine segments.
“The capacity is in place. The orders are flowing in. Execution will define valuation from here,” says Sandeep Raina, Head of Research at Nuvama.
📦 OBSC Order Book: A Pipeline for Five Years
One of the most bullish indicators in the OBSCP story is its order book, which has ballooned to INR 723 crore—double its size at the time of its IPO in October 2024.
Sector-wise Order Distribution:
- Automotive: INR 467 crore
- Defence: INR 133 crore (spread over 8–9 years)
- Marine: INR 60 crore
- Renewables: INR 39 crore
While auto remains the bread and butter, it’s the non-auto segment (now 54% of new orders) that promises a re-rating. Defence and marine contracts bring not just volume but sustainable, high-margin visibility.
The Forging Frontier: Margin Magic
OBSC is setting up a new forging line at its second Pune facility—primarily for defence components. This move is crucial for three reasons:
- Gross margin expansion (by ~50bps initially, with scope for more)
- De-risking auto dependency
- Technological edge in complex, low-competition verticals
This forging unit, along with a planned screw press line (expected in Q4FY26), could make the company a full-stack manufacturing partner for high-spec components.
Valuation: Still Cheap, Despite the Rally
Despite a strong run from INR 110 to INR 188 in the past six months, OBSCP still trades at a FY27E P/E of just 12.7x. Nuvama’s target of INR 360 implies a 17.1x P/E on FY28E earnings, which remains modest for a company growing its PAT at nearly 50% CAGR over the next two years.
Key Forecasts (FY25–FY27):
- Sales CAGR: 38%
- EBITDA CAGR: 50%
- PAT CAGR: 49%
- EBITDA Margin Expansion: From 17.8% to 21.0%
🧮 Fundamentals
| Metric | FY25 | FY27E | Change |
|---|---|---|---|
| Revenue | 143 | 272 | +90% |
| PAT | 17 | 37 | +117% |
| EPS | 8.12 | 15.1 | +86% |
| RoE (%) | 16.1 | 22.4 | +630bps |
| Net Debt | 10 | 7 | -30% |
Peer Comparison: How OBSCP Stacks Up
| Company | Market Cap (INR Cr) | FY27E P/E | RoE FY27E | Order Book Visibility |
|---|---|---|---|---|
| OBSCP | 460 | 12.7x | 22.4% | 5+ years |
| Bharat Forge | 53,000 | 26x | 18% | 2–3 years |
| Ramkrishna Forgings | 6,500 | 18x | 15% | 2–3 years |
Verdict: OBSCP is undervalued, under-owned, and under-the-radar.
OBSC Perfection Post-IPO Performance
OBSC Perfection launched its IPO on 22 October 2024, it was entirely a fresh issue with an issue size of INR 66.02 crore. OBSC IPO was subscribed 16.6 times and listed with 15% returns. Post-IPO shares of OBSC picked momentum and made an all-time high of INR 264.80 per share on 7 January 2025, reflecting a return of 164.8% from its IPO allotment price of INR 100 per share. Currently, it is trading around INR 198 per share (a correlation of 25% from its 52-week high).
Risks to Watch
While the outlook is strong, investors should keep an eye on:
- Execution risk on capacity ramp-up
- Geopolitical risk in defence contracts
- Commodity price swings affecting margins
- Working capital stretch, with CCC rising to 78 days
Final Take
OBSC Perfection is not just delivering numbers—it’s building a moat. From strategic capex and robust order flows to balance sheet discipline, the company is laying the foundation for sustainable scale. For investors seeking high-growth plays in India’s manufacturing renaissance, OBSCP offers a rare mix: earnings momentum, valuation comfort, and business transformation.
Key Takeaway:
Rating: 🔥 BUY
CMP: INR 198
Target Price: INR 360
Upside: 82%
Time Horizon: 12–18 months