Meet the hidden smallcap with Rs 1,180 cr orders and a plan to triple revenue by FY30

With a growing order book, rising margins and plans to nearly double capacity, this week’s Hidden Gem is aiming for a much bigger business. According to the Automotive Component Manufacturers Association of India (ACMA), the country’s auto component industry recorded turnover of Rs 7.6 lakh crore in FY26, growing 12.7% over the previous year. The industry more than doubled in size over the five years to FY26, registering a compound annual growth rate (CAGR) of 17%.

Exports grew 5% to US$24 billion, while imports rose 13% to US$25.4 billion. The widening gap points to an opportunity for Indian manufacturers to develop specialised components and reduce dependence on imports. FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now For domestic manufacturers, the opportunity is not simply to supply more components to India’s growing automobile market.

Global companies are also looking to diversify their supply chains, creating opportunities for Indian suppliers that can meet demanding requirements for quality and precision. But winning orders is only the beginning. Manufacturers must invest in machinery, raw materials and inventory before those orders translate into revenue, and revenue must eventually translate into cash. Poojaa Precision Engg.

Share Price Chart Source: Screener.in This is where Poojaa Precision Engg. comes in. The company manufactures aluminium die-cast and precision-machined components for automotive and non-automotive industries. Its integrated manufacturing capabilities cover design, engineering, melting, casting, machining, assembly and testing, with a portfolio of more than 600 stock-keeping units (SKUs). It has also entered aerospace after receiving customer vendor approval, taking its ambitions beyond its traditional automotive business.

The financial numbers make the growth story compelling. Revenue increased from Rs 130 crore in FY22 to Rs 293 crore in FY26, while the operating profit margin improved from 12% to 18%. In the first half of FY27, revenue grew 68% year on year to Rs 210 crore, with the operating margin at around 19%. Management is targeting 50% revenue growth in FY27, followed by annual growth of 30-35%, with an ambition to reach Rs 1,000 crore in annual revenue by FY30.

Poojaa Precision is positioning itself to benefit from this expanding market. Its growing order book, improving operating margins and plans to nearly double manufacturing capacity by FY28 provide the foundation for its next phase of growth. With revenue targeted to reach Rs 1,000 crore by FY30, the company is looking to build on its existing capabilities while expanding into new markets. Decoding the Rs 1,180 Crore Order Book The order book stood at Rs 1,180 crore at the time of its first-half FY27 earnings call.

That is roughly four times its FY26 revenue, providing a substantial base of business to fulfil over the coming years. Management expects these orders to be fulfilled over approximately two years. An order book does not automatically translate into revenue or cash. Orders must be fulfilled, recognised as revenue and collected, with margins determining how much value ultimately reaches the company.

Source: Company investor presentation Management has also indicated that annual requests for quotations exceed Rs 2,000 crore, with a conversion rate of around 8-10%. These opportunities could replenish the order book as existing orders are fulfilled. But requests for quotations represent potential business, not confirmed orders. The conversion rate will matter as much as the headline value of opportunities received.

The revenue targets are ambitious. A 50% increase over FY26 revenue of Rs 293 crore would take annual revenue to around Rs 440 crore in FY27. Reaching Rs 1,000 crore by FY30 would require the business to more than triple from its FY26 level. The company has demonstrated an ability to grow, but investors must distinguish between the growth already achieved and the growth management expects to deliver.

The important test is whether the order book converts into revenue at the required pace without weakening margins or absorbing too much additional capital. A large order book is useful because it provides visibility. Its real value, however, depends on the profits and cash flows generated when those orders are fulfilled. Growth Is Picking Up, Margins Are Holding Poojaa Precision’s operating margin increased from 10% in FY21 to 18% in FY25 and remained around 18% in FY26.

It was approximately 19% in the first half of FY27. This suggests that the company has managed to expand its business while improving its operating profitability over the longer term. Higher production can help manufacturers spread fixed costs over a larger volume of output. But the benefit is not automatic. It depends on capacity utilisation, product mix and raw material costs. If capacity increases faster than demand, the company may have to bear the cost of additional machinery before the corresponding revenue arrives.

Aluminium is a key input for the business. Changes in its price can affect margins, depending on the timing and terms of price adjustments with customers. Management has indicated that mechanisms exist to pass through aluminium price changes, although product mix and raw material costs can still influence reported margins. Source: Company investor presentation Diversification into non-automotive markets is another part of the growth strategy.

Automotive remains the largest contributor to revenue, accounting for 72.6% in FY26. Electric vehicles contributed 9.8%, while other non-automotive segments accounted for 17.6%. The company’s plans to expand beyond conventional automotive components could gradually change this mix. Management wants automotive and non-automotive businesses to contribute roughly equally by FY30. Diversification may reduce dependence on autos, but it will not automatically improve margins or reduce risk.

The test is whether Poojaa can sustain profitability as its product mix changes and new capacity comes onstream. Why Surging Working Capital is the Real Challenge Poojaa Precision’s growth will require more than a large order book. Its latest figures show that more money is getting tied up in the business as production and sales expand. Debtor days rose from 32 in FY21 to 65 in FY26, while inventory days increased from 102 in FY25 to 148 in FY26.

This means the company is taking longer to collect payments and holding inventory for longer, both of which can increase its funding requirements. There is a simple reason this matters. Poojaa must buy aluminium, maintain inventory and pay employees before it collects money from customers. As the business grows, these requirements can increase, even when revenue is rising. The key is whether the company can manage working capital as it fulfils its growing order book.

If collections improve and inventory is managed efficiently, growth can translate into stronger cash generation. Otherwise, a larger business could require more funding than investors might expect. Cash flow and the balance sheet Poojaa Precision generated around Rs 24 crore in operating cash flow in FY26, against investing outflows of approximately Rs 57 crore. This left free cash flow negative at around Rs 33 crore as the company invested in expanding capacity.

While negative free cash flow is not unusual during an expansion phase, the new capacity will need to generate stronger cash flows over time. The company’s debt-to-equity ratio stood at a low 0.08, while interest coverage was healthy at 12.9 times. These figures suggest that its current debt burden is manageable and operating earnings comfortably cover interest costs. However, as capacity expands and working capital requirements rise, investors should watch whether cash generation keeps pace with growth.

Can New Capacity Justify the 43x P/E Valuation? Poojaa Precision is preparing to nearly double its manufacturing capacity by FY28. Melting capacity is expected to rise from 13,800 metric tonnes to 28,800 metric tonnes, while casting and finishing capacity will increase from 6,000 metric tonnes to 12,600 metric tonnes. The new facility is expected to be fully operational by September 2027. The expansion comes with a bill of Rs 106.34 crore.

Poojaa plans to fund it from the proceeds of its Rs 159.83 crore IPO, rather than rely entirely on fresh borrowing. But raising money is only the first step. As of September 2026, Poojaa had spent Rs 40.62 crore of the amount earmarked for the facility. A further Rs 30 crore from the IPO proceeds was allocated to working capital, a reminder that expansion requires money not just for machinery but also to fund day-to-day operations.

The question is whether the additional capacity will generate enough revenue and cash to support the next stage of growth. Customer concentration and diversification Diversification could broaden Poojaa Precision’s business, but customer concentration remains significant. The five largest customers accounted for around 75-78% of revenue, with the largest contributing approximately 30-35%. A change in orders or pricing from a major customer could therefore affect performance.

Established relationships matter in precision engineering, where qualification and quality requirements can make suppliers difficult to replace. They do not, however, eliminate customer risk. The company’s entry into aerospace and other non-automotive markets could widen its revenue base. But entering a new industry is only the beginning. Actual diversification depends on approvals, order inflows and the ability to scale production.

Investors should look for a rising non-automotive contribution and declining dependence on the largest customers. Ideally, that shift should happen without weakening margins or tying up more cash in working capital. Valuation: how much growth is priced in? At Rs 983, Poojaa Precision trades at around 43.5 times earnings. Meanwhile, return on capital employed stood at 33%. The valuation reflects expectations of rapid growth alongside healthy margins and returns.

If the company meets its targets and improves cash generation, its performance could support those expectations. Poojaa Precision Engineering: Growth in Numbers What stands outKey numbersOrder bookRs 1,180 croreOrder book as a multiple of FY26 revenue4xH1 FY27 revenue growth68%H1 FY27 operating margin19%Planned capacity expansion by FY28Nearly 2xDebtor days65, up from 32 in FY21Free cash flow in FY26-Rs 33 croreReturn on capital employed33%Valuation43.5x earningsSource: Company filings, investor presentation, FY26 annual financial results and Screener.in The risk runs the other way, too.

Slower growth, rising working capital needs or delayed returns from new capacity could put pressure on the valuation. A large order book does not automatically make a stock attractive, just as a high price-to-earnings ratio does not automatically make it expensive. The question is whether future growth and cash generation can justify what investors are paying today. What investors should watch Poojaa Precision has several growth drivers: a sizeable order book, improving operating margins, planned capacity additions and expansion into non-automotive markets.

Together, these could support a substantially larger business. But growth alone will not determine shareholder returns. The company must fulfil orders, protect margins, manage customer concentration and earn adequate returns on new investment. It must also prevent inventory and receivables from absorbing too much of the cash generated. The next few reporting periods should offer clues. Revenue growth will show whether orders are translating into sales, while operating margins will indicate whether profitability is holding up.

Inventory days, debtor days and operating cash flow will show whether the company is converting sales into cash more efficiently. Poojaa Precision aims to reach Rs 1,000 crore in annual revenue by FY30. The target is ambitious, but the more important question is what that revenue will deliver in cash and returns. A bigger business is not necessarily a better business. For shareholders, growth creates value only when the returns justify the capital invested.

This article is strictly for educative purposes only. Manvi Aggarwal has been tracking the stock markets for nearly two decades. She spent about eight years as a financial analyst at a value-style fund, managing money for international investors. That’s where she honed her expertise in deep-dive research, looking beyond the obvious to spot value where others didn’t. Now, she brings that same sharp eye to uncovering overlooked and misunderstood investment opportunities in Indian equities.

As a columnist for LiveMint and Equitymaster, she breaks down complex financial trends into actionable insights for investors. Disclosure: The writer and her dependents do not hold the stocks discussed in this article. The website managers, its employee(s) and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein.

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