Unlike plain vanilla parts suppliers, SML is primarily a research-driven outfit, originally found in an IIT Bombay lab in 2007. Today, it is run by over 150 professionals from IITs, NITs and BITS. R&D expenses account for 7-10 per cent of revenue. The company holds 12 patents across India, US, EU, China and Japan.
SML has scaled up sharply over the past three years. Between FY23 and FY25, revenue and profit rose at CAGRs of 25 per cent and 124 per cent to ₹658 crore and ₹47 crore. In 9M FY26, revenue and profit reached ₹771 crore and ₹71 crore. Operating margin in 9M FY26 is 21 per cent, up from 13 per cent in FY23, driven by higher gross margins and operating leverage.
At the upper price band, the issue values SML at 63x 9M FY26 annualised earnings and 126x FY25 net profit. Indian listed peers trade at lower multiples with similar margins but are larger in size (see table). Still, the businesses are not directly comparable: Schaeffler India’s key product is bearings, Sona BLW’s is transmission gears, while SML focusses on ECUs (electronic control units).
Direct competitors to SML include Japan-listed Shindengen Electric, Denso and Mikuni, trading at 9x, 15x and 4x trailing earnings, per Bloomberg. Germany’s Bosch, with a wide portfolio, competes with SML in EFI ECUs (electronic fuel injection) and MCUs (motor control units). While the parent is unlisted, Bosch’s Indian arm trades at 49x. A JV between India’s Varroc Engineering and Italy’s Dell’Orto JV also rivals SML’s EFI ECUs; Varroc (which consolidates the JV) trades at 45x.
Given the management’s technical depth and the growth record outlined in the prospectus, SML could be well-placed as product penetration rises. But the risk factors flagged below suggest the issue is fully priced for now, with most positives already baked in. It also helps to be a bit conservative in today’s choppy markets. Investors interested in the company can track execution post-listing and consider entry at more favourable levels.
What Sedemac does
Sedemac designs and supplies ECUs to OEMs (original equipment manufacturers). An ECU is a semiconductor on a PCB (printed circuit board) that controls a device using software instructions — typically, an engine or motor for SML. The company operates in two verticals: mobility (85 per cent of revenue) and industrial (15 per cent). Exports are negligible in mobility, but form about 60 per cent of industrial revenue, translating to about 9 per cent of total revenue.
Mobility division
Under the mobility vertical, SML supplies EFI ECUs, ISG ECUs and ISG+EFI ECUs for ICE (internal combustion engine) two- and three-wheelers. For electric two-wheelers and e-bicycles, it supplies MCUs (motor control units) and rare-earth-free motors.
An EFI ECU controls the quantity and timing of fuel injected into engine cylinders, replacing the conventional carburettor. EFI became mainstream post the 2020 BS-VI emission norms, improving engine start reliability across weather conditions and aiding fuel efficiency. EFI technology needs an ECU to work.
ISG stands for integrated starter-generator. In a conventional two-/three-wheeler, a starter motor cranks the engine, and an alternator/magneto charges the battery, once the engine is running. An ISG combines these functions. The same alternator cranks the engine at start and later works as a generator to charge the battery—enabled by an ISG ECU. This supports silent starts and idle start-stop (engine cuts off at long signals and restarts just with a throttle twist). Eliminating the starter motor, along with idle start-stop, helps save weight and fuel.
Most ISG alternators rely on sensors, which can face reliability issues when temperature, dust and oil cause failures. SML was the first in India to design and manufacture SLC (sensor-less commutation) based ISG ECUs in 2018 and has a 35 per cent share of the ISG ECU market.
An ISG+EFI ECU integrates EFI and ISG functions into one unit, reducing cost for OEMs.
If it is an engine for ICE vehicles, it is an electric motor for EVs. In EVs, the MCU regulates the motor’s operation based on parameters such as temperature, current and voltage.
EV motors typically use permanent magnets made from rare earths such as neodymium, dysprosium and samarium. To reduce dependence on rare-earth magnets, SML offers ferrite magnet-based (rare-earth free) motors.
Industrial Division
Under the industrial vertical, SML supplies GCs (genset controllers) and EFI ECUs.
GCs are ECUs used in diesel generators. They detect power failures in real time and automatically start the generator to ensure uninterrupted supply. This business is largely domestic for SML.
EFI ECUs here perform the same fuel-control role as in mobility, but for gas engine-based generators. SML typically exports these EFI ECUs.
Growth drivers
E-two-wheeler penetration in India is about 6 per cent and is estimated to reach 22 per cent by FY30, assuming compounded volume growth of 39–41 per cent between FY25 and FY30, as per a CRISIL Intelligence report cited in the RHP. This can aid SML’s EV business (MCUs), which is currently barely 2 per cent of the mobility vertical’s volume.
ISG adoption in domestic two- and three-wheelers was 36 per cent in FY25, up from zero in 2018. CRISIL expects this to cross 50 per cent by FY31. Any further adoption by OEMs would provide incremental growth beyond the organic volume expansion among OEMs already using ISG.
SML’s entry into the commercial vehicles (CVs) space is in early stages. RHP suggests it has received letters of intent from a few OEMs for aftertreatment control modules (ACMs). The firm has also demonstrated MCUs for electric light CVs as a proof-of-concept.
CVs are largely diesel-powered and emit harmful nitrogen oxides. To curb these emissions, CVs use urea in a process called SCR (selective catalytic reduction). ACMs monitor the system and based on signals from sensors, initiate SCR. They also help de-clog the diesel particulate filter (DPF). ACMs are mandatory for all BS-VI diesel vehicles.
Risk factors
Customer concentration is high. TVS alone contributes 75 per cent of 9M FY26 revenue, and the top three customers account for 91 per cent. This risk stems from SML’s model. Unlike typical auto ancillaries that build to OEM specifications, SML researches and develops solutions to industry problems, proves them as a proof-of-concept and then pitches them to OEMs. Readers can recall how the company came up with SLC-based ISG ECUs to solve for unreliable ISGs with sensors.
OEMs would then reciprocate with a letter of intent, if they see value in the solution. However, not all OEMs would be forthcoming. The ones who adopt early become the ‘anchor clients’ (like TVS). Wider adoption by other OEMs can take years—keeping concentration elevated. TVS’s share has eased to 75 per cent from 80 per cent in FY25 but remains large.
The RHP also notes that customers, including TVS, are not contractually bound to minimum purchases or exclusive sourcing — exposing SML to demand swings and price competition. That said, as ECUs are critical to consistent powertrain output, switching costs could deter OEMs from going to another supplier.
Finally, the underlying two- and three-wheeler market is cyclical and not structurally high-growth. CRISIL estimates industry volumes to grow at a CAGR of about 6–8 per cent between FY25 and FY31.
Published on March 5, 2026