The company is aiming to raise Rs 1,283 crore from the primary market at a fixed price band of Rs 734-744. The issue of 17.2 million equity shares is entirely an offer for sale (OFS).
Reliance Securities has given the issue a thumbs up with a ‘Subscribe’ rating from a long-term perspective, citing its strong outlook and steady cash flow.
“The IPO is valued at 35x of FY21 earnings, which appears to be at a discount of 17 per cent to its peers like Endurance Technologies. Working capital cycle, which stood at 79 days in FY21 and steady cash flow over the years offer comfort. Asset turnover ratio at 1.15x in FY21 indicates that SEL can sustain higher growth with likely improvement in automobile volume in the subsequent years,” it added.
Echoing similar views, Choice broking said SEL’s business witnessed marked recovery from the impact of Covid-19 led complete lockdown in H1FY21. The brokerage has a subscribe rating on the issue.
“Revenue grew by 37 per cent to Rs 910 crore in H2FY21. Margin trend also remained at satisfactory level. SEL reported an EBITDA margin at 17.6 per cent and NPM at 7.1 per cent in FY21 compared to peer average of 14 per cent and 7 per cent, respectively,” it added.
In the financial year 2020-21, the company earned about 65 per cent revenues from India, whereas the remaining portion came from Europe, the US and other countries.
Sansera is an engineering-led integrated manufacturer of complex and critical precision engineered components across automotive and non-automotive sectors.
Investors can bid for a minimum of 20 shares each and in multiples of 20 shares thereafter. The issue can be subscribed till Thursday, September 16.
BP Equities has also given a ‘Subscribe’ rating to Sansera Engineering, considering the strong product portfolio, advanced manufacturing capabilities and robust track record.
“It is one of the top 10 global suppliers of connecting rods within the light vehicles segment and commercial vehicle segment for 2020. The company has strong relationships with respected Indian and global OEMs. They have a well-diversified portfolio of segments, products, customers and geography,” it added.
Half the offer size is reserved for qualified institutional buyers, whereas non-institutional investors have 15 per cent share reserved for them. Retail investors will be allotted the remaining 35 per cent shares in the IPO.
Sansera Engineering reported a profit of Rs 109.86 crore in financial year 2020-21 compared with earnings of Rs 79.9 crore in the financial year 2019-20 and Rs 98.06 crore in financial year 2018-19.
The company reported revenue at Rs 1,549.27 crore in FY21 compared to Rs 1,457.17 crore in FY20 and Rs 1,624.43 crore in FY19.
Earnings before interest, tax, depreciation and amortization were Rs 272.12 crore in FY21 from Rs 224.7 crore in FY20 and Rs 289.09 crore in FY19. The EBITDA margin was 17.56 per cent in FY21.
Religare Broking has highlighted the high dependence on a few key customers and increase in the raw material prices as key risks to the company. However, the brokerage has a positive view on the company, which is focusing on improving operating efficiencies.
Sansera has 16 manufacturing facilities, of which 15 are located in India and one in Sweden.
Kotak Securities has not rated the issue. Any failure to adapt to industry trends and evolving technologies to meet customers’ demands may materially adversely affect the company’s business and results of operations, it said.
However, “Sansera Engineering has a well diversified business model, a leading supplier of complex and high-quality precision engineered components that is gaining market share across automotive and nonautomotive sectors,” it added.
Brokerage firm ICICIDirect Research has also kept the issue ‘unrated’.
ICICI Securities, IIFL Securities and Nomura Financial Advisory and Securities (India) are the book running lead managers to the offer, whereas Link Intime India has been appointed as the registrar for the issue.
