SJS Enterprises is a leading player in the Indian decorative aesthetics industry offering the widest range of aesthetics products in the country. Most analysts are positive about the issue, thanks to its solid track record, robust portfolio, strong relationship with top-tier clientage and supply chain network.
Marwadi Shares and Finance, which has a subscribe rating on the issue, said considering the FY-21 adjusted EPS of Rs 15.69 on the post-issue basis, the company is going to list at a P/E of 34.54 with a market cap of Rs 16,497 million. “The company is a leading aesthetics solution provider with an extensive suite of premium products in a growing industry with long-standing customer relationships and is available at a reasonable valuation,” it added.
However, analysts have highlighted high dependence on customers in the automotive and the consumer appliance industry and volatility in raw material price as the key risks for the issue. These can impact margins.
The issue of SJS Enterprises is a complete offer for sale exercise of shares worth Rs 710 crore by Evergraph Holdings Pte Ltd and shares with Rs 90 crore by KA Joseph. At present, Evergraph Holdings and KA Joseph own 77.86 per cent and 20.74 per cent stake in the company, respectively.
Choice Broking said: “At a higher price band of Rs 542, SJS is demanding a P/E multiple of 31.7x, which seems to be on a higher side. Thus considering the above observations we assign a ‘Subscribe with Caution’ rating for the issue.”
SJS enterprises is a “design-to-delivery” aesthetics solutions provider with the ability to design, develop and manufacture a diverse product portfolio. It caters to the requirements of the two-wheeler, passenger vehicle, commercial vehicle, consumer appliance, medical devices, farm equipment and sanitary ware industries.
The IPO is valued at 34.5x FY21 and 43.4x FY22 annualised earnings, which looks fairly priced, said Reliance Securities, adding that the current valuations factor most tailwinds in the medium-term perspective. “Given that a strong rebound is expected in the automobile industry and consumer appliances/durables in subsequent quarters, SJS is expected to see a healthy traction,” it added. “A strong balance sheet, being a net cash company, and steady RoE at 15% offer an edge.”
There are no peers in the listed space that are engaged in business similar to that of SJS Enterprises. The company will not receive any fresh proceeds from the offer.
Religare Broking said SJS has a diversified product portfolio that differentiates the company from other players and long-standing relationships with customers, which bodes well in earning strong revenue. “SJS will benefit from the experience in the industry as well as a good track record of supplying premium products. The company aims to drive growth by focusing on new technology and advanced aesthetic products, increasing the geographical footprint, innovating quality products and expanding the customer base,” it added.
Axis Capital, Edelweiss Financial Services and IIFL Securities are the book running lead managers to the issue. The company raised Rs 240 crore from anchor investors on Friday, ahead of its IPO.
