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Sansera Engineering Ltd IPO
i) Sansera Engineering is an engineering-led integrated manufacturer of complex and high-quality precision components for the automotive and aerospace sectors, primarily supplying to original equipment manufacturers (“OEMs”) in India and internationally. It manufactures and supplies a wide range of precision forged and machined components that are critical for engine, transmission, and other systems for the two-wheeler, passenger vehicle, and light and heavy commercial vehicle verticals in the automotive sector.
ii) It also supplies its components to the aerospace sector and for off-road vehicles as well as for other segments including tractors, generator sets, stationary engines, and other non-automotive applications. They are a leading supplier to the two-wheeler and passenger vehicle verticals in India. Specifically, it is one of the leading Indian manufacturers of
a. connecting rods, crankshafts, rocker arms, and gear shifter forks for two-wheelers and
b. connecting rods, rocker arms, and gear shifter forks for passenger vehicles.
iii) It is among the top two and top three manufacturers of two-wheeler and passenger vehicle connecting rods in India, respectively; among the top two manufacturers and the largest manufacturer of two-wheeler and passenger vehicle rocker arms in India.
iv) It has longstanding relationships with several well-known Indian and global OEMs. Specifically,
a. In the two-wheeler vertical it has relationships of over 20 years with Bajaj, over 20 years with Yamaha, and over 15 years with HMSI, the fourth, fifth, and second-largest two-wheeler Indian OEMs in terms of domestic production volume for fiscal 2018, respectively.
b. In the passenger vehicle vertical it has relationships of over 30 years with Maruti Suzuki, the leading Indian passenger vehicle OEM in terms of domestic production volume for fiscal 2018, and over eight years with FCA, a leading European passenger vehicle OEM.
v) Sansera engineering is an employee driven, professionally managed organisation and none of its Promoters’ family members are involved in any executive capacity with the Company. The management is led by a professional team comprising of a CEO, head of operations and a CFO. The majority of the management team has been with the Company for more than 10 years and has led the expansion of the products and customer base over the last several years, resulting in business growth and diversification. The management team has ownership stakes in the Company through ESOP schemes with a view to aligning their interests with the performance
i. Well diversified business model
ii. Leading supplier
iii. Strong capabilities in engineering and design
Objects of the Sansera Engineering Ltd IPO:
Sansera Engineering Ltd IPO Details:
|Open Date:||Sep 14 2021|
|Close Date:||Sep 16 2021|
|Face Value:||₹ 2 Per Equity Share|
|Issue Type:||Book Building|
|Issue Size:||1282.53 Cr.|
|Lot Size:||20 Shares|
|Issue Price:||₹ 734 - 744 Per Equity Share|
|Listing Date:||Sep 24 2021|
Promoters And Management:
Financials of Sansera Engineering Ltd IPO:
|Particulars (in Millions)||Mar-21||Mar-20||Mar-19||Mar 18||Mar 17||Mar 16|
|Revenue from operations||15,492||14,571||16,244||11,717||10,392||9,074|
|Cost of material||6,678.||6,281||7,220||4,785||4,125||3,482|
|Changes in inventory||-43||-18||-167||-201||-128||-32|
|Consumption of stores and spares||1335||1310||1506||1,037||953||878|
|Power and fuel||670||750||841||614.86||477.65||410.32|
|Employee benefit expenses||2137||2134||2174||1,933||1,740||1,563|
|Depreciation and amortisation||1016||939||757||538||444||349|
|Profit before tax||1461||886||1649||1,547||963||876|
|Total tax expenses||362||87||668||550||319||243|
|Profit for the year||1098||799||980||997||644||633|
Comparison With Peers:
|Companies||Total Revenue (millions)||Face Value (Rs)||PE Ratio||EPS (Rs)||RoNW (%)|
|Mahindra CIE Automotive Limited||61,050||10||63.9||2.80||2|
|Sundaram Fasteners Limited||37,513.00||1||48||15.46||16|
|Motherson Sumi Systems Limited||635,368.00||1||64.7||3.71||9|
|Endurance Technologies Limited||69,653.00||1||32.8||40.2||19|
|Sansera Engineering Ltd||14,731.39||2||34.9||21.3||10.47|
Recommendation on Sansera Engineering Ltd IPO:
Lead Manager of Sansera Engineering Ltd IPO:
Registrar of Sansera Engineering Ltd IPO:
Discussion on Sansera Engineering Ltd IPO:
As on FY21….
Total outstanding shares = 4.69 Crores
PAT of FY21 = 109 Crores
EPS = 23x
P/E = 32x
The pricing looks decent as compared to its peers.
Understanding the business model
Sansera Engineering provides automotive components to different industries such as 2W, 3W, Passenger Vehicle and Commercial vehicle. So, to understand the business model of Sansera and to know its growth in future we need to study the health and growth of 2W, 3W, Passenger vehicle and Commercial vehicle in India.
Sansera revenue contribution from different sectors. = Total revenue in 2021 is 1288 Crores.
2W = 57%
3W = 0.85%
Passenger Vehicles = 27%
Commercial Vehicles = 14%
So, they are highly dependent on 2W segment for their revenues.
In 2W we have Hero, and Bajaj are two listed players.
Bajaj Auto in the last 3 years has shown Revenue growth of just 2% and PAT growth of 4%
Hero Motocorp in the last 3 years has shown Revenue growth of just 7% and PAT has grown negatively to -7.47%.
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