SANSERA ENGINEERING IPO

IPO Details:

Price Band: 734-744

Cutoff Price: 744

About Company:

Sansera is an engineering-led integrated manufacturer of complex and critical precision engineered components across automotive and non-automotive sectors. Within the automotive sector, they manufacture and supply a range of precision forged and machined components and assemblies, such as connecting rod, rocker arm, crankshaft, gear shifter fork, stem comp, and aluminium forged parts, that are critical for engine, transmission, suspension, braking, chassis and other systems for the two-wheeler, passenger vehicle and commercial vehicle verticals.

Within the non-automotive sector, company manufacture and supplies a range of precision components for the aerospace, off-road, agriculture and other segments, including engineering and capital goods. Sansera supplies most of the products directly to OEMs in finished (forged and machined) condition..

Competitive Strengths:

1. A leading supplier of complex and high-quality precision engineered components that is gaining market share across automotive and non-automotive sectors;

2. Well-diversified business model;

3. Advanced capabilities in design and engineering, machine building and automation resulting in continuous new product development and improved productivity, with fungibility of equipment, machinery and production lines across product families and sectors;

4. Long-standing relationships with well-known Indian and global OEM customers;

5. Financial performance that has outperformed the industry trends, with industry leading metrics;

6. Skilled and experienced board of directors and management team, with an employee culture that emphasises teamwork and collaboration across functions

Strategies:

1. Consolidate and strengthen global market share in the existing automotive product portfolio and diversify into new products to cater to the expected increase in electrification of vehicles;

2. Continue to leverage the existing capabilities to diversify further into non-automotive businesses and expand addressable market;

3. Retain and strengthen the technological leadership through continued focus on the engineering capabilities;

4. Focus on operational efficiencies to improve returns;

Financial Performance:

Revenue is decreasing, but Net Profit and EPS are increasing year on year. Company is net profitable. With EPS of 21, company's P/E is 35.4.

Objects of the Issue:

The Net Proceeds from the Issue are proposed to be utilised in the following manner:

1. Offer for Sale

Competitors Comparison:

Sansera Engineering IPO seems to be undervalued based on the P/E ratio on Price to book value.

Grey Market Premium:

Our view: GMP of the IPO is less and but the price seems to be undervalued after comparing it with listed competitors. I won't subscribe to this IPO as the GMP is not good.

Disclaimer: Views are shared for an educational purpose. Please consult your financial advisor or planner before taking any action based on the views or facts shared on this blog.

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