Sansera Engineering IPO: Investors have put in bids for 78.85 lakh shares against the IPO size of 1.21 crore shares
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The initial public offering (IPO) of Sansera Engineering, a precision components manufacturer across automotive and non-automotive sectors, has subscribed 1.02 times on September 15, the second day of bidding.
Investors have put in bids for 1.23 crore shares against the IPO size of 1.21 crore shares. The portion set aside for retail investors was subscribed 1.72 times and that for employees 1.03 times, data shows. Qualified institutional buyers had put in bids for 38 percent of their portion and non-institutional investors 22 percent.
The company aims to raise Rs 1,283 crore through the issue which is a complete offer for sale by investors and promoters. The price band for the offer, which closes September 16, has been fixed at Rs 734-744 a share.
“The IPO is valued at 35x of FY21 earnings, which appears to be at a discount of 17 percent to its peers like Endurance Technologies,” said Reliance Securities, which recommended subscribing to the issue for a long-term perspective.
“Notably, working capital cycle, which stood at 79 days in FY21, and steady cash flow over the years offer comfort. Further, asset turnover ratio at 1.15x in FY21 indicates that Sensera can sustain higher growth with likely improvement in automobile volume in the subsequent years,” it said.
Also read: Sansera Engineering IPO | 10 Key things to know before subscribing
The brokerage said operating cash flow yield at 6.7 percent appears to be the best among peers, while consistent cash generation is likely to result in strong dividend payout.
Incorporated in December 1981, Sansera Engineering manufactures a wide range of precision-forged and machined components and assemblies for automotive sector, which are critical for engine, transmission, suspension, braking, chassis and other systems for 2-wheelers, passenger vehicles (PVs) and commercial vehicles (CVs).
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In the non-automotive sector, it makes a range of precision components for aerospace, off-road, agriculture and other segments, including engineering and capital goods.
It was among the top 10 global suppliers of connecting rods within the light and the commercial vehicle segments in the year 2020.
As of July 2021, it had 16 manufacturing facilities—15 in India and one unit in Sweden.
Reliance Securities said Sansera Engineering’s financial performance has not been impressive over last two years, owing to slowdown in automobile industry. “While revenue clocked a negative CAGR of 2 percent over FY19-FY21, net profit recorded 6 percent CAGR during the same period. Profit growth was majorly supported by a reduction in debt and steady margin,” it said.
Cash flow generation, however, has been impressive, with cumulative operating cash flow and free cash flow generation standing at Rs 720 crore and Rs 170 crore, respectively over FY19-FY21, the brokerage said. The company derived 88.5 percent and 11.5 percent of its revenue from automotive and non-automotive sectors, respectively, in FY21.
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