Add Sansera Engineering, target price Rs 653: ICICI Securities

ICICI Securities has add call on Sansera Engineering (SEL) with a target price of Rs 653.

Sansera Engineering, incorporated in the year 1981, is a Small Cap company (having a market cap of Rs 3,032.99 crore) operating in General sector.

Investment Rationale
The brokerage's analysis of SEL’s business indicates:

• Strong capabilities for machining and forging precision components with connecting rods, rocker arms and gear shifter forks as key products.
• Ability to consistently deliver better than industry growth and diversify business without any large-ticket M&A.
• Strong product pipeline with order book at peak annual revenues of Rs 14.5 billion, with mix improving towards high-margin non-auto segments.
• Opportunity to improve kit value with existing customers (EV model kit value/unit is 10-20% higher than ICE). The brokerage believes the company’s constraint lies in low gross block turns of sub-1.5x, limiting its RoCE and FCF generation.

ICICI Securities expects SEL to deliver 27% earnings CAGR in FY22E-FY24E driven by 16% revenue CAGR and improving mix pushing RoCE up by 400 bps to 17%.


Financials
For the quarter ended 31-12-2021, the company has reported a Consolidated Total Income of Rs 486.79 crore, down -10.16% from last quarter's Total Income of Rs 541.82 crore. The company has reported a net profit after tax of Rs 23.90 crore in the latest quarter.

Promoter/FII Holdings
Promoters held 36.09 per cent stake in the company as of 31-Dec-2021, while FIIs owned 43.22 per cent, DIIs 11.73 per cent.