Sansera Engineering Shares Begin Trading At Rs 811, A Premium Of 9% Over Issue Price

Sansera Engineering is a technology-driven, integrated manufacturer of complex and crucial precision manufactured components for the automotive and non-automotive industries.

Sansera Engineering Shares Begin Trading At Rs 811, A Premium Of 9% Over Issue Price
Sansera Engineering Shares Begin Trading At Rs 811, A Premium Of 9% Over Issue Price

Sansera Engineering, a maker of automotive components, went public on September 24 for Rs 811.50 per share, a 9% premium to the issue price of Rs 744 per share. On the BSE, the stock opened at Rs 811.35, while on the National Stock Exchange, it opened at Rs 811.50.

The Rs 1,283-crore public issue attracted 11.47 times the number of bids it expected, with 13.88 crore equity shares received versus an IPO size of 1.21 crore shares, resulting in bids totalling Rs 10,329.62 crore. 

Qualified institutional purchasers made the highest bids, purchasing 9.06 crore shares, or 26.47 times the amount set aside for them. The reserved component for retail investors was subscribed 3.15 times, while the reserved portion for non-institutional investors was subscribed 11.37 times. 

Sansera Engineering's initial public offering (IPO) was solely for the purpose of selling the company. As a result, the selling stockholders will receive 100% of the proceeds from the offering. The company issued more than 1.72 crores of equity shares through its public issue. The price band for the offer was Rs 734-744 per share.

Given its leadership in precision engineered components supply, reasonable valuations compared to peers, strong relationships with Indian and global original equipment manufacturers (OEMs), and well-diversified portfolio of segments, products, customers, and geography, the issue received a subscribe rating from the majority of brokerages. 
Sansera Engineering is a technology-driven, integrated manufacturer of complex and crucial precision manufactured components for the automotive and non-automotive industries. For CY2020, it is one of the top 10 global connecting rod providers in the light vehicle and commercial vehicle segments.

"The company has good ties with well-known Indian and international OEMs. They have a well-balanced portfolio of segments, goods, clients, and locations. On the valuation perspective, the issue is fairly priced when compared to its listed industry peers, with a P/E of 36.2x based on FY21 profits, diluted equity shares, and upper price band (i.e, Endurance Technologies-43.3x, Minda Industries-91.6x, Sundram Fasteners-50.4x, Suprajit Engineering-30.7x and Motherson Sumi-64.1x). We assign a'subscribe' rating for the long term, based on the strong product portfolio, advanced production capabilities, and proven track record "BP Equities stated.

Reliance Securities stands out, with a working capital cycle of 79 days in FY21 and consistent cash flow over the years. "Furthermore, Sansera Engineering's asset turnover ratio of 1.15x in FY21 implies that the company can maintain stronger growth in the coming years, with expected increased automotive volume." 

"Additionally, the operating cash flow yield of 6.7 percent appears to be the best among peers, providing an advantage, while consistent cash generation is likely to result in strong dividend payout in the coming years," according to Reliance Securities, which advised investors to subscribe to the issue for the long term.

"The company has good ties with well-known Indian and international OEMs. They have a well-balanced portfolio of segments, goods, clients, and locations. On the valuation perspective, the issue is fairly priced when compared to its listed industry peers, with a P/E of 36.2x based on FY21 profits, diluted equity shares, and upper price band (i.e, Endurance Technologies-43.3x, Minda Industries-91.6x, Sundram Fasteners-50.4x, Suprajit Engineering-30.7x and Motherson Sumi-64.1x). We assign a'subscribe' rating for the long term, based on the strong product portfolio, advanced production capabilities, and proven track record "BP Equities stated.