Sansera Engineering IPO: All You Need To Know
Sansera Engineering: All You Need To Know
Sansera Engineering Ltd. launched its initial public offering on Sept. 14 to allow partial exit to its promoter shareholders and investors during a boom year for Indian firms looking to list on the bourses.
The offering, a Rs 1,283-crore offer-for-sale involving 1.72 crore shares priced at Rs 734-744 apiece, gives the company a market value of Rs 3,823 crore at the upper end of the price band.
The float comprises sale of shares by Client Ebene Ltd., CVCIGP II Employee Ebene Ltd. and its promoter shareholders—whose stake will fall from the existing 43.9% to 36.6% after the issue.
Issue Details
Issue Opens On: Sept. 14.
Issue Closes On: Sept. 16.
Face Value: Rs 10 apiece.
Lot Size: 20 shares and multiples.
Listing: BSE and NSE.
Merchant Bankers: ICICI Securities, IIFL Securities, Nomura.
Objective
This is an offer for sale, allowing existing shareholders to sell stake. The company won't receive any proceeds.
Business
The company makes complex and precision-led automobile and non-automobile parts. It supplies components directly to original equipment makers in finished condition.
It derived 88.45% of its revenue from the automotive segment as of the year ended March 2021. India is its largest market, contributing up to 64.9% of its revenue.
Sansera Engineering has 16 manufacturing facilities, including one in Sweden.
The company is among the top suppliers of connecting rods to passenger car and commercial vehicle makers in India and abroad. This segment contributes 39.6% of its revenue.
The company supplies to nine out of top 10 automakers in India and its clientele includes Bajaj Auto Ltd., Honda Motorcycles & Scooters, Yamaha and Maruti Suzuki India Ltd.
Bajaj Auto is Sansera's top customer, accounting for a little more than a fifth of its revenue in FY21. Its top 10 customers generated 59.21% of total revenue during the same period.
The company's revenue break-up from the auto sector is:
50.39% from supplying to two-wheeler makers.
24.12% from four-wheeler companies
13.14% from commercial vehicle firms.
The company plans to set up a greenfield aerospace and defence facility in Bengaluru. The segment accounts for 3% of its revenue as of now.
Financials
The company's financial performance has been affected by the disruption caused by the Covid-19 pandemic.
Revenue contracted 2% on an annualised basis during FY19-21 even as profit rose 6%. That's because it pared debt and margins held steady. The company's cash flows allowed it to spend on capex in the last three years.
As on July 31, the company had total borrowings of Rs 643.5 crore.
Peers
Sensera counts Motherson Sumi Systems Ltd. to Endurance Technologies Ltd. and Bharat Forge Ltd. among its peers.
Risk Factors
The Covid-19 pandemic has had a material adverse effect on its business, financial condition, results of operations and cash flows, which is expected to continue.
The company doesn't have firm commitments of long-term supply agreements with its customers.
Business is dependent on the sale of its products to certain key customers. The loss of any of these customers or loss of revenue from sales to these customers could have a material adverse effect on its business, financial condition, results of operations and cash flows.
Development of technologically advanced products involves a lengthy and expensive process with uncertain timelines and outcomes.
It derives a substantial portion of its revenue from its key product families, especially connecting rods, and if these products become obsolete it would have a material adverse effect on its business, financial condition, results of operations and cash flows.