SJS Enterprises IPO: All You Need To Know
The company will sell shares at Rs 531-542 apiece in its three-day initial public offering starting on Nov. 1.
(Image Courtesy: Company)
SJS Enterprises Ltd. will sell shares at Rs 531-542 apiece in its three-day initial public offering starting Nov. 1, joining the list of companies looking to list on exchanges in a boom year for maiden offers.
The initial share sale of the Bengaluru-based maker of aesthetics products for automotive to consumer appliance industries comprises an offer for sale by the subsidiary of private equity firm Everstone, Evergraph Holdings Pte, and promoter KA Joseph. The promoter shareholding, which stands at 98.8% at present, will fall to 50.4% after the issue.
Selling shareholders are putting up 1.47 crore shares worth Rs 800 crore for sale, according to the prospectus.
The firm has set a price band of Rs 531-542 apiece, giving it a market value of up to Rs 1,649.7 crore at the upper end.
Offer Details
Face value: Rs 10 per share.
Price band: Rs 531-542.
Market Lot: 27 shares and multiples.
Offer for sale: Rs 800 crore.
Listing: National Stock Exchange and BSE.
Book running lead managers: Axis Capital, Edelweiss Financial Services and IIFL Securities.
Business
Incorporated in 1987, the company gets 75% of its sales from the automotive sector, and the remainder comes from the consumer appliances industry.
Within the automotive segment, two-wheelers and passenger vehicles contributed nearly 58% and 16.7% of their FY21 sales, respectively. It earns 84% of revenue from India.
The company's product range includes decals and body graphics, 2D & 3D appliques/dials, 3D lux badges, overlays, aluminium badges, lens mask assembly and chrome-plated injection moulding plastic parts. It has two manufacturing facilities at Bengaluru and Pune.
In April, the company acquired Pune-based Exotech Plastics Pvt., which makes chrome-based aesthetics. The acquisition is expected to add to SJS Enterprises' revenue in the ongoing fiscal. Exotech has a monthly revenue run rate of Rs 8.5 crore, Sanjay Thapar, executive director and chief executive officer of SJS Enterprises, told BloombergQuint in an interaction. The acquisition, however, will dilute the company's margins, he said.
The company has built capacity in the last three years and its utilisation level was at 50% in FY21.
Financials
The company was net debt-free in FY21 with revenue and profit at Rs 251.6 crore and Rs 47.7 crore, respectively. In the quarter ended June, revenue and profit were Rs 74.3 crore and Rs 9.5 crore. The first-quarter revenue includes Exotech numbers.
Peer Competition
There are no listed peers for SJS Enterprises.
Valuation
At the upper end of the price band (Rs 531-542), the company is valued at nearly 32 times its FY21 earnings.
Risks
Unable to successfully integrate and manage Exotech or other strategic alliances or acquisitions.
The extent to which the Covid-19 pandemic will impact its business, operations and financial performance is uncertain.
Loss of any of its key customers or significant reduction in production and sales, or demand for its products from significant customers.
Depends significantly on customers in the automotive and consumer appliance industries.
Failure to anticipate, identify, understand and respond timely to evolving technological and market trends and preferences to develop new products.