Automotive components manufacturer, Sansera Engineering listed on September 24 at Rs 811.50- a 9 percent premium to the issue price of Rs 744 per share. The stock opened at Rs 811.35 on the BSE, while the opening price on the National Stock Exchange was Rs 811.50.
The Rs 1,283-crore public issue, which opened during September 14-16, saw a subscription of 11.47 times as it received bids for 13.88 crore equity shares against IPO size of 1.21 crore shares, generating bids worth Rs 10,329.62 crore.
Qualified institutional buyers had put in the maximum bids, buying 9.06 crore shares which was 26.47 times the portion set aside for them. Retail investors' reserved portion was subscribed 3.15 times and non-institutional investors subscribed 11.37 times.
The IPO of Sansera Engineering was completely an offer for sale. So all the proceeds from the issue will go to the selling shareholders.
The company issued more than 1.72 crore of equity shares through its public issue. The price band for the offer was Rs 734-744 per share.
Majority of brokerages had a subscribe rating to the issue given the leadership in precision engineered components supply, reasonable valuations compared to peers, strong relationships with Indian and global original equipment manufacturers (OEMs), and its well-diversified portfolio of segments, products, customers and geography.
Sansera Engineering is an engineering-led integrated manufacturer of complex and critical precision engineered components across automotive and non-automotive sectors. It is one of the top 10 global suppliers of connecting rods within the light vehicle segment and commercial vehicle segment for CY2020.
"The company has strong relationships with respected Indian and Global OEMs. They have a well-diversified portfolio of segments, products, customers and geography. On the valuation front, the issue is priced at P/E of 36.2x based on FY21 earnings, diluted equity shares and upper price band which is fairly priced when compared to its listed industry peers (i.e, Endurance Technologies-43.3x, Minda Industries-91.6x, Sundram Fasteners-50.4x, Suprajit Engineering-30.7x and Motherson Sumi-64.1x). Considering the strong product portfolio, advanced manufacturing capabilities and robust track record, we give a 'subscribe' rating for the long term," said BP Equities.
Reliance Securities feels 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 Sansera Engineering can sustain higher growth with likely improvement in automobile volume in the subsequent years."
"Additionally, operating cash flow yield at 6.7 percent appears to be the best among peers, which offers an edge, while consistent cash generation is likely to result in strong dividend payout in the ensuing years," said Reliance Securities which recommended subscribe to the issue from long-term perspective.
In the year FY21, Sansera Engineering reported a profit of Rs 109.86 crore compared with earnings of Rs 79.9 crore in FY20 and revenue increased to Rs 1,549.27 crore from Rs 1,457.17 crore in the same period.
For the FY21, the company derived 88.45 percent of revenue from sale of products from automotive sector and the remaining 11.55 percent from non-automotive sector.
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