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Sansera Engineering Ltd

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About the Company

Sansera Engineering Ltd is an engineering-led manufacturer of complex and critical precision engineered components across automotive and non – automotive sectors. The company manufactures and supplies a wide range of precision forged and machined components for the automotive sector and for non – automotive sector it manufactures and supplies a wide range of precision components for aerospace, off-road, agriculture, and other segments. 

 

Q4FY22 Updates

Financial Results & Highlights

Standalone Financials (in Crs)
  Q4FY22 Q4FY21 YoY % Q3FY22 QoQ % FY22 FY21 YoY%
Sales 519 430 20.7% 421 23.3% 1762 1368 28.8%
PBT 55 58 -5.2% 27 103.7% 171 132 29.5%
PAT 41 42 -2.4% 20 105.0% 128 98 30.6%
Consolidated Financials (in Crs)
  Q4FY22 Q4FY21 YoY % Q3FY22 QoQ % FY22 FY21 YoY%
Sales 581 496 17.1% 487 19.3% 2004 1572 27.5%
PBT 52 63 -17.5% 32 62.5% 178 146 21.9%
PAT 37 47 -21.3% 24 54.2% 132 110 20.0%

Detailed Results:

  1. The company recorded highest ever quarterly revenue with revenue growth of 17% YoY.
  2. EBIDTA decreased by 4% while EBIDTA margins decreased by 17.2% Vs 21.1% YoY.
  3.  PAT decreased by 21% YoY while NPM stood at 6.4%.
  4. Revenue mix product wise stood at:
  1. Non-auto – 16%
  2. Auto-Tech Agnostic & xEV – 22%
  3. Auto-ICE- 62%
  1. International to Domestic mix stood at 59% & 41%.
  2. Item wise mix stood at 
  1. Motorcycles – 36%
  2. Scooters – 12%
  3. Passenger vehicles – 29%
  4. Commercial vehicles – 13%
  5. Aerospace – 3%
  6. Off-road – 3%
  7. Agriculture – 3%
  8. Others – 1%
  1. Net Debt/ Equity stood at 0.57 while ROCE & ROE stood 13.7%. 

 

Investor Conference Call Details: 

    1. The company recently won a very big order of Rs.30 billion from a leading North American OEM for connecting rods for their upcoming project.
    2. The company also bagged orders for two packages consisting of 26 aluminium forged and machined parts from BMW Motorrad amounting to approximately Rs.3 billion over the next 10 years.
    3. The company incurred a capex of Rs.255 Cr in FY22.
    4. The company currently has about 255 components under various stages of development including auto and non-auto excluding aerospace & another 300 components on various stages of RFQ.
    5. The geographical sales mix for FY2022 stood as follows: India 63%, Europe 24%, USA 9%, and other foreign countries about 5%.
    6. The management expects at least a CAGR growth of about 25% to 30% in aerospace for the next three years.
    7. The management expects peak capex for its North America division to be Rs.30-35 Cr & peak revenue generation of Rs.75 Cr.
    8. The management believes that the trend of a newer set of engines, platforms & outsourcing will lead to an increase in its global market share from 3-3.5% to 10% in the coming years.
    9. The company expects the margins from the USA manufacturing plant to be either stable or increase Vs the Indian plant due to lower cost of capital & higher automation.
    10. The company currently have 5 two-wheeler EV manufacturers on board and expects to work with at least 7-8 manufacturers in the long term.
    11. The management expects a drop in EBIDTA margins of its Sweden biz from current levels of 7% to a lower no. In the current FY due to high energy prices. However, the company is working on developing alternative sources of energy whose benefits will come from FY24 onwards.
    12. The company is planning to keep the debt levels constant in FY23.
  • The management expects that technology agnostic and non-auto components which stand currently at 17% this year would at least 22% to 22.5% next year signifying 50% growth in this segment and which is in line with what the company has projected in terms of its roadmap to reach about 40% of this segment in the next three years.

 

Analyst’s View:

Sansera is a leading smallcap Auto ancillary provider in India. The company has seen a dismal quarter with declining margins. The company has done well to secure new 2 wheeler EV customers and also expects to onboard more in the future. The rising inflation posts a big challenge to Sansera as steel and other commodities are the main raw materials for the company. It remains to be seen how the company will be able to increase its non-auto businesses and whether it will be able to capture the rise in outsourcing in the auto sector manufacturing space in the future. Nonetheless, given its good innovation capabilities and its rising customer set, Sansera is an interesting smallcap auto ancillary stock to watch out for.