Sharescart Research Club logo ×
Screener Research Unlisted Startup Funding New IPO New

Shalom Martin    


Raipur, India

Mr. Shalom Martin has pursued Macro-Masters in Entrepreneurship from IIM Bangalore, and a Specialisation in Brand Management from London Business School. Being a Certified Valuer and Investment Adviser, he is also a full-time stock market trader and trainer since 2014. He is also the Founder of Price Action Learning Academy. Till now, he has conducted more than 80 seminars across India on various subjects related to the Capital Market and mentored more than 3500 students in the field of Fundamental Analysis, Technical Analysis, and Price Action Trading Techniques.

Read More..
Contributor since: 2022

72

Articles

186

Likes

30

Followers

SANSERA

Comments: 1 | Likes: 1 | Current Price: ₹ 1042.65


Equity Research: Sansera Engineering Limited

Sansera Engineering Ltd. looks strong in its financial with increasing costumer base and order book domestic as well as globally.


Sansera Engineering Limited (SEL) is an engineering-led integrated manufacturer of complex and critical precision engineered components across automotive and non-automotive sectors. Within the automotive sector, it manufactures and supply a range of precision forged and machined components and assemblies, such as connecting rod, rocker arm, crankshaft, gear shifter fork, stem comp, and aluminium forged parts, that are critical for engine, transmission, suspension, braking, chassis and other systems for the two-wheeler, passenger vehicle and commercial vehicle verticals. Within the non-automotive sector, it manufactures and supply a range of precision components for the aerospace, off-road, agriculture and other segments, including engineering and capital goods. It supplies most of its products directly to OEMs in finished (forged and machined) condition, resulting in significant value addition by it. Sansera Engineering Ltd (Sansera), incorporated in 1981, is an integrated manufacturer of complex and critical precision engineered components across automotive and non-automotive sectors. SEL is one of the top 10 global suppliers of connecting rods within the light vehicle segment (passenger vehicles with gross vehicle weight of 3.5 tonnes or less, “Light Vehicle”) and one of the top 10 global suppliers of connecting rods within the commercial vehicle (“CV”) segment for CY 2020. It has been gaining market share in connecting rods in terms of production volume (units) for (i) Light Vehicles with a global market share of 2.3% in CY 2020 compared to a global market share of 0.9% in CY 2015 and (ii) CVs with a global market share of 3.0% in CY 2020 compared to a global market share of 0.9% in CY 2015. Within India, it is one of the leading manufacturers of (i) connecting rods, crankshafts, rocker arms and gear shifter forks for two- wheelers and (ii) connecting rods and rocker arms for passenger vehicles. Specifically, it is the largest supplier of connecting rods, rocker arms and gear shifter forks to two-wheeler OEMs in India. It is the largest supplier of connecting rods and rocker arms to passenger vehicle OEMs in India.

The Company is a technology-driven company with a focus on design, engineering, machine building and automation capabilities. These capabilities enable it to roll out new products in a timely manner and develop higher strength components required for high-end performance and graduate from manufacturing individual parts to the designing and manufacturing of sub- assemblies, thereby moving up the value chain. It possesses machine building capabilities, with several complex special purpose machines being manufactured in-house. As of July 31, 2021, it had built over 900 computer numerical control special purpose machines, which are deployed across manufacturing facilities. Its engineering capabilities, evolved over decades, has enabled to consistently offer quality, complex, precision components and assemblies, allowing to diversify business beyond the automotive sector into various other sectors, including aerospace, off-road and agriculture. It sold components across 69 product families during Fiscal 2021 as compared to 51 during Fiscal 2019.

Recently developed products by SEL include (i) suspension, rotor and aluminium forged components for internal combustion engines (“ICE”) and electric two-wheelers (“e-2W”), (ii) steering system components and drive train parts for ICE and hybrid passenger vehicles, (iii) cabin tilt system components and braking system parts for CVs, (iv) suspension components for off-road vehicles, (v) common rail systems for agriculture and (vi) components for industrial engines within other non-automotive sectors. In addition, since April 1, 2021, it has have developed (i) suspension and drive train components for electric two-wheelers, (ii) braking system components for passenger vehicles, (iii) machined engine casings for aerospace components for the defence sector and the bicycle segment and (iv) components for power transmission. It also has an active pipeline of products under development, including components for the defence sector and the bicycle segment. Within the automotive sector (89% of FY21 revenue), it manufactures and supplies a wide range of precision forged and machined components and assemblies, with connecting rod (CRs, 40% of FY21 revenues) being the largest component by revenue. Within the non-automotive sector (11% of FY21 revenue), it manufactures and supplies a wide range of precision components for the aerospace, off-road, agriculture and other segments. As of FY21, it is the largest manufacturer of CR, RA and GS for two-wheelers and passenger vehicles (PVs) in India. Sansera is focused on expanding its electric vehicle, technology agnostic and non-auto product offerings and targets to reach 40% of total revenue from these segments from 17% in FY21.

Sansera was one of the 3 finalists across global vendor base of Daimler in “Daimler Sustainability Recognition 2021” for its commitment to reduce CO2 through the partial switch to solar and wind energy. Sansera has taken initiatives to reduce the risk of accidents and prevent environmental pollution at its facilities. These include ensuring periodic employee training on environmental hazards and safety training while using machines, implementing regular employee safety audits and periodic employee safety meetings; and conducting periodic emergency mock drills in their plants. The company has also set up effluent and sewage treatment plants at its manufacturing facilitates to treat and recycle treated wastewater; installed solar panels; and switched to LED lights from a conventional lighting system to reduce carbon footprint. It has also won several awards from its customers for excellent quality of its products like "Best Quality Supplier" award from Toyota India,in 2021;and “Quality Performance Award” from Volkswagen AG in 2017. It has a well-diversified and experienced board which drives a process based governance system with an objective to enhance value for all stakeholders 

Growth in Order Book:

Tata Motors (TTMT IN, Buy) and Force Motors (FML IN, Not rated) placed new orders with Sansera in 1QFY23 for 600k and 100k connecting rods, respectively. It got orders from HMCL and Ultraviolette in the 2W EV category; these orders are anticipated to enter mass production soon. In Jul-22, the order book was INR11.1 billion, down from INR14.9 billion in Apr-22. With xEV+non-auto share at 53% of the order book (38% in Apr-22) and 40% coming from export markets (29% of 1QFY23 revenue is from exports), the mix diversification keeps expanding. Order book was INR11.2bn (INR14.9bn in Mar-22), of which ~31% from EV+Tech agnostic (xEV) and 21% from non-auto. Revenue of INR170mn in 1Q was impacted due to dispatch issues. Revenue mix from EV + non-auto improved 300bp q-q to 20% and price hikes from customers benefited gross margins.

Growing Revenue:

With the exception of about 6-7% of increase being fueled by passing on of commodity inflation of Q1 and Q2 together, revenue growth of 19% QoQ was driven by gaining traction in domestic OEMs across key segments. Therefore, sales growth QoQ would still have been significant at around 15–16% even if Q1 inflation hadn't been carried over into Q2. This expansion occurred despite the fact that Swedish CV parts operations and exports were both sluggish (ex-India revenue mix at 23% vs. normalised levels of 30-35%). It is anticipated that the EV revenue mix, which increased from a sub-0.5% mix to 3% this quarter while supporting 6 domestic e-2W companies, will continue to rise. SEL received new orders of Rs1.5 billion per year from US-based car and non-auto customers. execution with almost 50% of the orderbook coming from non-auto, EV, and tech-agnostic markets. Based on its orderbook visibility and forecast for export markets stabilising from Q4FY23, SEL is aiming to return to 38% of revenue coming from outside of India starting in FY24. SEL wants to increase its aerospace revenue from its current annualised level of Rs1 billion to Rs2 billion by FY26.

Despite fall in gross margin SEL is still pessimistic:

The unfavourable mix (lower exports) accounted for about 60bps of the decline in gross margin in Q2FY23, with the remaining 400bps being driven by the optical effect of higher input commodity costs (for last two quarters). With exports returning by Q4 and a gradual normalisation of the rest of the gross margin due to the optical effect of passing on input costs reversing with declining input commodity prices, SEL anticipates a reversal of the 60bps mix-led impact. Operating leverage benefit appeared to be at an elevated level this quarter, driven by reported 19% QoQ revenue growth, and that would slightly normalise in Q3 with revenue set to decrease QoQ as there would be no input cost pass-on component in Q4 and more production shutdown days due to seasonal holidays. Thus, we expect gross margin to stabilise around 18% in Q3, too, with improvement in gross margin compensating adverse operating leverage effect.

Supplier in Aerospace Sector:

For Fiscals 2021, 2020 and 2019, SEL’s revenue from sale of products to the aerospace segment was 3.76%, 5.84% and 4.42% of its total revenue from sale of products, respectively. Fleet renewal is likely to be the main driver of order books for Airbus and Boeing till CY 2025. China and India are expected to be the first and third most important markets by delivery value. Aircraft deliveries by Airbus and Boeing are expected to increase at a CAGR of 10-12% between CY 2020 and CY 2025. Over the years, the Company’s strategy in the aerospace segment has been to increase its revenue by supplying high value components. It started by supplying components for cargo, structural, lighting and seating systems, with an objective to eventually graduate to supply critical and complex precision components for actuation systems and engine and landing gear systems.

It intends to increase the number of engine and landing gear components and graduate to supply of subsystems and assemblies. In addition, it plans to expand the end use application of its components from civilian aerospace to defence aerospace. In order to facilitate this strategy, it plans to construct a new greenfield manufacturing facility in Bangalore dedicated to aerospace and defence. This facility is planned to have a built up area of 13,020 square metres compared to a built up area of 4,000 square metres for its current facility for aerospace, which is Plant 9. SEL expects the facility to be commissioned during Fiscal 2023.

Financials:

 

 

Valuation:

The company added new customers and existing customers are expanding their product baskets and Domestic industry is performing better, due to a decline in commodity prices, and improved consumer sentiment.
Overall revenue increased 36% y-y, Employee expense / sales ratio came in at 14.6%, +120bp q-q due to salary increments and ESOP expense, but was in line with expectation of 14.1%. Other expense-to-sales came in at 27.7%, +140bp q-q. Interest expense at INR137mn ,-7% q-q, led to PAT of INR348mn.

 

Disclosure:

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.

Articles

Updated : May, 2024

Market Watch: Forecasting Post-Election Market Trend...

As voters prepare to cast their votes, market analysts often look for clues as to how the outcome of the general election, which will determine India's leadership for the next five years, might effect public opinion. elections are most crucial part for...

Author : Nikhil Singh

Updated : May, 2024

NSE's Q4 Result Analysis : Strong Results along with...

The National Stock Exchange (NSE) has recently announced its financial results for Q4 of the fiscal year 2024, showcasing strong growth across various financial metrics. The consolidated revenue from operations surged by an impressive 34% year-on-year,...

Author : Sudarshan

Updated : May, 2024

Nifty surged to almost life time high on bank earnin...

Bank Nifty also scaled life time high; looking ahead, Dalal Street's trajectory may depend on India's election trajectory

Author : Ashish Ghosh

Updated : Apr, 2024

Nifty may come under stress on growing election unce...

Dow and Nifty Future recovered on Friday as Iran downplayed the Israel retaliation; India may be heading for a hung Parliament as BJP may not get over 250 seats alone

Author : Ashish Ghosh

Updated : Apr, 2024

The Rise of Digit Insurance and Its Journey

Mr. Kamesh Goyal founded Digit Auto Insurance in 2016. The company, Digit Insurance, focuses on streamlining insurance procedures and providing quick claim settlements. It is India's first digital general insurance provider.

Author : Nikhil Singh

Updated : Apr, 2024

Nifty gained almost 30% in FY24 on positive global c...

Depending on likely poll outcome and various scenarios, Nifty may scale 23500-24500 by FY25, while may also correct to 20300-19500 (if BJP fails to get min 273 seats alone)

Author : Ashish Ghosh

Updated : Oct, 2023

EQUITY RESEARCH: Rico Auto Industries Ltd.

Rico Auto Industries Ltd is engaged inside the manufacturing of clutch and crank case. The Company is engaged inside the manufacturing and sale of vehicle additives for two wheelers and 4 wheelers. It manufactures and substances high precision and mach...

Author : Akshita

Updated : Oct, 2023

EQUITY RESEARCH: ZF STEERING GEAR (INDIA) LTD.

Z F Steering Gear (India) Ltd is engaged in the enterprise of manufacturing and assembling of steering structures for vehicles, buses and tractors. The Company is mainly engaged in the production of automobile factor (steerage tools) and renewable ener...

Author : Akshita

Updated : Jun, 2023

How much heat is left in Precision Camshafts Ltd?

Enforcement of BS-VI standards, government’s policy support and cost-effective manufacturing base are some factors which should support automotive industry and Precision Camshafts Ltd is likely to gain. Healthy market position in passenger vehicle ca...

Author : TheAsianInvestor

Updated : Dec, 2022

Equity Research: Sansera Engineering Limited

Sansera Engineering Ltd. looks strong in its financial with increasing costumer base and order book domestic as well as globally.

Author : Shalom Martin

Updated : Nov, 2022

Craftsman Automation Ltd: Business Analysis

Craftsman Automation is a diversified engineering company with integrated manufacturing operations. Its core competence in the powertrain segment includes its machining abilities, wherein it is the largest player in machining of cylinder blocks and cyl...

Author : Rising Investor

Updated : Oct, 2022

Equity Research Report - SONA BLW PRECISION FORGINGS...

To become the world’s most respected and valuable auto technology company for our customers, employees and shareholders.

Author : KFO

Updated : Jun, 2022

Equity Research Report: Sakar Healthcare

Sakar Healthcare Ltd is engaged in manufacturing of pharmaceutical formulations in the form of liquid injectables, tablets/ capsules, oral liquid syrups, dry powder injectables and syrups. Presently, its domestic sales accounts for 31% of revenues and ...

Author : Akshita

Updated : Jun, 2022

EQUITY RESEARCH REPORT: NEWGEN SOFTWARE

Newgen Software Technologies is a global software Company and is engaged in the business of software product development including designing and delivering end-to-end software solutions covering the entire spectrum of software services from workflow au...

Author : Akshita

Updated : Jun, 2022

Nifty and Bank Nifty Tumbles Due to Weak Global Cues...

Nifty and Bank Nifty tumbles due to weak global cues lead by higher inflation data, higher crude oil prices and weakening currency.

Author : Shalom Martin

Updated : Jun, 2022

Equity Research Report: Shree Renuka Sugar

Shree Renuka Sugars is a global agribusiness and bio-energy corporation. The Company is one of the largest sugar producers in the world, the leading manufacturer of sugar in India, and one of the largest sugar refineries in the world.

Author : Akshita

Updated : Jul, 2022

Equity Research : Tata Consumer Products Limited

TCPL future ambitions remain aggressive, At 17% EPS CAGR over FY22-25e, TCPL should deliver industry-leading growth within indian FMCG.

Author : Shalom Martin

Updated : Jul, 2022

Equity Research: Birlasoft Ltd

Birlasoft, a small-cap IT company, has an upside potential of 35%. The company’s repeated demonstration of ‘walking the talk’ makes us believe that it is on track to achieve its stated target of USD1bn revenue by FY25E.

Author : Shalom Martin

Comments

  • Shreyansh

    23 December, 2022, 1:44 pm
    Very nice detailed analysis
    Reply

IPO

Companies Open Date Close Date Issue Price Cost of 1 Lot GMP Expected Listing Listing Gain(%) Listing Price Current Price Type Exchange

View more.....

Companies Open Date Close Date Issue Price Cost of 1 Lot GMP Expected Listing Listing Gain(%) Listing Price Current Price Type Exchange

View more.....

Companies Open Date Close Date Issue Price Cost of 1 Lot GMP Expected Listing Listing Gain(%) Listing Price Current Price Type Exchange

View more.....

Companies Open Date Close Date Issue Price Cost of 1 Lot GMP Expected Listing Listing Gain(%) Listing Price Current Price Type Exchange

View more.....

Companies Open Date Close Date Issue Price Cost of 1 Lot GMP Expected Listing Listing Gain(%) Listing Price Current Price Type Exchange

View more.....