Last day to bid for auto components maker Sansera Engineering IPO; grey market indicates ₹10 premium

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Last day to bid for auto components maker Sansera Engineering IPO; grey market indicates ₹10 premium
BCCL
  • Sansera Engineering is looking to raise between ₹1,282 crore from a complete offer for sale of 1.72 crore shares in the IPO.
  • The Bengaluru-based firm’s IPO has been fully subscribed on the second day of IPO bidding process.
  • Most analysts suggest subscribing to the IPO for the long term considering strong product portfolio, robust track record and optimism over auto component industry growth.
Today is the last day to subscribe to Bengaluru-based auto component manufacturer Sansera Engineering’s initial public offering (IPO) that started from September 14. The IPO application is live from 10 a.m. to 5 p.m.

So far, the initial public offering (IPO) of the company has received good response from investors given it has been fully subscribed in the first two days. The IPO has received bids for 1.23 crore shares as against 1.21 crore shares for issue.

However, the grey market suggests premium has turned around for the IPO as it has come down to ₹10 premium per share from ₹80 earlier reflecting a poor sentiment.

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Meanwhile, analysts suggest investors to bid for the IPO keeping in mind long term investment.
Brokerage firmsRecommendation
Choice BrokingSubscribe
BP EquitiesSubscribe
Angel BrokingSubscribe
Kotak SecuritiesNot rated
ICICIdirectNot rated

Considering the strong product portfolio, advanced manufacturing capabilities and robust track record, we give a “SUBSCRIBE” rating for the long term, said a report by BP Equities.

The report took into consideration the company’s top position in supplying connecting rods within the light vehicle segment and commercial vehicle segment for calendar year 2020. Besides, the company has strong relationships with respected Indian and global original equipment manufacturers.

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Moreover, the company has shifted its focus towards aluminium forged components while manufacturing auto components for vehicles including electric vehicles as it believes it has better revenue prospects. This is in line with foreign auto majors -- Audi, BMW, Nissan and Porsche -- who are also making the switch from steel to aluminum for lightweight batteries in electric cars reportedly.

“One of our focused areas is aluminium forged components as you are aware the industry is going to get light weighted [sic] both in passenger vehicles and two-wheelers whether it is electric or not. Lightweighting is going to happen because of the emissions norms,” said B R Preetham, group chief executive officer at Sansera Engineering in an interview with Business Insider.

Analysts at Choice Broking say that likely strong revenue growth and healthy EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin over 15% to boost profitability in the coming future.

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The company’s gaining market share across automotive and non-automotive sectors, well-diversified business model with a strong customer base, geographical spread of revenues from India and foreign countries and diversified revenue stream from vehicle segments have impressed analysts at Religare Broking.

“On the financial front, the company’s performance has been steady and it would continue to focus on improving operating efficiencies. We have a positive view on the stock from the long term perspective,” said a report by the broking firm.

Peer companies to Sansera Technologies have recorded upto to 86% returns in 2021 so far.
Peer companies% year-to-date returns
Endurance Technologies19%
Minda Industries86%
Sundram Fasteners77%
Suprajit Engineering62%
Motherson Sumi System37%
Mahindra CIE Automotive31%

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TCS valued at almost $200 billion, closer to US-listed peer Accenture with $216 billion
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