Sansera Engineering

About
40+ years old manufacturing company that makes precision engineering components for automobile and non-auto industries.
In automobiles: Serves almost all major OEMs
In non-auto: Serves defense and aerospace industry - working on entering electronic sub-systems

Promotor: Mr. Sekhar Vasan - IIT / IIM Alumni (read here)
CEO: Mr. B. R. Preetham (has always been here - LinkedIn)

What’s interesting about Sansera

  1. Stickiness of customers: They have been working with almost all major OEMs. Interestingly these relationships last quite long.
    a) In 2W segment: Over 18 years of relationships with leading 2W players such as Bajaj Auto Limited, Honda Motorcycle, and Yamaha Motor India.
    b) With Maruti Suzuki India Limited for 30+ years, and with Fiat Chrysler Automobiles for 10+ years

  2. Largest domestic supplier of connecting rods: Has a market share of 2% to 3% for connecting rods for light vehicles (PVs dominantly) and CVs globally.

  3. Strategic Investments and Capex: Company has been doing significant capex. Also, exploring opportunities in electronic systems and autonomous driving sub-systems.
    a) Investment in MMRFIC Tech Pvt Ltd. This company is being by ex-Texas Instruments engineers. This company seems to be involved in making electronic subsystems used in defense/telecom/security. (source: employee profile)
    b) Company has setup a new facility for aerospace and defense. This should start showing results from FY24. Management expects a CAGR growth of about 25% to 30% in aerospace for the next three years. This facility was built much before the time management initially quoted :raised_hands:

  4. Trackers: Company expects to diversify topline-> auto v/s rest in 60% to 40% ratio.

Financials

Company’s Products

Risks:

  1. Client Concentration: Top 5 customers used to contribute over 50% to its topline during 1HFY22. However, the company has been diversifying this and it has fallen from over 70% in the last 7-8 years.
  2. Accounting Red Flags: I haven’t checked. I liked the management and betting on my instincts for their honesty so far

Relevant Links:

  1. Screener
  2. Rating Agencies - ICRA / Fitch
  3. Management’s Outlook commentary - CNBC Tv18

Disclaimer:

  • I am Invested from quite low levels (PF sizing here). Safe to assume, I have interests here.
  • This is not a recommendation advice. Please do your own research.
2 Likes

valuation is quite high - it seems to have discounted future growth… if sales dont increase price could correct.

3 Likes

Q1 FY24 Results

  • YoY - 24% Sales / 30% PAT growth
  • YoY order growth from EV segment
  • Haven’t gone through the concall yet . Incase anyone goes through, please update

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Excerpts from Concall Q1FY24

  • Demand is coming from off-road segment
  • New client: Cummins
  • Order book: Rs. 16.9 billion as on 30th June 2023 v/s 13.3 billion as on 31st March 2023
  • Cx Stickiness: Received Platinum award from Raytheon Group which is the second highest award in their group (imo, genuinely seems like a difficult to get award)

Guidances:

  • Targeting to grow 2x than industry - 20% growth, 20% EBITDA, 20 ROCE
  • Aerospace sector: ~50% growth. A recovery in performance should happen in upcoming quarters
  • MMRFIC: Need another 18 to 24 months
  • Debt: Expect overall debt to be between 680 to 700 by year-end
  • Expect degradation of working capital cycle - due to international market. EBITDA margins could slightly improve
  • Look for End of Q3 (I am assuming Q4): Plan to add capacity in US could be finalized. Company is already supplying to GM/Tesla and now cummins

***** The below section isn’t from concall ****

About Raytheon Group and the award

  • American multinational aerospace and defense conglomerate
  • One of the largest aerospace and defense manufacturers in the world by revenue and market capitalization, as well as one of the largest providers of intelligence services
  • Large military contractor for U.S.A

Source: Wikipedia and RTX website

6538967846e7424ebdb32f73304b3480-18092023.pdf (654.5 KB)

ICICI Securities:

Targeting 20% RoCE amidst executing growth capex
We interacted with the management of Sansera Engineering (SEL) to get mid-year update on its business execution
and outlook ahead. Following are the key takeaways: 1) Revenue is on course to meet the target of ~40% growth in exports in FY24, including ~50% growth in aerospace segment; 2) supplies to Triumph and Harley for the newly launched indigenised models would add to 2W segment revenue growth along with continued premiumisation of overall 2W market; 3) EBITDAM is on track to be at 17-18% in FY24 and inch up potentially higher in FY25 driven by the rising mix of exports/aerospace; 4) despite capex of INR 2.8-3bn p.a., SEL is confident of crossing ~20% pre-tax RoCE by FY25. We retain BUY on SEL with an unchanged target price of INR 1,133, implying 20x FY25E earnings.

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Update: "Company has made a total investment of Rs. 19.54 Cr (26%) in CleanMax Enviro Energy Solutions Private Limited (CleanMax) "

Find more details on notification - HERE

Found this info for CleanMax


Axis Bank acquires stake in Sansera. Stock will most likely shoot up in coming weeks. Good news for us minority stakeholders.
Disc- Invested, 5.3% of portfolio

2 Likes


Good growth yoy
Disc- Invested, 5% of portfolio.

1 Like