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The initial public offering (IPO) of automotive components manufacturer Sansera Engineering will open for subscription on September 14.
The Bengaluru-based company is a manufacturer of a range of precision forged and machined components and assemblies for the two-wheeler, passenger vehicle and commercial vehicle verticals. It is the largest supplier of connecting rods, rocker arms and gear shifter forks to two-wheeler OEMs in India
Here are key details on the IPO:
: The IPO will open for public subscription on September 14 and close on September 16.
Price Band: The company has fixed the price band for the issue at Rs 734-744 per equity share.
OFS: The public issue is a complete offer for sale (OFS) of 1,72,44,328 equity shares by existing selling shareholders. The OFS comprises the sale of 86,35,408 shares by Client Ebene Ltd, 48,36,723 shares by CVCIGP II Employees EBENE, 20,58,069 shares by S Sekhar Vasan, 5,71,376 shares each by Unni Rajagopal K, FR Singhvi and D Devaraj.
IPO Size: At the upper price band, the issue is estimated to garner Rs 1,283 crore.
Lot Size: The market lot of the IPO size is 20 shares and a retail-individual investor can apply for up to 13 lots (260 shares).
Offer Ratio: Half of the issue is reserved for qualified institutional buyers, 35 percent for retail investors, and 15 percent for non-institutional investors. The company has also reserved shares worth Rs 9 crore for employees who will get these shares at a discount of Rs 36 to the final issue price.
Issue Objective: The IPO is a pure offer for sale (OFS) and the company will not receive any proceeds from the issue. The company wants to achieve the benefits of listing Equity Shares on stock exchanges.
Lead Managers: ICICI Securities, IIFL Securities, and Nomura Financial Advisory and Securities (India) are the books running lead managers to the issue.
Allotment & Listing Date: The finalisation of the basis of share allotment is likely to take place on September 21 and the refunds will be initiated on September 22. The shares are expected to be credited to Demat accounts on September 23. The shares are likely to be listed on BSE and NSE on September 24.
Promoter Shareholding: At present, the promoter shareholding in the company stands at 43.91 percent. After the IPO, the shareholding will be reduced to 36.56 percent.
About Sansera Engineering
Incorporated in 1981, Sansera Engineering is an engineering-led integrated manufacturer of complex and critical precision engineered components for automotive (2-W, PV, CV) and non-automotive (aerospace, offroad, agriculture, etc.) sectors.
Its automotive product range includes connecting rod, rocker arm, crankshaft, gear shifter fork and stem comp among others.
The company has 16 manufacturing facilities, out of which 15 are in India and 1 in Sweden.
The company is among the top 10 global suppliers of connecting rods for light vehicles (2.3% CY20 global market share, up from 0.9% in CY15) and CVs (3% CY20 global market share vs. 0.9% in CY15). In India, it is the largest supplier of connecting rods, rocker arms and gear shifter forks to 2-W OEMs and the largest supplier of connecting rods and rocker arms to PV OEMs.
Sansera Engineering clocked EBITDA margins of 17.6 percent in FY21 with a return ratio of 10-12 percent. As of FY21, debt to equity is at 0.6x. In terms of valuation, it is priced at around 35x P/E on FY21 EPS (Rs 21/share) at the upper end of the price band i.e., Rs 744.
Promoters and Management
Subramonia Sekhar Vasan, Fatheraj Singhvi, Unni Rajagopal Kothenath and Devappa Devaraj are the promoters of the company.
Subramonia Sekhar Vasan is the Chairman and Managing Director of the company, while Fatheraj Singhvi is the Joint Managing Director.
Raunak Gupta is the Non-Executive, Nominee Director. Muthuswami Lakshminarayan, Revathy Ashok and Sylvain Bilaine are the Non-Executive, Independent Directors of the company.
B R Preetham is the Group Chief Executive Officer and Vikas Goel is the Chief Financial Officer of the company.
Praveen Chauhan is the Vice President (Group) of the company and Satish Kumar is the Associate Vice President of the company. P R Suresh and Vidyadhar Janginamath are also the Associate Vice President. Rakesh S B is the Associate Vice President – Aerospace Division.
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), said Berstein in a report.
Considering the strong product portfolio, advanced manufacturing capabilities and robust track record, we give a “Subscribe” rating for the long term, it added.