Buy Sansera Engineering; target of Rs 1251: LKP Research

LKP Research's research report on Sansera Engineering

We witnessed a strong performance in Q4 for the company, wherein the top line grew by 21% on consol basis, which was mainly driven by the Tech Agnostic, x-EV and Non Auto business. FY24 sales grew by 20% wherein the Motorcycle business grew by ~25%, PV grew by about 22%, tech Agnostic posted 40%+ sales growth, while xEV, Aerospace and OTR excelled by more than 50%, 23% and 60% respectively. Scooters, Agri, CV and Industrials posted a muted growth on the other hand. EBITDA grew by 35% yoy and 5.2% qoq at ₹1.27 bn, while margins came at 17%, up from 15.3% yoy and 10 bps up qoq on better product mix tilted towards exports (32% of topline) and & auto - ICE (25%) and operating leverage along with fall in RM prices. PAT was reported at ₹460 mn, a growth of ~30% yoy, but a fall of 5.1% qoq. The yoy growth came despite a 14.3% hike in depreciation led by new plant commencement, lower other income and increased interest expenses on debt raised last quarter.

Outlook

Keeping in view the above factors, we maintain our BUY rating and comfortably assign a forward P/E multiple of 19x on FY26 EPS to arrive at our TP of ₹1,251, with an upside potential of 18%.