LKP Research's research report on Sansera Engineering
We witnessed a modest performance in Q3 FY25 for the company, wherein the top line grew by 2.1% on consol basis, which was mainly driven by the Tech Agnostic, x-EV and the 2W ICE business. In Q3, the ICE Auto segment sales reported 0.2% yoy de-growth led by weak performance at PV and CV segments, which was somewhat offset by the strong two wheeler performance. During 9M FY25, sales were mainly driven by 2W ICE business wherein motorcycles grew by 12%, while scooters reported a 28.6% yoy growth. While, on the other hand, PV segment was weak as it de-grew by 11.5% during 9M, Tech Agnostic and xEV posted a whopping 34.4% and 43.8% growth respectively. In 9M FY25, within Non-Auto, sales we witnessed a strong Agri (7.8%) and Industrials (14.6%) segments growth, while Aerospace business posted muted performance as it showed a flattish growth yoy along with OTR segment which also decreased by 22%. Q3 EBITDA grew by 5.2% yoy and dipped by 4.5% qoq at ₹1.27 bn, while margins came at 17.5%, up from 17.4% qoq and 60 bps up yoy on better product mix tilted towards exports (24% of topline), prudent cost control measures and operating leverage along with benign RM prices. PAT was reported at ₹551 mn, a growth of 13.8% yoy, and 6.1% qoq. The yoy growth came despite a 17.5% yoy hike in depreciation led by new plant commencement. Higher other income also assisted the PAT growth.
Outlook
Keeping in view the above factors, we maintain our BUY rating post pruning down the FY25E and FY 26E estimates to adjust the slowdown in PVs and Aerospace businesses and introducing FY 27E numbers. We assign a P/E multiple of 24x on FY27E EPS to arrive at our TP of ₹1,431, with an upside potential of 23%.
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