ICICI Securities has rated Sansera Engineering Ltd stock as buy with a retain target price of Rs 280.
Sansera Engineering (SEL) aims to achieve Rs 3,500 crore in revenue by FY25, driven by the revival of domestic two-wheeler demand, growth in export markets and expansion in the aerospace segment.
According to the brokerage, SEL expects a Rs 1,200 crore growth in revenue for FY25 as against Rs 2,300 crore revenue for FY23. ICICI Securities reported, “Sansera Engineering (SEL) aims to double revenue from its Bidadi plant, reaching nearly Rs 500 crore by FY25 with the addition of a new 4000T press”.
The Bidadi facility, serving OEMs like Royal Enfield and KTM, targets an increase in aluminium forging revenue from Rs 60 crore in FY23 to Rs 150 crore by FY25. SEL plans to diversify its forging business, particularly in the Electric Vehicle (EV) segment.
With the establishment of a new aerospace facility, SEL expects a Rs 350 crore revenue, according to the brokerage’s report. By shifting machinery from the older plant, the company aims to raise aerospace revenue from Rs 90 crore in FY23 to Rs 250 crore by FY25.
ICICI Securities reported that expanding exports is a key focus for SEL, with a growth target of approximately 40-50 percent in FY23. This growth will be driven by the aluminium forging and aerospace businesses, along with strategic partnerships with companies like Polaris ATV, Tesla and CNH.
SEL plans to increase its EBITDA margin from 16 percent in FY23 to 18-19 percent in FY25, leveraging a favourable mix of exports and aerospace revenue. The company aims to reduce its debt-to-equity ratio from 0.55x to 0.4x by FY25, as reported by ICICI Securities.
By operating with an 8-9 percent capex-to-sales ratio and optimizing assets, SEL aims to achieve a Return on Capital Employed (RoCE) of nearly 20 percent, improving overall profitability.
During the March quarter, Sansera Engineering Ltd reported net sales of Rs 2,338.3 crore for FY22, up 17.5 percent from Rs 1,989 crore in FY22. Net profit rose 7.7 percent from Rs 130.5 crore in FY22 to Rs 146.2 crore in FY23. The company's FY23 EBITDA stood at Rs 246.9 crore, up 15.4 percent, compared to Rs 213.9 crore in FY22. The EPS for the SEL share is 28.5 for FY23 as against 25.4 for FY22.
The SEL share is currently trading at Rs 849.70 at 11:45 am on June 12.
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