SJS Enterprises Ltd. will sell shares at Rs 531-542 apiece in its three-day initial public offering starting Nov. 1, joining the list of companies looking to list on exchanges in a boom year for maiden offers.
Business
Incorporated in 1987, the company gets 75% of its sales from the automotive sector, and the remainder comes from the consumer appliances industry.
Within the automotive segment, two-wheelers and passenger vehicles contributed nearly 58% and 16.7% of their FY21 sales, respectively. It earns 84% of revenue from India.
The company's product range includes decals and body graphics, 2D & 3D appliques/dials, 3D lux badges, overlays, aluminium badges, lens mask assembly and chrome-plated injection moulding plastic parts. It has two manufacturing facilities at Bengaluru and Pune.
In April, the company acquired Pune-based Exotech Plastics Pvt., which makes chrome-based aesthetics. The acquisition is expected to add to SJS Enterprises' revenue in the ongoing fiscal. Exotech has a monthly revenue run rate of Rs 8.5 crore, Sanjay Thapar, executive director and chief executive officer of SJS Enterprises, told BloombergQuint in an interaction. The acquisition, however, will dilute the company's margins, he said.
The company has built capacity in the last three years and its utilisation level was at 50% in FY21.
Financials
The company was net debt-free in FY21 with revenue and profit at Rs 251.6 crore and Rs 47.7 crore, respectively. In the quarter ended June, revenue and profit were Rs 74.3 crore and Rs 9.5 crore. The first-quarter revenue includes Exotech numbers.
Peer Competition
There are no listed peers for SJS Enterprises.
Valuation
At the upper end of the price band (Rs 531-542), the company is valued at nearly 32 times its FY21 earnings.
Risks
Unable to successfully integrate and manage Exotech or other strategic alliances or acquisitions.
The extent to which the Covid-19 pandemic will impact its business, operations and financial performance is uncertain.
Loss of any of its key customers or significant reduction in production and sales, or demand for its products from significant customers.
Depends significantly on customers in the automotive and consumer appliance industries.
Failure to anticipate, identify, understand and respond timely to evolving technological and market trends and preferences to develop new products.
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