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Dolat Capital Report
Sandhar Technologies Ltd. printed decent performance in Q1. Despite a weak two-wheeler industry volume, Consolidated revenue jumped 8.4% QoQ to Rs 8.28 billion, led by strong growth in sheet metal and aluminium die casting business.
Ebitda margin expanded 70 basis points YoY to 8.8%.
Sandhar Tech has guided 25% revenue growth led by new business win and capacity addition. Margin to see sharp expansion in H2 FY24 led by ramp up of production from new plants.
Management expect Ebitda margin of overseas subsidiary is likely to inch up to 12-13% versus currently 9-10%.
Margin trajectory is improving well in sheet metal, ADC and cabin and fabrication business due to improving utilisation and cost cutting exercise.
As most of the capex has already been done, Sandhar Tech is targeting to reduce debt by more than Rs 2 billion in next two years.
We anticipate a 55% earnings per share compound annual growth rate over FY23-25E and maintain 'Buy' rating with target price of Rs 472 (16 times FY25E EPS).
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