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Axis Securities Report
Financial Performance:
Sansera Engineering Ltd.'s revenue slightly beat our estimates by approximately 3.3%, while Ebitda/profit after tax were in line with our estimates. Revenue stood at Rs 713 crore, up around 28%/3% YoY/QoQ. The improvement in topline was driven by a 32%/27% YoY increase in International/domestic revenues respectively.
The reported Ebitda of Rs 121 crore was up approximately 39%/2.5% YoY/QoQ, with Ebitda Margins of 16.9%, up 138 basis points YoY (flat QoQ). This was a 53 bps miss on estimates due to higher personnel costs and raw material costs (as % of sales), partly offset by lower other expenses. The company's PAT stood at Rs 48 crore, up around 55%/2% YoY/QoQ.
This 0.9% slight miss from our estimates was on account of lower other income than in prior periods.
Outlook:
In light of attributes such as -
Higher sales mix in Non-Auto ICE components driven by strong order books,
Higher exports,
The management's focus on improving margin trends,
Its capability to generate strong operating cash flows, and
Capacity expansion plans.
we believe the stock is currently trading at a reasonable forward price-to-earning multiple of 16 times (based on our FY26 earning per share estimates).
We expect Revenue/Ebitda/PAT to grow at a 17.4%/22%/30% compound annual growth rate over FY23-26E.
Valuation and Recommendation:
Keeping in view the above factors, we maintain a 'Buy' rating and continue to confidently award a Forward PE multiple of 20 times on FY26 EPS to arrive at our target price of Rs 1,220. The TP implies a robust upside of 23% from the current market price.
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