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ICICI Securities Report
'Buy' rating maintained. Target Price updates to Rs. 1,033 from Rs. 1001.
Key takeaways from management interaction:-
Sansera Engineering Limited has invested Rs3.5bn towards gross block for the Bidadi plant. SEL expects revenue to ramp up to Rs4.8bn-5bn by FY25 from the Bidadi facility, which has both steel and aluminum forging capabilities.
By putting a new 4,000T press in this plant, the company is aiming to make large steel crankshafts inhouse for 6-litre genset engines in addition to making large aluminum components for 2Ws for OEMs like Royal Enfield, KTM, etc.
SEL has no plans to enter the casting business in the foreseeable future, but will focus towards diversification of the forging business only.
The new aerospace facility's peak revenue is estimated at Rs3.5bn with machineries from the older plant getting shifted here. As against Rs900mn aerospace revenue in FY23, SEL is targeting Rs2.5bn revenue from the segment by FY25.
SEL is looking forward to grow its exports by 40-50% in FY23 led by expansion in the aluminum forging and aerospace businesses along with addition of new businesses from Polaris ATV, Tesla, CNH, and overall growth in key markets.
Company is aiming to improve EBITDA from 16% currently to 18-19% by FY25 through improvement in exports and aerospace mix, and improved operating leverage.
SEL aims to reduce ‘net debt / equity' from 0.55x currently to 0.4x by FY25 along with operating at 8-9% capex/sales ratio and subsequently increase the RoCE towards 20% with improved profitability.
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