Sansera Engineering IPO: The IPO of this auto component maker is opening today i.e. on September 14. The issue will close on 16 September. The company’s issue price band is Rs 734-744. Sansera Engineering is bringing an IPO of Rs 1,282.98 crore. This issue is a 100% offer for sale. The promoters and existing investors of the company are selling some of their stakes.
Is it ok to invest in this IPO?
Sansera Engineering has a total of 16 plants. Of these, 15 are in India and one in Sweden. The company manufactures complex and critical precision engineering components in the automotive and non-automotive sectors. In the automotive segment, the company manufactures connecting rods, rocker arms for 2W, PV, and CV verticals. Most of the company’s revenue comes from manufacturing components related to the internal combustion engine of the car.
Market experts say that more electric vehicles will be made in the coming days. The engines used in these vehicles will be replaced by electric motors and components. According to Financial Express, COO Aditya Kondavar, Founder, JST Investments said, “Although the company says that it is the most important part of its business model. But it remains to be seen how the company adopts it. But this is the perfect example of Major Disruption coming up.”
Disruption is because if more electric vehicles are made, then the company will also have to change its business accordingly. Although the company says that it is ready for it. According to the higher price band of the issue, Kondavar said, “Sansera Engineering has a valuation of 2.4 times the price to sales, while the company’s P/E is 36.2.
The partnership of Sansera Engineering and Maruti Suzuki in the passenger vehicle segment is more than 30 years old. The company’s partnership with Fiat Chrysler is of 10 years. At the same time, Sansera Engineering’s partnership with North American’s passenger vehicle OEM is 10 years old.
JM Financial says that the business model of Sansera Engineering is diversified. Its results are also better than the industry trends. In addition, it is the industry leader on many parameters. According to the brokerage firm, there is also some risk to the company. These include dependence on third parties for transportation and timely delivery of products.
The company relies on third parties for transportation and does not have long-term supply contracts with them. In such a situation, due to the non-availability of suppliers on time or due to a bottleneck in the delivery of raw material, or too much fluctuation in raw material prices, the business of the company can be adversely affected. Apart from this, one of the risks associated with the company is also related to foreign exchange rate fluctuations.
The issue of Sansera Engineering will close on September 16 and allotment of its shares is likely to take place on September 21. Its listing can be done on NSE and BSE on 24 September. One lot of Sansera Engineering consists of 20 shares. Retail investors will have to invest at least Rs 14880 in this. After the listing of the company, the promoters’ stake in the company will come down from 43.91% to 36.56%.
The trading of unlisted shares of the issue of Sansera Engineering started in the gray market only after the issue price was ascertained. Today its unlisted shares are trading at a premium of Rs 75. That is, the shares of Sansera Engineering are being traded at Rs.819 (744+75) in the gray market. This is 10% more than the issue price.