Started in 1987, Sandhar Technologies Limited is a customer centric component supplier primarily catering to automotive OEMs and largely focused on safety and security systems of vehicles with a pan India presence and a growing international footprint. STL is the leader in the two-wheeler locking systems market, and the commercial vehicle rear view market in India, and is one of the two largest companies catering to the commercial vehicle locking systems market, and the two-wheeler rear view market in India. Company is also one of the two largest manufacturers of operator cabins in India, along with being the largest player in the excavator cabins market. 60190709 STL has long-standing relationship with its major customers. Company's customer portfolio consists of 79 Indian and global OEMs across various segments. Some of the OEM customers of the company are Hero, TVS, Royal Enfield, Suzuki, UM Lohia, Honda Cards, Tata Motors, Ashok Leyland, Scania, SML Isuzu, Atlas Copco, Caterpillar, Escorts, JCB, TAFE, Volvo, etc. In addition to the above OEM customers, company also has relationships with global automotive component suppliers such as Autoliv, Bosch, and CTS, to whom it supplies various products. Presently, STL manufactures 21 categories of products, which cater to different industry segments. Its portfolio comprises various categories of products including safety and security systems such as lock assemblies, mirror assemblies, operator cabins for off-highway vehicles, aluminium spools, spindles, and hubs. Company also manufactures other product categories including wheel assemblies, handle bar assemblies, brake panel assemblies, sheet metal components such as fuel filler caps, fuel cock assembly, step pillions, tools, dies, moulds, other aluminium components, crane and tractor parts, plastic and painted parts such as door handles (inner and outer), panels for televisions, and cabinets for air conditioners. STL manufactures its products from 31 manufacturing facilities across eight states in India, two manufacturing facilities in Spain, and one manufacturing facility in Mexico. Further, STL is in the process of commissioning five manufacturing facilities in India. Apart from this, company also has an overseas assembly and packaging centre located in Poland. Further, through SCID, its research and development activities are undertaken at Gurugram, Haryana. Company's facilities are located in key auto-clusters in the northern, southern, and western parts of India, and most of its facilities are in close proximity to the plants of our OEM customers. Its products are manufactured through diversified technology platforms such as plastic injection moulding, zinc die casting, aluminium die casting, sheet metal stampings and fabrication, automotive electronics and robotic painting. Company commenced operations as a supplier to Hero (formerly Hero Honda Motors Limited) for sheet metal components in 1987 and as of December 31, 2017, company had a total work force of 7,426 individuals comprising of 2,292 employees, and 5,134 individuals engaged with them on contractual basis. On performance front, STL has posted turnover/net profits of Rs. 1162.30 cr. / Rs. 19.06 cr. (FY13), Rs. 1268.89 cr. / Rs. 33.11 cr. (FY14), Rs. 1487.34 cr. / Rs. 38.28 cr. (FY15), Rs. 1517.89 cr. / Rs. 33.45 cr. (FY16) and Rs. 1633.53 cr. / Rs. 39.19 cr. (FY17). For H1 of FY18, it has reported net profit of Rs. 34.23 cr. on a turnover of Rs. 990.60 cr. Thus company has posted consistent growth over last couple of years. Due to higher spending of borrowed funds (Rs. 635 crore) between FY14 till Sept. 2017 for expansion, bottom-line remained static all these years. STL has posted an average EPS of Rs. 7.26 and average RoNW of 13.04% for last three fiscals. Issue is priced at a P/BV of 5.14 on NAV of 64.65 as on 30.09.17. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/E of around 29, which looks fully priced as Industry average P/E is 36. As per RHP documents, peers like Minda Corp, Suprajit Engg., Gabriel India, JBM Auto, Minda Ind. and Fiem Ind are currently trading at a P/E of around 60, 44, 22, 53, 80 and 30 respectively. On BRLM's front, two merchant bankers associated with this issue and have handled 51 public issues in the past three years out of which 16 issues closed below their offer price on listing dates. As per financials, company's growth is consistent, RoNW is 13.04% for last three fiscals and issue is priced at P/E of around 29 as per latest earnings. Company manufactures auto parts and auto sector has good future. This company is a market leader in two wheeler segment and gearing for latest digital technology products to remain one step ahead from others. So we give SUBSCRIBE rating to this IPO.
✍️ Post a Comment