Sansera Engineering: Should you buy this smallcap stock post record annual total income in FY23?

Brokerages see up to 30 per cent upside in Sansera Engineering, citing double-digit revenue growth in FY24 and FY25 on the back of ramp-up in aerospace, defence, PV exports and new orders in domestic PVs. The smallcap company on May 22 posted the highest-ever consolidated total income of Rs 2,356.11 crore for the financial year ended March 31, registering a growth of 17.54 per cent on year-on-year (YoY) basis. Consolidated total profit for the period increased 12.48 per cent YoY to Rs 148.34 crore in FY23.

Shares of the company traded 0.15 per cent down at around Rs 778 in the afternoon trade on May 23. On the other hand, the benchmark BSE Sensex was up 272 points at 62,235 at around the same time.

On a quarterly basis, the total income of the company grew 7.26 per cent YoY to Rs 623 crore in Q4FY23. On the other hand, the net profit of Sansera Engineering declined 5.19 per cent YoY to Rs 35.42 crore during the quarter under review.

Global brokerage Nomura maintained a bullish view on Sansera Engineering with a target price of Rs 1,014. “We expect Sansera to deliver 21 per cent and 16 per cent revenue growth in FY24 and FY25 led by a ramp-up in aerospace, defence, PV exports and new orders in domestic PVs. This should diversify its mix further. We view the current valuation at around 13.8 times FY25 EPS as attractive, given the growth outlook,” Nomura said in a report.

The company’s order book with annual peak revenues stood at around Rs 1,330 crore after removing orders that moved to mass production in FY23.

Management expects performance to improve in FY24 on the back of both its end markets (auto and non-auto) showing signs of strong growth in India and overseas markets. Based on recent trends observed by the company, management has revised its long-term revenue contribution target from xEV and tech-agnostic products to 20 per cent (from 15 per cent earlier). Over the long-term, it targets 60 per cent of sales from auto ICE and 20 per cent each from the non-auto and xEV and tech agnostic segments.

Commenting on the performance BR Preetham Group, CEO, Sansera Engineering said, “We finished another year with our best-ever performance with a topline of Rs 2,356.1 crore and 16.8 per cent EBITDA. The momentum is expected to continue as we start the current fiscal year with a solid order book for Rs 1,330 crore.”

Earlier, ICICI Securities on May 8 also gave a ‘Buy’ call on Sansera Engineering a target price of Rs 939.

“Company is confident of delivering 20 per cent revenue CAGR in FY23-FY25 amidst a recovery in export markets, recovering domestic 2W market, and expanding aerospace business (around 50 per cent revenue CAGR in next 3-4 yrs),” ICICI Securities said adding that rise of exports, aerospace business and EV parts in the overall revenue mix will likely enhance EBITDA margin for Sansera Engineering.

Earlier, shares of the company were listed at Rs 811.35 on September 24, 2021 against the issue price of Rs 744.

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