Sansera Engineering (SEL), established in 1981, is a Bengaluru based engineering led integrated manufacturer of critical precision forged components (engine, non-engine oriented) for end application in predominantly auto domain.
SEL’s price has corrected ~18% since listing from ~₹ 818 levels in September 2021, underperforming the wider Nifty Auto index.
We value SEL at ₹ 900 i.e. 20x P/E on FY24E EPS of ₹ 45, building in 18%, 34% sales, earnings CAGR, respectively, over FY22-24E.
In our auto universe, we also like Mahindra & Mahindra.
|Key Financials||FY19||FY20||FY21||FY22P||3 year CAGR (FY19-22)||FY23E||FY24E||2 year CAGR (FY22-24E)|
|EBITDA Margins (%)||17.8||15.4||17.6||16.8||-||17.0||18.5||-|
Sansera Engineering (SEL), established in 1981, is a Bengaluru based engineering led integrated manufacturer of critical precision forged components for end application in automotive (2-W, PV, CV) & non-automotive (aerospace, off-road, agriculture, etc.) sectors. Its automotive product range includes connecting rod, rocker arm, crankshaft, gear shifter fork and stem comp among others. SEL has 17 manufacturing facilities (16 - India, one -Sweden). It commenced commercial production of passenger vehicle components in 1986, for two-wheeler vertical in 1996, for off road vehicles in 2009 and commercial vehicle vertical in 2011. It has installed capacity of ~11.05 crore units (components) with utilisation as of FY21 at ~56%.
Connecting Rod: - The rod connects the piston to a crankshaft, with the smaller end connected to the piston and the bigger one to the crankshaft. SEL is the largest supplier in 2-W connecting rod. One connecting rod is required per cylinder. It is primarily made from steel. The size of the connecting rod market (catering to OEM demand) is estimates to be ~| 1,060 crore as of FY21.
Crankshaft: - The crankshaft connects the pistons and flywheel for transfer of energy & motion of vehicles. It is made from forged steel (.31% carbon, 2.5% nickel, .65% chromium, rest iron ~96.5%). The size of the 2-W & PV crankshaft market in India catering to OEMs is estimated at ~| 1,720 crore (FY21)
Rocker arm: - This component is used in the fuel injection mechanism and is in regular contact with valves. Two per cylinder is required in case of single cylinder 2-W. One for inlet and one for outlet. A PV with four-cylinder engines having two inlet and outlet valves each for one cylinder uses 16 rocker arms. It is primarily made of alloy steels due to high strength required and frequent movement. Rocker arm market size is estimated at ~| 540 crore as of FY21.
Gear shift forks: - Used to change gear position and typically used in manual transmission gears. Quantity required for PV ~five forks, for 2-W - two forks
2-W stem components: - it connects handle bar with suspension forks
2-W axel – Joints wheels with handle. Pair is required in 2-W
The company also started manufacturing of EV powertrain components for 2-W & PV
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