Sansera Engineering - Pioneering Precision For Over Four Decades: Axis Securities

Axis Securities Report

We initiate coverage on Sansera Engineering Ltd. with a 'Buy' recommendation and price target of Rs 1,210/share, implying an upside of 26% from the CMP.

We expect the company to generate strong operating cash flows driven by -

• Strong product pipeline,

• Higher sales mix in Non-Auto ICE components,

• Higher exports,

• Managment's unwavering focus on improving margin trends, and

• Execution capabilities.

We believe these traits will be value-accretive for the company’s bottom line. Moreover, we believe Sansera will continue to source its capex funding of Rs 200-250 crore annually from its robust internal operating cash flows over FY24-26E.

Keeping these factors in view, we recommend a 'Buy', rating on the stock and base our rationale on the following premise.

Key risks

• Sale of products to certain key customers,

• Pricing pressure from original equipment manufacturers,

• A substantial portion of revenue from key product families,

• Recruit and retain qualified and skilled personnel,

• Any downturn in the Automobile Industry in India.

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