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I-direct Instinct - Sandhar Technologies - ICICI Direct

Posted On: 2021-07-18 06:22:51 (Time Zone: UTC)


Sandhar Technologies (STL) is a leading auto ancillary player primarily serving Indian auto OEM industry through a host of product categories, such as locking systems, Al die-casting & cabins (together form 57% of sales).

- Established in 1987 with long-standing customer relationships across segments. The 2-W, PV combined accounted for ~80% of FY21 sales

- Sustained improvement in blended EBITDA margin profile over the years accompanied by consistent CFO generation and healthy capital efficiency

The company outperformed domestic OEM industry courtesy its multi-segment, multi-product, multi-client exposure.

- Sales down ~4% YoY to Rs. 1,864 crore (vs. ~14% industry volume decline)

- EBITDA margins at ~9.5% were barely changed YoY. EBITDA at Rs. 177 crore

- Consolidated PAT was flattish YoY at Rs. 57.8 crore

Key triggers for future price performance

- High double digit Sales, PAT growth lies ahead with lean balance sheet and robust capital efficiency. Expect sales to grow at 20% CAGR over FY21-23E

- Growth will be led by (i) increase in wallet share with existing clients, (ii) new client additions & order wins, (iii) infra-revival related growth in cabin space

- Margins to grow to 11.5% by FY23E; PAT to post ~59% FY21-23E CAGR

- Consequent RoCE expansion on the horizon to ~17% by FY23E

- Unaffected by EV transition in the 2-W space. STL has already on-boarded Ampere, Ather Energy, Revolt, Mahindra Electric among others in the e-mobility domain with talks progressively on with Ola- Electric as well

- Trades at inexpensive valuation of ~12x P/E & ~6x EV/EBITDA (FY23E)

For details, click on the link below: Link to the report

Shares of Sandhar Technologies Ltd was last trading in BSE at Rs.291.9 as compared to the previous close of Rs. 290.1. The total number of shares traded during the day was 23323 in over 1468 trades.

The stock hit an intraday high of Rs. 299 and intraday low of 290. The net turnover during the day was Rs. 6863027.


Source: Equity Bulls

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