Sansera Engineering Ltd Share Price – NSE  /  BSE

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The agency has reaffirmed its short-term rating on the credit facilities of Sansera at ‘[ICRA] A1+’.

ICRA said that the reaffirmation of ratings factors in the continued strong operating performance of Sansera Engineering, aided by an established market position in the precision forged and machined components space, wherein the company caters primarily to the automotive segment (which drove approximately 88.0% of itsrevenues in 9M FY2024, including 12% from electric vehicles and tech-agnostic components).

The rating action also considersthe steady growth in the company’s scale, driven by improving domestic demand as well as its forays into newer product segments, which is likely to ensure a diversified growth over the medium to long term.

The impending electrification of the automotive industry is expected have a bearing on the company’s revenues over the medium term. Currently, Sansera derives approximately 76% of its revenue from engine and transmission components for the auto internal combustion engine (ICE) segment.

While the transition to electric vehicles (EVs) is expected to be very gradual in the passenger vehicle (PV) and motorcycle segments, the threat is higher in the scooter segment, which currently accounts for approximately 6% of the company’s revenues.

To mitigate the risk of impending EV transition, Sansera has been focused on diversifying into the non-automotive and auto-tech agnostic/ EV segments. The company has been able to secure orders from reputed customers in the EV segment, whose revenue share increased to 4.5% in 9M FY2024 from 0.4% in FY2022.

As of 31 December 2023, approximately 53% of the company’s order book came from the non-automotive, and auto-tech agnostic and EV segments. Moreover, most of the planned capex is likely to be allocated towards these segments, which is expected to augur well for the company as the industry transitions increasingly towards EVs.

The rating strengths are partially offset by moderate customer concentration risk, with the company’s top five clients generating approximately 48% of Sansera’s revenues in 9M FY2024 (52.4% in FY2023 and 53.9% in FY2022), and the inherent cyclicality in the auto components industry.

During 9M FY2024, the company’s international sales improved by 35% on a YoY basis, with sales in the US market improving by about 73% during the same period, indicating revival of demand and sentiments, although the subdued performance in Sansera’s Sweden facility and recessionary fears remain a concern.

Sansera Engineering is primarily engaged in the machining of precision engine forged components for the automotive (2Ws and 4Ws) and non-automotive sectors (aerospace, agriculture). The company also manufactures connecting rods for medium and heavy commercial vehicles.

The scrip shed 0.10% to currently trade at Rs 1008.85 on the BSE.

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Net profit of Sansera Engineering rose 54.64% to Rs 48.00 crore in the quarter ended December 2023 as against Rs 31.04 crore during the previous quarter ended December 2022. Sales rose 27.34% to Rs 712.64 crore in the quarter ended December 2023 as against Rs 559.64 crore during the previous quarter ended December 2022.

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Sansera Engineering has allotted 2,59,138 equity shares under ESOP on 13 December 2023.

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Net profit of Sansera Engineering rose 2.33% to Rs 46.97 crore in the quarter ended September 2023 as against Rs 45.90 crore during the previous quarter ended September 2022. Sales rose 9.34% to Rs 692.88 crore in the quarter ended September 2023 as against Rs 633.71 crore during the previous quarter ended September 2022.

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