This post on Sandhar Technologies Limited IPO tries to bring out consolidated brokerage views , Grey Market Premium, Anchor Investor, Subscription information. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Sandhar Technologies Limited or not.
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Sandhar Technologies Limited IPO: Grey Market Premium etc.
19/03/18 Grey Market Premium Rs. NIL Kostak: NIL
Anchor Investors (AIs) portion portion in the Public Issue of Sandhar Technologies Limited 46,30,842 equity shares have been subscribed today by 15 AIs at Rs. 332/- per equity share. The anchor investors include DSP BlackRock Small Cap Fund, ICICI Prudential Indo Asia Equity Fund, SBI Equity Savings Fund, IDFC Tax Advantage Fund, Theleme Master Fund, Aurigin Master Fund etc.
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Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Sandhar Technologies Limited IPO .
Angel Broking: “Sandhar Technologies Ltd. is one of the leading auto component suppliers for safety and security systems such as lock assemblies, mirror assemblies, operator cabins for 2W, PV and off-highway vehicles. Currently, 2W, PV & CV and off highway contribute ~58%, 30%, and 9% respectively to its revenue. The company has 21 product categories and 31 manufacturing facilities in India, 2 in Spain, 1 in Mexico and 5 are in the process of getting commissioned in India. Outlook & Valuation: Sandhar is continuously diversifying its product portfolio and expanding its customer base by offering high value added products and focusing on exports. In terms of valuations, the pre-issue P/E works out to 25x 1HFY2018 annualized earnings (at the upper end of the issue price band), which is lower compared to its closest peer Minda Corporation (trading at 30x its 1HFY2018 annualized earnings). Hence, considering the above positive factors, better ROE profile and reasonable valuations, we recommend SUBSCRIBE on the issue.”
Capital Market: ” Score 45/100, The diluted equity share capital of the company at upper price band of Rs 332 stands at Rs 60.19 crore of face value of Rs 10. This gives an EPS of Rs 6.5 for FY 2017. The P/E on FY 2017 earnings works out to 51.”
IDBI Capital: “STL has consistently maintained its profitability in last 5 years and EBITDA margin at ~9%, due to strong operations and focus on profitable customers. We believe high dependence on 2W segment, failure of upcoming product would be major concerns for earnings. We believe future valuation upgrades will be dependent on strong balance sheet, free cash flow and quality of earnings improvement. We believe more value added products and lower finance cost would certainly boost the earnings in coming years. At the upper price band of Rs332, STL would trade at PER of 29x FY18.“
Kotak : “At the higher end of of the issue price of Rs 332per share, the stock (post ipo dilution) is being offered at 29.2x 1HFY18 annualized earnings. In the past two years, the auto component segment in India has witnessed significant re-rating. STL operates in various product categories with the auto components segment and thereby have different competitors in different segment. Some of listed competitors are Minda Corporation, FIEM Industries and Endurance Technologies. In view of new growth opportunities, expected reduction in debt (IPO proceeds will be used) and reasonable valuation, we advise investors to SUBSCRIBE to the issue.”
Prabhudas Liladhar: “At the consolidated level, the company will trade at steep valuations of 50x FY17 earnings, while at FY18E too it is expensive at ~29x. Its closest competitors, Minda Corp and Minda Industries, are currently trading at 26x and 40x FY18E, respectively. Given the expensive valuations, low quality business, volatile past performance, high customer concentration (HMCL forms ~30% of revenues) and unconvincing story, we recommend ‘Avoid’.”
SMC : “Rating 2.5/5 Considering the P/E valuation on the upper end of the price band of Rs. 275, the stock is priced at pre issue P/E of 29x on its projected annualised FY18 EPS of Rs. 9.48. Post issue, the stock is priced at a P/E of 39.97x on its EPS of Rs. 6.88. Looking at the P/B ratio at Rs.275 the stock is priced at P/B ratio of 5.41x on the pre issue book value of Rs.50.83. and on the post issue book value of Rs. 42.32 the P/B comes out to 6.82x”
SP Tulsiyan website: “Company has the old world charm of a PSU (3% dividend yield + sovereign trust), coupled with enormous potential indigenous defence companies hold. However, short term triggers depend on H2FY18 financial performance. Hence, those considering the IPO with a short term view may give it a miss. However, since defence sector holds a lot of potential, it will be incorrect to rule out this company ab initio. And for long term investors, we advise to consider the IPO.“
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.