Sandhar Technologies IPO opens: Should you subscribe?

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The price band for the issue set at Rs 327-332 per share.

Automotive component supplier Sandhar Technologies will open its initial public offering for subscription on March 19.

Equity shares are proposed to be listed on BSE and NSE. The book running lead managers to the offer are ICICI Securities and Axis Capital.

The price band for the issue set at Rs 327-332 per share.

The issue will close on March 21. Bids can be made for a minimum lot of 45 equity shares and in multiples of 45 equity shares thereafter.

The company is the leader in the two-wheeler locking systems market, and the commercial vehicle rear view market in India, and one of the two largest companies catering to the commercial vehicle locking systems market, and the two-wheeler rear view market in India.

Brokerage: Geojit | Rating: Subscribe

The company is well positioned to capture market opportunities and benefit from the expected growth in the automobile segment in India on back of their diversified product portfolio, strong R&D and longstanding relationships with key OEMs in India & overseas.

The company plans to utilise IPO fresh issue proceeds for prepayment/repayment of all or a portion of certain borrowings availed by the company and for general corporate purposes.

Brokerage: Choice Broking | Rating: Subscribe with caution

At the higher price band of Rs 332 per share, company’s share is valued at a P/E multiple of 50.3x (to its restated FY17 EPS of Rs. 6.6), which is in-line to its peer average of 48.1x.

The company has a long-standing relationship with its major customers, which consists of 79 Indian and global OEMs namely, Hero TVS, Royal Enfield, Asoka Leyland, Caterpillar, Volvo, JCB, Honda Cars, Suzuki etc.

Brokerage: ICICIdirect

Sandhar Technologies has a diversified portfolio vis-à-vis some of its peers. Further, comparing with some of the listed entities, the company is available at PE of 51x on FY17 diluted EPS of Rs 6.5 & P/BV of ~5.6x book value of Rs 58.9/share.

It manufactures products from 29 manufacturing facilities across eight states in India, two manufacturing facilities in Spain and one manufacturing facility in Mexico.

Brokerage: Prabhudas Lilladher | Rating: Avoid

The company is looking at raising Rs 3 billion through fresh issue, while there is an additional OFS for 6.4mn shares by its private investor GTI. The post issue market cap for the company at the upper band works out to be Rs 20 billion.

At the consolidated level, the company will trade at steep valuations of 50x FY17 earnings, while at FY18E too it is expensive at 29x.

Brokerage: IIFL | Rating: Subscribe

A quality player like Sandhar would make the most of the conducive environment through credible revenue and profitability growth. We recommend subscribe for long term investors.

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