Sandhar Technologies Ltd. share price target

We initiate coverage on Sandhar Technologies (STL) with BUY and TP of Rs825 (implying 51% upside), based on 20x Dec-27E PER (in line with the LTA). STL has been through a deep capacity build-out phase (over FY21-25) via both organic and inorganic routes.

Consolidated EBITDA de-grew 44% to Rs 389mn with margin of 9.5% (230bps YoY) due to negative operating leverage. We believe Sandhar would be a key beneficiary of quicker recovery in 2W led by rise in rural demand. 2W contributes 60% of overall revenue and major revenue comes from Hero and TVS Motors. Performance of the Barcelona subsidiary has improved in FY20. Revenue remain flat YoY and EBITDA margin improved to 12.7% (vs...

India Business to become Debt Free in FY21: During Q2FY20, Sandhars sales declined by 20 percent YoY to Rs4.3bn

India Business to become Debt Free in FY21: During Q2FY20, Sandhar s sales declined by 20 percent YoY to Rs 4.3bn (below our estimates Rs4.6bn).

Industry Outperformance to continue BUY: During FY19 Sandhar reported 20% sales growth and 47.2% PAT growth. This growth is primarily driven by strong ramp up in Off highway Operator Cabins Business and 2W business segment (primarily for TVS and Hero Motocorp).

Business Momentum to Pick Up Maintain BUY: Sandhar Continues to deliver strong operating performance with 19.8% salesgrowth during 9MFY19 which is much faster than its OEM clients.

Profit Set to More Than double over FY18-20E: Post Q2FY19, we had an interaction with the Sandhar management. We continue to believe in the robust growth prospects for Sandhar in the medium term. We retain our earnings estimates for FY19 and FY20 and reiterate BUY rating on the stock with revised price target of Rs420 (PER of 16xFY20E). Following are the key takeaways.

Incorporated in 1987, a Gurgaon based company, Sandhar Technologies (Sandhar) has been promoted by a first-generation entrepreneur, Jayant Davar, Co-Chairman and Managing Director of the company, who has 30 years of experience in the OEM component manufacturing industry. Sandhar is a component supplier primarily catering to automotive OEMs and is largely focused on safety and security systems of vehicles with a pan-India and growing international presence. Sandhar commenced operations as a sheet metal product supplier to Hero Honda & has steadily diversified into locks, automotive mirrors, handles, zinc and aluminium PDC,...

Entry into high growth phase Maintain BUY: During FY18, Sandhar Technologies (Sandhar) sales grew by 20.8% to Rs19.5bn (our estimates of Rs19.4bn), driven by strong volume growth across all its business segments. Its EBITDA margins expanded by 160ps to 10.7% (in line with our estimates). PAT increased by 55.8% YoY to Rs662mn (our estimates of Rs 685mn).

Sandhar technologies Ltd (STL) 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. STL is the leader in the two-wheeler locking systems market and the commercial vehicle rear view market in India. Currently, company has a well-diversified product portfolio with a pan India presence and a growing international footprint. STL primarily caters auto-components to 79 Indian and global key automotive OEMs including Hero, TVS, RE, Suzuki, M&M;, Bosch, CTS etc. As on H1FY18, the...

IPO NOTE

and systems, driven by technology, process, people and governance. Company's customer portfolio consists of 79 Indian and global OEMs across various segments. As of December 31, 2017, the company had a total work force of 7,426 individuals comprising of...

Incorporated on Oct 19, 1987, Sandhar Technologies Ltd (STL) commenced operations as a supplier to Hero for sheet metal components promoted by a first-generation entrepreneur, Mr. Jayant Davar, Co-Chairman and MD who has 30 years experience in the Original Equipment Manufacturer (OEM) component manufacturing industry. Currently, the company's main business includes manufacturing 21 categories of products and components including locks, mirror assembly, wheel assembly, sheet metals and aluminum components. They cater their products to various industries mainly focused on the automobile industry. Having headquartered in Haryana, Gurugram, operating through its 4 subsidiaries and joint ventures, the manufacturing units are located mostly in North, South and West India in close proximity to its 79 costumers including Hero, TVS and Royal Enfield. Till date, the company has...

STL manufactures 21 categories of products & caters to different automotive segments like 2-W, PV, CV, off-highway vehicles and tractors, as well as nonautomotive segments including medical & electrical equipment. Through its six joint ventures, STL also manufactures products like high precision press parts, insert moulded contact plates, AVN panels and switches. It manufactures products from 29 manufacturing facilities across eight states in India, two manufacturing facilities in Spain and one manufacturing facility in Mexico. The company has a long-standing relationship with some of its major OEMs and is one of the most significant factors contributing to its growth. Its...

Building blocks in place for next phase of upsurge We attended the IPO meet of Sandhar Technologies Limited (STL), one of the leading manufacturers of two wheelers locking systems and commercial vehicle rear view market in India. Overall STL present in ~21 product categories such as wheel assembly, sheet metal components, aluminum components etc. and catering to various industry segments. Currently it has 31 manufacturing facilities in India, 2 in Spain, 1 in Mexico, and 5 in the process of getting commissioned in India. It also has 6 Joint Ventures with: 1) JBM Auto, 2) Han Sung, 3) Jinyoung Electro-Mechanics, 4) DMRG and Tarun Agrawal,...

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..

IPO Note - Sandhar Technologies Limited Issue Open: Mar 19 - Mar 21, 2018, Price Band: Rs 327 - 332