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BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
SANDHAR TECHNOLOGIES LTD
IPO Report
Issue Date 19th Mar-21st Mar 2018
Price Band 327-332/Share
Bid Lot 45 & in multiplethereof
Face Value Rs 10/Share
Listing BSE, NSE
Offer For Sale 64,00,000 Eq Shares
Fresh Issue Rs 300 Cr
Pre Issue Eq Shares 5.12 Cr Eq Shares
Post Issue Eq Shares 6.02 Cr Eq shares*
BRLM ICICI Securities Ltd, Axis
Capital Ltd
Registrar Link Intime India
Private Ltd
Note * Calculated @ Upper Price Band of Rs 332/ Share
Research Analyst : Astha Jain
IPO Details
Co is the leader in the two-wheeler locking systems market, and the
commercial vehicle rear view market in India, and is one of the two largest
companies catering to the commercial vehicle locking systems market, and
the two wheeler rear view market in India. Co is also one of the two largest
manufacturers of operator cabins in India, along with being the largest
player in the excavator cabins market (Source: CRISIL Report). Co’s business
involves designing and manufacturing a diverse range of automotive
components, parts and systems, driven by technology, process, people and
governance.
Long-standing, and growing relationships with major OEMs :Co have
long-standing relationships with 79 Indian and global OEM customers,
which include some leading companies such as Ashok Leyland, Doosan
Bobcat, Escorts, Hero, Honda Cars, Komatsu, Scania, TAFE, Tata Motors, TVS,
UM Lohia, and Volvo. Co have grown its client base over the last few years to
include OEMs such as Caterpillar, CTS, Hyundai Construction, International
Tractors, JCB, Kobelco, Mahindra & Mahindra, and SML Isuzu.
Joint Ventures & Collaborations : Co currently have six Joint Ventures
which manufacture products such as high precision press parts, insert
moulded contact plates, AVN panels, and switches. In addition to co’s joint
ventures, co have also entered into technical collaborations, inter alia, with:
(i) Honda Lock for availing technical advice from Honda Lock in relation to
door mirrors, outside door handles, and key sets for automobiles and
motorcycles, and (ii) JEM Techno for availing technical advice from JEM
Techno in relation to relays used in automobiles. Co have also collaborated
with leading international players for development of parking assistant
systems, fuel filters, fuel modules, starter motors and shark-finned antennas
Valuation
Co is bringing the issue at p/e multiple of 28.7-29.19 on post issue H1FY18
annualized eps at price band of Rs 327-332/share. Co with its long-standing,
and growing relationships with major OEMs has diversified product
portfolio along with in-house research and development, design capability
and technical collaborations. Looking after strong fundamentals of company,
we recommend “Subscribe” to issue.
▪ Experienced and strong management team backed by good governance
standards
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SANDHAR TECHNOLOGIES LTD
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
www.hemsecurities.com
Company Overview
Co is a customer centric component supplier primarily catering to automotive OEMs and largely
focused on safety and security systems of vehicles with a pan India presence and a growing
international footprint. Co’s business involves designing and manufacturing a diverse range of
automotive components, parts and systems, driven by technology, process, people and governance.
Presently, co manufacture 21 categories of products, including such product categories that are
manufactured through its subsidiaries and Joint Ventures, which cater to different industry segments.
Co’s portfolio comprises various categories of products including safety and security systems such as
lock assemblies, mirror assemblies, operator cabins for off-highway vehicles, aluminium spools,
spindles, and hubs. Co also manufacture other product categories including wheel assemblies, handle
bar assemblies, brake panel assemblies, sheet metal components such as fuel filler caps, fuel cock
assembly, step pillions, tools, dies, moulds, other aluminium components, crane and tractor parts,
plastic and painted parts such as door handles (inner and outer), panels for televisions, and cabinets
for air conditioners.
Company manufacture its products from 31 manufacturing facilities across eight states in India, two
manufacturing facilities in Spain, and one manufacturing facility in Mexico. This apart, co also have an
overseas assembly and packaging centre located in Poland. Further, through SCID, co’s research and
development activities are undertaken at Gurugram, Haryana. Co’s customer portfolio consists of 79
Indian and global OEMs across various segments, including those indicated in the table below:
Segment Total No of OEM Customers Key OEM Customers Two -Wheelers
9
Hero TVS Royal Enfield Suzuki UM Lohia
Passenger Vehicles 21 Honda Cars Passenger Vehicles & Commercial Vehicles
Tata Motors Ashok Leyland
Commercial Vehicles Scania SML Isuzu
Commercial vehicles, Off -Highway Vehicles & Tractors
34
Atlas Copco Caterpillar Doosan Bobcat Escorts Hyundai Construction International Tractors HCB Kobelco Komatsu LeeBoy India Mahindra & Mahindra Potain India Tata Hitachi Tafe Volvo
Non- Automotive 15 Forza Medi
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SANDHAR TECHNOLOGIES LTD
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www.hemsecurities.com
Investment Rationale
Experienced and strong management team backed by good governance standards
Co have a well – qualified management team that has significant experience in all aspects of its
business. Co’s management team is led by its Promoter, Jayant Davar, who serves as Co-Chairman
and Managing Director. He is a mechanical engineer with 30 years of experience in the industry of
auto components. With substantial industry, operational, and financial experience, co’s
management has led the expansion of its operations from four manufacturing facilities in India as
on March 31, 2005, to 31 manufacturing facilities in India, two manufacturing facilities in Spain,
and one manufacturing facility in Mexico, as on the date.
Diversified product portfolio
Co’s portfolio comprises various categories of products including safety and security systems such
as lock assemblies, mirror assemblies, operator cabins for off-highway vehicles, aluminium spools,
spindles, and hubs. Co also manufacture other product categories including wheel assemblies,
handle bar assemblies, brake panel assemblies, sheet metal components such as fuel filler caps,
fuel cock assembly, step pillions, tools, dies, moulds, other aluminium components, crane and
tractor parts, plastic and painted parts such as door handles (inner and outer), panels for
televisions, and cabinets for air conditioners
Production facilities close to its customers based on co’s philosophy – ‘Be Glocal’
Co’s constant strategy has been to invest in locations close to its OEM customers’ plants, which
has been a key factor in aiding a strong relationship with co’s OEM customers. Co’s manufacturing
facilities are in close proximity to its OEM customers’ plants in all key auto-clusters in India. For
example, co’s manufacturing facilities at Gurugram, Chennai, and Bengaluru are close to plants of
Hero, Royal Enfield, and TVS, respectively. Further, in line with its philosophy of being ‘Glocal’, co
have manufacturing facilities in Mexico and Spain, and an assembly and packaging centre in
Poland, to cater to customers in western Europe, eastern Europe and NAFTA markets. Co’s
presence in all key auto-clusters in India allows to optimise its deliveries to its customers and
facilitates greater interaction with its customers by enabling co to respond to their requirements
in a timely manner.
Risk Factors
Co depend on a limited number of customers for a significant portion of its revenues. The loss of a
major customer or significant reduction in production and sales of, or demand for co’s products
from its major customers may adversely affect co’s business, financial condition, results of
operations and prospects.
For Private Circulation only HEM RESEARCH
SANDHAR TECHNOLOGIES LTD
BROKING | DEPOSITORY | DISTRIBUTION | FINANCIAL ADVISORY|MERCHANT BANKING
www.hemsecurities.com
Objects of Offer
Offer For Sale
Company will not receive any proceeds from the Offer for Sale.
Fresh Issue
Company proposes to utilise the Net Proceeds from the Fresh Issue towards:
• Repayment or prepayment in full, or in part of certain loans availed by company worth of
Rs 225 Cr
• General corporate purposes
Financial Statements
Rs Cr
Particulars FY15 FY16 FY17 H1FY18 Total Income 1482.05 1513.22 1626.87 989.41 Operating Exp 1342.90 1371.91 1481.06 887.03 EBIDTA 139.15 141.31 145.81 102.38 EBIDTA Margin (%) 9.39 9.34 8.96 10.35 Other Income 5.29 4.67 6.66 1.19 Depreciation 52.37 55.15 60.28 33.67 EBIT 92.07 90.83 92.20 69.90 Interest 40.67 41.87 42.24 19.80 PBT 51.40 48.97 49.95 50.10 E/O Item 0.00 3.74 0.51 0.00 PBT After E/O Item 51.40 45.22 49.45 50.10 Tax 13.03 11.47 9.89 15.52 PAT 38.68 33.75 39.56 34.57 Other Comp Inc 0.12 0.30 0.37 0.34 Adjusted PAT 38.26 33.45 39.19 34.23 NPM(%) 2.58 2.21 2.41 3.46 Eq Capital 10.23 51.16 51.16 51.16 Res & Surplus 248.97 222.48 250.182 279.57 Net Worth 259.20 273.63 301.33 330.72 Eq Shares ( In No) 102 5.12 5.12 5.12 EPS 37.40 6.54 7.66 6.69 ROE (%) 14.76 12.22 13.01 10.35 ROCE (%) 9.05 8.26 7.20 6.83 Book Value 253.37 53.49 58.91 64.65
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Sebi Registration No For Research Analyst: INH100002250
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