IPO Note: Sandhar Technologies Ltd - SUBSCRIBE - Kotak

- STL is a 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. STL is the leader in the two-wheeler locking systems market and the commercial vehicle rear view market in India, STL is one of the two largest companies catering to the commercial vehicle locking systems market and the two-wheeler rear view market in India. STL is also one of the two largest manufacturers of operator cabins in India, along with being the largest player in the excavator cabins market. Company's customer portfolio consists of 79 Indian and global OEMs across various segments.

- STL's product portfolio comprises safety and security systems such as lock assemblies, mirror assemblies, operator cabins for off-highway vehicles, aluminium spools, spindles, and hubs. It also manufactures 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 has entered into six joint venture arrangements. STL has 29 manufacturing facilities in India, two manufacturing facilities in Spain and one manufacturing facility in Mexico.

- 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.

Source : Equity Bulls

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