Sandhar Technologies Limited - IPO Note - 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.

Diversified product portfolio: Sandhar'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. Further, Snadhar also manufactures other product s including wheel assemblies, handle bar assemblies, brake panel assemblies, sheet metal components such as fuel filler caps, fuel cock assembly, etc.

Relationships with major OEMs in India and overseas: Sandhar has a relationship with 79 OEMs across India, eastern and western Europe and NAFTA regions. Moreover, Sandhar supplies various product s to global automotive component suppliers such as Autoliv, Bosch and CTS. The company's prominent customers are Hero, TVS, Royal Enfield, Honda etc.

Strong focus on R&D: Sandhar has a modern and advanced technology through in-house research and development activities, joint ventures and technical collaborations. The company's R&D team of 31 engineers are currently working on the development of new products, designing, prototyping and product upgrades.

Manufacturing locations in close proximity to automobile hubs: Sandhar has 31 manufacturing facilities in India, 2 in Spain, 1 in Mexico and 5 manufacturing facilities are in the process of commissioning. All the plants are located near the OEMs, which could cater to the demand easily.

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 rating.

Source : Equity Bulls

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