125% Dividends:Smallcap Auto Stock Hits New 52-Week High; More Opportunity To Buy?

Smallcap automobile stock, Sansera Engineering has shifted gears for multiple opportunities. The stock is attractive to buy on the back of pioneering precision for over four decades, and a robust order book. The stock has also paid hefty dividends in 2023. In the latest coverage, brokerages like Antique Stock Broking and Axis Securities have recommended buy on Sansera for a target price of Rs 1,155 and Rs 1,210 apiece. Up to 22% potential upside is seen in the stock ahead.

Last week, on Friday, Sansera touched a new 52-week high of Rs 992.65 apiece, up by 0.91% on BSE with a market cap of Rs 5,319.19 crore. The key factor on this day was that Sansera also touched its new 52-week high of Rs 1,046.05 apiece before correcting. {image-stocks6001-1703446946.jpg www.goodreturns.in

In the trading week from December 18th to 22nd, Sansera shares ended with an upside of nearly 5%. YTD, the stock has gained by a massive 26%.

Sansera also paid dividends up to 125% amounting to Rs 2.5 per share in 2023. Its dividend yield is at 0.25%.

Sansera Engineerings Target Price Ahead:

In its research note, Antique Stock Broking said, "We initiate coverage on Sansera Engineering (SANSERA) with a BUY rating and a target price of Rs 1,155 at a PE of 18x FY26E EPS. The company is an integrated player engaged in the manufacturing of various critical components and precision engine-forged components for 4Ws, 2Ws, and CVs. It also manufactures components for the aerospace, defence, and EV industries."

Antique's note also said, "The company has a strong order book of ~INR 19.3 bn as of 2QFY24. Of which ~52% is from tech-agnostic, xEV & non-auto segments, which we believe should drive strong topline growth going ahead and outperform industry growth. Our positive stance on the company is underpinned by 1) Its strong engineering capabilities enabling it to expand the addressable market both in terms of product offering and geographic presence, 2) Cashing in on large non-auto opportunities, 3) Consistent organic growth outpacing peers, 4) Improving product mix to drive profitability, and 5) An improving financial profile."

Further, the brokerage's note said, "We build in revenue growth of 19% over FY23-26E led by the addition of component clients, recovery in the 2W segment, and rising vehicle content driven by premiumization. We are assuming a margin of ~17.7% for FY25/ 26, further driving PAT growth of 32% CAGR over FY23-26E. We also build in RoE/ RoCE of 19%/ 20.2% in FY26 against 13.3%/ 14.3% in FY23. We believe that the current PE of 15x FY26E EPS is constrained by high exposure (77%) to ICE engine-related components. However, we also note that the share of ICE engine-related components is expected to decline to ~65% in FY26."

Meanwhile, in its latest note, Axis Securities said, "We initiate coverage on Sansera Engineering Ltd (Sansera) with a BUY recommendation and price target of Rs 1,210/share, implying an upside of 26% from the CMP. We expect the company to generate strong operating cash flows driven by (i) Strong product pipeline, (ii) Higher sales mix in Non-Auto ICE components, (iii) Higher exports, (iv) Management's unwavering focus on improving margin trends, and (v) Execution Capabilities. We believe these traits will be value-accretive for the company's bottom line."

Moreover, Axis' note added, "We believe Sansera will continue to source its Capex funding of ~Rs 200-250 crore annually from its robust internal operating cash flows over FY24-26E."

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.