0.24% Dividend Yield: This Midcap Auto Ancillary Stock Soars After Brokerages Give 'BUY' Call; Do You Own?

Sansera Engineering Ltd witnessed a surge in its share prices, climbing nearly 2% to reach Rs 1,055.20 per share as of 11:20 am on the National Stock Exchange (NSE). This upswing follows the 'BUY' rating assigned to the company by Indian brokerage firm LKP Securities. LKP Securities projects a 21% upside potential for Sansera Engineering in the next 12 months, setting a target price of Rs 1,251 per share.

Analysts at LKP Securities have expressed optimism about Sansera Engineering, citing its diversified portfolio and robust order book. The company, with a market capitalization of Rs 5,559.53 Crore, operates in the Auto Ancillaries sector, specializing in critical components for various industries including automotive, aerospace, defence, and electric vehicles.

Sansera Engineering boasts a strong order book of approximately Rs 20.4 billion as of the third quarter of FY24. Significantly, 53% of these orders stem from tech-agnostic, xEV, and non-auto segments, indicating a promising avenue for sustained growth. LKP Securities predicts a revenue growth of 19% over the period of FY23-26E, driven by expanding clientele, recovery in the two-wheeler segment, and increased vehicle content spurred by premiumization.

In their comprehensive report, analysts at LKP Securities forecast a PAT (Profit After Tax) growth of 32% CAGR over FY23-26E, underpinned by a projected margin of 18% for FY26. The company aims to enhance its Return on Equity (RoE) and Return on Capital Employed (RoCE) to approximately 22% and 20%, respectively, by FY26.

Furthermore, Sansera Engineering has secured new orders worth around Rs 2,000 crore, a record-breaking achievement for the company. Notably, 59% of these orders originate from global clients, reflecting its global competitiveness. With a significant portion of orders derived from auto tech-agnostic and non-auto sectors, Sansera Engineering is poised to surpass industry growth expectations.

Financially, Sansera Engineering reported a Consolidated Total Income of Rs 713.95 Crore for the quarter ended 31-12-2023, marking a 2.89% increase from the previous quarter and a notable 26.60% surge compared to the same quarter last year. The company recorded a net profit after tax of Rs 48.37 Crore in the latest quarter, indicating a healthy financial performance.

Promoters hold a 35.05% stake in Sansera Engineering as of 31st December of 2023, with Foreign Institutional Investors (FIIs) owning 22.73% and Domestic Institutional Investors (DIIs) holding 28.22%. The stock has exhibited significant growth, with a notable uptick of over 45% in the last year and 13.50% in the last month.

Moreover, Sansera Engineering declared an equity dividend of 125.00% amounting to Rs 2.5 per share for the year ending March 2023, resulting in a dividend yield of 0.24% at the current share price of Rs 1,060.00.