Auto suppliers play a crucial role in the automotive sector, especially in India. They support vehicle manufacturing by supplying key components. India is emerging as a major hub for auto suppliers, driving the growth of the industry. This growth is having a positive impact on the Indian market and increasing its global competitiveness.
The importance of auto components is evident in the success of companies like Sansera Engineering Limited. In this article, we present the solid order book, financial performance and business segments of Sansera Engineering Limited.
Automotive Components Industry Overview
India’s automotive component industry is experiencing strong growth, boosted by a shift in global supply chains and rising domestic demand. This sector is a major contributor to the economy, contributing 2.3% to India’s GDP and providing direct employment to over 1.5 million people.
With exports expected to reach $30 billion by FY 2026, India’s role as a global hub for auto parts sourcing is cementing. By 2026, the auto parts industry is expected to increase its contribution to GDP to 5-7% and grow to $200 billion, underscoring its importance as an engine of macroeconomic growth and in shaping India’s automotive future.
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Sansera Engineering Company Overview
Sansera Engineering was established in 1981. The company is an engineering-focused integrated manufacturer of complex and critical precision components for the automotive and non-automotive sectors. Sansera Engineering Limited has accumulated experience over the last four decades. The company has developed differentiated products and diversified across various product categories, both domestically and geographically.
Sansera Engineering Limited operates 17 integrated manufacturing facilities, including 16 plants in India and one plant in Sweden. The company manufactures forged iron and steel products. The company also manufactures and sells rocker arms, shift forks, shafts and crankshaft assemblies for the automotive and aerospace industries. Sansera Engineering Limited manufactures products essential to the manufacturing of two-wheelers, passenger cars and commercial vehicles.
In the Indian market, Sansera Engineering Limited is the largest supplier of connecting rods, rocker arms and shift forks for two-wheelers and light vehicles. In the international market, the company is also one of the top 10 suppliers of connecting rods for light vehicles and commercial vehicles.
Segment analysis
The company has diversified its broad product range into Automotive industry and non-automotive. In the automotive sector, the company manufactures and supplies a range of precision forged and machined components and assemblies such as connecting rods, rocker arms, crankshafts, shift forks, shaft components and aluminium forgings. These are used in the engine, brakes and suspension of the two-wheeler, passenger car and commercial vehicle industries.
The automotive sector (ICE) has a sales mix of two-wheelers including motorcycles (35.5%) and scooters (6.2%), passenger cars (19.4%) and commercial vehicles (10.1%) in Q1 FY25. The automotive sector (technology agnostic and EV) has a sales mix of 10.2% in technology agnostic and 6% in xEV segment in Q1 FY25.
In the non-automotive sector, the company manufactures and supplies a range of precision components for aerospace, off-road, agriculture and other segments including engineering and capital goods. The non-automotive sector has a revenue mix of aerospace and defense (3.7%), off-road (4.3%), agriculture (2.3%) and others (1.7%) in the first quarter of fiscal 2025.
The following graph shows the revenue mix of the different segments of Sansera Engineering Limited.
Financial analysis of Sansera Engineering
Looking closely at the financial analysis of Sansera Engineering Limited, the company’s revenue has grown by 19.84% from ₹2346 crore in FY23 to ₹2811.4 crore in FY24. The revenue is mainly from the top five customers, which account for 46% of the revenue and have increased by 160 basis points year-on-year.
The company has generated revenues from India (69%), Europe (18%), US (10%) and others (3%). In FY 2024, the revenue was split between Auto-ICE (76%), Auto-Tech-Agnostic & xEV (12%) and Non-Automotive (12%). The company’s revenue has been growing at a compound annual growth rate of 17.75% over the last four years.
Sansera Engineering Limited’s net profit has increased from ₹148.3 crore in FY23 to ₹187.5 crore in FY24, growing at 26.26%. The company’s net profit has been increasing over the last five years. The company’s net profit grew at a CAGR of 23.81% over the last four years. EBITDA margin has also improved year-on-year, increasing from 16.40% in FY23 to 17.10% in FY24. The company has maintained a margin of over 15% for the last five years.
Sansera Engineering Limited’s return on capital has increased from 15.30% to 17.10% in FY24. The company’s return on capital has increased over the last three years in FY22. In FY23, the return on capital has declined slightly. In the subsequent years, the company has improved the return on capital from 13.40% in FY23 to 14.70% in FY24. Sansera Engineering Limited’s debt to equity ratio has declined slightly from 0.55x in FY23 to 0.54x in FY24.
Sansera Engineering order book
Sansera Engineering Limited had a strong order book of Rs. 16.9 billion in Q1 FY 2025, up 6.29% from Rs. 15.9 billion in Q4 FY 2024. Of the total, 63% of the orders came from the global market and 37% from the domestic market.
Automotive internal combustion engine holds half of the company’s order book. In this segment, passenger cars and commercial vehicles hold 36% and two-wheelers hold 15% of the total automotive internal combustion engine. Automotive Tech Agnostic holds 17% and xEV holds 17% of the order book, making up a total of 26% of the order book. The remaining 23% of the order book is held by the non-automotive sector. In this sector, aerospace and defense holds 10% and the off-road, agricultural and other non-automotive sectors account for 13% of the order book.
From the following chart, we can understand the diversification of the company’s order book and the different time periods.
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Future plans of Sansera Engineering
- The company is investing approximately Rs 4,500 million, of which 40-45% Investment costs The focus will be on technology-independent and non-automotive segments, with the rest being auto components.
- The company will build a 4,000-ton press in fiscal 2025, which will help expand the product portfolio for higher capacity engines and produce lightweight and aluminum components.
- The company’s board will invest Rs 30 crore to expand its existing aerospace manufacturing facility with a dedicated processing unit, which will be added in mid-FY 2026 and will be fully operational by FY 2027.
- Sansera Engineering has signed a MoU with the Government of Karnataka to acquire 55 acres of land, which will be used for expansion of the company premises in the coming years.
- Sansera Engineering Limited has made a strategic investment in MMRFIC Technology Pvt. Ltd. having a transaction size of INR 200 million.
- The company has won new orders for its Swedish subsidiary, including larger connecting rods. This will improve the company’s profitability.
- Sansera Engineering Limited works in several areas including defense, surveillance and space applications. The company expects significant growth in this high-margin business segment.
- The company is focused on expanding its aluminum forging capabilities as it sees them as critical to the development of lightweight powertrains.
- The company has a strong order book of Rs 16,900 crore as of June 2024. It is targeting a compound annual growth (CAGR) of 40-50% in the aerospace and defense segments over the next two-three years.
Key financial metrics of Sansera Engineering
Some of the key financial metrics of Sansera Engineering Limited are listed below.
Target price
- Axis Direct Securities has set the target price for Sansera Engineering Limited at Rs. 1580. According to Securities, the company will achieve over 20% EBITDA margin growth in FY 2025 and FY 2026. It has also increased capital expenditure, new orders and customer additions for future growth.
- IDBI Capital Ltd. has announced a target price of Rs. 1,625. Sanseera has a strong order book and attractive valuation and growth potential. IDBI Capital expects revenue and PAT CAGRs of 17% and 35%, respectively, for the period FY24-FY27E.
- ICICI Direct Securities has set the target price for Sanseera Engineering Limited at Rs. 1570. According to the securities, the company has a solid order book capable of double-digit growth, a healthy ROCE profile and a good balance sheet. The securities also estimate margins to expand by 50 basis points for FY2025 and 100 basis points for FY2026.
Diploma
We have come to the end of the article about Sansera Engineering Limited. The company has performed well both financially and in its various segments. Sansera Engineering Limited is actively expanding in the auto accessories sector, focusing on innovative solutions and strategic investments.
The company has a solid order book of Rs 16,855 crore, which underscores its solid market position and demand for its products. This positions the company well for future growth, especially in the automotive and aerospace markets. What do you think about the future growth of Sansera Engineering Limited? Let us know in the comments below.
Written by Nikhil Naik
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