1. At a Glance
Sansera Engineering, the not-so-hidden gem in auto ancillaries, has delivered a crisp ₹217 Cr profit in FY25 while flexing its aerospace and defense contracts. Yet, with a P/E of 38x and promoter holding barely above 30%, investors are left wondering: is this a precision engine or just a high-revving hype machine?
2. Introduction
Sansera Engineering Ltd is the unsung hero of connecting rods, precision machined components, and now aerospace-grade modules. Established in 1981, it has grown from being a traditional auto-part supplier to a diversified player in aerospace, agriculture, and off-road segments. And yes, Airbus just rang the bell with a ₹1,600 Mn contract—fancy.
But under the shiny surface, cracks appear: declining promoter stake, low ROE (10.5%), and a balance sheet that has seen more debt than investors would like. At ₹1,330 per share, the market expects this firm to morph into an aerospace giant overnight. Spoiler: reality is slower than a Hero Splendor on a rainy day.
3. Business Model (WTF Do They Even Do?)
Sansera makes precision forged and machined components for:
- Automotive (majority) – connecting rods, rocker arms, crankshafts.
- Non-Automotive – aerospace, defense, agriculture, and off-road vehicles.
The company thrives on long-term supply contracts and high switching costs (you don’t casually change engine component suppliers). Aerospace is the next growth frontier, but competition and certifications make it a slow burn.
4. Financials Overview
FY25 Snapshot:
- Revenue: ₹3,017 Cr
- EBITDA: ₹515 Cr
- PAT: ₹217 Cr
- EPS: ₹34.75
- ROCE: 13.3%
- ROE: 10.5%
Fresh P/E:
CMP ₹1,330 / EPS ₹34.75 ≈ 38.2x
Margins (17% OPM) are stable, but returns are meh compared to the valuation. Debt reduced significantly (₹407 Cr vs ₹891 Cr last year), which is a relief.
5. Valuation – Fair Value Range
A. P/E Method
Peer average P/E in auto ancillaries: 25x – 30x.
- 25 × ₹34.75 = ₹870
- 30 × ₹34.75 = ₹1,040
→ Fair Range: ₹870 – ₹1,040
B. EV/EBITDA
EV/EBITDA peers trade at 16x – 20x. EBITDA ₹515 Cr.
- 16 × 515 = ₹8,240 Cr (≈ CMP)
- 20 × 515 = ₹10,300 Cr (≈ ₹1,650/share)
→ Range: ₹1,000 – ₹1,650
C. DCF
Assuming 10% FCF growth & 12% discount, fair DCF ≈ ₹950 – ₹1,100
📌 Valuation Band: ₹900 – ₹1,100 (current price above fair range)
6. What’s Cooking – News, Triggers, Drama
- Airbus Contract (Jun ’25): ₹1,600 Mn for Airborne Intensive Care Modules.
- MMRFIC Investment (Apr ’25): Strategic move into semiconductor IP development.
- QIP Issue (Oct ’24): Raised ₹1,200 Cr, equity dilution concerns.
- Credit Rating Upgrade (Feb ’25): IND AA, signaling stronger balance sheet.
- Defense & Aerospace Expansion: Multiple iDEX awards, long-term Airbus A220 supply deal.
Triggers: defense orders, export growth, debt reduction. Risks: low margins, high capex, sluggish domestic auto growth.
7. Balance Sheet – Auditor’s Comments
| Metrics | Mar 2024 | Mar 2025 |
|---|---|---|
| Assets | ₹2,793 Cr | ₹3,736 Cr |
| Borrowings | ₹891 Cr | ₹407 Cr |
| Net Worth | ₹1,348 Cr | ₹2,750 Cr |
Comment: Debt halved—impressive. Asset base up 34%. But increasing equity (QIP) dilutes old shareholders. Auditor’s verdict: “Stable, but keep an eye on cash burn.”
8. Cash Flow – Sab Number Game Hai
| Year | Ops CF | Inv CF | Fin CF | Net CF |
|---|---|---|---|---|
| FY23 | ₹256 Cr | -₹239 Cr | -₹6 Cr | ₹11 Cr |
| FY24 | ₹374 Cr | -₹367 Cr | -₹8 Cr | -₹1 Cr |
| FY25 | ₹377 Cr | -₹955 Cr | ₹583 Cr | ₹5 Cr |
Comment: Ops cash is solid. Massive capex in FY25 (-₹955 Cr) shows aggressive expansion. Fin CF inflow from QIP saved the day. Cash still positive, barely.
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 10.5% |
| ROCE | 13.3% |
| P/E | 38x |
| PAT % | 7.2% |
| D/E | 0.15 |
Comment: Low returns, high valuation = stress. ROE < 12% doesn’t justify a 38x multiple.
10. P&L Breakdown – Show Me the Money
| Year | Revenue | EBITDA | PAT |
|---|---|---|---|
| FY23 | ₹2,811 | ₹482 | ₹188 |
| FY24 | ₹3,017 | ₹515 | ₹217 |
Growth? Yes. But nothing screaming “buy me at 38x.”
11. Peer Comparison
| Company | Revenue | PAT | P/E |
|---|---|---|---|
| Bharat Forge | ₹15,123 | ₹923 | 59x |
| Endurance | ₹11,561 | ₹782 | 44x |
| Schaeffler | ₹8,547 | ₹1,058 | 61x |
| Sansera | ₹3,017 | ₹217 | 38x |
Comment: Sansera is smaller than peers but trades at nearly the same P/E as industry leaders. Premium without the leadership? Questionable.
12. Miscellaneous – Shareholding, Promoters
| Holder | Jun ’25 |
|---|---|
| Promoters | 30.34% |
| FIIs | 19.53% |
| DIIs | 36.88% |
| Public | 13.18% |
Comment: Promoter holding is worryingly low and has been declining. Institutions hold the wheel—retail investors better buckle up.
13. EduInvesting Verdict™
Sansera Engineering is a solid company making precision parts and precision moves into aerospace and defense. Debt halved, margins stable, Airbus orders in the bag. The diversification away from autos is a smart move—defense and aerospace bring higher margins and prestige.
Strengths
- Diversified portfolio: auto + aerospace + defense.
- Strong order book & exports.
- Debt reduction & credit rating upgrades.
Weaknesses
- Low ROE/ROCE for current valuation.
- Promoter stake only 30%.
- High equity dilution via QIP.
Opportunities
- Aerospace & defense expansion (Airbus deals).
- Rising global demand for precision components.
- Strategic investments in semiconductor tech.
Threats
- Cyclical auto sector.
- Capex-heavy growth impacting cash flows.
- High P/E leaves no margin for error.
📌 Final Word:
Sansera is a precision manufacturer with a promising future, but the present valuation already bakes in a lot of optimism. Unless earnings growth accelerates beyond 20% YoY consistently, the 38x P/E looks frosty. A great business? Yes. A great buy at ₹1,330? Maybe only if Airbus keeps calling.
Written by EduInvesting Team | 2 August 2025
SEO Tags: Sansera Engineering Ltd, Auto Components, Aerospace Expansion, Airbus Contract, Sansera Stock Analysis
