Dolat Capital Market has given Buy recommendation for Sandhar Technologies with a target price of Rs. 396 in its research report issued on Feb 17, 2021

Dolat Capital Market’s research report on Sandhar Technologies

Sandhar reported strong EBITDA growth (+38% YoY) led by strong operating leverage, cost control measures and healthy subsidiary performance. Consolidated revenue grew 23.5% YoY led by strong growth in Cabin and Fabrication, Sheet Metal and ADC business. Recovery in 2W volume, pick up in infra and construction business, strong traction in ADC business, exponential growth in aftermarket and increase in content per vehicle are key earning drivers in the near to medium term. For Vision and Locking systems, increasing presence in the scooter segment, winning new business with improving share of high value products and premiumization to aid revenue growth and margin expansion. The company has received orders for mirrors for newly launched RE Meteor and TVS Motors. ADC business is also showing impressive recovery led by addition of new components and several new clienteles in the domestic 2Ws. Sandhar is increasing its presence in 4W segment and is under process of cementing business with leading 4W OEMs in the domestic market. This will help the company diversify and de-risk its revenue concentration from 2Ws. Cabin and fabrication business has seen sharp recovery in Q3FY21 (+54% YoY) led by pick up in infra and construction activities and new business orders from Hyundai Constructions and Samy Constructions. In the Assembly segment as well, company is increasing its SOB from RE and TVS and has procured orders from leading 4W players. The international subsidiaries are also witnessing sharp improvement Topline grew 7.4% YoY to Rs 832mn with margin expansion of 360bps to 14.3%. Management expects healthy order growth for the Barcelona subsidiary. Bosch (one of their largest customers) has awarded new business in Romania which will attribute to incremental revenues of Euro 10mn over 2 years with healthy margins of +20%.


We anticipate a 58% EPS CAGR over FY21-23E and maintain our Buy rating with a TP of Rs 396 (18x FY23E EPS).