S.J.S. Enterprises Limited incorporated in June 10, 1987, is one of the leading players in the Indian decorative aesthetics industry in terms of revenue as at March 31, 2021. The company is a “design-to delivery” aesthetics solutions provider with the ability to design, develop and manufacture a diverse product portfolio for a wide range of customers primarily in the automotive and consumer appliance industries. SJS also manufactures a wide range of aesthetics products that cater to the requirements of the commercial vehicles, medical devices, farm equipment and sanitary ware industries.
SJS manufactures their products from modern manufacturing facilities located in Bengaluru and Pune in India, with the facility in Pune acquired as part of the recent acquisition of their Subsidiary. The company supplied over 115 million parts with more than 6,000 SKUs in Fiscal 2021 to around 170 customers in approximately 90 cities across 20 countries. In FY 2021, the company and its subsidiary produced 91.94 million and 15.60 million products, respectively
Promoters & Shareholding:
Evergraph Holdings Pte. Ltd and K.A Joseph are the company promoters.
|Pre Issue Share Holding||98.86%|
|POst Issue SHare Holding||50.37%|
Public Issue Details:
Offer for sale: OFS of approx. 19,132,653 equity shares of Rs. 10 aggregating up to Rs. 800 Cr.
Total IPO Size: Rs. 800 Cr.
Price band: Rs. 531 – Rs. 542.
Objective: To carry out the offer for sale of equity shares by the selling shareholders.
Bid qty: minimum of 27 shares (1 lot) for Rs. 14,634 and maximum of 13 lots.
Offer period: 1st Nov 2021 – 3rd Nov 2021.
Date of listing: 15th Nov 2021.
- One of the leading players in the Indian decorative aesthetics industry in terms of revenue.
- Strong manufacturing capabilities supported by an established supply chain and delivery mechanism.
- Professional and experienced management team.
- Strong innovation and product design and development capabilities.
- SJS has developed long-standing relationships with several key customers.
- Strong financial performance.
- The company depends significantly on customers in the automotive industry and consumer appliance industry.
- It does not have long term contracts or exclusive arrangements with any of its suppliers.
- It is exposed to counter party credit risk.
- The cyclical and seasonal nature of automotive sales and production could adversely affect its business.
- 24% of its revenue is from a single customer
Subscribe or avoid?
Sectorial outlook – Production of passenger vehicles (“PVs”) in India increased at a CAGR of 5.20% between Fiscals 2016 and 2019 due to an increase in domestic and exports demand. PV production is expected to increase at a CAGR of 10% to 12% from Fiscal 2021 to 2026. CRISIL Research estimates the size of the decorative aesthetic market in India catering to OEMs at approximately ₹19.9 billion in Fiscal 2021. The demand for decorative aesthetics was approximately ₹22.6 billion in Fiscal 2020 and this is expected have positive impact on the company and its business as the Indian two wheeler and PV segment continues to grow.
The financials (revenue and net profit) are shown in graph below:
Valuation – For the last 3 years average EPS is Rs. 14.42 and the P/E is around 37.6x. On the upper price band of Rs 163 and EPS of Rs. 15.69 for FY21, the P/E ratio works out to be 34.5x. There are no listed peers.
Since the company is asking P/E for 2021 is between 37.6x and 34.5x, the listing does not seem to offer much of listing gains.Recommendation – Considering all the above factors, we would recommend investors to “Avoid” this IPO for now and may look at buying on dips.
This article should not be construed as investment advise, please consult your Investment Adviser before making any sound investment decision. If you do not have one visit mymoneysage.in now.