Highlights of the IPO issue of SJS Enterprises Ltd

download 39 Highlights of the IPO issue of SJS Enterprises Ltd

SJS Enterprises Ltd, a major player in the decorative aesthetics industry and has strong relations with OEM manufacturers in India and across the globe. Now, it proposes to come out with an IPO of Rs.800 crore, which will be entirely an offer for sale or an OFS issue. The issue opens on 01-November and closes for subscription on 03-November.

Being an OFS, it will not result in any fresh fund infusion into the company but will only result in enabling the stock to list, giving an exit route to promoters and to provide a basis or currency for valuation of the company in stock market terms.

%name Highlights of the IPO issue of SJS Enterprises Ltd

Here are key advantages of the SJS Enterprises Ltd business model

  • A leading player in decorative aesthetics, SJS Enterprises straddles the total value chain from design to delivery
  • It supplies 11.5 crore parts to over 170 customers spread over 20 countries and OEMs account for close to 70% of total revenues
  • The ten largest customers of SJS have been loyal customers of the company for over 15 years and that has meant robust ROCE of 31.6%

Structure of the IPO of SJS Enterprises Ltd

  • The 100% OFS will comprise of an issue of 147.60 shares valued at Rs.800 crore at the peak price band of Rs.542 per share.
  • Out of the offer for sale worth Rs.800 crore, Evergraph Holdings will sell shares worth Rs.710 crore and promoter, Mr. K A Joseph sells shares worth Rs.90 crore.
  • The promoter holdings will dilute to a very great extent post the OFS and the public will hold up to 49.63% shares while promoters will hold 50.37% shares post IPO.

%name Highlights of the IPO issue of SJS Enterprises Ltd

The issue will not result in dilution of equity and hence shareholders earnings will be protected. Here is the valuation story.

  • The design to delivery approach of SJS Enterprises Ltd implies that it straddles the entire value spectrum. That gives them much greater control and say over inputs and output as well as costs and profit margins.
  • SJS has a marquee client list. It counts OEM customers like Suzuki, ,M&M, John Deere, Volkswagen, Honda, Bajaj Auto, Ashok Leyland, TVS Motors, Marelli, Whirlpool, Panasonic, Samsung, Eureka Forbes and Godrej among its key customers.
  • If you look at valuations in P/E terms, the stock is quoting at 35X last year earnings and around 31X next year earnings assuming CAGR growth rates sustaining into the future too. That is a reasonable level to pick up a stock dominant position in its niche.

What do you think the future plans of SJS can be?

Share your feedback in the comment section below.

Disclaimer

The article is for informative purpose and does not suggest to buy or sell or hold. Decision or investing is to be taken by individuals.

Evaluate investing in the IPO based on your individual risk tolerance, investment Span etc.

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