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Sansera reported mix set of performance in Q4FY24. Total revenue for quarter under review grew by 21% YoY basis to Rs. 7.46bn vs est of Rs.7.29bn, led by better growth in 2W segments and higher premium content in the MC segment. Operating profit for the quarter jumped by 32% YoY/+5.3% QoQ to Rs.1.27bn vs est of Rs.1.26bn and margin expanded by 149bps YoY to 17% vs est. of 17.3%. PAT for the quarter increased by 31.2% to Rs.461mn vs our estimates of Rs.502mn. On Full year basis, Top line grew by 20% to Rs.28.11bn, EBDITA jumped by 24.7% to Rs.4.8bn. PAT grew by 27% to Rs.1.85bn. We expect SEL’s Revenue/EBIDTA/PAT to grow by 18%/23%/26% CAGR over FY24-26.

* Management expects going forward Non-auto share to be around 20% and XEV and techagnostic to be around 20% to meet this target company has planed a capex of around Rs.400cr in FY25 and post that around Rs.300-350cr which can be managed by internal accrual.

* Embracing Light-Weighting, Premiumization, and Diversification: Management is confident to outperform the industry by over 10% driven by light-weighting and premiumization and addition of new capacity. SEL is looking to add more press machines in 2500-3500 tonnage segment for bigger engine parts. This expansion will help to mfg. more aluminium forge product which is 3-4x of steel parts. In the 2W segments, the premiumization trend continues support the industry leading growth. The new capex is largely directed towards light-weighting products, supporting SEL's expectation for better-than-industry growth. Additionally, the non-automotive segment will diversify SEL's product portfolio. Future expansion is focused on the non-automotive segment, with increased capex guidance for FY25 aimed at capacity expansion, line balancing, and facility build-up. The company has also realigned its vision, raising long-term sales contribution targets for xEV and tech-agnostic products from 15% to 20%. 60% of sales will come from auto ICE, while 20% each will come from non-auto and xEV and techagnostic portfolios.

* Outlook & Valuation: Given the industry's shift towards higher CC segments from lower 2W and the integration of more premium components with lightweight materials, SEL is undergoing a transformation from an automotive to a non-automotive and xEV-agnostic products supplier by its ability to adapt to these changes. In the medium to long term, we anticipate substantial revenue growth for SEL driven by: 1) an increasing proportion of revenue from non-automotive segment; 2) securing new orders for engine-agnostic components; 3) an increase in the share of aluminum components; and 4) a recovery in the export business, which will contribute to margin expansion in the coming quarters. We expect revenue/EBIDTA/PAT to grow at a CAGR of 18%/23%/26% over FY24-26E and value the stock based on 22x FY26E EPS and arrive at the TP of Rs.1205 and assign BUY rating.

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