Investing in Sandhar Technologies: A Promising Opportunity

Sandhar Technologies: A Company on the Rise

We're initiating coverage on Sandhar Technologies (STL), a company that's poised for significant growth. With a BUY rating and a target price of Rs825, we believe STL has the potential to increase in value by 51%.

A History of Expansion

Over the past few years, STL has been focused on expanding its capacity through both organic and inorganic means. This period of growth has set the company up for success, and we believe it's now ready to reap the benefits of its investments. With the peak investment phase behind it, STL is expected to see a moderate capex intensity of 4.5-5% of revenue over the next few years.

Key Areas of Growth

There are several areas that are driving STL's growth, including:

• ADC portfolio: This segment has seen significant growth, with domestic revenue increasing by 5x over 5 years.
• Sheet-metal segment: This area has also seen substantial growth, with revenue increasing by 3.5x over 5 years.
• Smart locks: The premiumization of smart locks offers 10x ASP potential compared to mechanical locks.
• EV portfolio: STL's electric vehicle portfolio is already generating revenue, with Rs69mn in revenue in H1FY26.

A Promising Outlook

We're expecting STL to see significant growth in the coming years, with 14/20/22% revenue/EBITDA/EPS CAGR over FY26E-28E. The company's stock is currently trading at a 12x Dec-27E PER, which is a 54% discount to the peer average. This makes it an attractive opportunity for investors looking for a promising stock market investment in the automotive industry and electric vehicle market.

Overall, we believe that Sandhar Technologies is a company with significant potential for growth and a promising outlook. With its strong portfolio and moderate capex intensity, it's an attractive option for investors looking to capitalize on the market trends in the industry.