Please refer to important disclosures at the end of this report
1
S.J.S. Enterprises Limited (SJS) is one of the leading players in the Indian decorative
aesthetics industry in terms of revenue as on FY21 and offer the widest range of
aesthetics products in India (CRISIL Report). They are a “design-to-delivery”
aesthetics solutions provider catering to requirements of the two-wheeler,
passenger vehicle, commercial vehicle, consumer appliance, medical devices, farm
equipment and sanitary ware industries. They have an established relationship with
reputed OEMs and tier-1 suppliers and their relationship with 10 largest customers
averaged 15 years. The share of exports currently stands at ~17.6% as on
Q1FY22, up from 9.8% in FY19. The current capacity stands at ~50% providing
ample scope to cater to growing industry demand.
Positives: (a) Leading aesthetics solution provider with an extensive suite of
premium products in a growing industry. (b) Well diversified product portfolio and
long-standing relationship with customers that enables cross-sell and increase in
wallet share. (c) Potential to scale up utilization and drive operating leverage. (d)
Strong margins and net-debt free position with healthy cash generation.
Investment concerns: (a) Significant dependence on top 10 customers (~87% of
FY21 revenues) and the automotive segment (~75% of FY21 revenues). (b) High
dependence on the two-wheeler industry (~58% of FY21 revenues). (c) Increased
competition, lack of firm long term commitment agreements with customers or
suppliers (d) Continuing impact of the COVID-19.
Outlook & Valuation: As per the industry trends, higher preference for premium
and technologically advanced products is leading to growing content per vehicle or
appliances thus benefitting companies like SJS. The company has demonstrated its
ability to scale up its client relationships across geographies on the back of its
strong design and product development capabilities. It commands higher margins
which can be supported due to operating leverage benefits and SJS has a strong
financial profile (net debt free and healthy cash generation). At `542, the P/E
based on FY21 EPS is ~35x and ~32x considering the Exotech financials which
was acquired in April-22. Given the moderate scale of operations and after
considering better than industry level growth rates, issue appears rightly priced
based on Sep-23 EPS. We have a “NEUTRAL” rating on the issue.
Key Financials
FY2019
FY2020
FY2021
Q1FY2022
237
216
252
74
--
-8.9
16.4
--
38
41
48
9
--
9.8
15.7
--
28.7
29.4
30.3
23.6
12.4
13.6
15.7
3.1
43.9
40.0
34.5
--
6.9
5.9
5.2
--
36.3
15.9
16.1
--
33.6
15.5
15.8
--
23.7
24.8
20.2
--
6.8
7.3
6.1
--
Source: Company, Angel Research; Note: Valuation ratios at upper price band.
NEUTRAL
Issue Open: Nov 01, 2021
Issue Close: Nov 03, 2021
Offer for Sale: `800 cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 50.4%
Others 49.6%
Fresh issue: NA
Issue Details
Face Value: `10
Present Eq. Paid up Capital: `30.4 cr
Post Issue Shareholding Pa ttern
Post Eq. Paid up Capital: `30.4cr
Issue size (amount): `800 cr
Price Band: `531-542
Lot Size: 27 shares and in multiple thereafter
Post-issue mkt. cap: * `1,616 cr - ** `1,650 cr
Promoters holding Pre-Issue: 98.86%
Promoters holding Post-Issue: 50.37%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Milan Desai
+022 39357600, Extn: 6842
[email protected]
S.J.S. ENTERPRISES LIMITED
IPO NOTE S.J.S. ENTERPRISES LTD.
October 29, 2021
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
2
Company background
SJS is one of the leading players in the Indian decorative aesthetics industry
offering a wide range of aesthetic products. It 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. Apart from catering to the requirements for two-
wheeler, passenger vehicle and consumer appliance industries, it also caters to
requirements of requirements of the commercial vehicles, medical devices, farm
equipment and sanitary ware industries.
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. Its
product offerings include decals and body graphics, 2D appliques and dials, 3D
appliques and dials, 3D lux badges, domes, overlays, aluminium badges, In-
mould label, or decoration parts (IML/IMD(s)), lens mask assembly and chrome-
plated, printed, and painted injection moulded plastic parts. As of Q1FY22, SJS’
relationship with its 10 largest customers in terms of revenue averaged
approximately 15 years. As on FY21, its sales of products and services to two-
wheeler OEMs and Tier-1 suppliers contributed 58%, to passenger vehicle OEMs
and Tier-1 suppliers contributed 16.6% and majority of the balance being
contributed by sales to consumer appliance manufacturers. Exports accounted for
16% of revenue from operations in FY21, up from 9.8% in FY19
Issue details
The IPO is made up of offer for sale of ` 800 Cr shares by selling shareholders.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
3,00,91,960
98.86
1,53,31,812
50.37
Public
3,45,944
1.14
1,51,06,092
49.63
Total
3,04,37,904
100.00
3,04,37,904
100.00
Source: Company, Angel Research & RHP.
Objectives of the Offer
To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
Key Management Personnel
K.A. Joseph is the Managing Director and one of the Promoters and co-founders.
He holds a bachelor’s degree in science from the Bangalore University and a post
graduate diploma in business administration. He has more than 34 years of
experience in the aesthetics printing business.
Sanjay Thapar is an Executive Director and CEO having over 30 years of
experience in the automotive industry. He holds bachelor’s degree in science
(mechanical engineering) from the Delhi College of Engineering. He leads the
strategy, business development and finance functions.
Amit Kumar Garg is the CFO of the Company. He holds a bachelor’s degree in
commerce from the University of Delhi and a master’s degree in business
administration from the Massachusetts Institute of Technology.
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
3
Exhibit 1: Consolidated Profit & Loss Statement
Y/E March (` Cr)
FY2019
FY2020
FY2021
Q1FY2022
Total operating income
237
216
252
74
% chg
--
-8.9
16.4
Total Expenditure
169
153
175
57
Cost of materials consumed
95
84
99
32
Power and fuel
0
(2)
(2)
(1)
Employee benefits expense
32
33
36
12
Other expenses
42
37
42
14
EBITDA
68
64
76
18
% chg
--
-6.8
19.9
--
(% of Net Sales)
28.7
29.4
30.3
23.6
Depreciation& Amortization
10
13
15
5
EBIT
58
51
61
12
% chg
--
-13.2
21.0
--
(% of Net Sales)
24.6
23.5
24.4
16.8
Finance costs
2
1
1
1
Other income
4
5
4
1
(% of Sales)
1.5
2.4
1.4
1.4
Recurring PBT
57
49
61
12
% chg
--
-13.2
23.1
-80.6
Exceptional item
7
-
-
-
Tax
15
13
16
3
PAT (reported)
38
41
48
9
% chg
--
9.8
15.7
-80.1
(% of Net Sales)
15.8
19.1
19.0
12.8
Basic & Fully Diluted EPS (Rs)
12.4
13.6
15.7
3.1
Source: Company, Angel Research
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
4
Exhibit 2: Consolidated Balance Sheet
Y/E March (` Cr)
FY2019
FY2020
FY2021
Q1FY2022
SOURCES OF FUNDS
Equity Share Capital
30
30
30
30
Other equity
208
249
285
289
Shareholders’ Funds
239
280
315
320
Total Loans (incl. lease liabilities)
23
6
9
26
Other liabilities
13
12
9
9
Total Liabilities
274
298
334
355
APPLICATION OF FUNDS
Property, Plant and Equipment
145
149
141
154
Right-of-use assets
4
4
8
20
Capital work-in-progress
0
0
4
4
Intangible assets
9
8
7
35
Non-Current Investments
-
-
-
-
Other Non-Current Asset
15
14
6
8
Current Assets
131
157
219
195
Inventories
25
28
33
45
Investments
55
70
81
41
Trade receivables
46
45
60
61
Cash and Cash equivalents
3
11
38
36
Loans & Other Financial Assets
0
0
1
2
Other current assets
2
4
6
10
Current Liability
30
35
50
62
Net Current Assets
101
123
169
133
Total Assets
274
298
334
355
Source: Company, Angel Research
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
5
Exhibit 3: Consolidated Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021
Q1FY2022
Operating profit
53
54
64
13
Net changes in working capital
(8)
3
(5)
8
Cash generated from operations
9
11
14
5
Direct taxes paid (net of refunds)
(19)
(10)
(15)
(4)
Net cash flow from operating activities
36
58
58
22
Purchase of Assets
(48)
(21)
(13)
(66)
Interest received
0
0
0
0
Others
4
(11)
(25)
41
Cash Flow from Investing
(44)
(32)
(37)
(25)
Repayment (long term borrowings)
-
-
-
(0)
Repayment (short term borrowings)
8
(17)
3
(5)
Proceeds from Issue of Shares
2
-
-
-
Interest paid
(1)
(1)
(0)
(0)
Payment of Lease liabilities
-
-
-
(1)
Dividend Paid
-
-
(12)
(5)
Cash Flow from Financing
9
(18)
(10)
(12)
Inc./(Dec.) in Cash incl. forex fluctuation
0
8
11
(15)
Cash from acquired co.
-
-
-
11
Opening Cash balances
3
3
11
22
Closing Cash balances
3
11
22
18
Source: Company, Angel Research
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
6
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
43.9
40.0
34.5
P/CEPS
34.9
30.5
26.4
P/BV
6.9
5.9
5.2
EV/Sales
6.8
7.3
6.1
EV/EBITDA
23.7
24.8
20.2
Per Share Data (Rs)
EPS (Basic)
12.4
13.6
15.7
EPS (fully diluted)
12.4
13.6
15.7
Cash EPS
16
18
21
Book Value
78
92
104
Returns (%)
ROE
36.3
15.9
16.1
ROCE
33.6
15.5
15.8
Turnover ratios (x)
Receivables (days)
70
76
87
Inventory (days)
53
66
69
Payables (days)
23
51
53
Working capital cycle (days)
101
91
103
Source: Company, Angel Research
S.J.S. Enterprises Ltd | IPO Note
Oct 29, 2021
7
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelone.in
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