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SJS Enterprises came out with its IPO about four months ago, and you can find our detailed analysis of the IPO here. In this update, we will look at the market performance and business performance of SJS Enterprises post issue.
Our analysis of the IPO
We gave a score of 16 out of 25 to this decorative aesthetics manufacturer. SJS Enterprises designs and manufactures a wide range of aesthetic solutions primarily for the automotive and consumer appliance industries. The company also caters to the medical devices, farm equipment and sanitary ware segments. It deals in 11 product categories like decals, logos, badges, dials, etc. SJS Enterprises has two manufacturing facilities in Bangalore and Pune and exports to more than 20 countries.
Our rating of SJS Enterprises was based on the following:
- Out of the 10 business metrics, the company did well on five.
- It scored six out of six on management-quality-related metrics.
- It cleared five of eight financial metrics.
- It didn't clear any valuation-related metrics.
Stock performance since listing
The company saw a decent response to its IPO, which was oversubscribed about 1.6 times. The qualified institutional buyers (QIB) portion was oversubscribed 1.4 times, while the non-institutional investors' portion was oversubscribed 2.3 times and the retail portion about 1.4 times.
SJS Enterprises didn't have a great debut on the stock exchanges with the shares listing close to its issue price, opening at Rs 540 and ending the day at Rs 510. Post listing, the stock has continued to tank, and it reached a low of Rs 340 per share on December 27, 2021. As of March 14, 2022, the stock closed at Rs 358, which is about 34 per cent lower than its issue price of Rs 542.
Business performance
In Q3 FY22, SJS Enterprises recorded a revenue of Rs 91.8 crore, which is a fall of 7.9 per cent QoQ. Profit after tax fell by 2.4 per cent QoQ to Rs 14.9 crore. The company's revenue growth was impacted on account of the lower automotive sales in India. The automotive segment contributed about 75 per cent to Q3 revenue, while consumer durables contributed about 20 per cent. The remaining was from other segments.
The company's recent acquisition (Exotech) has helped it to increase the share of passenger vehicles in the revenue mix. SJS Enterprises is investing in building a strong export team to drive growth. It is strengthening its sales force in Turkey, Brazil and Argentina. During the quarter, exports contributed about 13 per cent to sales. One of the projects that the company is working on is for a major two-wheeler electric vehicle manufacturer.
What to do now?
SJS Enterprises is a leading player in an industry that is projected to grow at about 20 per cent annually over the next five years. It has long-standing relationships with its customers. It is well placed to serve the transition from traditional products to premium products. It is planning to increase its geographical footprint, develop and introduce new products and increase its share of business with existing customers.
Since its listing in November, the company has traded at a P/E between 21-33 times. It currently trades at a P/E of about 23 times. The company has been positioning itself to take advantage of the gradual pick-up in automotive sales. However, the recent spike in commodity prices and the impact on demand for automobiles due to the Russian invasion of Ukraine is a negative development for the company's customers. Thus, it would be better to wait it out until a clearer picture emerges or a greater bargain is available.
Disclaimer: This analysis is not meant to serve as a recommendation. Do your research before investing in the company. If you are interested in our stock recommendations, please visit Value Research Stock Advisor.
Also read:
SJS Enterprises IPO: Information Analysis
Our other recent IPO updates:
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