{"id":143636,"date":"2023-04-12T07:12:12","date_gmt":"2023-04-12T11:12:12","guid":{"rendered":"https:\/\/44.250.171.167\/?p=143636"},"modified":"2023-04-12T07:12:13","modified_gmt":"2023-04-12T11:12:13","slug":"sika-interplant-systems-a-small-cap-that-is-pure-defense-play","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/sika-interplant-systems-a-small-cap-that-is-pure-defense-play\/","title":{"rendered":"Sika Interplant Systems – A small cap that is pure defense play"},"content":{"rendered":"\n

\u201cMSMEs in the A&D space have survived through tough times over the years\u2014 given the trifecta of low volumes, high capital investment coupled with high cost of funding, and  challenging payment terms\u2014and during this time have imbibed certain niche capabilities and competencies. This is the opportune time to harness and nurture these capabilities towards the goal of achieving self-reliance\u201d.<\/em><\/p>\n\n\n\n

\u2013 Mr Kunal Sikka, Vice President, IDEF\u201917<\/p>\n\n\n\n

Stock Data:<\/strong><\/h3>\n\n\n\n
Ticker<\/td>523606<\/td><\/tr>
Exchange<\/td>BSE<\/td><\/tr>
Industry<\/td>Engineering<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
Price Performance:<\/strong><\/h5>\n\n\n\n
Last 5 days<\/td>+4.26%<\/td><\/tr>
YTD<\/td>-15.45%<\/td><\/tr>
Last 1 year<\/td>-32.36%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Company Description:<\/strong><\/h3>\n\n\n\n

Incorporated in 1985, Sika Interplant Systems Ltd is an engineering driven company focused on providing products, systems and services to Aerospace, Defence & Space and Automotive sectors in India. Additionally, the Company\u2018s in-house capabilities in technology development and production are complemented by tie-ups with international partners. The majority of the Company\u2018s business is catered to serving the Aerospace, Defence & Space (AD&S) and Automotive sectors.<\/p>\n\n\n\n

Business verticals:<\/strong><\/h5>\n\n\n\n

The company is actively involved in four main areas, namely, engineering (design and development); manufacturing, assembly and testing; projects and systems integration; and maintenance, repair and overhaul (MRO).<\/p>\n\n\n\n

The company has presence in businesses like search and rescue (Rescue hoists\/ winches; air ambulance\/ EMS modules), Landing gear & hydraulics, interconnection systems (harness & looms, electro mechanical assemblies, etc.), handling systems (cargo hooks, cargo and marine winches, sonar winch, etc.). Within the Automotive sector, the company undertakes projects to supply critical capital equipment to a significant number of major automobile manufacturers across the country.<\/p>\n\n\n\n

Certifications and accreditations:<\/strong> <\/p>\n\n\n\n

The company is one of the selected private enterprises with design approval from the center for Military Airworthiness and Certification (CEMILAC). It also has Industrial license for Defence production from the Government of India, which enables it to undertake several projects and also qualifies the company for offset programs. It also holds approval from the Directorate General of Aeronautical Quality Assurance (DGAQA)<\/p>\n\n\n\n

Plant Location:<\/strong><\/p>\n\n\n\n

The company’s only plant\/ technology center is located in Bommasandra Industrial Area, Bangalore.<\/p>\n\n\n\n

Financials:<\/strong><\/h5>\n\n\n\n
\"\"\/<\/figure>\n\n\n\n
\"\"\/<\/figure>\n\n\n\n

What we like:<\/strong><\/h3>\n\n\n\n
  1. Among the certified company for defense equipment production:<\/strong><\/li><\/ol>\n\n\n\n

    The Company is one of the select private enterprises with design approval from the Center for Military Airworthiness and Certification (CEMILAC).Sika has also been granted an Industrial License for Defence production from the Government of India, and also a qualified Indian Offset Partner with a license for Defence production from the Government of India-that provides advanced products and solutions to the Aerospace & Defence sector.<\/p>\n\n\n\n

    1. The company plans to be debt free:<\/strong><\/li><\/ol>\n\n\n\n

      The company plans to remain debt free and grow on internal accruals. It wants measured growth rather than fast unprofitable growth. There seems to be a lot of openness in the current government to support the industry, but things could move faster. The company plans to take revenues to INR 200 crore in the next 4-5 years. It is happy to have margins at current levels and continue this growth – but margins should expand.<\/p>\n\n\n\n

      1. New management is pivotal towards growth:<\/strong><\/li><\/ol>\n\n\n\n

        It is a three decade old company with major growth in revenue coming only in the last few years. The new management is pivotal to growth in revenues as seen in recent years. Also, the government has given priority to this sector and is pivotal to their \u2018Make in India\u2019 plans which has acted as a tailwind. One can also witness the swift moves taken by the management as the revenues have jumped two folds since the point they have taken charge.  <\/p>\n\n\n\n

        1. HAL has signed MoU with Sika Aerospace for SAR, medevac & aerial firefighting:<\/strong><\/li><\/ol>\n\n\n\n

          The MoU intends to leverage the existing business relationship between HAL and SIKA, utilising each company\u2019s respective strengths, to generate mutually beneficial business outcomes while providing state-of-the-art solutions to customers. Further, the MoU envisages combining HAL\u2019s experience in manufacture, integration, and upgrades of platforms together with SIKA\u2019s expertise in supply and integration of SAR, CASEVAC, MEDEVAC and HADR equipment, and is consistent with the goals of the Government of India\u2019s \u201cMake in India\u201d initiative.<\/p>\n\n\n\n

          Factors to consider:<\/strong><\/h3>\n\n\n\n
          1. Most of the threats to the domestic A&D industry are rooted on the policy front, such as lengthy procurement and evaluation processes, controversies related to corruption, and disputes over shortlisting in competitive bids. These will serve to delay acquisition plans of the armed forces and impact the timing of execution of already long-dated projects<\/li>
          2. In A&D business, the products and systems involved are typically of complex advanced technologies, often resulting in the approval and certification cycle extending for materially longer than originally planned. This can result in delays in production orders and consequent deliveries, affecting the timing of revenues.<\/li><\/ol>\n\n\n\n

            Industry Analysis and Conclusion<\/strong><\/h3>\n\n\n\n

            Following the Covid-19 pandemic induced downgrade in the growth of the global A&D industry in 2020-21, the sector is steadily\u2014if tentatively improving\u2014following a bottoming out in early 2021 and a moderate improvement in the second half of 2021-22. However, downside risks remain\u2014including from a possible worsening of the war, escalation of sanctions on Russia, a sharper-than-anticipated deceleration in China as a strict zero-COVID strategy is tested by Omicron, and a renewed flare-up of the pandemic should a new, more virulent virus strain emerge.<\/p>\n\n\n\n

            India\u2018s geopolitical scenario and compulsions, real or perceived, are continuing to drive the development of its A&D industry. The stand-offs seen in recent years on the Indo-China border have renewed the urgency to build capability and capacity for India\u2018s defense industry. The geopolitical situation in South Asia and the Indian Ocean region, as well as the wider theater of Southeast Asia and South China Sea, has important implications for the defense sector.<\/p>\n\n\n\n

            The last decade has seen India emerge as one of the most attractive A&D markets in the world given the Ministry of Defence\u2018s (MoD) continued emphasis on modernisation of the armed forces, which is expected to result in capital expenditure of about USD 250 billion over the next 10 years. There is a broad acknowledgement that while the man behind the machine remains motivated, some machines being manned need an upgrade.<\/p>\n\n\n\n

            With the world\u2018s third largest armed forces, the Government of India\u2018s (GoI) increase in the defense budget for 2022-23 to USD 70 billion also makes India the world’s third largest defense spender, behind the US and China. Crucially, the outlay for weapons and modernisation has been increased by nearly 19% for 2021-22, despite the continued pressures on the economy following the pandemic, which represents about 31% of the total defense budget<\/p>\n","protected":false},"excerpt":{"rendered":"

            \u201cMSMEs in the A&D space have survived through tough times over the years\u2014 given the trifecta of low volumes, high capital investment coupled with high cost of funding, and  challenging payment terms\u2014and during this time have imbibed certain niche capabilities and competencies. This is the opportune time to harness and nurture these capabilities towards the […]<\/p>\n","protected":false},"author":1863,"featured_media":135310,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1941,5753,6352],"tags":[9022,11834,9973],"class_list":["post-143636","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-analysis","category-industrials","category-research-summary","tag-aerospace-defense","tag-aircrafts","tag-automotive"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2022\/11\/iStock-689838230.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":148668,"url":"https:\/\/alphastreet.com\/india\/bharat-electronics-ltd-empowering-indias-technological-advancement\/","url_meta":{"origin":143636,"position":0},"title":"Bharat Electronics Ltd.: Empowering India’s Technological Advancement.","author":"Divyansh_Kasana","date":"June 15, 2023","format":false,"excerpt":"Stock Data: TickerNSE: BELExchangeNSEIndustryDEFENCE Price Performance: Last 5 Days+3.31%YTD+21.60%Last 12 Months+57.37%As of 15-06-2023 Company Description: Bharat Electronics Limited is a Public Sector Undertaking with strong manufacturing and research and development (R&D) capabilities. The company is involved in the manufacturing of electronics, communication, and defense equipment. BEL operates in both defense\u2026","rel":"","context":"In "Research Summary"","block_context":{"text":"Research Summary","link":"https:\/\/alphastreet.com\/india\/category\/research-summary\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/f6ceac66-f2a3-45a2-ae80-d4455cad9356-6.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":147415,"url":"https:\/\/alphastreet.com\/india\/alphagraph-bharat-dynamics-limited-nse-bdl-q4fy23-results-out-total-income-fell-41-yoy\/","url_meta":{"origin":143636,"position":1},"title":"Alphagraph | Bharat Dynamics Limited (NSE: BDL): Q4FY23 Results Out; Total Income fell 41% YoY.","author":"Divyansh_Kasana","date":"May 26, 2023","format":false,"excerpt":"Bharat Dynamics Limited is a Government of India Enterprise that specializes in the production of guided missiles and related defense equipment. With a rich heritage spanning decades, BDL has established itself as a key player in the defense sector. The company is actively involved in the design, development, and manufacturing\u2026","rel":"","context":"In "Earnings"","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/ff0bd97f-80c8-4411-823b-149a5744decf-1.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":148831,"url":"https:\/\/alphastreet.com\/india\/solar-industries-india-the-king-of-explosives\/","url_meta":{"origin":143636,"position":2},"title":"Solar Industries India: The King of Explosives","author":"Karan_Singh","date":"June 26, 2023","format":false,"excerpt":"\u201cThe strong growth of our non-CIL and institutional sector, along with the exports and overseas business were the key drivers behind the growth in our top line. These results are being achieved with the improved operational performance, despite the challenges arising mainly out of volatility in commodity prices, currency fluctuations\u2026","rel":"","context":"In "Other Industries"","block_context":{"text":"Other Industries","link":"https:\/\/alphastreet.com\/india\/category\/other-industries\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/iStock-1324995831.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/iStock-1324995831.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/06\/iStock-1324995831.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":147260,"url":"https:\/\/alphastreet.com\/india\/earnings-bharat-electronics-limited-nse-bel-q4fy23-results-out-total-income-rises-2-yoy\/","url_meta":{"origin":143636,"position":3},"title":"Earnings | Bharat Electronics Limited (NSE: BEL): Q4FY23 Results Out; Total Income rises 2% YoY.","author":"Divyansh_Kasana","date":"May 24, 2023","format":false,"excerpt":"Bharat Electronics Limited was established in 1954 as a joint venture with CSF, France (now known as Thales), with the aim of meeting the specific electronic equipment needs of the Indian Defence Services. As a state-owned aerospace and defense company, BEL operates around nine factories and multiple regional offices across\u2026","rel":"","context":"In "Earnings"","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-3-5.png?resize=1400%2C800&ssl=1 4x"},"classes":[]},{"id":124942,"url":"https:\/\/alphastreet.com\/india\/ipo-alert-data-patterns-files-papers-for-an-initial-public-offering\/","url_meta":{"origin":143636,"position":4},"title":"IPO Alert: Data Patterns files papers for an initial public offering","author":"Nishadkishore","date":"October 1, 2021","format":false,"excerpt":"The Indian defense electronics market is estimated to have grown at a CAGR of 4.5% between 2016 and 2020. The market, which is cumulatively worth around $1.88 billion so far this year, is expected to grow to approximately $6.99 billion by 2030, with an encouraging market opportunity. Data Patterns (India)\u2026","rel":"","context":"In "IPO"","block_context":{"text":"IPO","link":"https:\/\/alphastreet.com\/india\/category\/ipo\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/07\/iStock-649278704.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/07\/iStock-649278704.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/07\/iStock-649278704.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/07\/iStock-649278704.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/07\/iStock-649278704.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":147391,"url":"https:\/\/alphastreet.com\/india\/earnings-dcx-systems-limited-nse-dcxindia-q4fy23-results-out-total-income-rises-14-yoy\/","url_meta":{"origin":143636,"position":5},"title":"Earnings | DCX Systems Limited (NSE: DCXINDIA): Q4FY23 Results Out; Total Income rises 14% YoY.","author":"Divyansh_Kasana","date":"May 26, 2023","format":false,"excerpt":"DCX Systems Limited is a prominent player in the Indian market specializing in the manufacturing of electronic sub-systems and cable harnesses. Since its establishment in 2011, the company has emerged as a trusted partner for foreign original equipment manufacturers (OEMs) in the aerospace and defense sectors, serving as a preferred\u2026","rel":"","context":"In "Earnings"","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=1050%2C600&ssl=1 3x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2023\/05\/4b0b185d-fd09-4e7e-947d-ef141089055f-4-7.png?resize=1400%2C800&ssl=1 4x"},"classes":[]}],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/143636","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/users\/1863"}],"replies":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/comments?post=143636"}],"version-history":[{"count":0,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/posts\/143636\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media\/135310"}],"wp:attachment":[{"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/media?parent=143636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/categories?post=143636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alphastreet.com\/india\/wp-json\/wp\/v2\/tags?post=143636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}