SJS reported decent set of numbers in Q3 FY25. On standalone basis, revenues were slightly hurt by stunted production on the 2W side owing to seasonality and annual maintenance shutdowns at some of its clients. Still, on the back of robust PV business growth (22% yoy), the company grew more than double the underlying industries during the quarter (2W+PV industries grew at 7.1%, while SJS grew at 15.4% yoy). Consumers business grew flattish in Q3. Margins in the standalone business have grown to 31.8%, 220 bps up yoy as RM/sales as a % of sales has gone down to 37.5% from 38.8% yoy. Employee/sales ratio has also gone down to 13.6% v/s 13.9% yoy. PAT has grown by 69% yoy in Q3 FY25 on strong operating performance.
OutlookThe company in Q2 had mentioned that it had off late retired its entire debt of ₹300 mn to become debt free, which would reduce the interest costs, thus auguring well for the bottomline. On the back of these positives, we are slightly increasing our target price to ₹1,379/- (valued at 24x FY27E earnings as compared to current PE of 17x) with an upside of 40%. Maintain BUY.
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