Suprajit Engineering (SEL)’s agreement for acquisition of prominent light duty cable maker Stahlschmidt Cable Systems (SCS; refer to press release) out of the German insolvency proceedings is another step in its ‘last man standing’ approach. It 1) potentially adds ~15% to consol. sales at attractive valuations (~0.3x EV/sales on trailing basis), 2) builds near-shoring capability for Europe along with exports from China, 3) increases wallet share with existing clients while adding new clients, and 4) enables improved competitive positioning (would emerge as the leader in Europe) with associated improvement in pricing and payment terms.
OutlookWe raise FY26E EPS by ~13% (driven by consolidation of SCS) with a similar increase in TP to Rs610/sh at unchanged 22x FY26E PER and retain BUY, amid improving growth outlook, esp. in the overseas business.
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