Emkay Global Financial's research report on Suprajit Engineering
Suprajit Engineering Limited's (SEL) Q1 performance was a miss with margins declining by ~200bps QoQ to 10.5% (our est. 12.7%). We believe i) cyclical recovery in the underlying industries, ii) market-share gains owing to competitive pricing/scale and industry consolidation, iii) growth in content per vehicle (led by new products) and iv) healthy order wins would drive ~11% revenue CAGR in FY23-25E. We introduce FY26E and cut FY24E EPS by 11.6% mainly to reflect weak Q1 margin performance, with FY25E EPS trimmed by 2.5%.
Outlook
We retain our BUY rating on the stock with a revised TP of Rs440, based on 20x its FY25E EPS. Key downside risks: Lower-than-expected growth in underlying auto segments, slower acceptance of new products and adverse movement in currency/commodity prices.
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