Emkay Global Financial's research report on Suprajit Engineering
Suprajit Engineering Limited's (SEL) Q2 performance was a miss, with margins declining by 67bps QoQ to 9.8% (Emkay est. 10.8%). We believe while the global-facing business (particularly non-autos) may remain weak in the near term i) market share gains owing to competitive pricing/scale and industry consolidation, ii) growth in content per vehicle (led by new products), iii) healthy order wins and iv) cyclical recovery in domestic 2Ws would drive ~10% revenue CAGR in FY23-26E. We have cut FY24E/FY25E/FY26E EPS by ~13%/~8%/~2% on weak Q2 margins and soft non-auto exports outlook for the next few quarters.
Outlook
We retain our BUY rating with a revised TP of Rs460 at 18x its FY26E EPS (rolled-over). Key risks: Lower-than-expected growth in underlying segments and adverse movement in currency/commodity prices.
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