Add Suprajit Engineering Ltd for the Target Rs.525 by Choice Institutional Equities
Operational turnaround gains momentum:
SEL delivered a strong Q4FY26 performance, led by a meaningful improvement in operational execution across global businesses and successful restructuring of acquired entities. The key highlight remained the sharp turnaround in Stahlschmidt Cable Systems (SCS), wherein EBITDA margin improved sequentially, from ~(20)% in Q1FY26 to +2.1% in Q4FY26, aided by plant consolidation, workforce rationalisation and supplychain optimisation across Europe and North America. With major restructuring now largely complete, the management expects Global Cables & Mechatronics (GCM) division EBITDA margin to improve sharply to 10–12% in FY27E as compared to ~6% in FY26.
Suprajit Electronics Division (SED) momentum strengthens growth visibility: SED remained the key growth driver, delivering ~30% YoY revenue growth in Q4FY26 with EBITDA margin improving to ~9.7%, led by a strong demand for digital clusters, throttle controls and sensors. SEL is steadily evolving into a higher-value “system supplier” through ABS, braking systems and actuators, supported by strong R&D capabilities. Further, its diversified global manufacturing footprint positions the company favourably amid ongoing tariff realignments and supply-chain diversification trends. We believe completion of major restructuring and improving SCS integration would support margin recovery going forward.
View and Valuation: We revise our FY27E/28E EPS estimate upwards by 18.2%/10.7%, factoring in well-progressing SCS turnaround, improving margin trajectory across global operations and strong growth momentum in the electronics segment. We value the company at 22x on FY28E EPS, arriving at a target price of INR 525. We upgrade our rating from ‘REDUCE’ to ‘ADD’, supported by improving operating leverage, rising contribution from high-margin “Beyond Cable” products and sustained double-digit growth visibility.
Q4FY26: Beats our estimate across the board
* Revenue was up 18.8% YoY and up 6.4% QoQ to INR 10,419 Mn (vs CIE est. at INR 10,140 Mn)
* EBITDA was up 38.4% YoY and up 26.9% QoQ to INR 1,204 Mn (vs CIE est. at INR 959 Mn). EBITDA margin was up 163 bps YoY and up 186 bps QoQ to 11.6% (vs CIE est. at 9.5%)
* APAT was up 161.0% YoY and up 249.6% QoQ to INR 711 Mn (vs CIE est. at INR 342 Mn)
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