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* On segmental performance, SCD business which consist of automotive and non-automotive exports from India and businesses outside of India reported a 3.74% YoY growth to Rs.3.74bn due to weak performance of Lonestar and Wescon. The operating margin for the segment came at 7.28% (-290bps YoY/+110bps QoQ). Management expects the worst is behind and expects performance to improve from hereon.

* DCD segment revenue during the quarter grew by 15% YoY to Rs.2.81bn and EBIDTA increased by 8% to Rs.484 mn. Margin continues to remain in the 17-18% range.

* PLD division growth was an 8.69% growth on yearly basis due to muted performance on aftermarket division however margin came at 15.12%.

* SED division to aid EV growth in SEL: SED division continues to witness strong operational performance as guided by the management. In Q4, SED registered an EBITDA of initial teen digit which improved from 11.05% in Q3. SED has developed a few products such as digital clusters, throttle position sensors, rotary sensors, and lock actuators of which production has started. Further, SED is witnessing good traction for its digital clusters (E-2Ws), actuators, and rotary actuators.

* Company is also getting good enquiry from Europe and Russia clients. It is further working on other new applications such as electric charge flak cables (under safety norms), elevator conveyor belt cables, parking brake cables, and sunroof cables are under development. We expect SEL’s strong and long relationship with OEMs will help to cross-sell this product which will increase the content value per client for SEL.

View & Valuation:

 We maintain our positive view of SEL’s long-term growth strategy based on: leading market share in domestic 2W in the cable division; leadership position in lamp manufacturing capacity and pricing power (aftermarket); foray into EV related products; expansion in global footprint through LDC acquisition (de-risking domestic cyclicality); and strong aftermarket in both cable and lamp division (60% market share). We recommend BUY rating on the stock due to attractive valuation and arrive at TP of Rs.507 (22x of FY26E EPS).

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