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In 1QFY26, Suprajit Engineering (SEL) reported consol. EBITDA margin of 9.5%, 40bps below JMFe. Excluding SCS, consol. EBITDA margin expanded 100bps YoY to 12.8%. Order wins in SCD remain healthy, while DCD continues to see strong aftermarket demand and growth in ‘beyond cables’ projects. PLD and SED are expected to recover in 2HFY26, with PLD margins holding in double-digits despite near-term headwinds in MEA. Tariffs are expected to have minimal impact, with the majority of US business (70% of US business) being USMCA compliant and most of the remaining covered through customer pass-throughs. The second tranche of the SCS acquisition is now complete (profitable side of business, the Canada and the China), with the division on track to turn EBITDA positive by 4QFY26. Restructuring initiatives in SCD (registered 370bps YoY expansion in EBITDA margin in 1Q) and SCS are expected to start delivering benefits from 4QFY26, driving margin improvement in FY27. Therefore, we raise our FY27 EBITDA margin estimate by 80bps from our previous estimates. We upgrade the stock to BUY with a Mar’27 TP of INR 510 (20x FY27E).

• 1QFY26 – Margin below estimates: Organic biz. performance: Consol. revenue (excluding SCS) stood at INR 7.7bn (+5% YoY, -5% QoQ). EBITDA stood at INR 993mn (+15% YoY, -6% QoQ). EBITDA margin stood at 12.8% (+100bps YoY, -80bps QoQ). SCS performance: SCS reported operating revenue of INR 897mn with an EBITDA loss of INR 176mn. Reported performance: SEL’s consol. net sales stood at INR 8.6bn (+17% YoY, - 2% QoQ), 3% below JMFe. EBITDA stood at INR 817mn (-5% YoY, -6% QoQ). EBIDTA margin stood at 9.5% (-230bps YoY, -40bps QoQ), 40bps below JMFe. Reported PAT increased 26% YoY to INR 481mn (+77% QoQ), 39% above JMFe due to sharp increase in other income. Gross debt increased by INR 164mn QoQ to INR 6,735mn.
• Suprajit Controls Division (SCD): Revenue for 1Q stood at INR 3.8bn (+6% YoY; flat QoQ). EBITDA margin improved 370bps YoY to 11.8% (+100bps QoQ), primarily led by restructuring initiatives. Order wins continue to remain healthy. Regarding the US tariff, SEL’s total exposure to US is INR 110mn, of which 70% is USMCA compliant. For the balance, 30% of the customers have accepted increased tariffs, another ~35% have principally agreed but formalities are in process, and for the rest ~35% negotiations are ongoing. Additonally, the restructuring (rationalisation of headcount in Germany, reloaction of the warehouse from Germany to Hunagry and new warehouse at Hungary) at SCS and SCD is expected to deliver the benefits from 4QFY26 onwards.
• Domestic cable division (DCD): Revenue for 1Q stood at INR 2.7bn (+8% YoY; -9% QoQ). EBITDA margin contracted by 80bps YoY to 14.9% (-80bps QoQ), largely due to a significant increase in manpower and IT implementation costs. Aftermarket growth remained robust and beyond cables projects has received healthy traction.
• Phoenix Lamps division (PLD): Revenue stood at INR 864mn (-3% YoY, -12% QoQ). EBITDA margin declined 340bps YoY to 12.8% (-160bps QoQ), largely due to conflict in the Middle East, which impacted sales of higher margin Trifa brand. Indian business remained steady during the quarter. The company expects a modest drop in business in 2QFY26 owing to order cancellations in MEA, with recovery expected in 2HFY26. Further, double-digit margins are expected to continue going ahead.
• Suprajit Electronics Division and Technology Centre (SED & STC): Revenue for the segment declined 1.5% YoY to INR 304mn (-11% QoQ), due to volume reduction from a major client, partially offset by ramp-ups of sales to SCD, and a new throttle sensor business to a 3W OEM. EBITDA margins declined 280bps YoY to 6.9% (-220bps QoQ), due to underutilisation of plant. However, the company expects degrowth phase to conclude this quarter. STC division continues to focus on development and launch of new products. It has been working with Blubrake for the development of an ABS product, which could be a growth trigger given mandatory implementation of ABS across all 2Ws starting from Jan’26 (final notification is awaited though).
• Other Highlights: 1) SEL has guided for double-digit revenue growth for the controls division in FY26. 2) Revenue contribution from Automotive / 2W / Aftermarket / NonAutomotive stood at 44% / 25% / 14% / 16% for 1QFY26 (vs. 39% / 28% / 17% / 15% in FY25). 3) SCS: Revenue for the quarter stood at INR 897mn (vs. INR 616mn in 4QFY25). EBITDA margin improved significantly from -28.6% in FY25 to -19.6% in 1QFY26, and the company expects it to turn EBITDA positive by 4QFY26. SEL has also guided for ~USD 40mn revenue from the SCS business in FY26. The second tranche of SCS acq. involving China and Canada has been completed (1Q results include 1 month of revenue from these assets).

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