Sell Suprajit Engineering Ltd For Target Rs. 390 - Choice Broking Ltd
Q4FY25: Weak Performance, Misses Street Expectations Across All Metrics
* Revenue for Q4FY25 was at INR 8,769 Mn up 12.0% YoY and 5.5% QoQ (vs consensus est. at INR 8,897 Mn).
* EBITDA for Q4FY25 was at INR 870 Mn down 7.8% YoY and 10.3% QoQ (vs consensus est. at INR 1,020 Mn). EBITDA margin was down 213bps YoY and 175bps QoQ to 9.9% (vs Consensus est. at 11.5%).
* PAT for Q4FY25 was at INR 272 Mn down 53.9% YoY and 18.5% QoQ (vs consensus est. at INR 521 Mn).
SCS Losses and Global Weakness Weigh on Outlook: SEL’s nearterm outlook remains challenging due to continued losses from the SCS acquisition and weak global demand. The SCS business reported an operational loss of INR 490 Mn in FY25, and management has positioned FY26 as a year of stabilization, consolidation, and assimilation. EBITDA breakeven is targeted only by Q4FY26, while restructuring efforts in Morocco and Germany are likely to add further interim costs. On the macro front, SEL remains exposed to a sluggish global automotive environment, particularly in the US and Europe, where demand remains flat and order volumes under pressure. Tariff-related disruptions continue to affect pricing and supply chains, especially in the US, resulting in passthrough lags and margin strain. While execution risks remain, management has guided for an EBITDA margin of 12–14% in FY26; we conservatively factor in the lower end of this range, given ongoing uncertainties. As restructuring efforts mature and cost controls improve, we expect losses to narrow progressively. Consequently, we estimate SEL to achieve a positive EBITDA of INR 110 Mn by FY27, driven by operational efficiencies and a more balanced global footprint
View and Valuation:
While SEL’s restructuring efforts in Morocco and Germany aim to stabilize operations, near-term execution risks persist amid weak global demand and cost pressures. Expansion into Canada and Mexico may aid U.S. growth but could stretch resources. Factoring in lower losses and gradual recovery, we revise our FY26/FY27 EPS estimates upwards by 10.3%/2.5% and raise our target price to INR 390 (from INR 364), valuing the stock at 20x (unchanged) FY27E EPS. We upgrade our rating to ‘REDUCE’ from ‘SELL’.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
