Suprajit Engineering is a prominent player in the automotive cable industry, boasting a significant market share. With a strong presence in both domestic and international markets, the company has established itself as a reliable supplier of high-quality cables to leading OEMs. Suprajit Engineering leads the market in both the two-wheeler OEM and four-wheeler OEM segments, with a substantial market share of about 75% and 32%, respectively.
Industry Overview Of Suprajit Engineering
The Indian automotive wiring harness market size reached US$1.6 billion in 2023. An automotive wiring harness refers to a bundle of terminals, electric wires, and connectors that provide power to a vehicle. IMARC Group predicts that the market will reach US$ 2.3 billion by 2032, with a compound annual growth rate (CAGR) of 3.9% from 2024 to 2032.
Automotive cables are used in lighting, battery cables, brake cables, multi-crore screened cables, and sheathed ABS sensor cables. The automotive cable market size has grown strongly in recent years. It will rise from $5.74 billion in 2023 to $6.14 billion in 2024, with a compound annual growth rate (CAGR) of 6.9%. The industry will be expecting to grow to $8.19 billion in 2028 at a CAGR of 7.5%.
Company Overview Of Suprajit Engineering
Suprajit Engineering was incorporated as a private limited company in 1985. The company was founded and promoted by K. Ajith Kumar Rai. Suprajit Engineering Limited is the largest manufacturer of automotive cables, the top 2 in control cables globally, and the top 3 globally in halogen lamps. The company is engaged in manufacturing auto components consisting mainly of control cables, speedo cables, auto lamps, and other components for automobiles.
Suprajit Engineering Limited came out for public issue in October 1995. The funds are used to set up a separate unit for the manufacture of instruments such as speedometers, Odometers, tachometers, fuel gauges, etc. The company has started manufacturing high-quality liner cables to exact Japanese standards for the automotive industry. Now it is catering to a wide spectrum of automotive and non-automotive cables.
Segment Analysis
Suprajit Engineering Limited has operated in the Domestic Cable Division, Suprajit Controls Division, Phoenix Lamps Division, and Suprajit Electronics Division. The company has geographical synergies in India of 47%, and global and export synergies are to be 53% in fiscal year 2024. Suprajit Engineering has exported to more than 50 countries. The company has a global presence, with manufacturing facilities in India, the UK, the US, and Mexico.
Suprajit Engineering Limited has engaged with many segments, such as automotive (36%), 2-wheelers (27%), non-automotive (19%), and aftermarket (18%) in FY24. The company has more than 40 PV OEM customers, more than 10 2-wheel OEM customers, more than 20 OFH OEM customers, and more than 15 lighting customers. Suprajit Engineering has a strong presence in the global aftermarket and non-automotive cable segments in the US (North America).
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Financial Analysis Of Suprajit Engineering
| FY24 | FY23 | FY22 | FY21 | FY20 | |
|---|---|---|---|---|---|
| Revenue (in crores) | ₹2,895 | ₹2,752 | ₹1,840 | ₹1,640 | ₹1,562 |
| Net Profit (in crores) | ₹167 | ₹152 | ₹173 | ₹142 | ₹103 |
| Operating Profit Margin (%) | 9.63 | 9.29 | 12.93 | 13.01 | 11.7 |
| Net Profit Margin (%) | 5.77 | 5.52 | 9.4 | 8.69 | 6.65 |
| ROE (%) | 12.27 | 12.42 | 15.96 | 14.41 | 12.17 |
| ROCE (%) | 16.54 | 15.79 | 20.09 | 19.22 | 18.26 |
| Debt/Equity | 0.46 | 0.52 | 0.29 | 0.27 | 0.36 |
Suprajit Engineering Limited’s revenue has increased over the last 5 years. The revenue was increased by 5.20% from ₹2,752 in FY23 to ₹2895 in FY24. They have maintained revenue growth with a CAGR of 17% in the last 4 years.
Suprajit Engineering Limited’s net profit has increased till FY22. In FY23, the net profit dropped by 12.14%, from ₹173 crore to ₹152 crore.
This was mainly because the expenses of the company increased by 55.46%, including material expenses by 50.29%, employee expenses by 70.76%, depreciation and amortization expenses by 63.14%, financial costs by 144.93%, and other expenses by 50.12%. In FY24, Suprajit Engineering’s net profit recovered to ₹167 crore and grew by 9.86%.
The company’s operating profit margin increased from 9.29% in FY23 to 9.63% in FY24. The net profit margin of Suprajit Engineering Limited was 5.77% in FY24. Suprajit Engineering’s return on equity has decreased over the last 2 years. In FY24, the return on equity and return on capital employed were 12.27% and 16.54%, respectively. Suprajit Engineering has raised debt in FY23 due to the acquisition of Light Duty Cable (LCD). It has reduced its debt compared to previous years. It was 0.46x in FY24.
Future Plans Of Suprajit Engineering
- Suprajit Engineering is expected to increase its revenue by approximately 450 crores (€50 million) following the complete acquisition of German-based light-duty cable manufacturer Stahlschmidt Cable Systems (SCS).
- Suprajit Engineering Limited plans to achieve double-digit revenue growth in the financial year 2025.
- The company’s electronics division is predicted to contribute Rs. 5 billion annually in the near future, having already reached a revenue run rate of Rs. 100 million per month.
- Suprajit Engineering is concentrating on launching new products in the non-automotive cable segment and growing the range of products it offers in the EV market.
- The company is planning to acquire more land parcels for its growth requirements, for its electronics and braking divisions.
- Suprajit Engineering is expecting its domestic business to grow between 6% to 8% in fiscal year 2025.
- Suprajit Engineering plans to increase its sales to four-wheelers, which currently account for 33% of its sales mix, in order to reduce its dependency on two-wheelers.
Financial Metrics Of Suprajit Engineering
Some of the key financial metrics of Suprajit Engineering Limited are presented below.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹511.25 | Market Cap (Cr.) | ₹7,194 |
| EPS (TTM) | ₹17.04 | Stock P/E (TTM) | 30.49% |
| ROE (TTM) | 18.10% | ROCE (TTM) | 19.75% |
| ROA (TTM) | 13.03% | P/B Ratio | 5.79 |
| Debt to Equity | 0.21 | Current Ratio | 4.73 |
| Promoter Holding (%) | 44.61% | FII Holding (%) | 4.79% |
| Operating Profit Margin | 9.63% | Net Profit Margin | 5.77% |
Target Price
- Sharekhan is bullish on Suprajit Engineering and has given a target price of Rs. 642. According to him, SCS’s acquisition would be EPS accretive for Suprajit as volumes increase and the business improves. SCS is expecting to generate revenue of Rs. 450 crore.
- Emkay Global Financial has announced a target price of Rs. 610. According to Emkay, Suprajit has the potential to add 15% to sales and improve competitive positioning with associated improvements in pricing and payment terms.
Conclusion
We have reached the last section of Suprajit Engineering Limited’s story. Suprajit Engineering has become one of the biggest cable producers in the world by streamlining its manufacturing procedures to produce large quantities of products while maintaining quality standards. The company’s extensive product range, cutting-edge manufacturing facilities, and commitment to customer satisfaction have contributed to its leadership position in the industry.
To stay ahead of the competition and meet its customer’s changing needs, the company has invested in research and development, which includes the development of products for the electric vehicle (EV) market.
Suprajit Engineering has a strong financial performance with revenue and net profit growth with a compounded annual growth rate (CAGR) of 16.68% and 12.84%, respectively. Suprajit Engineering has a strong ROE and ROCE of 12.27% and 16.54%, respectively. Suprajit has a better debt-to-equity ratio of 0.46x in FY24. What do you think about Suprajit Engineering Limited? Let us know in the comments below.
Written By Nikhil Naik
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