Suprajit Engineering Limited - Q2FY2023 REVIEW

Suprajit Engineering Limited reported net revenue of ₹737.81 crores for the quarter ended September 30, 2022, compared to ₹508.85 crores for September 30, 2021. Profit After Tax was ₹45.75 crores for the quarter ended September 30, 2022, compared to ₹49.55 crores during the corresponding quarter of the previous year, respectively.

STOCK DATA

Suprajit Engineering Limited - OVERVIEW

• With an annual worldwide capacity of 400 million cables and 110 million halogen lights, Suprajit is India's largest automotive cable and halogen bulb manufacturer.

• The majority of Indian automotive giants are on Suprajit's list of clients. Suprajit also exports to a variety of prestigious global clients.

• Suprajit Engineering has been rated AA & A1+ for long-term and short-term Funds by ICRA Rating Agency.

SHAREHOLDING PATTERN (%)

Suprajit Engineering Limited - BENCHMARK COMPARISON

BUSINESS

• Suprajit, which was founded in 1985 with an entrepreneurial attitude, has established itself as a pioneer in the design and production of mechanical control cables. It is now known as the largest cable manufacturer in India and the largest in the world for the two-wheeler cable market.

• Wescon Controls Inc. USA was purchased by Suprajit in 2015 as part of its strategic development into the non-automotive cables and controls market. Phoenix Lamps Limited was acquired by Suprajit in 2014 to diversify into the automotive lighting industry.

• Mechanical control cables, speedometers for 2Ws, and halogen lights for 2Ws, 3Ws, passenger cars, commercial vehicles, and off-road applications are among the main products made by Suprajit Engineering Limited for the automotive and non-automotive sectors.

• A wide range of control cables, including brake cables, clutch cables, throttle cables, starting cables, gear shifter cables, choke cables, tachometer cables, window regulator cables, mirror cable assemblies, seat recliner cables, and latch release cables, are included in SEL's product profile in its cables division.

• Fog lights, side position lights, front lights, position and parking lights, dashboard and interior lights, brake light lamps, trunk lights, front indicator lights, rear parking lights, number plate lights, rear indicator lights, stop lights, low beam/high beam lights, etc. are all included in the SEL product profile under halogen lamps.

• With 22 production locations (including a technical centre in the UK) spread out over the world, SEL serves both the automotive and non-automotive industries.

• Reputable 2W OEMs including Bajaj Auto Limited (BAL), Hero MotoCorp Limited, TVS Motor Company Limited, and Honda Motorcycle & Scooter India (HMSI), among others, are included in SEL's customer list.

• While serving clients including Atul Auto Limited (AAL), Piaggio Vehicles Private Limited (PVPL), and TVS in the 3W market, SEL also serves Mahindra & Mahindra (M&M), BMW AG (BMW), and Volkswagen AG (VW) in the 4W segment. Customers of the business in its non-automotive sector include Club Car LLC, Whirlpool Corporation (WC), Kubota Corporation (Kubota), and John Deere (JD) (Club Car).

• Category-wise Revenue contribution from Automotive was 18%, 2-Wheelers was 33%, Aftermarket was 26% and from Non-Automotive was 23% in FY 2022 compared to 17%, 35%, 27%, and 21% in FY 2021, respectively.

• Geographically contribution from India was 55% and from countries were 45% in FY 2022 compared to 40% and 60% in FY 2021, respectively.

Suprajit Engineering Limited - SWOT ANALYSIS

STRENGTH

• Company with Zero Promoter Pledge.

• Company with low debt.

• Effectively using its capital to generate profit.

• Strong customer base.

WEAKNESS

• Decline quarterly net profit with a falling profit margin.

• Exposure to inherent cyclic ability in Indian Automotive Industry.

OPPORTUNITIES

• Suprajit is among the top three global manufacturers of both, control cables and halogen bulbs, this will create a lot of opportunities with the increasing demand of the automobile industry.

• The company has a diversified product portfolio and geographical presence.

THREAT

• Increasing global uncertainty.

• An increase in prices of raw materials costs could impact the profit of the company.

AUTO COMPONENTS INDUSTRY ANALYSIS

• Based on domestic demand, notably from the passenger car sector, India's auto components industry saw a rise of 34.8% to ₹2.65 lakh crore in the first half of 2022–23.

• Exports of components increased by 8.6% over the period to USD 10.1 billion (₹79.03 lakh crore), while imports increased by 17.2% to USD 10.1 billion (₹79.8 lakh crore).

• The percentage of shipments to North America increased by 12% to 33% of the total. The proportions of Europe and Asia increased by 4% and 11%, respectively, to 30% and 26%, respectively.

• Exports from the Indian auto component sector, which were valued at $13.3 billion in FY21, are anticipated to increase to $80 billion by 2026. The major export destinations are the USA, Germany, UK, Thailand, and Italy.

• In the fiscal year 2021–2022, India's auto component sector had its highest-ever trade surplus of $700 million.

• From $9.8 billion in FY20, the aftermarket category, which includes tyres, batteries, and brake components, is predicted to grow to $32 billion by 2026.

• By 2025, the whole Indian auto components market, which presently contributes 2.3% of India's GDP, is expected to overtake the United States as the third-largest market worldwide.

• The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi announced the Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors. The PLI scheme (outlay of $ 3.5 Bn) for the automobile sector proposes financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products and attract investments in the automotive manufacturing value chain.

• Incentives are applicable for determined sales of products manufactured in India from April 1, 2022, for a period of five consecutive years. The scheme was closed on 9th January 2022. Total of 95 applicants have been approved under this PLI scheme: 20 under Champion OEM and 75 under Component champion.

Suprajit Engineering Limited - FINANCIAL OVERVIEW

Suprajit Engineering Limited - QUARTERLY SUMMARY

Suprajit Engineering Limited - PROFIT AND LOSS STATEMENT (₹ IN Millions)