04 February 2015

3QFY15 Result Update | Sector: Auto

Suprajit Engineering Ltd.

BSE SENSEX

28883

Shares O/s (cr)

52-W H/L Range (Rs)

1/6/12m Rel. Perf. (%)

Market Cap. (Rs cr)

Market Cap. (US$ m)

NIFTY

8723

12.0

170/ 48

4 / 22 / 143

1656

269

CMP: INR138

YEAR

END

FY14A

FY15E

FY16E

SALES RPAT

A.EPS

EPS

Gr.(%)

17

1

30

(INRCr) (INRCr) (INRCr)

545

609

722

51

51

66

4.2

4.3

5.5

TP: INR175

PE

(X)

32.6

32.4

25.0

P/BV EV/EBITDA

(X)

8.1

6.9

5.7

(X)

18.6

17.6

14.4

Accumulate

Div yld

(%)

0.7

0.8

0.9

ROE

(%)

27

23

25

ROCE

(%)

28

24

27

Result Highlights



Revenue growth of 2% was constrained on account of mutued domestic 2 wheeler growth and on account of negative

impact of Euro depreciation



Margins were, also, impacted by euro depreciation and rise in employee costs (as min wages rose)







Profits have dropped as operating profits have dropped

Standalone performance has been better with zero contribution from subsidiaries this quarter

We downgrade numbers to factor in the poorer than expected numbers in 3Q.

QE Dec-13 QE Sep-14 QE Dec-14

160

130

30

-1

3

2

24

7

16

16

18.8

31.4

153

128

25

2

4

2

20

6

14

14

16.3

27.8

163

138

25

1

4

3

20

8

12

12

15.5

38.8

% y/y

2%

6%

-16%

-281%

28%

11%

-17%

2%

-26%

-26%

% q/q

7%

8%

1%

N.A.

7%

2%

-2%

37%

-17%

-17%

INR Cr.

Revenue

Expenditure

OPM

Other Income

Interest

Depreciation

Profit before tax

Tax

RPAT

APAT

OPM (%)

Tax rate (%)

Valuation and view



Exports to rise 30% over FY14-FY16:

Exports stood at 20% of global revenues for 9mFY15 vs 14% a year ago. The

plant at the 100% EOU subsidiary's commissioned in 1QFY14 could add Rs. 35 cr to exports over the next 2 years.

Exports sales are, also, likely to benefit in FY15 from start-up of supplies for models to be launched international

by some of the larger partners. Supplies to premium customers such as BMW for their plant in Germany (25% of

subsidiary revenues) speaks volumes of the company's quality of operations \ product. This business is likely to

see a robust pace of growth.

Raising capacity:

The company is raising capacity to 225 M cables from 150M cables. This 50% capacity hike will

come in at 3 plants within the next 18 months and drive growth in future years.



Recommend to Accumulate for a target of INR175:

We have revised our target on the stock to INR175. We recommend

to accumulate on any result-disappointment induced downsides based on the following rationale









Leadership in the 2-wheeler cables space with more than 70% marketshare of 3 leading players

Expected 12% growth CAGR in 2-wheeler volumes upto 2020

Rising share of Honda's Indian 2-wheeler cable requirements

Growth from new model launches in FY15-FY16 by global partners

Ravi Shenoy

(ravi.shenoy@MotilalOswal.com); Tel: +91 22 30896865

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Suprajit Engineering Ltd.

No

No

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