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S J S Enterprises Ltd

| Q4 & FY26 Earnings Conference Call

BULLISH SENTIMENT

Report Source

⬤11th May 26

Summary : SJS Enterprises reported record Q4/FY26 results, driven by strong automotive growth and exports, with a bullish outlook on future expansion and premiumization strategies.

Management Perspective positive : Management consistently highlighted 'strong performance,' 'highest ever' metrics, 'bullish outlook,' and 'confident' statements regarding future growth and strategic initiatives. They expressed satisfaction with execution and market outperformance.

Concall Report Analysis & Insights

Business Overview

  1. SJS achieved its highest ever quarterly revenue of INR2,601.2 million in Q4 FY26.
  2. Automotive segment grew 41.1% Y-o-Y, outperforming industry growth by over 2x.
  3. Reported highest ever PAT of INR488.7 million, driven by improved product mix and exports.
  4. Entered a technology license agreement with BOE Varitronix for automotive display systems.
  5. Maintained a robust net cash position and declared a final dividend of 35%.

Future Growth Prospects

  1. Aims to increase export contribution to 14-15% by FY28 through deeper penetration and new geographies.
  2. Expanding capabilities in advanced aesthetic and functional products, including optical cover glass and display systems.
  3. Developing next-generation technologies like in-mold electronics, illuminated logos, and integrated solutions.
  4. Expects to outperform underlying industry growth by 1.5x to 2x in FY27.
  5. New generation products are expected to grow from 24% to 25-30% of revenues over 5 years.

Management Insights

  1. "India's automotive industry witnessed steady growth in FY26, supported by sustained demand."
  2. "SJS has continued to set new benchmarks, delivering strong performance and marking its 26th consecutive year of outperformance."
  3. "We remain focused on innovation and leveraging our in-house design and R&D capabilities to develop differentiated products."
  4. "We are pleased to conclude FY26 on a strong note, marking yet another quarter of consistent execution across both operational and financial parameters."
  5. "Our outlook is bullish. We are excited about the future."

Signs of Skepticism

  1. Analyst questioned if the growth guidance revision from 2x-2.5x to 1.5x-2x indicated a softer outlook, which management clarified was not a revision.
  2. Analyst inquired about the specific quantitative split of market share vs. content-led growth, which management stated was difficult to provide due to product variety.

Risk Factors

  1. Global uncertainty and geopolitical events could impact demand and supply chains.
  2. Input cost increases, like crude oil and polymer prices, could affect margins, though largely passed on.
  3. Execution risks related to commissioning new facilities and ramping up production.
  4. Reliance on customer adoption for new display technologies to drive content per vehicle growth.
  5. Competition in global markets requires continuous innovation and cost efficiency.

Good To Know

  1. ICRA upgraded SJS's long-term credit rating to AA- (Positive) from AA- (Stable).
  2. Company received multiple accolades, including ACMA Excellence Awards and CFO of the Year Award for Mahendra Naredi.
  3. SJS continued focused CSR initiatives, supporting community safety, healthcare, and women empowerment.
  4. Appointed Mr. Randhir Singh Kalsi as an Independent Director.
  5. Ranked among Top 30 Mid-Size India's Best Workplaces in Manufacturing for the sixth consecutive year.

Key Drivers

  1. Strong export growth and global expansion.
  2. New product development and premiumization.
  3. Capacity expansion and utilization.
  4. Strategic partnerships for display systems.

Key Analyst Discussions

Competitive Environment

  1. SJS continues to win new businesses and strengthen relationships with leading OEMs like Mahindra, Suzuki, and Bajaj Auto.
  2. The company focuses on differentiated products and value-added features to maintain its competitive edge.
  3. Strategic partnerships, like with BOE Varitronix, enhance capabilities for global OEM requirements.

Market Trends & Consumer Behavior

  1. Automotive industry, especially 2-wheelers and 4-wheelers, experienced a record year in FY26 with strong demand.
  2. Management noted that April also showed strong demand, maintaining a bullish outlook.
  3. Premiumization trends and adoption of enhanced products continue to drive value growth in the industry.

Financial Highlights

  1. Management clarified that the capex spend for FY26 was lower than guided due to timing differences in payments and project milestones.
  2. Confirmed that the Bangalore facility is at 75% capacity, with a 20% expansion underway for INR45 crores.
  3. Stated that the chrome plating facility at SJS Decoplast is at 95%+ utilization, with a greenfield project for INR100 crores nearing commissioning.
  4. Management expects margins to be sustainable and aims for 27-28% in the long term, up from the current 29.6%.

Product Composition

  1. New generation products contribute around 24% of consolidated revenue, validating premiumization strategies.
  2. Content per vehicle is increasing through advanced aesthetic and functional products, including display systems.
  3. Company is developing in-mold electronics, illuminated logos, and integrated solutions to enhance product offerings.
  4. The kit value for PVs is expected to increase 5x to 8x by early FY28 due to focus on display business.

Strategic Considerations

  1. SJS is actively pursuing inorganic growth opportunities, targeting bite-sized acquisitions in North America, Southeast Asia, and India.
  2. The BOE Varitronix partnership aims to expand capabilities in advanced display solutions, with the Hosur facility ready for equipment installation.
  3. Management confirmed that all capex initiatives, including Bangalore expansion, Pune chrome plating, and Hosur display plant, will be completed in FY27.
  4. The company prioritizes global customers with potential for large-scale, long-term business over smaller local opportunities.