SUPRAJIT - Suprajit Engineering Ltd. Share Price

In the Q3 FY 2026 earnings conference call, management highlighted a positive outlook for Suprajit Engineering, emphasizing strong underlying performance despite some one-time costs primarily in the Controls division. The consolidated revenue, excluding SCS, for the nine months ended December 31, 2025, was INR 2,464 crores, representing an 8% growth year-over-year. The operational EBITDA also grew by 11% to INR 327 crores. Management declared an interim dividend of 150% (INR 1.5 per share), reflecting confidence in ongoing business recovery.

Key forward-looking points include:

1. The Controls division expects to see a turnaround and stabilize despite recent challenges, with an operational revenue growth of 13.7% attributed to newly launched programs. However, operational EBITDA declined by 10.5% due to shutdown costs incurred during the relocation from Juarez to Matamoros.

2. The domestic cable division's revenue grew by 9%, bolstered by strong aftermarket performance and new product initiatives, which maintain healthy EBITDA margins.

3. Suprajit Electronics Division recorded nearly 20% growth, driven by robust demand for electronics programs, with the EBITDA margin improving to 11.2%.

4. Management reiterated that the SCS business is on track to achieve positive EBITDA after full integration, anticipating improvements from tariff clarity in current contracts.

5. The company is bolstering its competitive positioning with enhanced production capabilities in Morocco and Hungary, supported by new business wins, suggesting potential growth avenues through global market expansion.

6. They expect normalization of margins moving forward as restructuring concludes and operational efficiencies improve.

Management expressed optimism around customer engagements and project pipelines, positioning Suprajit favorably as market conditions evolve.

1. Question: "On the SCD side, what is the normalized EBITDA margin you reported this quarter, sir? And if possible to quantify the onetime hit Matamoros?"

   • Answer: The normalized EBITDA margin for this quarter is around 9.5%. The one-time hit from Matamoros is roughly USD 2 million, which translates to about INR 18 crore.

2. Question: "Is it fair to say Q4 would be the breakeven quarter for us in terms of EBITDA margin?"

   • Answer: Yes, we committed to turning EBITDA positive by the end of this financial year. There may be some consolidation costs, but we believe we will achieve breakeven as projected.

3. Question: "If I have to look at next year for SED and SCS, then what will drive the normalized margins for the business?"

   • Answer: We expect SCS to turn positive EBITDA soon, with integration efforts facilitating cost efficiencies. Historically, the auto components industry operates between 6% to 10%, and we aim to stabilize around 10% as we scale.

4. Question: "What is the opportunity landscape for the Chuhatsu JV for transmission cables?"

   • Answer: The JV is strategically positioned with Japanese OEMs, focusing on technical products. While it may take time to commercialize, we are already engaging in export orders, indicating a strong long-term business association with the Chuo group.

5. Question: "What would drive employee costs as a percentage of sales to return to around 18%?"

   • Answer: As top line growth materializes, we anticipate operating leverage will help bring down employee costs relative to sales. Continuous cost management initiatives and improvements in operational efficiency should contribute positively.

6. Question: "Will there be any other negative surprises in upcoming quarters?"

   • Answer: I do not foresee significant negative surprises. Most of our restructuring costs should conclude this quarter, with ongoing costs likely being minor and manageable compared to what we've incurred this year.

7. Question: "In the SCD division, would it be possible to quantify if there is any benefit from rupee depreciation?"

   • Answer: Yes, the rupee depreciation provided a 2-3% advantage, but the growth is fundamentally driven by strong performance and recovering customer confidence, especially post-insolvency issues.

8. Question: "So would we stand by 12-14% EBITDA margins for the SCD division?"

   • Answer: Yes, we remain in the range of 12% to 14% EBITDA margins for the SCD division, even exceeding 10% at times. This reflects our ongoing efforts and stable operational performance.