Suprajit Engineering – Crossing the threshold?

19th June23 : Suprajit Engineering —CNBC Interview with MD & CEO :

–Margins under pressure in FY23 which was at 11% Consolidated EBITDA Margins

–EBITDA margin will go up to 12-14% in FY24 but historically we have talked about 13/15% –that gap of 100Bps is due to our new acquisition LDC & that division will have one more year of consolidation this year which will be in single digits ,hence a drag on consolidated margins for this year. Next year we will be 13/15%

–Demand Trends— earlier Industry was growing at 5/10% and we were growing faster than that and now the trend for FY24 —Newspapers are saying MAY no.s are interesting but the trend for the year will be single digit growth , the PV will have a strong mkt , it will grow well & it will be historic high.
–2W is not out of the woods, there is structural shift here from aspirations & Point of EVs –that will continue to struggle. The aspiration is to buy higher CC and go away from 100/150/200 CC & go higher —so that is where strong growth is happening & if you look at internationally, China had 40Mn 2W biz which is now 25 Mn 2W biz –there PV is world’s largest. We have seen the shift starting in 10 yrs back and derisked our biz from what was 90% 2W is just 25% Biz & we are further derisking it by strong entry into electronics segment —we are protecting ourself pretty well

–Non-Auto has some weakness i.e global Biz

–EV –FAME subsidy issue the biz will be low but it will settle down after a few months and grow

–We will continue to outperform –we will have a double digit biz growth with Margin improvements

–LDC —We are tgting 100Mn$ biz for FY24 & margins which were 1% in FY23 will grow to mid-to-high single digits by FY24. Next yr will be double digit –that is the road map. We are winning new contracts in the controls division , LDC is getting merged as controls division and we are getting strong new biz , that will drive the margins in next few yrs.

–Non-Auto Biz outlook for FY24 —In our 4 segments like Auto / Non Auto , 2W and after market –the most challenging of them is the non-auto which is 20% of our biz . In NA and Europe mkts the non-Automotive products are discretionary products i.e lawn mower , sports vechicle , outdoor sports vehicles–these get hit by the economic slow-down & that is happening. Not seeing growth in this segment.
–Overall we see a double digit growth for FY24 although globally , the growth will be 0%
–Aftermkt cable division ? —We had 3/4 separate facilities which we have regrouped into one large facility –that is helping us streamline the segment , this will improve the margins of ops.

–Electronics Division –its our new segment, we have developed home grown products in our tech center which is being commercialized & growth will be like any start-up i.e very high growth on a small base. We are getting new contracts in 2W electric and 3W electric Vehicle space.

Dis: Not invested