Robust performance, Strong growth potential ahead, Maintain BUY!
Overall performance was above our expectations. The 2W segment grew ~44% YoY driven by GST-led volume growth, premiumization and addition of Hero MotoCorp as a new customer. The PV segment expanded ~16.5% YoY supported by industry tailwinds from GST reforms and continued premiumization trend. EBITDA margins stood at 28.3% during the quarter led by lower costs & economies of scale. SJS Decoplast (erstwhile Exotech) reported stronger growth led by strong PV growth which outperformed industry growth. Overall, management is optimistic about the upcoming fiscal year, citing strong growth momentum from cross-selling opportunities, improving exports, the introduction of new products, and a trend towards premiumization. SJS has signed a MOU with BOE Varitronix to collaborate on manufacturing automotive display solutions for 4W industry. This partnership marks SJS’s entry into advanced display technologies, enhancing its portfolio of premium & high-value products. The company has also added new customers including: Orafol USA (Nissan supplier), River (EV 2-wheeler manufacturer) & Azad (EV bus manufacturer). SJS is strategically expanding and growing faster in the exports market, with exports expected to increase from around 9.6% in Q2FY26 to ~15% of consolidated revenue by FY28e. The standalone business is set to outpace industry growth due to the addition of the new display & cover glass product and strong performance from key clients like TVS, Bajaj, HMSI, M&M, Whirlpool, etc. Subsidiaries also have healthy growth prospects, with SJS Decoplast new plant coming online by Q3FY26E, aiming to double revenue, and WPI receiving RFQs from domestic and global clients. Overall, Consolidated EBITDA margin is expected to improve due to increased exports, the introduction of high-margin products, and scale benefits. We roll forward our valuations to Sept 27E & now anticipate CAGR growth of ~22%/26%/30% in Revenue/EBITDA/PAT from FY25-28E. We have revised our estimates upwards for FY27E & also upgraded our target multiple to 30x (earlier 26x) & arrive at a target price of Rs 2,223 per share. Consequently, we maintain our BUY rating on the stock.
Q2FY26 Result Analysis – Overall robust performance, higher standalone performance than estimates
Results were above our estimates with Revenue/EBITDA/PAT up by ~3%/12%/11% respectively. Revenue beat was largely on account of higher than est. growth in subsidiaries topline (SJS Decoplast + WPI), while standalone revenue was slightly lower than estimates (down by ~2%). The EBITDA margin at 28.3% beat est. by 236 bps largely on account better margins in standalone business (up by 180bps vs est.) due to lower than anticipated employee costs and higher GM, while subsidiaries margin was higher than est. by 300bps, due to better GM. PAT outperformance vs. est. is attributed largely to better operational performance.
The company exports stood at ~9.6% of topline in Q2FY26. SJS is strategically expanding its exports into new markets, adding new clients, and securing a significant order from a global OEM. The export orders of Whirlpool & Stellantis have commenced & this will drive the exports growth. The goal is to increase exports’ contribution to ~15% by FY28e.
During the quarter, the company secured new businessesfrom customers include Orafol, USA (Nissan), River, Azad (EV Bus) and Same Deutz-Fahr (Tractors).
The company has recently signed an MoU with BOE Varitronix, Hong Kong, to manufacture advanced display solutions for the 4W industry, combining SJS’s manufacturing capabilities and customer relationships with BOE’s technology expertise. The partnership is expected to formalize soon, with localized plant setup underway, and commercial volumes targeted from FY28E.
SJS Enterprises Ltd – Q2Y26 Result Update – SMIFS Institutional Research
