Suprajit Engineering
CMP ₹ 136.60 Target* ₹ 190 Upside 40%
About
the company
Fundamental Highlights;
Shares of Suprajit
Engineering are traded on both Indian stock exchanges i.e. NSE & BSE, its
current MARKET CAP is ₹ 1,796.71 Cr, with EPS (TTM)
3.86 Suprajit Engineering is trading at P/E of 35.44 while
INDUSTRY P/E is 34.67, its BOOK VALUE is ₹ 17.61 per share and
PRICE/BOOK is 7.77. The company has delivered 95.00% dividend with Dividend yield
of 0.69%, face value being Re. 1.
Technical;
Why Suprajit Engineering is value pick for long term Investors?
Multiple triggers for revenue growth
- Two wheeler OEMs – The company wintnessed growth consistent from existing customers with industry growth of 8-10%, there is a higher growth expectancy from HMSI because in the next few years market share of business is scheduled to increase from 30% to around 50%.
- Passenger car OEMs – Currently suprajit is having only 30% market share as it has no major presence with lead player - Maruti Suzuki. But after acquisition of cables division of Pricol, this is set to be changed. At the same time superior experience of HMSI for two wheelers can also extend to Honda cars.
- Exports – There is a tremedous export potential as Suprajit has set up a branch in Atlanta, USA which will gain inetraction in US market. By high quality levels of Suprajit cables will will drive new customers as well as existing one.
- Replacement market – Suprajit Engineering is currently dominated by some unorganized players in the market, however implementation of GST may be a trigger for the company, with quality products, competitive prices and established brand, Suprajit Engineering should see strong traction in global market.
- Aquisition of Phoenix Lamps – Suprajit recently acquired Phoenix Lamps, after this aquisition strong revival in the business of 'Phoenix lamps' can be seen through synergy benefits. increasing proportion of LED lights will improve topline revenue growth as well as profitability of the company.
- Strong earnings growth expected - Company having a track record of strong revenue growth, expects benefits of operating leverage triggering its core business operations as well as newly acquired 'Phoenix Lamps'. Decreasing commodity prices will also help Suprajit in boosting margins. One may expect margins to expand 107bps during FY15-18E, which will be converted into earnings CAGR of 34% during FY15-18E.
- Shares valuation perfectly justified : Suprajit is proving its leadership in the cables business and with Phoenix acquisition it will have upper hand in lighting business too. Strong balance sheet, healthy return ratios and high earnings CAGR, it justifies its current valuation at 13 P/Ex based on FY18 expected earning.
Brokers' view on Suprajit Engineering
- IIFL recently initiatedcoverage on "Suprajit Engineering" with a BUY recommendation and given one year target of ₹180.
- *Buy Suprajit Eng; target of Rs 190: Motilal Oswal
Shares of Suprajit Engineering closed at 136.6 up by Rs. 3.00 i.e. 2.25% on April 13, 2016 in NSE. It made 52 Week Low/High of 110.7/152.20.
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Hello Sir,
ReplyDeleteThank u so much for posting such stuffs,you have really made indepth analysis on Suprajit which will surely help hundred of thousand investors to select a value scrip. Cool keep it on.
Hello rajesh,
ReplyDeleteThanks for showing interest in my blog. Hope our readers will be having good profit in Suprajit Engineering; It made high of 216 since this post when it was at 136, up by 60%. Enjoy, happy investing.