2 weeks ago
Zero-debt auto stock SJS outgrows industry for 27 quarters
SJS Enterprises makes the shiny and nice-looking parts inside cars, like badges, chrome trims and fancy dashboard pieces.
When car makers make cars look more premium, SJS earns more money from every single car.
The company has grown faster than the whole car and motorcycle industry for 27 quarters in a row, which is a very long winning streak.
In the latest quarter, SJS earned its highest-ever money in a single quarter.
It also has almost no debt, so it is in a strong financial position.
The company is now trying something new: making special glass for car screens and digital displays, helped by a partner company from Hong Kong.
It is also selling more products to other countries, with exports growing much faster than its India business.
SJS believes it can keep growing by getting bigger orders from existing car makers rather than depending only on more cars being sold.
Even when fewer cars are made, the company can still earn more if each car has more of its parts inside.
SJS Enterprises' automotive business grew 32.4% in Q1FY27, outstripping the combined passenger vehicle and two-wheeler industry's growth of 21.7% for a 27th straight quarter.
Q1FY27 revenue hit a record Rs 261 crore (up 24.5% YoY), with EBITDA up 36.2% to Rs 80 crore and the EBITDA margin expanding to 30% from 27.6%.
Reported profit after tax rose 115% to Rs 74.4 crore, but excluding a one-time gain from sale of an old Bengaluru facility, adjusted PAT grew 45.2% to Rs 50.3 crore.
SJS has tied up with Hong Kong-based BOE Varitronix to make automotive display and cover glass solutions in India, with commercial production expected from Q2FY28.
Exports jumped 83.2% YoY to about Rs 25.6 crore, and SJS is targeting exports at 14%-15% of revenue by FY28; the company holds net cash of roughly Rs 329 crore with zero long-term debt.
Management expects to outperform the underlying auto industry by 1.5-2 times in FY27, driven by premiumization, an expanding customer base and new products.
The stock trades at about 41 times trailing earnings, well above its five-year median P/E of roughly 29 times.
- Who
- SJS Enterprises, an Indian auto components maker supplying premium decorative parts such as badges, chrome trims and dashboard finishes
- What
- Reported record quarterly revenue and extended its streak of outperforming the automotive industry to 27 consecutive quarters while expanding into displays, cover glass and exports
- Where
- India, with market expansion in Germany, Turkey, Brazil, Argentina, South Korea and ASEAN countries
- When
- Q1FY27, with the company also outlining expectations for FY27 and FY28
- Why
- To benefit from vehicle premiumization by increasing the value of parts supplied per vehicle rather than relying only on higher vehicle sales volumes
Growth Optimist
Valuation Skeptic
Valuation premium
Growth Optimist
The premium is justified because the company has a proven 27-quarter outperformance streak, expanding margins and new growth engines in displays and exports.
Valuation Skeptic
Trading at about 41 times trailing earnings versus a five-year median of 29 times already prices in the future growth, leaving little room for error.
Display and cover glass bet
Growth Optimist
Localizing displays and instrument clusters for EV makers could open a market worth Rs 5,000-7,000 crore by FY30, and SJS is preparing capacity early.
Valuation Skeptic
Commercial production only begins from Q2FY28 and the market opportunity is an estimate, so meaningful revenue and profits remain unproven.
Export growth
Growth Optimist
Exports are growing far faster than domestic sales (83.2% YoY) and the customer base and product mix are expanding across many geographies.
Valuation Skeptic
Exports still contribute less than a tenth of revenue and the 14%-15% target depends on global customer launches and the expiration of the Walter Pack Spain non-compete in January 2027.
Key facts
- Industry outperformance streak
- 27 consecutive quarters
- Automotive business growth (Q1FY27)
- 32.4% YoY vs industry growth of 21.7%
- Quarterly revenue
- Rs 261 crore (highest-ever, up 24.5% YoY)
- EBITDA / Margin
- Rs 80 crore, up 36.2%; margin expanded to 30% from 27.6%
- Adjusted profit after tax
- Rs 50.3 crore, up 45.2% (excluding one-time gain)
- Net cash position
- Roughly Rs 329 crore; zero long-term debt
- Export revenue growth
- 83.2% YoY to about Rs 25.6 crore; target of 14%-15% of revenue by FY28
- Display JV
- Partnership with BOE Varitronix; production expected from Q2FY28
Sources
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