S.J.S. Enterprises Limited — Q4 FY26 earnings call

So Pritesh, on the capacity side, our SJS Bangalore facility with the improved revenue what we have in FY26, we have now reached around 75% of our capacity. We are further expanding our capacity here. In our last call also, we have guided that we are investing INR45 crores into the SJS Bangalore facility, which will give us another 20% kind of a capacity expansion. So, that is one. Our subsidiary, SDPL - SJS Decoplast we call, which is the chrome and plating facility, they are operating 95%+ kind of a capacity utilization, and we are working with a couple of outsourced suppliers. At the same time, we are expanding our capex. We are setting a greenfield project for INR100 crores, which is Mr. Thapar said it is on final commissioning level. So, that will almost double the capacity what we have as of now. Now, third is Walter Pack. Walter Pack, we are operating somewhere 75% kind of a capacity.

Provides specific details on current capacity utilization across key facilities and planned expansions with associated investments and expected capacity increases.

Asked by Pritesh Chheda

Okay. FY26 was a record year for the automotive industry, both for 2-wheelers and 4-wheelers. ... The 4-wheeler sales went up, thanks in a large measure to the GST rationalization and improved rationalization of the free cash available with customers to do discretionary purchases. And as we talk, April also has been a very strong month. So the outlook continues to be extremely bullish. On a global view, we still have challenges of multiple wars going on. We don't know, which way they will go. But overall, what all these wars have taught us, if we look back, is that business continues. There are some short-term hiccups that do come. But I think finally, sense prevails and business comes back to normal. So, what we are hearing from customers at this moment is all of them are gearing up for high growth. And we are accordingly gearing up. And I think we were right in line with our capacity expansion plans to benefit from this growth. So, our outlook is bullish. We are excited about the future.

Management provides a bullish outlook on automotive demand, citing strong FY26 performance and continued momentum in April, while acknowledging global uncertainties as short-term hiccups.

Asked by Pranay Roop Chatterjee

So, that is a very, very strong statement to make. Now as far as the progress on our project goes, we have a plant which we've announced earlier. Our plant is ready. This is a facility in Hosur that we have. The plant, as I said, is ready. The equipment is on order, and we will expect that by Q2, we will have the machines coming in and then there will be a phase of trials. What I've said in my earlier calls also is that we expect supplies to start by early FY27 and could be earlier, but this early FY28, sorry, my mistake, end of FY27, early FY28 is when we hope supplies to start. Currently, our teams are interacting with the BOE plant to get trained on what these processes are. So it is progressing well. So, we will have a common agenda to demonstrate capabilities to customers in India of how we can bring this technology into India and supply to them in a good manner, which meets the quality cost expectations.

Clarifies the status of the Hosur optical display facility, timelines for equipment arrival, trials, and expected start of supplies for the strategic BOE Varitronix partnership.

Asked by Ganeshram

So thank you, Rakesh. Yes, our focus is on premiumization. We try and understand the requirement of the customer. We have a styling studio, which engages very early in the development phase with customers. So, we have enriched margins by providing different features and different finishes on the existing products that the customers have. And of course, a big strategic move that we've made is that electronics, especially the display area is going to see a lot of action. So, my personal sense is that the content in the vehicle in the future is going to be driven by what appeals to a customer sitting inside the vehicle. So, there could be IML, IMD parts, IME applications. ... So over the next 5 years, my expectation is that this 24% could grow up to maybe 30% of our revenues.

Explains the strategy behind premiumization, its impact on content per vehicle, and sets a target for new generation products to reach 30% of revenues in the next 5 years.

Asked by Rakesh Jain

Yes. Absolutely. So, inorganic growth is a very strong pillar of our strategy moving forward. We've done 2 acquisitions in the last 4 years. And as I've said in my earlier calls, we are generating a lot of cash. So, we have close to about INR243 crores in our books now available for deployment, for expansion projects and for new acquisitions, and we'll generate free cash in this year as well. So, we are looking at targets. We already have a few in mind, which we are in discussions with. So as and when we conclude, we'll, of course, announce to the market. In terms of geographies of interest, so as I maintained earlier, North America is a target. Southeast Asia is a target. India as well is a target because this is a fragmented business. And it could simply be consolidation where we could bring our own efficiencies and efficiencies of scale to play out. So it would depend on what target do we zero in on in terms of what meets our strategic requirement in terms of the cost of acquisition and how can we add value to it. As I maintained earlier, these will be bite-size acquisitions. We are, intrinsically a Company, that does not believe in taking a lot of debt on our books. So, we are largely debt free. And we wanted to continue to maintain this. But if we get some exciting opportunity, we are not averse to taking debt. But typically, it would be companies that add strategic value to us and where we feel that we can contribute to increase margins. So, margin growth is a very key or central to our overall philosophy as a Company, and we'll continue to focus on that.

Outlines the company's M&A strategy, target geographies (North America, Southeast Asia, India), focus on bite-size, value-accretive acquisitions, and preference for maintaining a debt-free status.

Asked by Nilesh Jain

Nilesh, our focus really is, to be honest, our benchmark is more than 25% margin is what we focus on. So we, of course, don't rest at 25% as you've seen with our results. So, 29.6% margin is a result of that focus that we have. But in the long term, I think that 27% - 28% sort of margins with a high growth trajectory is what you should expect from SJS.

Management clarifies its long-term margin target of 27-28% and explains the drivers behind current strong margins, indicating sustainability.

Asked by Nilesh Jain

Yes. So okay, let me answer that, Prateek. Basically, there is a very large global set available. As you know, the reason why we are building capacity across plants is primarily to tap into that. So, we have very strong inquiries. There's a lot of interest from customers. We've proven ourselves in terms of being competitive globally, and that is a theme that we'll continue to drive but we choose to do it in a step-by-step manner. There could be an inorganic acquisition that suddenly not only gives us an office in an overseas location, could give us a company there. So, we are well aware of that. And we are balancing what we need to do to make sure that we continue our growth trajectory. So, we grew by 25% last year. We hope to continue that growth trajectory and to grow looking at export markets is critical because we already are today supplying to all the customers in India, and there will be a certain rate of growth in the Indian market. But the export market for us is underpenetrated. So, we've proven our credentials in terms of quality, cost and delivery. And we now have built capacity or we have invested in capacity. And certainly, we want to utilize that to grow. For the short term, just setting up an office is additional cost. So, we have a lot of reps in multiple countries who operate from their home. We feel that this is a model that works for us at the moment. But when we have a very large opportunity set in a specific region, we certainly are open to look at setting up an office or a warehouse. We already have warehouses in North America. ASEAN, for example, is one area that we could look at setting up our own office and a warehouse to be able to benefit from proximity to the customer. So on a need-based basis, wherever the opportunity exists, we'll take that call.

Details the strategy for achieving export targets, including capacity building, competitive positioning, and a flexible approach to establishing global presence (reps vs. offices/warehouses).

Asked by Prateek Giri

So Sahil, on the capex spend, last earnings call, we have guided that over a period of 3 years starting from FY26, we have special initiative, which is the SJS Bangalore expansion, SDPL chrome plating greenfield. And we are also investing for the cover glass and the display business. So put together, there is an investment close to INR220 crores. Apart from that, we have the normal capex, which is around INR15 - 20 crores per annum. ... The second question was on capacity. So the new plant at Pune is complete for the chrome plating facility that we've added, where we are doubling capacity there. And so the plant is just in the final stages of commissioning. ... Coming back to Bangalore, there were opportunities both for exports and for the major Indian customer that we added. So, already the equipment has been ordered. It is installed and we are shipping parts out of those. So the capacity is created. There are some additional modifications that we are doing at that plant. So, this will be done. By the end of this quarter, we will have this plant fully ready. ... But the production equipment is already installed. So, our capacities are already in place.

Provides a comprehensive update on capex plans, including total spend, annual run rate, and specific commissioning status for the Pune chrome plating facility and Bangalore plant modifications.

Asked by Jigar Jani