Suprajit Engineering Limited — Q1 FY26 earnings call

Call held 12 Aug 2025

Management summary

Suprajit Engineering reported a strong Q1 FY26, driven by robust performance in its Controls Division and Domestic Cable Division, despite a soft quarter for Phoenix Lamps and Electronics Division. The company is actively integrating its SCS acquisition, targeting profitability by Q4 FY26, and making strategic investments in technology and infrastructure. Global challenges like tariffs and geopolitical risks are being actively managed, with a focus on long-term growth and diversification.

Highlights

  • Consolidated revenue (excluding SCS) at INR 7,733 million, up 5.2% YoY.

  • Consolidated EBITDA (excluding SCS) at INR 993 million, up 15% YoY, with margins improving 100 bps to 12.8%.

  • Standalone revenue at INR 3,900 million, up 3.5% YoY.

  • Standalone EBITDA at INR 605 million, down 6.5% YoY, with margins at 15.5%.

  • Controls Division EBITDA improved from 8% to 12%.

  • SCS acquisition losses significantly reduced, targeting EBITDA positive by Q4 FY26.

  • Group debt stands at INR 6,735 million, with investments at INR 2,568 million.

Concerns

  • Global geopolitical and economic challenges, including tariffs and Chinese rare earth issues.

Key financials

  1. Consolidated Revenue (excl. SCS) 7,733 Mn +5.2%YoY
  2. Consolidated EBITDA (excl. SCS) 993 Mn +15%YoY
  3. Consolidated EBITDA Margin (excl. SCS) 12.8%
  4. Standalone Revenue 3,900 Mn +3.5%YoY
  5. Standalone EBITDA 605 Mn -6.5%YoY
  6. Standalone EBITDA Margin 15.5%
  7. Group Debt 6,735 Mn
  8. Investments (MF & Bonds) 2,568 Mn

What they filed

Q1 FY27: revenue up 24.0%, net profit up 8.3% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue834 832 877 863 941 +13%979 +18%1,042 +19%1,070 +24%
EBITDA63 97 87 82 100 +59%95 −2%120 +38%129 +57%
Net profit0 33 27 48 51 13 −61%71 +163%52 +8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Suprajit Controls Division (SCD)
    12% EBITDA Margin4% EBITDA Margin Growth
  • Domestic Cable Division (DCD)
    — Revenue Growth— EBITDA
  • Phoenix Lamps Division
    — Revenue— EBITDA
  • Suprajit Electronics Division (SED)
    — Revenue— EBITDA
  • Stahlschmidt Cables (SCS)
    — Losses Reduction1 month Revenue Impact (Q1)

Guidance & targets

Operations

  • SAP HANA Rollout Operations · next 12 months · High confidence 15 plants
    And we plan to roll out across 15 plants over the next 12 months

    — Akhilesh Rai, Director and Chief Strategy Officer

Infrastructure

  • STC Facility Inauguration Infrastructure · 2026 · High confidence Inauguration
    The new STC facility is also on track for an inauguration in 2026

    — Akhilesh Rai, Director and Chief Strategy Officer

Revenue

  • SCS Revenue Revenue · FY26 · Medium confidence USD 30-35 million
    So put together, I would put a ballpark number of somewhere around close to USD 30 million to USD 35 million.

    — N.S. Mohan, Managing Director and Group Chief Executive Officer

Volume

  • Electronics Division Degrowth Volume · Q2 FY26 onwards · Medium confidence Arrested
    from this quarter onwards, our degrowth will probably be arrested. And I think that will also help in improving the margins going forward.

    — Ajith Kumar Rai, Founder and Chairman

  • Electronics Division Growth Volume · Future · Medium confidence High single digit or low double digit
    it is probably in the high single digit or low double digit kind of region.

    — Akhilesh Rai, Director and Chief Strategy Officer

Capex

  • Total Capex Capex · FY26-FY27 · High confidence INR 150-160 crores
    In terms of capex, I think we talked about INR150 crores, INR160 crores. But then it's probably spread out between this year and the next year to some extent.

    — Ajith Kumar Rai, Founder and Chairman

Market context

  • SCS EBITDA Profitability · Q4 FY26 · High confidence Positive
    SCS, which, as Akhilesh mentioned earlier, we should be EBITDA positive by the fourth quarter of this year.

    — Ajith Kumar Rai, Founder and Chairman

  • Controls Division Business Growth Volume · End of FY26 · Medium confidence Double digit
    by end of the year, we will have a double digit business at Controls division.

    — Ajith Kumar Rai, Founder and Chairman

  • Phoenix Lamps Margin Profitability · Ongoing · High confidence Double digit
    I think double digit margin in Phoenix Lamps will continue.

    — Ajith Kumar Rai, Founder and Chairman

Risks & concerns

  • Global geopolitical and economic challenges, including tariffs and Chinese rare earth issues.

    high

    Global conditions remain challenging with geopolitical risks, Chinese rare earth issues, and tariffs being super hot topics, requiring active engagement with customers.

    Management acknowledged

  • Middle East conflict impacting Trifa brand exports for Phoenix Lamps Division.

    medium

    The Middle East conflict has led to a soft quarter for Phoenix Lamps, with softness expected to continue for a few quarters due to global market uncertainty.

    Management acknowledged

  • Struggles of a major EV customer impacting Suprajit Electronics Division (SED).

    medium

    SED's revenue and EBITDA were down due to a major EV customer struggling in the market last quarter.

    Management acknowledged

  • Headwinds in the non-automotive business due to shifts in buying patterns and ICE to EV transition.

    medium

    The lawnmowers and snow throwers segments face headwinds from changes in consumer behavior and the industry's shift from ICE to EV.

    Management acknowledged

Areas of evasion (2)

  • Exact breakup of STC/IT/corporate costs within DCD margins
  • Exact size of US departmental store order for Phoenix Lamps

Q&A highlights

2 direct
Reasons for increased employee costs and improved gross margins. Direct
I think basically on the employee side, you must realize that we took the entire hit of German reduction in people in one quarter. That's I think about 1.2 million. Secondly, of course, the STC and corporate, there are multiple numbers are adding. STC numbers have now probably 100, 110 now. And at the corporate also some senior level people have joined.

Asked by Viraj from SIMPL

Impact of upcoming ABS regulations on existing CBS business and Suprajit's readiness for ABS. Partial
I think first on the regulations, I mean, I think we need to wait for the final notification to come out. But our guessing is that there will be certain delays because the industry is just not ready to ramp up to the kind of requirements of ABS that will be there if they really plan for January. So, we do think there is going to be a bit of a delay. However, we are pretty much on track that we think we can productionize our ABS by January.

Asked by Viraj from SIMPL

Estimated revenues for the SCS business for FY26 following the acquisition completion. Direct
So basically, if I look at it, we would be looking at 3 quarters of the Canada and the China business. And the full 4 quarters of the earlier Morocco and the German business. So put together, I would put a ballpark number of somewhere around close to USD 30 million to USD 35 million.

Asked by Gokul Maheshwari from Awriga Capital

3 min read 8 chapters

Detailed narrative

Q1 FY26 Performance Overview

Suprajit Engineering reported a robust Q1 FY26, with consolidated revenue (excluding SCS) reaching INR 7,733 million, a 5.2% year-on-year increase. Consolidated EBITDA (excluding SCS) grew by 15% to INR 993 million, with margins improving by 100 basis points to 12.8%. Standalone revenue stood at INR 3,900 million, up 3.5%, though standalone EBITDA saw a 6.5% decline to INR 605 million, with margins at 15.5%. The company's group debt is INR 6,735 million, with investments in mutual funds and bonds at INR 2,568 million.

Suprajit Controls Division (SCD) & SCS Integration

The Global Cables and Controls Division (SCD) delivered a strong quarter, with its EBITDA margin improving significantly from 8% to 12%. The recent acquisition of Stahlschmidt Cables (SCS) saw its losses significantly reduced, and management is confident it will be EBITDA positive by Q4 FY26. Integration efforts are progressing well, including the complete relocation of the Germany warehouse to Hungary and the closure of the Poland entity. The second tranche of the SCS acquisition, including China and Canada businesses, was completed in Q1, contributing one month of revenue.

Domestic Cable Division (DCD)

The Domestic Cable Division (DCD) reported very strong revenue growth, outpacing the industry, and maintained a strong EBITDA performance. Aftermarket growth was particularly robust. Management noted that DCD's margins were impacted by higher IT, R&D, and corporate costs, which are bucketed into this division, reflecting strategic investments in global SAP HANA implementation and the Suprajit Technology Center.

Phoenix Lamps Division

The Phoenix Lamps Division experienced a soft quarter in both revenue and EBITDA, primarily due to the Middle East conflict impacting Trifa brand exports. While the India business remains steady, management expects softness to continue for a few quarters due to global market uncertainties. Despite this, the division secured an order from a large U.S. departmental store, and management expects double-digit margins to continue, with a potential turnaround in the second half of FY26, driven by new schemes starting August 15.

Suprajit Electronics Division (SED) & Technology Center (STC)

The Suprajit Electronics Division (SED) saw a decline in revenue and EBITDA, mainly attributed to a major EV customer struggling in the market. However, this was partly offset by increased requirements from the Global Controls Division and the launch of a new throttle sensor project with a top 3 three-wheeler OEM. The Suprajit Technology Center (STC) is actively developing a 2-wheeler ABS product, with its new facility housing 200 engineers on track for inauguration in 2026. Management anticipates degrowth in SED to be arrested from Q2 FY26, with improving margins and high single-digit to low double-digit growth potential.

Strategic Investments & Capex

Suprajit is undertaking significant strategic investments, including a large-scale SAP HANA implementation across 15 plants in five countries, targeted for rollout over the next 12 months. The company's capex outlook for FY26-FY27 is projected at INR 150-160 crores, spread across restructuring under SCD, the global Suprajit Technology Center, and other infrastructural projects in India. These investments are aimed at enhancing operational efficiencies, supporting global operations, and driving new technology development.

Tariff Impact & Mitigation

Tariffs, particularly in the U.S., remain a key discussion point, with Suprajit actively engaging with customers to mitigate the impact. The company's exposure to the U.S. market (from India, China, Canada, Europe, and Mexico) is approximately $100-110 million, with 70% being US MCA compliant. Management stated that about 30% of customers have agreed to accept increased tariffs, another 30-35% are in principle agreement, and the remaining 30-35% are still negotiating. The company believes its multiple opportunities to change its footprint offer a unique competitive position in the medium to long term.

Non-Automotive Business Headwinds

The non-automotive business, particularly segments like lawnmowers and snow throwers, faces headwinds due to shifts in consumer buying patterns (from individual ownership to contract services) and the transition from ICE to EV. Despite these challenges, management views this as an opportunity, actively diversifying into new products like rotary sensors and throttle sensors, and expanding into electronics to mitigate the impact on traditional cable-based systems.

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