Suprajit Engineering Limited — Q3 FY26 earnings call

Call held 10 Feb 2026

Management summary

Suprajit Engineering reported a solid Q3 FY26 with 9M consolidated revenue (ex-SCS) growing 8% and EBITDA (ex-SCS) growing 11%. While the Electronics division showed strong performance, the Controls division faced one-time restructuring costs and tariff-related timing issues. The company declared an increased interim dividend, reflecting confidence in the ongoing turnaround of SCS and improving global trade clarity.

Highlights

  • Consolidated revenue (excluding SCS) for 9M FY26 grew 8% to INR 2,464 crores, outperforming global industry trends.

  • Consolidated operational EBITDA (excluding SCS) for 9M FY26 grew 11% to INR 327 crores.

  • Suprajit Electronics Division (SED) reported robust revenue growth of nearly 20% and a significant EBITDA increase of almost 160%, with margins reaching 11.2%.

  • The Board declared an interim dividend of INR 1.5 per share (150%), reflecting confidence in the company's turnaround and global trade.

  • SCS restructuring is substantially complete, and the division is progressing well towards achieving positive EBITDA by the end of the financial year.

Concerns

  • The Controls division incurred one-time costs of approximately USD 2 million (INR 15-18 crores) due to relocation from Juarez to Matamoros and labor restructuring.

  • Phoenix Lamps division experienced a muted quarter with a sharp reduction in exports to the Middle East, compounded by counterfeit products and low-cost Chinese imports.

  • A timing issue with tariff pass-through mechanisms led to delayed cash recovery, causing a strain on working capital and impacting gross margins in the current quarter.

Key financials

  1. Consolidated Revenue (ex-SCS) ₹2,464 Cr +8%YoY
  2. Consolidated Operational EBITDA (ex-SCS) ₹327 Cr +11%YoY
  3. Standalone Revenue ₹1,371 Cr +7%YoY
  4. Standalone Operational EBITDA ₹234 Cr +4%YoY
  5. Total Debt ₹723 Cr
  6. Surplus Cash (Mutual Funds) ₹206 Cr

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 (ex-SCS)
    13.7% Operational Revenue Growth-10.5% Operational EBITDA Decline
  • Domestic Cable Division
    9% Revenue Growth
  • Suprajit Electronics Division
    20% Revenue Growth11.2% EBITDA Margin160% EBITDA Increase

Capital allocation

high confidence
  • Debt Gross ₹723 Cr · Net ₹517 Cr
    The total debt level was INR723 crores as on 31st December 2025.
  • Dividend ₹1.5/share (interim)
    the Board has declared an interim dividend of 150%, that is INR1.5 per share, up from the 125% last year
  • Liquidity Cash ₹206 Cr Surplus cash balance invested in mutual funds.
    The surplus cash balance invested in the mutual funds was INR206 crores as on 31st December 2025.

Guidance & targets

Margin

  • SCD EBITDA Margin (International Business) Margin · Over a period of time (next year onwards) · Medium confidence 10%
    globally, the auto component industry operates between 6% to 10%. Right now, SCD is at the 10%. But with the SCS adding on for next year, there will be it will take a little more time to stabilize. But I think it will be in that range. And the aspiration is certainly reach 10% over a period of time.

    — Ajith Kumar Rai

  • Consolidated EBITDA Margin (ex-SCS) Margin · Ongoing · High confidence 12-14%
    The 12% to 14% that I have said was the consolidated total business, excluding SCS, which has been even now in the same range, which is I think 13 point something. So, we are still in that range of 12% to 14% is the consolidated, excluding SCS.

    — Ajith Kumar Rai

Tax

  • Effective Tax Rate Normalization Tax · More than a year (not next year) · Low confidence Mid-20s level
    Yes, I think so. You are correct. That will be over a period of time, yes.

    — Ajith Kumar Rai

Market context

  • SCS EBITDA Profitability · End of Q3 FY26 / End of Financial Year · High confidence Positive
    SCS is progressing pretty well towards the positive EBITDA we had committed by end of this quarter, the current quarter that is, as has been projected by us in the beginning of this acquisition.

    — Ajith Kumar Rai

What to watch in Q4 FY26

SCS EBITDA Positivity

End of Q4 FY26 (end of financial year)
Current Progressing well towards positive EBITDA
Target EBITDA positive

Why it matters

Crucial for the overall profitability and successful integration of the SCS acquisition.

I think we have said in the beginning of the year when we did the acquisition that by end of this financial year, we'll turn the corner and will be EBITDA positive.

Risks & concerns

  • Tariff uncertainty and delayed cash recovery

    high

    Tariff changes led to a significant hit on gross margins due to delayed cash recovery, though customers have confirmed payment, creating a timing issue.

    Management acknowledged

  • Geopolitical risks and trade uncertainties

    medium

    Global conditions remain challenging with geopolitical risks and trade uncertainties.

    Management acknowledged

  • Memory chip shortages and Xperia challenges

    medium

    Memory chip shortages remain a risk for the Electronics division, along with Xperia challenges, but mitigation actions like sourcing diversification are underway.

    Management acknowledged

  • Counterfeit products and low-cost Chinese imports for Phoenix Lamps

    medium

    Phoenix Lamps division is affected by counterfeit products and low-cost Chinese imports in the Indian aftermarket, impacting performance.

    Management acknowledged

Q&A highlights

5 direct, 1 evasive
Normalized EBITDA margin and one-time hit for Matamoros Direct
I think in our press release, we have mentioned that is more or less, I would say, normalized EBITDA for the quarter, which is at about 9.5%. The one-offs for the quarter is about, I would say I mean, this is a rough number at this moment. It's about USD2 million. That's about, let's say, INR15 million, INR18 million or so INR18 crores or so.

Clarifies the impact of one-time costs on reported margins and provides a specific figure for the hit.

Asked by Jaiprakash Toshniwal

DCD growth vs. industry and market share Direct
No, I think in DCD, if you are looking at it, the growth is close to double digit, whereas industry growth is at about 8%. It is in line with that. But you must also understand that the other than beyond cables, the base is pretty small, although the percentage looks interesting, but the base is still very small.

Addresses concerns about DCD's market share and clarifies that growth is in line with the industry, with 'beyond cables' being a small base.

Asked by Viraj

Chuhatsu JV opportunity landscape and timeline Partial
I think I think correctly, Akhilesh said, Japanese are very cautious and they are really long term. So, it has taken some time to come to the current stage. And we must also keep in mind the 2 Japanese the leading Japanese customers, OEMs, passenger vehicle in India have already got multiple suppliers for these products. So, they have also been a little cautious. But I think we have broken that ice. I think we have now starting to receive RFQs.

Provides insight into the cautious nature of Japanese OEMs and the long-term strategic value of the JV, rather than immediate revenue.

Asked by Viraj

Utilization of deferred tax from losses Evasive
It's more a conservative approach, Viraj, because we have always been very conservative in such matters. So, we are very confident of what how it will pan out when it pans out. But at this moment, we have taken a prudent and conservative view on this. I think in a year or so, these things will completely change.

Highlights a conservative accounting approach that might be impacting reported tax rates and suggests potential future changes.

Asked by Viraj

Gross margin decline QoQ and tariff impact Direct
So, in the number as announced, there has been a significant hit of that tariff amount, although we have a written confirmation from customers that they will pay, but it's a timing issue.

Explains the reason for gross margin pressure, attributing it to a timing issue with tariff recovery, which is expected to normalize.

Asked by Gokul Maheshwari

Braking business for OEMs Direct
So, in terms of braking, I think we do multiple braking products in production in terms of we supply lever and combi brake systems to multiple ICE OEMs and EV OEMs. That started only in the last year where we displaced multiple current vendors where showing the kind of confidence customers have with us.

Details the company's current braking product offerings and its strategy to become a systems provider, including ABS.

Asked by Gokul Maheshwari

Employee cost as a percentage of sales Partial
On the consolidated piece, let's also understand 5 years ago, our international exposure was less. It is a lot more now. And the employee cost, as you all very well know, overseas or internationally at a much higher level. And I think that will remain the same. The point here is that between then and now, the size of our STC has increased. To that extent, the employee cost also has gone up.

Explains the reasons for higher employee costs (increased international exposure, STC growth) and suggests that growth will eventually bring the ratio down.

Asked by Jinal Sheth

Negative surprises in restructuring costs in Q4 Direct
I think as we said, by end of this that means I'm talking about the Q4, we would be all done with it. I don't really see anything significant that in the quarter, at least at this moment or so far in this quarter. And I think most of our restructuring is complete.

Provides assurance that major restructuring costs are largely complete and no significant negative surprises are expected in Q4.

Asked by Saurabh Shroff

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview (9M)

For the 9 months ended December 31, 2025, consolidated revenue (excluding SCS) reached INR 2,464 crores, marking an 8% growth over the previous year's INR 2,290 crores. Consolidated operational EBITDA (excluding SCS) grew 11% to INR 327 crores, up from INR 295 crores in the prior year. Standalone revenue for the same period was INR 1,371 crores, a 7% increase, with standalone operational EBITDA growing 4% to INR 234 crores.

Controls Division Restructuring & Challenges

The Suprajit Controls division (excluding SCS) saw operational revenue grow by 13.7%, but operational EBITDA declined by 10.5%. This was primarily due to the shutdown and relocation of operations from Juarez to Matamoros, leading to one-time severance costs and overtime expenses for expedited shipments. Management noted approximately USD 2 million (INR 15-18 crores) in one-off costs for the quarter. The division also faced delayed cash recovery from tariff pass-through mechanisms, impacting gross margins.

Domestic Cable & Electronics Division Performance

The Domestic Cable division's revenue grew by 9%, aligning with the domestic industry's performance, and maintained strong EBITDA margins. The aftermarket segment showed particularly strong performance. The Suprajit Electronics Division (SED) demonstrated robust growth of nearly 20%, with EBITDA increasing by almost 160% and margins reaching a strong double-digit territory of 11.2%. This growth reflects strong traction in electronics programs, clusters, and plotters, despite ongoing risks from memory chip shortages.

Phoenix Lamps Division Headwinds

The Phoenix Lamps division experienced a muted quarter, primarily driven by a sharp reduction in exports to the Middle East. The Indian aftermarket for Phoenix Lamps also faced challenges from counterfeit products and low-cost Chinese imports. Management is aggressively working to overcome these issues, with the outlook for the next year appearing brighter due to new inquiries.

SCS Integration & Turnaround

The restructuring of Stahlschmidt Cable Systems (SCS), following its acquisition, is substantially complete. Key actions included relocating a tool room from Germany to Morocco, ramping up the new Hungary warehouse, and finalizing headcount reductions in Germany. SCS is progressing well towards achieving positive EBITDA by the end of the current financial year, with renewed customer confidence and new business wins starting to materialize.

Strategic Investments & Product Development

Suprajit completed a EUR 1 million strategic investment in Blubrake Italy, its ABS partner, complementing an earlier licensing agreement. The company is actively developing new products, including ABS hydraulic brake systems, which are currently under testing at multiple OEMs with hopes for commercialization this financial year. The Chuhatsu JV for transmission cables is also progressing, with RFQs received from Japanese OEMs in India and for exports, though commercialization is expected to take time due to the cautious nature of Japanese partners.

Tariff Impact and Recovery

The company highlighted the impact of tariff changes, particularly the increase from 25% to 50% in the last quarter, which led to a significant hit on reported gross margins. While customers have provided written confirmation of payment, the cash recovery is delayed, creating a timing issue that strains working capital. Management expects gross margins to normalize once these tariff amounts are recovered, and believes improving tariff clarity will accelerate new business wins globally.

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