Suprajit Engineering Limited — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

Suprajit Engineering reported a satisfactory Q4 FY25, with strong consolidated EBITDA growth driven by operational efficiencies. The company provided clear guidance for FY26, targeting double-digit revenue growth and improved EBITDA margins for the group, alongside a strategic turnaround for the acquired SCS business. Key focus areas include diversification beyond cables, technology investments, and navigating global tariff challenges.

Highlights

  • Consolidated revenue (excluding SCS) for FY25 reached INR 3,106 crores, marking a 7% YoY growth.

  • Consolidated operational EBITDA for FY25 was INR 401 crores, up 23% YoY.

  • Standalone revenue for FY25 grew 12% to INR 1,718 crores, with standalone operational EBITDA up 8% to INR 298 crores.

  • The Board recommended a final dividend of 175%, bringing the aggregate FY25 dividend to 300%, an increase from 250% in the prior year.

  • Total debt stood at INR 657 crores as of March 31, 2025, with a surplus cash balance of INR 251 crores.

  • The SCS business is targeted to turn EBITDA positive by Q4 FY26, with an expected full-year revenue of around USD 40 million for FY26.

  • Management guided for double-digit revenue growth for the group (excluding SCS) and an EBITDA margin of 12% to 14% for FY26.

  • A capex budget of INR 160 crores is planned for FY26.

Concerns

  • Tariff issues / trade wars (especially US-China, Europe)

Key financials

  1. Consolidated Revenue (ex-SCS) ₹3,106 Cr +7%YoY
  2. Consolidated Operational EBITDA ₹401 Cr +23%YoY
  3. Standalone Revenue ₹1,718 Cr +12%YoY
  4. Standalone Operational EBITDA ₹298 Cr +8%YoY
  5. Total Debt (as of Mar 31, 2025) ₹657 Cr
  6. Surplus Cash (as of Mar 31, 2025) ₹251 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 (SCD)
    65% Y-o-Y Margins Growth9.7% Y-o-Y Margins52% Q4 EBITDA Growth
  • Domestic Cable Division (DCD)
    13% Revenue Growth
  • Phoenix Lamps Division (PLD)
    0% Revenue Growth22.7% EBITDA
  • Electronics Division
    27% Revenue Growth
  • SCS Business
    ₹49 Cr 9-month Operational Loss (Phase 1)

Guidance & targets

Profitability

  • Group EBITDA Margin Profitability · Coming year (FY26) · High confidence 12% to 14%
    We expect that the group will have double-digit revenue growth. This is even excluded even SCS, we still expect to have double-digit EBITDA I mean, double-digit revenue growth, and we expect EBITDA margin to be 12% to 14%.

    — Akhilesh Rai

Revenue

  • SCS Business Revenue Revenue · Full year (FY26) · High confidence USD 40 million
    The business of that SCS to be generally give an idea, will be around USD 40 million for the full year.

    — Ajith Kumar Rai

  • Phoenix Lamps Division (PLD) Growth Revenue · This year (FY26) · Medium confidence Single digits
    This Phoenix Lamps would be although the aim is to get back to double-digit, knowing the business, I think it will be somewhere in single digits.

    — Ajith Kumar Rai

Other

  • SCS Business Integration Other · FY27 (under SCD) · High confidence Complete consolidation
    And along with the Canada and China acquisition, which is already supposed to be EBITDA positive, we think the SCS as a group will certainly reach EBITDA positive by Q4, and we will then consolidate completely in FY '27 under SCD.

    — Akhilesh Rai

Capex

  • Total Capex Budget Capex · Current year (FY26) · High confidence INR 160 crores
    The capex for the entire group is about INR160 crores.

    — Ajith Kumar Rai

Tax

  • Effective Tax Rate Tax · Generally · High confidence 25% to 26%
    Yes, it's generally 25%, 26% in the group.

    — Medappa Gowda J.

Market context

  • Group Revenue Growth (excluding SCS) Revenue · Coming year (FY26) · High confidence Double-digit
    We expect that the group will have double-digit revenue growth. This is even excluded even SCS, we still expect to have double-digit EBITDA I mean, double-digit revenue growth, and we expect EBITDA margin to be 12% to 14%.

    — Akhilesh Rai

  • SCS Business EBITDA Profitability · By Q4 FY26 · High confidence Positive
    But as we've clearly said, by Q4, we should be turning EBITDA positive. I think that is the target for SCS for the current year.

    — Ajith Kumar Rai

  • Controls Division (SCD) Growth Revenue · This year (FY26) · High confidence Double-digit
    I think while the global business is expected to grow at 0% in the current year, our Controls Division is expecting to grow in double-digit this year.

    — Ajith Kumar Rai

  • Domestic Cable Division (DCD) Growth Revenue · This year (FY26) · High confidence Double-digit
    we expect both the Domestic Cable Division and Suprajit Controls Division to grow in double digits for the year.

    — Ajith Kumar Rai

  • Electronics Division Growth Revenue · This year (FY26) · High confidence Double-digit
    And Electronics Division, of course, will have a double-digit growth, but it's a small base still for making a big impact on the top line.

    — Ajith Kumar Rai

Risks & concerns

  • Tariff issues / trade wars (especially US-China, Europe)

    high

    Unpredictable tariff changes cause turmoil, creating an intervening period where costs are absorbed before being passed on to customers.

    Management acknowledged

  • Global automotive industry slowdown / weak market scenario

    medium

    Globally, the auto industry growth is near 0%, posing a challenge, though Suprajit expects to outperform.

    Management acknowledged

  • Customer write-offs and insolvency

    medium

    Write-offs occurred in Phoenix Lamps (insolvent European customer) and Electronics Division (troubled EV customers), though management states EV-related write-offs are now complete.

    Management acknowledged

  • SCS integration costs and losses

    medium

    The SCS business incurred operational losses, with restructuring and integration costs contributing to one-off expenses, but management expects improvement from Q1/Q2 FY26.

    Management acknowledged

Areas of evasion (3)

  • Specific breakup of one-off costs beyond general categories
  • Exact margin impact of changing sourcing to India for tariffs
  • Granular geographical revenue breakup

Q&A highlights

2 direct
SCS business outlook (revenue, profitability, 3-year prospect) Direct
from the SCS point of view, the year will be a year of stabilization and consolidation and assimilation of the acquisition... by Q4, we should be turning EBITDA positive. I think that is the target for SCS for the current year. The business of that SCS to be generally give an idea, will be around USD 40 million for the full year.

Provides specific financial targets and strategic direction for the recently acquired SCS business, which has been a drag on overall performance.

Asked by Amit Hiranandani

One-off expenses, restructuring charges, and customer write-offs in Q4 FY25 Partial
The customer write-offs have been happening, but this year has been a little more than normal. For example, at Phoenix Lamps, one of our European customers went insolvent... some of those things had to be written off... oneoffs which are in a total amount, if you look at all of that, maybe around INR25 crores, INR30 crores would be there for the last year.

Clarifies the impact of non-recurring items on Q4/FY25 results and gives an approximate magnitude, crucial for understanding underlying performance.

Asked by Amit Hiranandani

SCD margins and challenges to achieve 14-15% normalization Direct
The Controls Division is already now in the last 2 quarters have hit 10%. Now will it go to 14%? That is your basic question, which is fair. I think it is the kind of targets we have. But whether we'll achieve in 1 year is a different point... Challenge is, of course, when somebody can tweet a change of tariff, we don't know what's happening. So that's the major most major uncertainty in this.

Addresses a key profitability target for the core division and highlights the significant external risk of tariff changes impacting margin realization.

Asked by Shubham Sehgal

3 min read 7 chapters

Detailed narrative

Q4 FY25 Financial Performance and Dividend

Suprajit Engineering reported a consolidated revenue (excluding SCS) of INR 3,106 crores for FY25, reflecting a 7% year-on-year growth from INR 2,896 crores. Consolidated operational EBITDA saw a robust increase of 23% to INR 401 crores, up from INR 326 crores in the previous year. Standalone revenue grew 12% to INR 1,718 crores, with operational EBITDA rising 8% to INR 298 crores. The Board recommended a final dividend of 175%, bringing the total dividend for FY25 to 300%, an increase from 250% in FY24.

SCS Business Turnaround Strategy and Outlook

The acquired SCS business, which recorded an operational loss of INR 49 crores over nine months, is a key focus for turnaround. Management projects SCS to achieve EBITDA positive status by Q4 FY26 and generate approximately USD 40 million in revenue for the full year FY26. The integration of Canada and China operations is nearing completion, and the full consolidation of SCS under the Suprajit Controls Division (SCD) is targeted for FY27, aiming to leverage global footprints and synergies.

Divisional Performance and Growth Drivers

The Suprajit Controls Division (SCD) demonstrated strong performance, with Y-o-Y margins increasing by 65% to 9.7% and Q4 EBITDA jumping 52%, driven by new business wins. The Domestic Cable Division (DCD) grew its revenue by 13%, though margins were impacted by increased corporate and technology center staffing. The Phoenix Lamps Division (PLD) maintained flat revenue but improved EBITDA to 22.7%, despite Q4 write-offs. The Electronics Division saw revenue growth of 27%, but Q4 performance was weaker due to sales drops from large customers and provisioning.

Strategic Focus on Diversification and Technology Investment

Suprajit is actively diversifying its product portfolio beyond traditional cables, with significant traction in combi brake systems, which have been launched for 4 OEMs (1 ICE, 3 EV). The Suprajit Tech Center (STC) is expanding, with a new building expected this financial year, supporting global entities and introducing new products. A technical tie-up with Blubrake, Italy, for an innovative ABS product for the Indian market further underscores the company's commitment to advanced technology solutions.

Navigating Global Tariff Challenges

The company highlighted the significant impact of global tariffs, particularly from the US, on supply chains. Management is implementing a multi-pronged strategy to mitigate these effects, including passing on duties to customers, changing sourcing locations to India and Morocco, and pursuing legal avenues for legacy tariff issues. They expressed confidence in their ability to manage the duty situation effectively, leveraging their global footprint for nearshore and onshore supplies.

FY26 Outlook: Growth, Margins, and Capex

For the upcoming financial year (FY26), Suprajit expects double-digit revenue growth for the group, excluding the SCS business. The company also targets an EBITDA margin in the range of 12% to 14%. A capital expenditure budget of INR 160 crores has been set for FY26, following a conservative spend of INR 80-90 crores in FY25. The effective tax rate is anticipated to remain stable at 25-26%.

One-off Expenses and Customer Write-offs

Approximately INR 25-30 crores in one-off expenses were incurred in FY25, primarily due to SCS transaction costs, restructuring efforts in Matamoros, and warehouse relocation from Germany to Hungary. Customer write-offs affected Phoenix Lamps due to an insolvent European customer and the Electronics Division due to issues with certain EV customers. Management confirmed that write-offs for these EV customers have already been accounted for, and no further significant write-offs are expected.

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