Target: ₹440

CMP: ₹340.95

Founded in 1985, Suprajit Engineering is among the top-three global manufacturers of control cables and halogen bulbs. Suprajit has a diversified revenue base across segments (auto cable: 59 per cent; non-auto cable: 23 per cent; lamps: 19 per cent) and geographies (India/overseas: 47 per cent/53 per cent).

We forecast revenue CAGR of 25 per cent over FY22-25E, driven by: cyclical recovery in the underlying industry (8 per cent medium-term volume CAGR); market-share gains set to add 3 percentage points outperformance vs. the industry, thanks to decentralised plant locations and competitive pricing owing to scale advantages; growth in content per vehicle (CPV) led by new products (about ₹50,000/unit opportunity).

We forecast 28 per cent EPS CAGR over FY22-25 for Suprajit, encouraged by the 25 per cent revenue CAGR and 50 bps EBITDA margin expansion. RoIC is likely to improve to 20 per cent in FY25E from 15 per cent in FY22. We estimate average annual FCF generation of ₹220 crore during FY24E/25 and expect the company's balance sheet to have net-cash of ₹210 crore by FY25 vs. net-debt of ₹100 crore in FY23 (post acquisition of LDC).

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