SJS Enterprises rallies 31% in last nine days on strong Q4 results

Shares of SJS Enterprises hit an over six-month high of Rs 492 and rallied 9 per cent on the BSE in Thursday’s intra-day trade on healthy demand outlook.

The stock of the auto components & equipments company has surged 31 per cent in the last nine sessions, after it delivered a strong and robust performance, outpacing the industry during March 2022 quarter (Q4FY22).

At 12:43 pm; SJS Enterprises was trading 7 per cent higher at Rs 483, as compared to a 0.27 per cent rise in the S&P BSE Sensex. It was trading at its highest level since November 26, 2021.

The company had debuted on the bourses on November 15, 2021 and is now trading 9 per cent below its issue price of Rs 542 per share. It had hit a 52-week high of Rs 551 on November 15, 2021 and touched a 52-week low of Rs 340 on December 27, 2021.

Ace investor Ashish Kacholia held 3.77 per cent stake in SJS Enterprises at the end of March 31, 2022, the shareholding pattern data shows.

SJS Enterprises is a leading aesthetics solution provider with an extensive suite of premium products for the auto industry. The company deals in 11 product categories like decals, logos, aluminium badges, 2D & 3D dials, chrome plated parts, overlays in-moulding labeling, optical plastics and lens mask assembly.

These products primarily serve two wheelers (2W), passenger vehicles (PV) and large consumer durables (CD) industries along with commercial vehicles, medical devices, farm equipment’s and sanitary ware segments.

The company announced its plans to grow at a CAGR of around 25 per cent organically for FY23-25 period and said its inorganic growth would boost the growth further. SJS said its current order book that will be executed in FY23 is around 80-85 per cent of FY23 forecasted revenue.

The strong moat, margin profile and expected operating leverage will drive PAT growth of around 30 per cent YoY going ahead, it said. 

In Q4FY22, the company’s consolidated revenues stood at Rs 104 crore, a growth of 13.4 per cent quarter on quarter (QoQ), compared to the 2 per cent growth QoQ of the combined production volumes of Passenger Vehicle (PV) and Commercial Vehicle (CV) segments.

Despite a rise in raw material costs, earnings before interest, taxes, depreciation, and amortization (Ebitda) downside was limited at Rs 26.69 crore on the back of operational efficiencies. Ebitda stood at Rs 26.43 crore in Q3FY22. Ebitda margin declined to 25.3 per cent from 28.5 per cent in the previous quarter.

Meanwhile, aesthetics are a growing source of product differentiation for OEMs amid wider customer preference for aesthetically pleasing, premium products.

SJS is one of the industry leaders with the widest product portfolio spanning traditional as well as advanced technology offerings. Decorative aesthetics are unaffected by the EV transition and would instead be poised to gain from a kit value perspective, according to analysts.

Crisil Research expects the Indian decorative aesthetic market catering to OEMs to grow at 20 per cent CAGR to around Rs 4,920 crore by FY26E, led by growth in the underlying application segments, shift towards premium products (e.g. bigger cars, higher demand for mid/top car variants), higher penetration of superior aesthetic products (such as optical plastics and chrome-related parts) and technology shift towards newer products that cost more.