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SJS Enterprises Ltd

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About the Company

SJS Enterprises Ltd. (SJS) is one of the leading players in the Indian decorative aesthetics industry in terms of revenue. It offers a “design-to-delivery” aesthetics solutions provider with the ability to design, develop and manufacture a diverse product portfolio for a wide range of customers primarily in the automotive and consumer appliance industries.

 

Q4FY22 Updates

Financial Results & Highlights

Standalone financials (in Crs)
  Q4FY22 Q4FY21 YoY % Q3FY22 QoQ % FY22 FY21 YoY%
Sales 74 74 0.0% 67 10.4% 271 255 6.3%
PBT 19 15 26.7% 19 0.0% 69 64 7.8%
PAT 14 11 27.3% 14 0.0% 52 48 8.3%

Detailed Results:

  1. The revenue growth for Q4FY22 was flat YoY & increased by 10% on a QoQ basis.
  2. EBIDTA margins stood at 25.3% while NPM stood at 14.6%.
  3. The company’s new customer additions include Stellantis, MG, Honda, Hyundai & Continental.
  4. Revenue contribution from different segments for FY22 stood as follow: –
  1. 2W- 43.3%
  2. PV- 28.8%
  3. CD- 22.2%
  4. Others- 5.7%

 

Investor Conference Call Highlights: 

  1. The management states that traditional versus the new age products, which were only 3% of its sales in FY2019 today constitute about 16% of its overall sales in FY2022.
  2. The management states that for Q4FY22, the two-wheeler industry production volume declined 21% YoY while SJS sales were down only 5%, similarly Passenger vehicle industry production volume growth was flat at 2% YoY while SJS passenger vehicle sales jumped to 52.3 YoY.
  3. The company’s acquisition of Exotech ltd has led to strong performance in FY22 with revenue growth of around 50% YoY & increase in EBITDA margins to 12.8% from 11.3% in FY2021 excluding the one-time gain on the sale of land.
  4. The company’s medium-term growth plan for FY2023 to FY2025 involves the aspiration to grow the top line at a CAGR of about 25% organically while maintaining margins.
  5. The company is expected to incur a capex of about 100 Crores over 18 to 24 months to service high demand for its chrome platings division which will generate revenue & ROCE of Rs.300 Cr & 20% respectively at full capacity.
  6. The management states that almost 85% – 90% of the sales that the company is expecting to do for FY2023 are already business awarded to the company.
  7. The company’s exports for FY2022 over FY2021 have grown by 15% and its consumer durable business grew by 24% during the same period.
  8. The management states that customers prefer SJS over others due to its strong financial profile, diversified product basket, lower employee costs in comparison to suppliers in Europe & North America & its services in the form of a styling studio.
  9. The company expects sustainable margins of 13-15% from its chrome plating division.

 

Analyst’s View:

SJS is one of the leading players in the Indian decorative aesthetics industry. The company saw a mixed quarter with revenues flat YoY while profit increased by 27% YoY. The company is gearing up for a capex of Rs 100 Cr to expand its chrome plating division to meet the additional demand. It has also added MG, Honda and Hyundai as customers in Q4. The management guides for an organic topline growth of 25% for the next 3 years. It remains to be seen whether the company will be able to match the management growth guidance and how will its export business pan out in the future. Given the company’s strong position in its industry, SJS is an interesting smallcap stock to watch out for.