SJS Enterprises Ltd - Premiumisation and Export-led Outperformance - Company Update

We revise our target price on SJS Enterprises upwards to Rs2,190 to account for an increase in revenue/ margin estimates, and valuation roll-forward to Dec’27E. SJS delivered another quarter of strong industry outperformance, with record profitability and sharp acceleration in exports, supported by premiumization, operating leverage and continued ramp-up with key OEMs. While the near-term outlook at WPI remains cautious, we believe the legacy business and SJS Decoplast will continue to exhibit strong growth momentum, reaping the benefits of GST 2.0. Our estimates currently exclude any contribution from potential acquisition and the collaboration with BOE Varitronix, which remains optional. We remain positive on company’s earnings consistency and execution strength, and upgrade our rating to BUY due to attractive valuations.

Revenue beats expectations:

Legacy business revenues (decals, logos, dials, etc) increased by 58% yoy to Rs1.45bn, driven by ramp up of dispatches to Hero and a sharp scale-up in exports. Amongst subsidiaries, SJS Decoplast reported 16% yoy increase in revenue to Rs553mn, while WPI delivered revenue of Rs429mn (+10% yoy, +2% qoq), impacted by weak demand from consumer segment. On a consol. basis, revenue grew by 36.4% yoy to Rs2.44bn (MNCL estimates of Rs2.21bn). The automotive segment of SJS delivered 46% yoy growth, sharply outperforming the 15.7% yoy growth in the base industry (2W + PV) production volumes, while the consumer segment grew 7% yoy.

Margins fortify:

SJS reported consol. margins at 29.3%; +395bps yoy. The margin expansion was primarily attributable to better product mix, operational efficiencies and increasing share of exports. Effectively, SJS reported consolidated EBITDA of Rs714mn; +57.7% yoy. Consolidated PAT grew by 61.9% yoy to Rs446mn, aided by higher other income.

Staunch outperformer, trend to persist:

SJS continues to outpace industry growth, supported by the premiumization trend, increasing wallet share among existing customers, and progressive scale-up with new domestic and overseas clients, targeting ~14–15% export contribution by FY28E. We believe the company is well placed to sustain its outperformance. The signing of a Technology License and Supply Agreement with BOE Varitronix for automotive display assembly and optical bonding strengthens SJS’s position in higher-value aesthetic and electronics-adjacent components, providing medium-term optionality to further increase kit value. We maintain a positive outlook on the long-term prospects of SJS, supported by (i) preferred premiumization play, underpinned by its integrated one-aesthetic-shop capability, (ii) demonstrated track record of consistent outperformance versus industry, and (iii) strong earnings visibility at both SJS standalone and Exotech. Capacity expansion is on track, with the Pune chrome plating facility under commissioning and capex in standalone business expected to be operational by 4QFY26. We have revised our earnings estimates upward for FY26/27E by 12.2%/ 8.4% resp. to account for higher revenue/ margin. Potential acquisition and revenue from collaboration with BOE Varitronix remain optionality to our estimates.

Valuation and risks:

With robust earnings visibility, we factor in revenue/EBITDA/PAT CAGR of 20%/23%/27% respectively over FY25-28E. We value SJS at 30x Dec’27 earnings to arrive at target price of Rs 2,190 (vs. Rs1,930 earlier). The increase in TP is due to valuation rollover, upward adjustment to our revenue and margin estimates. Risks: Poor recovery in consumer segment, slowdown in premiumization.

Company website: https://www.sjsindia.com/

*CMP is as per report published date

Click to download the full SJS Enterprises Ltd. Q3FY26 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

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FAQs on SJS Enterprises Ltd. Q3FY26 Company Update

Overview: SJS Enterprises has emerged as a strong growth player in the automotive aesthetic components segment, benefiting from premiumisation trends and expanding export opportunities. Below are key questions investors commonly evaluate while assessing the company’s outlook.

1. What drove SJS Enterprises’ strong earnings growth?

The company delivered strong growth due to rising exports, premium product mix, higher OEM dispatches and improved operating leverage.

2. What is the role of premiumisation in SJS Enterprises’ growth?

Automotive manufacturers are increasingly using premium design elements such as logos, decals and chrome components, which increases the value of aesthetic components supplied by companies like SJS Enterprises.

3. How important are exports for SJS Enterprises?

Exports are a growing part of the company’s strategy, with management targeting around 14–15% export contribution to total revenue by FY28.

4. What opportunities come from the BOE Varitronix partnership?

The collaboration allows SJS Enterprises to enter higher-value segments such as automotive display assembly and optical bonding, potentially expanding its product portfolio.

5. What risks should investors monitor?

Key risks include weaker demand in the consumer segment and any slowdown in the automotive premiumisation trend.

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