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

SJS’ 4QFY26 performance was beat to our estimates due to better than expected growth in 2W revenues. SJS maintained its leading profitability with margins > 28% due to ramp up in exports, premiumization and operating leverage. The only laggard was WPI due to the product rationalization in consumer segment, which is expected to iron out in medium term. The collaboration with BOE Varitronix is progressing well, with orders placed for the equipment and commercial production expected to start in 1QFY28E. We expect the outperformance to continue due to various drivers like rising content per vehicle, increasing wallet share, addition of customers in domestic & export markets and entry into new business having much larger addressable market. We have upward revised our earnings for FY27E/28E by 3.2%/ 0.6% resp. to account for margin expansion, partly offset by increase in depreciation (capex spent pushed to FY27E & FY28E). This along with valuation roll forward has led to upward revision in target price at Rs 2,320 (previously Rs 2,190). Re-iterate BUY.

Delivers robust growth on revenue:

Legacy business revenues (decals, logos, dials, etc.) surged 41% yoy to Rs 1.4bn, driven by ramp up of dispatches to Hero and exports. Amongst subsidiaries, SJS Decoplast reported strong 31% yoy increase in revenue to Rs 713mn, while WPI delivered revenue of Rs 466mn (+3% yoy, +9% qoq), impacted by a product rationalization in consumer segment. On a consol. basis, revenue grew by 30% yoy to Rs 2.6bn (MNCL estimates of Rs 2.5bn). The automotive segment of SJS delivered 41% yoy growth, sharply outperforming the 19% yoy growth in the base industry (2W + PV) production volumes, while the consumer segment declined 9% yoy. For FY26, SJS delivered 26% yoy growth in revenues at Rs 9.6bn.

Margins strength persists:

SJS reported consol. margins at 28.7%; +330bps yoy, primarily attributable to better product mix, operational efficiencies and increasing share of exports.  This translated into consol. EBITDA of Rs 747mn; +46% yoy. Consol. PAT grew by 48% yoy to Rs 485mn, aided by higher other income. For FY26, SJS delivered a strong 38% yoy growth in EBITDA at Rs 2.7bn and a 260bps margin expansion at 28.3%. SJS closed FY26 with a 45% yoy jump in PAT at Rs 1.7bn, strong supported by high other income.

Outperformance outlook constructive:

We expects SJS’s outperformance to industry growth to continue, supported by 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. 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 and enter a high TAM (total addressable market). Commercial production is expected to start in 1QFY28E. Capacity expansion is on track, as the Pune chrome plating facility is in final stages of commissioning, with trials underway and business wins already secured for FY27. The capacity expansion at Bangalore plant (running at more than 95% utilisation) is expected to be commissioned in 1QFY27E. We have upward revised our earnings estimates for FY27/28E by 3.2%/ 0.6% resp. to account for margin expansion, partly offset by the increased depreciation charge (capex spent pushed to FY27E & FY28E). Potential acquisition to further penetrate overseas markets, remains an optionality to our estimates. Remain positive on SJS.

Valuation and risks:

With visibility on outperformance, we factor in Revenue/EBITDA/PAT CAGR of 18%/18%/19% respectively over FY26-28E. We value SJS at 30x (unchanged) FY28E earnings to arrive at target price of Rs 2,320 (vs. Rs 2,190 earlier) and maintain a BUY rating. The increase in TP is due to upward revision in earnings and valuation rollover. Risks: Poor recovery in consumer segment, slowdown in exports.

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

*CMP is as per report published date

Click to download the full SJS Enterprises Ltd. Q4FY26 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. Q4FY26 Company Update

What drove SJS Enterprises’ strong Q4FY26 performance?

Strong growth in automotive revenues, export ramp-up, premiumization trends, and operational efficiencies supported performance.

Why are margins remaining strong for SJS Enterprises?

Improved product mix, rising exports, and operating leverage have helped the company sustain industry-leading profitability.

What are the key future growth drivers?

Growth will be supported by premium vehicle content, export expansion, new customer additions, and automotive display opportunities.

What risks should investors monitor?

Risks include slower recovery in the consumer segment, export demand weakness, and delays in scaling new business initiatives.

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