Suprajit Engineering Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

4 Ajith Kumar Rai, Akhilesh Rai, Medappa Gowda J., N.S. Mohan

Analysts

11 Anubhav Mukherjee, Chirag Shah, Gokul Maheshwari, Jinal Sheth, Mumuksh Mandlesha, Nishita Shanklesha, Pornima, Rakesh, Ravi Purohit, Unidentified Participant, Viraj Kacharia

Financials & KPIs

Geographic & Segment Commentary

• Global Cables & Mechatronics (GCM): Revenue grew ~28% (true growth ~23% after adjusting for acquisition optics) with EBITDA margin surging from 5.8% to 12.6%. Restructuring completed with operations now leaner; VAT recoveries secured in China, Canada, and Germany. New business wins recorded across India, Mexico, and China, including 25 cable projects with a leading Chinese EV OEM (5-6 launched) and multiple lines for a large US OEM building resilient supply chains.

• India Cables & Mechatronics (ICM): Revenue grew 21% YoY broad-based across OEM and aftermarket, but EBITDA grew only 4.2% with margins down from 15% to 13% due to raw material inflation and wage increases in the NCR region post-election labor migration. Management treats this as a timing issue; pass-through discussions underway with customers, with recovery expected in Q2-Q3. Braking products growing off a small base (CBS +110%, brake shoes/pads +80%).

• Phoenix Lamps & Electricals (PLE): Revenue grew 5.4% but EBITDA declined 45% with margins down from 12.8% to 6.7% due to delayed aftermarket price increases, now implemented. Trifa sales in Middle East remain soft; ramp-up of deliveries to one of the largest US retailers is underway with store count expected to triple or quadruple next year. A European competitor's insolvency still unresolved, creating potential market share opportunity.

• Sensors, Electronics & Displays (SED): Revenue grew 48% and EBITDA doubled with margins close to double-digit, driven by digital clusters and electronic throttle grips. Capacity expansion on "war footing" — relocating to larger leased premises and rebuilding the current plant as a much larger multi-story facility. Won Mahindra Last Mile Mobility award for rapid throttle ramp-up (rare earth-free throttle development) and ACMA Manufacturing Excellence Award. July clocked highest-ever monthly sales.

• STC (Technology Center): R&D engine supporting ABS and sunroof cable projects; jointly won Ather's Most Innovative Supplier Award with ICM. New STC building on track for completion in Q3. Won three projects in telematics, connected clusters, and TCUs, launching in the coming year.

Company-Specific & Strategic Commentary

• GCM Restructuring Completion: The multi-quarter global restructuring is complete, with margin improvement from 5.8% to 12.6% reflecting tangible results. Operations consolidated across entities (Wescon merged into LDC, SCS warehouse consolidated), previously announced SCS standalone disclosures now subsumed under GCM as a single operating entity.

• Order Wins Momentum: Three large contracts announced in a recent press release: largest EV cable contract (annualized $5M, lifetime $37M); European luxury OEM ($2M/year, lifetime $12M); Japanese OEM ($1.2M/year, lifetime $6M) — allocated across plants in Matamoros, China, and Morocco. Additional wins secured subsequently across India, Mexico, and China.

• EV & Content Strategy: Products are powertrain-agnostic; focus on braking as key EV-enabling technology (stopping side) and digital clusters. Content per vehicle increasing 3-5x across product lines (₹100 cable → ₹400-2,000 brake systems; ₹100 speedometer cable → ₹700-7,000 digital clusters). Combined ICM+SED growth ahead of industry growth.

• Braking Technology Stack: Strategy to own complete braking system responsibility — levers, cables, hoses, reservoir, caliper, rotor, brake pad, ABS — positioned as a "North Star" long-term growth story, longer-dated than electronics. Validation cycles with multiple OEMs in progress.

• Actuation Systems: Product refresh from LDC acquisition complete; pitching to US and European customers. A leading EV OEM evaluating 4-5 actuation-based R&D projects. Indian seating companies discussions underway; 2-3 year timeline for market entry.

• Telematics & Connected Products: Won three projects in telematics, connected clusters, and TCUs; new platform to be offered across OEM base, launching in the coming year.

• Non-Auto Pivot: US non-automotive cable business muted; pivoting pitch to displays and sensors from STC with some sensor supplies already started.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

GCM Margin Quality & Sustainability

• Question: Was there any one-off write-back or FX element driving GCM margin expansion? (Viraj Kacharia)
• Answer: No material one-offs — margin reflects completed restructuring into leaner operations, 20%+ top-line growth dropping through, and cost-improvement projects initiated globally last year. Management maintains GCM guidance of 10-12% EBITDA despite Q1 at 12.6%, citing product-mix variability with new project launches. (Ajith Kumar Rai)

GCM Growth Composition & Optics

• Question: What is the constant-currency growth rate, and is there FX enhancement? (Gokul Maheshwari)
• Answer: No significant FX change in the quarter — rates stable around ₹95-96/USD. GCM growth of 27-28% is optically inflated by ~4 percentage points due to SCS China/Canada second tranche closing in May last year (no April-May revenue in base); true growth is ~23%. July remains strong, with August typically a holiday month in Europe. (Ajith Kumar Rai)

EV Strategy & Content Per Vehicle

• Question: How is management thinking about EV powertrain participation given the product portfolio doesn't significantly cater to powertrain? (Rakesh, Axis AMC)
• Answer: Products are powertrain-agnostic — focused on braking (the "stopping side") and electronics where EV requirements are changing. Content per vehicle is increasing 3-5x across product lines regardless of powertrain. Supply relationships exist with all major EV players in India (Ather, new-age brands). SED+ICM combined growth is ahead of industry growth, validating the strategy. (Akhilesh Rai, Ajith Kumar Rai)

ICM Margin Recovery Timeline

• Question: Can we assume standalone margins will recover to last year's levels once pass-through completes? (Chirag Shah)
• Answer: Yes, expected to be "almost similar" within ±50 bps, with 100 bps as an extreme downside case. Material cost pass-through is not debated by customers; the real debate is wage increases in a labor-intensive operation. Recovery expected by Q2-Q3 as customers agree to wage escalations and productivity measures kick in. (Ajith Kumar Rai)

SED Order Wins & Telcom/Displays Pipeline

• Question: Earlier disclosed order wins (SED) showed consolidated run-rate of ₹40-45 crores; what is the execution timeline and quantum over the next 2-3 years? (Jinal Sheth, Awriga Capital)
• Answer: SED growth hampered earlier by one large EV player that didn't sustain volumes; replaced by multiple new projects from various customers. Currently facing ~6 product launches this month/next month with various customers, a "good problem." July clocked highest-ever electronics sales. Expanding capacity aggressively — relocating temporarily to leased premises, rebuilding current plant as a much larger multi-story facility. Three telematics/connected cluster/TCU projects won, launching next year. Visibility strong for next 12 months. (Akhilesh Rai, N.S. Mohan, Ajith Kumar Rai)

PLE Turnaround & Competition

• Question: With the US retailer ramp-up and European competitor insolvency, will PLE break out of the ~₹90 crore quarterly run-rate? (Jinal Sheth)
• Answer: US business ramping as planned — pilot done last year, specific store counts this year, store count expected to triple/quadruple next year. European competitor insolvency still unresolved (operating, customers supporting); discussions ongoing with multiple prospects and clarity expected in 3-6 months. New prices now in effect, so recovery expected in Q2 and Q3. (Ajith Kumar Rai, Akhilesh Rai)

Braking Business Strategy & Disclosures

• Question: Given braking is a key long-term story, how should we think about the addressable market and CBS progress? (Chirag Shah)
• Answer: Braking is safety-critical with long validation cycles (product and design validation with multiple OEMs). Approach is a complete technology stack — levers, cables, hoses, reservoir, caliper, rotor, pad, ABS — with ambition to own complete system responsibility and specific "real estate" in two-wheeler architecture. Management acknowledged need for better order-win disclosure in quarterly updates, a suggestion taken on record. (N.S. Mohan, Chirag Shah, Ajith Kumar Rai)

Actuation Systems Opportunity

• Question: What is the status of actuation systems from the LDC acquisition, where addressable market is significantly larger? (Ravi Purohit)
• Answer: Product development completed; pitching to US customers, then Europe. In India, a leading EV OEM has 4-5 actuation-based projects in R&D phase (2-3 year timeline). Seating companies entering India are discussing actuation technologies. Existing actuation business continues with new two-wheeler projects launched in last 2-3 years; two levels of actuation products (based on force) in final approval. (Akhilesh Rai, Ajith Kumar Rai)

Chinese OEM Partnership Growth

• Question: How has the Chinese OEM business grown and what is the contribution outlook? (Unidentified Participant)
• Answer: Won nearly 25 cable projects with the world's largest EV maker, 5-6 launched, balance over next 12 months. Shanghai Lonestar saw ~20% growth after two flat years. Positioning is as a global supplier leveraging footprints in Hungary (Europe) and Mexico (North America) as the OEM expands globally. (Ajith Kumar Rai)

Other Income Decline

• Question: Why did other income drop sharply versus Q1 last year? (Anubhav Mukherjee)
• Answer: Multiple elements — loan restatement across divisions, quarter-end creditor/debtor FX restatement, forward covers not routed through balance sheet, and last year's Morocco subsidy not recurring. Last year benefited from favorable rupee-dollar and rupee-euro movements (large translation gains); since March rates have been stable, so no delta. (Ajith Kumar Rai)

Key Takeaway

Suprajit Engineering delivered its highest-ever quarterly revenue of ₹1,070 crores (+24% YoY) in Q1 FY27, with consolidated EBITDA up 57% to ₹129 crores driven by the completed GCM restructuring — margins doubling from 5.8% to 12.6% — and SED revenue growing 48% with EBITDA up 100%. India divisions (ICM and PLE) saw margin compression from raw material and wage inflation, with management emphasizing this is a temporary timing issue as price pass-through completes by Q2-Q3; guidance of 12-13.5% consolidated EBITDA margin for FY27 was reaffirmed. Strategic momentum is visible in order wins across geographies (including 25 cable projects with the largest Chinese EV OEM and three large contracts with lifetime value of $55 million), a complete braking technology stack strategy, telematics wins, and aggressive SED capacity expansion — including a plant relocation and rebuild to support a pipeline of launches. Key watch-points: wage pass-through negotiations with OEMs, PLE margin recovery, the European competitor insolvency resolution, and sustained GCM margin sustainability within the guided 10-12% band despite stronger Q1 performance.

Transcript incomplete — standalone P&L line items (other income, tax, PAT) and balance sheet details beyond debt/cash were not discussed in detail on the call.