Suprajit Engineering: Navigating Global Headwinds with Robust Q2 FY26 Performance

Suprajit Engineering Limited, a prominent player in the automotive components sector, has reported a resilient performance for the second quarter and half-year ended September 30, 2025. Despite a challenging global economic landscape marked by geopolitical conflicts, tariff issues, and shipping congestions, the company demonstrated strong operational improvements and strategic execution. The consolidated revenue, excluding the recently acquired Stahlschmidt Cable Systems (SCS), grew by a healthy 6.4% year-on-year to INR 1,605 crore for the half-year. Operational EBITDA saw an even more impressive surge of 17%, reaching INR 215 crore, reflecting enhanced efficiency and strategic initiatives.

The company's performance was largely propelled by its Suprajit Controls Division (SCD) and Suprajit Electronics Division (SED). SCD, excluding SCS, saw its operational revenue increase by 7% year-on-year, with a remarkable 50% jump in operational EBITDA, achieving a double-digit margin of 11.6%. This growth was attributed to strong new program introductions and underlying operational improvements, including in-sourcing of populated PCBAs and labor productivity enhancements. The Domestic Cable Division (DCD) also contributed positively, with operational revenue growing by 10.2% and robust EBITDA margins of 16.8%, driven by traction in 'beyond cable' products and new braking projects. Capacity expansion at the Chakan facility has been completed to support this growth.

Divisional Performance Snapshot (H1 FY26)

Conversely, the Phoenix Lamps Division (PLD) experienced a muted quarter, with revenues declining by 5.1% to INR 1,805 crore for the half-year and EBITDA margins dropping to 12.8%. This was primarily due to a steep reduction in exports to Middle Eastern countries. However, a significant opportunity has emerged for PLD, as a global competitor's Chapter 11 declaration has led to multiple new inquiries for exports and from domestic OEMs. The Suprajit Electronics Division (SED) showcased exceptional growth, with revenue increasing robustly by 36% to INR 715 crore and operational EBITDA soaring by 250.7% to INR 77 crore, achieving a significant margin of 10.7%. This was achieved by overcoming a slowdown from a leading EV customer through new order execution from other clients, with throttle grips showing record sales.

Strategic Initiatives and Future Outlook

Suprajit's strategic roadmap, encapsulated in its 'De-Risk and grow Profitably' policy, is clearly yielding results. The integration of Stahlschmidt Cable Systems (SCS) is progressing well, with European production fully relocated to Morocco and the Poland plant closed. Operations at Juarez are being moved to Matamoros, and a new Hungary warehouse has been established. Management anticipates SCS to turn EBITDA positive by the fourth quarter of this year, marking a significant turnaround for the acquired entity.

The Suprajit Technology Center (STC) continues to be a cornerstone of innovation, driving 'beyond cable' product lines. These include advanced braking and brake release systems, digital clusters and sensors, and actuation systems. The STC is actively collaborating on Blubrake ABS, which is currently under validation for two customer requirements, and developing non-magnetic throttle controls to address rare earth material issues. The company also announced the application for 6-8 acres of additional land at AURIC Bidkin Industrial area near Aurangabad, signaling plans for future expansion and new projects.

Market Diversification and Global Footprint

Suprajit's diversified market presence across Passenger Vehicles, Off-Highway, 2 & 3-Wheelers, and Aftermarket segments ensures that no single customer accounts for more than 10% of its revenue. This broad market reach, combined with a global manufacturing footprint spanning India, Mexico, USA, Hungary, Morocco, and China, positions the company strongly to leverage onshore, nearshore, and offshore models effectively. The company's 'EV Readiness' strategy ensures its products are largely drivetrain/EV agnostic, with its SED portfolio mitigating threats from evolving technologies.

Management maintains its guidance of growing consolidated business by 5-10% better than global industry growth (5-year average), while sustaining strong double-digit margins. The second half of the fiscal year is expected to be stronger, buoyed by anticipated US trade agreements, resolution of Middle East uncertainties, and better performance in Indian automotive markets due to GST reductions and ongoing group restructuring. Suprajit Engineering continues to demonstrate disciplined execution and strategic foresight, reinforcing investor confidence in its long-term growth trajectory.