Automobile, Cables

Suprajit Engineering – Leader in Automotive Cables

The market leader in Automotive Cables with a ~75% market share in 2W OEMs

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(A) About

Suprajit Engineering Ltd is the Flagship company of the Suprajit Group. Suprajit Engineering Ltd (SEL) was incorporated on May 24th, 1985 as a Pvt Ltd company and then converted into a Public Ltd company in Jun'95.

The company is engaged in the business of manufacturing auto components consisting mainly of control cables, speedo cables, auto lamps, and other components for automobiles and caters to both domestic and international markets.

further, The company is one of the major suppliers to the OEMs such as TVS Motors, Hero Honda, Motors Ltd, Escorts Automotives, Kinetic Honda Motors, RHW India, and Whirlpool Washing Machines Ltd.

(B) About The Suprajit Group

The Suprajit Group is a global leader in the automotive cable and halogen bulb industry. With a competitive manufacturing base in India, the UK, the US, and Mexico, along with our technical and logistical support worldwide.

However, the group provides optimal product development and manufacturing solutions to its domestic and international customers.

Further, The Group comprises Suprajit Engineering Limited (which includes Phoenix Lamps), Suprajit Automotive Limited, Suprajit Europe Limited, Wescon Controls LLC, and Suprajit Inc USA.

In fact, With a compounded annual growth of over < 25%, the group has one of the largest manufacturing capacities in the world with 300+ million cables per year and 80+ million bulbs per year.

(C) Journey

(D) Shareholding Pattern

Suprajit Engineering Ltd. - Shareholding Pattern
Suprajit Engineering Ltd. - Shareholding public
Suprajit Engineering Ltd. - Shareholding Promoters

(E) Management Executive of the company

(i) Mr. K Ajith Rai - Chairman and Founder

Ajith Rai Rai is the current Chairman of the company and the Suprajit Group. He is 63 Years old and has rich experience of 36 Years. Moreover, He has completed his education in B.E.M.A.Sc from Canada.

Before finding the group, Mr. Ajith worked as a Research & Technical assistant at the Technical University of Nova Scotia, Canada.

for FY22, Remuneration received Rs 4.91 Cr which is 0.26% of Net Sales and 2.83% of Net Profit.

(ii) Mr. Mohan Srinivasan Nagamangala - MD & CEO

Mr. Mohan Srinivasan Nagamangala is the present MD and CEO of the Company. He is 59 Years.

Further, Mr. Mohan has also rich experience of close to 35 Years in diverse industries. From the day of Joining Suprajit, Mohan played a Vital role in the growth of the group as well as the company.

Subsequently, Mr. Mohan has completed a degree in B.E (Mechanical), from ICWA.

for FY22, Remuneration received Rs 1.54 Cr which is 0.08% of Net Sales and 0.89% of Net Profit.

(F) Business of the Company

Suprajit Engineering Ltd is one of the leading companies for Automotive Cables. The company has mainly 4 Businesses which consists

  • Automotive Cables
  • Control Cables
  • Phoenix Lamps (Halogen & LEDs) and
  • Other Components such as Brake shoes, Levers, Speedometers, etc.
Suprajit Engineering Ltd. - Entities and Subsidiaries

(G) Segment and Products Categorization

Suprajit is mainly offering Four Division of diverse products to Both OEMs and Aftermarket which caters to the Automotive, Non-Automotive and Non-Automotive Outdoor Power Equipment (OPE) industry.

Suprajit Engineering Ltd. - Products Portfolio

As we all know, Company is the leading manufacturer of 2W Automotive Cables with a ~75% market share, So Company manufactures different types of cables Push and Pull cables, Connectivity cables, and Lever assemblies Cables.

Whereas, Some other products have good weightage such as Halogen Lamps which are supplied to Domestic and international OEMs and in the aftermarket segment. Concerning emerging markets EV Push co is also inline them to Manufacturer LED light that comes under the "Phoenix" Brand

However, Company is also Manufacturing and Selling Speedometers and Digital Clusters according to Customer needs and Technology adoption that it wants.

Similarly, Suprajit has also developed and is supplying Rotary sensors, gear shifters, and patented braking systems across EV, OPE, and LCV customers. All were developed by STC and handed over to regional manufacturing plants.

Suprajit Engineering Ltd. - Products Portfolio

(H) Revenue Mix

(i) Revenue Mix By Different Businesses

Suprajit Engineering Ltd. - revenue share by Business

Auto Cable

In FY22, ~59% of Revenue was contributed by Auto Cable Business. However, Under Auto Cable Business 2W (OEMS) has contributed a share of 48% and 18% by 4W (OEMs). Whereas, 18% has been contributed by Domestic Aftermarket and rest 18% contribution by 18% Export OEMs.

PLD Business

Further, In FY22, 19% of Revenue was driven by Phoenix Lamp Division. PLD primarily caters to the aftermarket segment in the overseas market. Well, overall PLD Business distributed among 70% Aftermarket (15% Domestic, 55% Export) and 30% OEMs (Domestic).

Subsequently, The company operates the overseas business through two wholly-owned subsidiaries i.e
Trifa and Luxlite

SENA - Cables

SENA which is Suprajit Engineering Non-Automotive Business contributed 23% in total Revenue for the year FY22. SEL caters to the Non-Auto businesses through two entities – one is the standalone entity (15% of segment revenue) and Wescon Controls LLC (85% of total revenue).

In fact, Wescon is the market leader in Non-Auto Power Equipment cables in the USA and has recently diversified by supplying cables to other Non-Auto segments such as Power Sports Vehicles (PSV) and medical instruments.

LDC (Newly added Business)

LDC means Light Duty Cables. Its a leading supplier of cables and cable-based actuation systems, supplying to all the major OEMs and Tier-1 suppliers. Its Portfolio consists of a broad range of mechanical cables and electromechanical actuation (EMA) systems.

In Oct’21, SEL signed an agreement to acquire the assets of the Light Duty Cables (LDC) business unit of "Kongsberg Automotive". The deal was valued at an EV of US $42 Mn.

LDC is expected to add ~Rs6.8bn in FY23 and ~Rs8.1bn in FY25 an EBITDA of margin of 10% over FY24-25.

(The company aims to replicate this stellar performance in the global markets post-LDC’s acquisition)

(ii) Segment-wise Revenue Breakup

Suprajit Engineering Ltd. - category Wise revenue Mix

In FY21, The Automotive category contributed 17% and the Non-Automotive Category contributed 21% to Total Revenue. Whereas, 2 Wheeler contributed the highest with 35% revenue rest by Aftermarket.

Interestingly, The share of Aftermarket and Non-Automotive grew significantly post the addition of the lamps and non-auto cables division.

Additionally, The Company is Diversifying the product profile by reducing the dependence on 2Ws through organic and inorganic. Moreover, Increasing share in PV, After Market, and non-auto.

(iii) Geography-wise Revenue mix

Suprajit Engineering Ltd. - geography wise revenue mix

Over the years, Suprajit's overall Export increased significantly. The exports have increased because of the acquisition done by Suprajit over the years.

By Acquiring several Businesses and divisions, the company can win the business and able to build its strong footprints such as Europe, Mexico, Russia, and the US.

(iv) Customers Across Various Segments

Suprajit Engineering Ltd. - Customers

(I) Operational Facilities

(i) Manufacturing Facilities

Suprajit Engineering Ltd. - Manufacturing Facilities

19 Plants across India has enough facilities of manufacturing automotive Cables and Bulbs. However, Out of the total India's Plants, some are Domestic oriented and some are Export oriented (OEMs).

Additionally, SEL has been supplying Auto Cables to foreign OEMs like BMW, VW, John Deere, MTD, Kubota, and Honda.

After that on the LDC side, LDC has production facilities in Mexico, China, and Hungary (low-cost manufacturing locations) while it also has 9 sales offices located near major customers.

(ii) Manufacturing Capacities

(a) Cable

Suprajit Engineering Ltd. - Cable Capacity

In FY22, The Suprajit has a Cable Capacity of <300mn/p.a, After the Addition of LDC Capacities the combined capacity reported at 410Mn/p.a. However, The LDC has a presence in 4 countries Mexico, China, Hungary, and the US.

Suprajit Engineering Ltd. - Cable Capacity Growth

(b) Bulbs

Earlier, Suprajit's entity Phoenix, into Manufacturing of Bulb, has the capacity of 87m/p.a but After the acquisition of Osram’s Chennai facility (23mn capacity), Phoenix Lamps is the only remaining large manufacturer of halogen headlamps in India with a total capacity of 110mn bulbs per annum.

(J) Peers Comparison

Suprajit Engineering Ltd. - Peer Comparison (competitors)

Suprajit's Engineering is a part of one of the highly competitive Automotive industries, Despite its having a concrete position in the Automotive cable industry with the highest Manufacturing Capacity of 410 mn/P.a.

Suprajit Competes with several major competitors like under Lighting Business with Signify (formerly Philips) and Under Cable Hi-Lex Japan.

Several other players are competitors but their Manufacturing capacity levels are not as much as Suprajit has. So here, Suprajit is a Competitive edge over their Competitor to grow faster than expected.

(K) Cost Structure

(i) As % of Net Sales

Suprajit Engineering Ltd. - Cost structure as % of Net sales

During Mar 21, the Company’s Major expense that has incurred on raw materials comprised a proportion of ~59%. Whereas, Employee Costs comprised 18.79% and Power & Fuel costs reported at 1.52%.

(ii) Operational Expenses (YoY)

Suprajit Engineering Ltd. - Raw Material Consumed as % of Net sales
Suprajit Engineering Ltd. - Employee Cost as % of Net sales
Suprajit Engineering Ltd. -Freight and Forwarding Expense as % of Net sales

Suprajit Engineering Ltd. - Power & Fuel Expense as % of Net sales

(L) Financial Parameters

Suprajit Engineering Ltd. - Financial Parameters
  • Undoubtedly, Over the year, Company had given stellar sales. The10 Years CAGR of sales was reported at 17%.
  • PAT stood at 16% at CAGR Growth.
  • However, During FY21-22 company acquired some investments by acquiring a Company which affected the cash flow.
  • Moreover, Company is aiming to reduce its debt by keeping moderate CAPEX for upcoming years. the debt will be paid by generating more cash from the business.

(ii) Terms of Trade

Suprajit Engineering Ltd. - terms of trade

(iii) DU Pont Analysis

DU Pont is similar to ROE. Over the past 10 Years, Company's ROE improved significantly.

Suprajit Engineering Ltd. - Du Pont

PATM improved from 6.65% (2022) to 9.40% (2022) which is telling company has worked exponentially on stabilizing its profitability.

However, on Sales/Total Assets, which tells the Asset Turnover which means how much that the company is efficient in generating sales via utilizing its assets. So, from 2012 to 2022 Company Turnover is decreasing which raises the question of not utilizing of assets effectively.

Furthermore, the asset/equity ratio indicates the relationship of the total assets of the firm to the part owned by shareholders (aka, owner’s equity). This ratio is an indicator of the company’s leverage (debt) used to finance the firm. So, here the picture is a bit different. The company is using the moderate size of the borrowed fund against its equity. which is good for the company.

(M) Management Discussion

Light Duty Cables (LDC)

The Recently Closed Deal of LDC business which is one of the divisions of "Kongsberg automotive" has faced certain Headwinds due to Commodity prices and also because of Muted demand. Although, Plant was running at Low capacities due to Shangai (China Lockdown restrictions).

Both Suprajit and LDC have come together for the finance and IT Integration which is going well and as expected it will Complete in time.
To boost the Process a Project is also Running called Project Max.

After there the First target is to achieve a $100mn business in 2-3 yrs and then cross EBITDA of 10% from single Digit. Btw facing a Headwind here with existed players which are giving Difficulties to Compete.

Suprajit technical Center (STC)

Recently it Received an order worth 100cr for the products which are part of STC. For the accomplishment of the order co. Is going to set up a small division of Electronics. (production is also on the way at unit-3)

Now management is Focusing on two products

  1. Digital Clusters Instruments (For the US) under which they are developing and some have developed new and Innovative speedometers for all 2w and 3w. For 4w its is still lagging and not focusing but given a sign to move very sooner (or it could be the next step) to foray into 4W. Management is clear with the STC products that it will generate similar growth to other Segments btw (14-16% EBITDA Margins) So the company is in line and expecting traction
  1. Rotary Sensor - a Hall effect sensor (which will be used with the throttle mechanism). Due to EV out space throttle can be Replaced with an e-throttle so here they are focusing. For these two they have decided to Investment after getting good Response and acceptance from the market.


  • By the next 3-5yrs company is having a clear aim to ensure more content for 2w against what it is having today.
  • Last yr STC contributed 10-15cr in Total revenue, but now it's expected to double by 30-40cr by this year. And by a double from 30-40cr by next year with a full streamlining of electronic digitalization.

For Lamps (Phoenix)

Entry into the US is still difficult Because players are much stronger and have deep connectivities with other OEMs. So it is facing issue to broke the chains. Somehow they had won some Business but Ukraine Sentiment was Disrupted. Some strategies were Adopted which had been used in Russia's entry time but not worked well.
So here making a presence will take some more time.


Last year they have announced a CAPEX of 140cr which used 110 for Land and building and rest 30cr for the expansion of 2 Units and electronics (Clean Room)


In automotive cables, it's Already leading. whereas In Bulbs is much stronger against even nearer competitors because it's having a cap in the range of 110 - 115mn against 25mn to the nearer peer. So Capacities in their hands. Moreover, Reduced Imports are also in favor.

Q4-Concalls Highlights

Overview of the Business

  • Supply Chain Areas Will Remain Challenging because of Shortages of Semi Chips, and a Strong uptick in Commodity Prices.
  • Rising Shipping Costs and container costs Made it difficult to pursue the Supply in lean time, which resulted in Delays in the Supply.
  • In 2W, Suprajit reported extremely Tepid performance and therefore it has got some amount of bearing. Despite the headwinds, the company believes that it has performed well in the Domestic 2W segment and US Market which has shown good traction.
  • Moreover, Other/New Market are also affected in terms of Both Demand and Supply Due to the Ongoing war Between Ukraine and Russia.
  • The company has reported 12% Growth in Revenue. Revenue for the Year March 2022 stood at 1840 cr against Rs 1641 cr for the previous
  • EBITDA stretched by 10%.
  • The overall group debt level was Rs.312 Crores as of Mar 22, Whereas Last year it was 327 cr.
  • Moreover, Co. has cash that it has invested in the form of MF worth Rs 261 cr.
  • Last year, Suprajit had already enhanced the additional Capacity for Phoenix (Lamps), So now Company set a very minimal Capex for Upcoming Years.
  • Board has approved an investment in the SMP Line such as Electronic Clusters (Meters) and e-throttle control lines which will be commissioned by July 2022
  • Moreover, Company is on the track to expand Narasapura and Bommasandra facility

(N) Risk Concerns

(i) Risk of product obsolescence

LEDs are gaining prominence and are preferred over Halogen Lamps by OEMs. With the increasing preference for LEDs, the price difference between LEDs and Halogen Lamps has significantly narrowed.

The price differential in FY19 was at ~7-10x, which has reduced to ~2-2.5x. Increasing adoption of LEDs poses a risk to PLD.

But the good part is that the company has introduced LEDs in the Aftermarket segment, which it can expand going ahead.

(ii) Delayed recovery in the Automobile industry

A large part of SEL’s revenue is dependent on the automobile industry. Many Analysts believe that the auto industry is set for a recovery, but any delay in this recovery can affect the topline in the future.

(iii) Geopolitical risks

SEL has significant exposure to foreign markets like the EU and the US. Geopolitical issues, if they get prolonged, can affect the company’s growth prospects. Furthermore, inflation and recessionary risks can further hurt exports.

(iv) Currency risk

About 40% of SEL’s revenue comes from exports. The company exports primarily to the US and the EU. Any adverse currency movements can affect the topline.

However, the company has a natural hedge for part of this revenue as the costs in foreign subsidiaries are in the same currency. Also, SEL hedges a part of its exposure on a rolling basis.

(N) Strength and Weakness

(i) Strength

(a) Established market position, diversified revenue profile, and strong operating efficiency

The group is one of the largest manufacturers of mechanical control cables with a presence in both automotive and non-automotive segments. Revenue growth has been healthy in the past few years, driven by steady offtake and diversification into aftermarket and export segments.

The group has entered segments such as lamps, and started catering to non-automotive segments, through acquisitions, and augmented capacities in the cables business. The operating margin has been healthy at 14-16%, over the four fiscals through 2021.

For the first half of fiscal 2022, the group has reported a revenue of Rs.856 crore with operating profitability of around 16 percent. Over the medium term, revenues and profitability are expected driven by benefits from economies of scale, higher productivity, and the leadership position allowing for passage of any hike in key raw material prices to customers.

(ii) Weakness

(a) Susceptibility to volatility in raw material prices and cyclicality in end-user industries

The group remains susceptible to volatility in raw material prices and pricing pressure from OEMs, as the domestic automobile industry contributes to 60% of revenue. In the exports segment, the group faces competition from other large automotive component players across the globe.

Raw material cost also accounts for a large portion of the overall cost of sales.  As raw materials are commoditized in nature, their prices tend to fluctuate widely and thus impact the operating margin.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered as a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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