The shares of one of the leading mechanical control cable manufacturers gained 3% after the company announced that it is expected to add €50 million to its revenue following its acquisition of a Germany-based cable maker.
Suprajit Engineering Ltd is one of the largest manufacturers of mechanical control cables with a presence in both automotive and nonautomotive segments, primarily engaged in the manufacture of speedo cables, auto lighting, and other components for automobiles.
Suprajit Engineering Ltd. (SEL) holds a market share of over 65% in domestic 2-wheeler category, And 30-35% of passenger vehicles in the automotive cables market, and it has a wallet share of more than 75% with most of its key customers.
The company’s product categories include braking systems, control cables, display clusters, telematics, friction products, gearboxes, gear shifter systems, lighting systems, linear actuation, and throttle control.
As per the company’s exchange filing,Suprajit Engineering Ltd. is expected to add €50 million to its revenue following the acquisition of Germany-based Light Duty Cable maker Stahlschmidt Cable Systems (SCS). This acquisition, valued at €13.5 million, is being carried out through insolvency proceedings in Germany.
Suprajit will execute the acquisition through its subsidiary, Suprajit USA Inc. Additionally, it plans to establish companies in Canada and China, alongside the newly formed Suprajit Germany GmbH, to facilitate this transaction.
The transaction is expected to occur in two phases. The first phase, involving Germany, Poland, and Morocco, is anticipated to be completed by July 1, 2024, contingent upon debt reduction, essential restructuring, and other prerequisites. The second phase, involving Canada and China, will be finalized in the subsequent months.
Suprajit Engineering intends to finance this entire transaction using its internal accruals and available cash on hand.
The company’s revenue climbed by 12 percent year on year, from Rs 699 crore in Q4FY23 to Rs 783 crore in Q4FY24. During the same period, the company’s net profit increased by 44 percent, from Rs 41 crore to Rs 59 crore.
In the last six months, the share price has gained 30%, and in the last 12 months, the shares have gained 26%.
The company boasts notable clients, including BMW, Mahindra Group, Hero Motocorp, TVS, Bajaj, Honda, and various other automotive customers.
Suprajit Engineering holds the position of the largest manufacturer of automotive cables in India based on sales, boasting a manufacturing capacity of approximately 400 million cables annually. Additionally, the company produces halogen lamps with a manufacturing capacity of around 110 million per year.
Operating on a global scale, Suprajit Engineering has 22 manufacturing facilities worldwide, including a technology centre in the UK. The company’s facilities cater to both automotive and non-automotive businesses.
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, Mexico and China.
The group consists of Suprajit Engineering Limited (including Phoenix Lamps), Suprajit Automotive Limited, Suprajit Europe Limited, Wescon Controls LLC, Suprajit Mexico, Suprajit Hungary, and Suprajit Inc. USA.
At the time of writing this report, Suprajit Engineering Ltd, shares were trading at Rs 486 each, representing a 3% increase from the previous closing price.The company belongs to the small-cap category of stocks, with a market capitalization of Rs 6,728 crores.
Written by Omkar Chitnis
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