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Suprajit Engineering is an attractive growth stock

06-06-2016 • About Suprajit Engineering ($SUPRAJIT) • By InTwits

Suprajit Engineering is a growth stock in Auto Parts & Equipment industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


Suprajit Engineering showed growth in the last financial year. The company's revenue surged on 55.7% in FY2016. In addition to revenue Suprajit Engineering also keeps delivering EBITDA growth. It was 66.8% in FY2016

If we look for the longer period the company showed fast revenue growth of 27.2% from FY2013 to FY2016 annually. EBITDA surged on 28.2% from FY2013 to FY2016 annually.

Suprajit Engineering ($SUPRAJIT) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue4,2264,6255,4526,1189,525
Revenue growth, %9.4%17.9%12.2%55.7%
SG&A, %
EBITDA6877869409911,654
EBITDA growth, %14.4%19.6%5.5%66.8%
EBITDA margin, %16.2%17.0%17.2%16.2%17.4%
Net Income398471508503719
Net Income margin, % 9.42%10.2%9.32%8.22%7.55%
 
CAPEX300331253413543
CAPEX/Revenue, %7.10%7.16%4.64%6.74%5.70%
Debt8251,1131,5601,6602,586
Cash29726552172
Net Debt/EBITDA1.2x1.3x1.6x1.6x1.5x
 
ROIC, %31.8%28.0%26.1%22.9%25.1%
ROE, %35.2%31.8%27.4%22.6%20.9%

Profitability and return on investment


EBITDA growth was supported by margin expansion. EBITDA margin increased on 1.20 pp from 16.2% to 17.4% in FY2016. In the last 3 years Suprajit Engineering's EBITDA margin increased slightly on 0.400 pp from 17% in FY2013 to 17.4% in FY2016.

We call Suprajit Engineering an attractive growth stock as together with the growth it delivers high ROIC at 25.1%. During the last three years it dropped - it was 28.0% in FY2013. It's average level of ROIC for the last three years was 24.7%.

Suprajit Engineering showed decline of 0.600 pp from 8.20% to 7.60% in FY2016. In the longer period Net Income margin dropped on 2.60 pp from 10.2% in FY2013 to 7.60% in FY2016.

Suprajit Engineering operates at ROE of 20.9%. For the last three years the average ROE was 23.6%.

Capital expenditures (CAPEX)


To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 5.70% in FY2016. CAPEX/Revenue dropped on 1.46 pp from 7.16% in FY2013 to 5.70% in FY2016. For the last three years the average CAPEX/Revenue was 5.70%.

Leverage (Debt)


Having such a fast growth profile the company keeps medium debt level at 1.5x Net Debt/EBITDA. If we look for the longer period leverage surged on 0.13x from 1.33x in FY2013 to 1.46x in FY2016.

Valuation vs. comparable companies


The market closed today at 15.8x EV/EBITDA for Suprajit Engineering which is 35.8% lower than 24.5x Auto Parts & Equipment peer group avearge calculated on the basis of 122 companies. At the end of trading day today Suprajit Engineering traded at 32.9x P/E which is 46.9% higher than 22.4x Auto Parts & Equipment peer group avearge calculated on the basis of 13 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Suprajit Engineering traded at 23.5x EV/(EBITDA-CAPEX) which is 641% higher than 3.2x Auto Parts & Equipment peer group avearge calculated on the basis of 13 companies.

Peers in Auto Parts & Equipment


Below we provide Suprajit Engineering benchmarking against other companies in Auto Parts & Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Fiem Industries ($FIEMIND)13.4%18.7%14.5%19.4%
Ip Rings ($IPRINGLTD)2.4%-0.1%19.5%16.7%
Amara Raja Batteries ($AMARAJABAT)25.1%16.1%22.6%11.4%
Spectra Industries ($SPECTRA)40.2%-10.1%57.1%11.1%
Motherson Sumi Systems ($MOTHERSUMI)71.3%20.2%14.0%10.7%
 
Median (35 companies)12.1%2.4%4.9%8.7%2.8%
Suprajit Engineering ($SUPRAJIT)9.4%17.9%12.2%55.7%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Ist ($ISTLTD)71.6%
Tube Investments Of India ($TUBEINVEST)18.4%24.4%28.3%30.0%21.4%
Shivam Autotech ($SHIVAMAUTO)24.1%24.1%20.6%18.7%16.6%
Amara Raja Batteries ($AMARAJABAT)14.9%15.7%14.2%17.0%17.6%
Raunaq Automotive Components ($RAUNAQAU)10.2%10.5%12.0%15.1%13.1%
 
Median (45 companies)10.8%9.8%10.1%9.9%10.8%
Suprajit Engineering ($SUPRAJIT)16.2%17.0%17.2%16.2%17.4%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Shivam Autotech ($SHIVAMAUTO)11.6%4.1%4.9%12.5%27.9%
Fiem Industries ($FIEMIND)12.5%4.7%6.7%7.2%11.2%
Amara Raja Batteries ($AMARAJABAT)3.7%2.5%10.9%9.6%11.0%
Steel Strips Wheels ($SSWL)13.3%11.4%5.8%4.5%9.7%
Jbm Auto ($JBMA)9.8%8.4%14.4%7.8%
 
Median (22 companies)5.7%4.5%4.9%4.5%4.9%
Suprajit Engineering ($SUPRAJIT)7.1%7.2%4.6%6.7%5.7%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Amara Raja Batteries ($AMARAJABAT)32.1%34.5%30.3%35.4%33.7%
Motherson Sumi Systems ($MOTHERSUMI)13.5%16.5%25.0%24.9%25.1%
Gabriel India ($GABRIEL)19.9%15.5%18.0%24.0%25.0%
Fiem Industries ($FIEMIND)18.7%16.9%19.9%20.2%23.1%
Harita Seating Systems ($HARITASEAT)16.6%16.2%12.7%12.5%22.4%
 
Median (48 companies)15.7%11.9%14.5%14.5%13.6%
Suprajit Engineering ($SUPRAJIT)31.8%28.0%26.1%22.9%25.1%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Shivam Autotech ($SHIVAMAUTO)2.0x1.5x1.5x2.2x4.3x
Steel Strips Wheels ($SSWL)5.4x6.3x6.5x5.6x4.2x
Jbm Auto ($JBMA)3.0x2.8x1.7x2.5x2.7x
Rico Auto Industries ($RICOAUTO)3.6x4.2x2.3x1.5x2.1x
Subros ($SUBROS)3.1x2.8x3.1x3.1x1.9x
 
Median (39 companies)1.3x2.3x0.7x0.0x0.0x
Suprajit Engineering ($SUPRAJIT)1.2x1.3x1.6x1.6x1.5x