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Suprajit Engineering demonstrates fast growth

06-06-2014 • About Suprajit Engineering ($SUPRAJIT) • By InTwits

Suprajit Engineering is an attractive 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 fast growth in the last financial year. Suprajit Engineering's revenue surged on 17.9% in FY2014. The growth also happened in EBITDA of 19.6% for the same period.

In the longer period the company showed fast revenue growth of 16.4% from FY2011 to FY2014 annually. EBITDA surged on 18.2% from FY2011 to FY2014 annually.

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

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue7,3693,4574,2264,6255,452
Revenue growth, %-53.1%22.2%9.4%17.9%
SG&A, %
EBITDA458569687786940
EBITDA growth, %24.2%20.7%14.4%19.6%
EBITDA margin, %6.22%16.5%16.2%17.0%17.2%
Net Income222327398471508
Net Income margin, % 3.01%9.47%9.42%10.2%9.32%
 
CAPEX88263300331253
CAPEX/Revenue, %1.20%7.60%7.10%7.16%4.64%
Debt6176588251,1131,560
Cash823297265
Net Debt/EBITDA1.3x1.1x1.2x1.3x1.6x
 
ROIC, %30.6%32.4%31.8%28.0%26.1%
ROE, %35.5%39.2%35.2%31.8%27.4%

Profitability and return on investment


EBITDA growth was supported by margin expansion. EBITDA margin increased slightly on 0.200 pp from 17% to 17.2% in FY2014. If we look for the longer period EBITDA margin increased slightly on 0.700 pp from 16.5% in FY2011 to 17.2% in FY2014.

We call Suprajit Engineering an attractive growth stock as together with the growth it delivers high ROIC at 26.1%. Three years ago it was higher at 32.4%. It's average level of ROIC for the last three years was 28.6%.

Suprajit Engineering showed decline of 0.900 pp from 10.2% to 9.30% in FY2014. In the last 3 years Suprajit Engineering showed small Net Income margin decline of 0.200 pp from 9.50% in FY2011 to 9.30% in FY2014.

Suprajit Engineering operates at ROE of 27.4%. It's average level of ROE for the last three years was 31.5%.

Capital expenditures (CAPEX)


Suprajit Engineering's CAPEX/Revenue was 4.64% in FY2014. CAPEX/Revenue dropped on 2.96 pp from 7.60% in FY2011 to 4.64% in FY2014. It's average CAPEX/Revenue for the last three years was 6.30%.

Leverage (Debt)


Suprajit Engineering has medium debt level at 1.6x Net Debt/EBITDA to maintain high growth. In the last 3 years leverage surged on 0.47x from 1.12x in FY2011 to 1.59x in FY2014.

Valuation vs. comparable companies


At the end of trading day today Suprajit Engineering traded at 13.2x EV/EBITDA which is 17.4% lower than 16.0x Auto Parts & Equipment peer group avearge calculated on the basis of 122 companies. The market closed today at 21.5x P/E for Suprajit Engineering which is 16.4% higher than 18.5x Auto Parts & Equipment peer group avearge calculated on the basis of 16 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 18.1x EV/(EBITDA-CAPEX) which is not surprisingly 99.5% higher than 9.1x Auto Parts & Equipment industry avearge calculated based on 14 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, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Exide Industries ($EXIDEIND)-59.6%11.5%19.7%30.6%
Motherson Sumi Systems ($MOTHERSUMI)-86.4%79.1%71.3%20.2%
Fiem Industries ($FIEMIND)-54.4%25.2%13.4%18.7%
Amara Raja Batteries ($AMARAJABAT)-66.9%34.3%25.1%16.1%
L.G.Balakrishnan & Bros ($LGBBROSLTD)-48.0%27.7%4.8%15.9%
 
Median (33 companies)-35.9%16.9%2.4%4.4%
Suprajit Engineering ($SUPRAJIT)-53.1%22.2%9.4%17.9%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Tube Investments Of India ($TUBEINVEST)7.2%33.7%18.4%24.4%28.3%
Shanthi Gears ($SHANTIGEAR)27.8%44.6%37.9%30.2%27.8%
Amtek Auto ($AMTEKAUTO)25.1%20.7%
Shivam Autotech ($SHIVAMAUTO)8.5%23.2%24.1%24.1%20.6%
Banco Products (India) ($BANCOINDIA)7.8%12.9%12.2%11.6%14.4%
 
Median (32 companies)5.4%10.9%11.1%9.8%10.1%
Suprajit Engineering ($SUPRAJIT)6.2%16.5%16.2%17.0%17.2%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Amtek Auto ($AMTEKAUTO)18.9%27.1%
Amara Raja Batteries ($AMARAJABAT)1.3%2.9%3.7%2.5%10.9%
Subros ($SUBROS)5.4%11.6%16.6%10.7%9.3%
Lumax Auto Technologies ($LUMAXTECH)1.7%3.7%5.1%7.3%7.8%
Sona Koyo Steering Systems ($SONASTEER)3.5%5.9%9.8%6.6%7.1%
 
Median (24 companies)2.7%8.0%5.6%4.5%5.2%
Suprajit Engineering ($SUPRAJIT)1.2%7.6%7.1%7.2%4.6%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Amara Raja Batteries ($AMARAJABAT)39.1%30.5%32.1%34.5%30.3%
Exide Industries ($EXIDEIND)45.9%34.2%24.2%24.3%29.5%
Motherson Sumi Systems ($MOTHERSUMI)15.9%23.7%13.5%16.5%25.0%
Munjal Showa ($MUNJALSHOW)14.6%18.8%29.9%23.8%22.5%
Munjal Auto Industries ($MUNJALAU)23.6%26.3%30.6%21.5%21.1%
 
Median (43 companies)12.3%14.0%16.2%13.7%13.6%
Suprajit Engineering ($SUPRAJIT)30.6%32.4%31.8%28.0%26.1%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Tube Investments Of India ($TUBEINVEST)5.8x8.1x17.6x17.8x17.3x
Autoline Industries ($AUTOIND)3.3x3.1x3.2x4.0x12.0x
Steel Strips Wheels ($SSWL)4.4x4.6x5.4x6.3x6.5x
Automotive Stampings & Assemblies ($ASAL)1.8x1.8x1.1x3.9x6.3x
Ucal Fuel Systems ($UCALFUEL)8.4x4.1x4.3x5.6x5.7x
 
Median (40 companies)2.1x2.3x1.4x2.0x0.8x
Suprajit Engineering ($SUPRAJIT)1.3x1.1x1.2x1.3x1.6x


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