Broker’s call: SJS Enterprises (Buy)

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Target: INR 850

CMP: INR 587.70

SJS Enterprises (SJS) is one of the leading manufacturers of fast growing decorative aesthetics industry in India (pegged at Rs 4,900 crore, growing at 20 per cent) serving 2Ws (45 per cent), PVs (33 per cent) and consumer appliances segments.

SJS outperformed growth in its core industry (2W + PV industry + 10 percent CAGR during FY2019-23) led by premium (feature products share of 10% in FY23 vs. 3% in FY2019) and product New/add customers (through the acquisition of Exotech).

SJS remains a franchisee (increases content by 2-4x) in the core industry. It was recently announced that it has acquired Walter Pack India strategically in expanding its product offering / customer base.

Due to the long-standing relationships with their clients, SJS is well-positioned to take advantage of cross-selling opportunities and drive higher content.

We expect SJS revenue/earnings per share to grow 27 percent / 30 percent over fiscal year 23-26 driven by the addition of customers, increased portfolio share with existing and new customers (opportunity to cross-sell) and recovery in the underlying industry.

We commenced coverage on SJS Enterprises with a Buy rating and TP of Rs 850.

The main risks to the delay are a recovery in consumer durables demand and a continued slowdown in exports.