We recently visited SJS’s manufacturing facilities in Bengaluru. The company has built end-toend capabilities, spanning from product ideation to final output. It covers all key technologies and is the only player among its peers in India to operate a 2K injection molding process. The company showcased its full range of new-age products (in-mold labelling (IML), in-mold design (IMD), in-mold electronics (IME), chrome plating, cover glass, etc.), highlighting how these offerings are expected to increase content per vehicle by 4x–6x compared to legacy products. SJS is expected to outperform the industry growth by 2x, led by premiumisation, cross-selling opportunities, strong order book and a diversified customer base. On the exports front, SJS does not foresee tariff-related headwinds impacting its competitive positioning and aims to increase export revenue contribution to 14–15% by FY28. We expect SJS’s growth momentum to remain robust, with an EPS CAGR of ~23% over FY25–27E. Maintain BUY rating with a Mar’27 target price of INR 1,425 (25x Mar’27E EPS).
Key highlights from management interaction:
– The management highlighted the complexity involved in manufacturing each product and the need to adhere to stringent quality standards. Even a slight deviation can lead to rejection by the customer. However, they have mastered this process and consistently deliver high-quality products, giving them a competitive edge over peers.
– SJS is confident of outperforming industry growth by 2x, primarily driven by rising content per vehicle led by next-generation products like IML, IMD, IME, and cover glass. They emphasized that SJS has a near-monopoly in these product segments, with minimal competition.
– The new-age products have a higher rejection rate (around 3%) versus the industry average of 2% for conventional products. While this may have some impact on margins, it is expected to be offset by operating leverage.
– During our visit, management indicated that the company has started supplying cover glasses to Visteon. Content per vehicle of a cover glass in a PV ranges between INR ~4k-10k, depending on the sizes. Total addressable opportunity: ~4mn units in India + export opportunity through Visteon, Continental and Marelli. SJS has been working on this technology since last 3 years and has an early mover advantage in this segment.
– Currently, automotive cover glass is getting imported from China and the localisation is expected to happen in phases. Infact, the management has plans to assemble TFT screen and backlight with the cover glass and supply the final product to OEM, that could translate into a bigger opportunity. As per management, the timeline for this is around 1-1.5 years.
– On the export side, management reiterated that they do not foresee any tariff-related risks affecting their competitiveness. They highlighted a strong pipeline of export-ready products and a focused strategy to aggressively onboard new international clients.