Suprajit Engineering Limited Stock Analysis

Standalone revenue momentum is robust with Q3 FY26 revenue of Rs. 4,940.61 million, up ~8.2% YoY from Rs. 4,563.74 million, and nine-month standalone revenue of Rs. 13,714.53 million versus Rs. 12,832.96 million in 9M FY25, a ~6.9% YoY growth. / Standalone earnings quality is improving: nine-month standalone PAT of Rs. 2,087.50 million versus Rs. 1,982.72 million in 9M FY25 (+5.3% YoY), and the nine-month standalone EPS of Rs. 15.21 already exceeds 83% of FY25 full-year EPS of Rs. 18.33, suggesting Q4 FY26 standalone earnings should comfortably beat FY25 full-year levels. / Interim dividend raised 20% to Rs. 1.50/share (150% of face value Re. 1/-) versus Rs. 1.25 in the prior year, reflecting management confidence in cash generation sustainability on a standalone basis and signaling shareholder-return commitment. / Consolidated topline is expanding strongly with 9M FY26 revenue of Rs. 27,828.94 million versus Rs. 24,000.28 million in 9M FY25 (+15.9% YoY), demonstrating that the SCS acquisition and global footprint are meaningfully scaling consolidated revenues even if profitability lags. / Exceptional item of Rs. 71.11 million (standalone) and Rs. 78.15 million (consolidated) relating to Labour Code reclassification is a one-time, clearly disclosed liability — core recurring profitability remains unimpaired and the nature of this charge is transparent and bounded. / Hedge accounting adoption effective April 1, 2025 under Ind AS 109 for highly probable forecast sales using forward contracts reduces forex volatility risk on export revenues, improving earnings predictability going forward.

Consolidated Q3 FY26 PAT of Rs. 125.27 million represents a sharp ~62.5% YoY decline from Rs. 334.10 million in Q3 FY25, and four international subsidiaries cumulatively lost Rs. 222.49 million in Q3 and Rs. 779.32 million in 9M FY26, creating a sustained and material drag on consolidated profitability. / SCS acquisition integration risk is elevated: the second-stage acquisition of Canada and China operations (Rs. 304 million cash consideration, completed May 2025) is still on provisional purchase price allocation per an independent valuer, meaning final goodwill and asset values remain unconfirmed, adding accounting uncertainty. / Consolidated finance costs for 9M FY26 stand at Rs. 492.92 million versus Rs. 461.06 million in 9M FY25 (+6.9% YoY), and standalone finance costs for 9M FY26 are Rs. 204.63 million versus Rs. 169.70 million (+20.6% YoY), indicating rising debt service burden that could pressure free cash flow if operating performance softens. / Consolidated cost structure shows employee benefit expenses of Rs. 6,670.62 million for 9M FY26 versus Rs. 5,368.19 million in 9M FY25 (+24.3% YoY), significantly outpacing revenue growth of ~15.9%, compressing operating leverage and suggesting integration-related headcount costs are yet to be rationalized. / SCS Polska subsidiary was liquidated in August 2025 and Trifa Lamps Germany GmbH is currently under liquidation subject to German regulatory approval — these restructuring activities signal ongoing operational difficulties in the European subsidiary portfolio and may entail further charges or impairments. / Consolidated deferred tax charge for Q3 FY26 stands at Rs. 170.99 million (versus a credit of Rs. 31.63 million in 9M FY25 full year), indicating reversal of deferred tax assets at the subsidiary level, which could reflect recognition of losses at overseas entities and adds a layer of earnings volatility uncertainty.