SJS Enterprises (SJS) is a leading player in India’s fast growing decorative aesthetics industry (pegged at ₹4,900 crore, growing at 20% CAGR) serving 2Ws (45%), PV (33%) and consumer devices. segments.
SJS outperformed growth in its underlying industry (2W+PV industry of 10% CAGR in FY2019-23), driven by premiumization (premium product share of ~10% in FY2019-23). fiscal 23 vs. 3% in fiscal 2019) and new products/customer additions (through the acquisition of Exotech).
SJS remains one of the beneficiaries of premiumization (content increases 2-4x) in the underlying industry. The recently announced acquisition of Walter Pack India has played a strategic role in expanding its product offering and customer base.
Given the long-standing relationships with its customers, SJS is well positioned to take advantage of cross-selling opportunities and drive higher content.
We expect SJS revenue/EPS to grow 27%/30% CAGR in FY23-26, driven by adding customers, increasing share of wallet with customers existing and new (cross-selling opportunity) and underlying industry recovery.
We are launching a cover on SJS Enterprises with a buy rating and a TP of ₹850.
The main risks are the delay in the recovery of demand for durable consumer goods and the continued slowdown in exports.