Multibagger Stock: SJS Enterprises zooms 106% in 6 months, over 200% in 1.5 years. More upside ahead?

Multibagger Stock: Shares of SJS Enterprises, one of the leading players in the Indian decorative aesthetics industry, continued their upward trajectory for the fourth consecutive trading session on Thursday, October 31, rising an additional 3% to reach an all-time high of ₹1,226.90. This latest surge brings the cumulative gain over the past four days to 9%.

The shares have experienced a significant upward trajectory in recent months, consistently reaching new highs every month. This steady rally is driven by the company's strong financial results in recent quarters, prompting investors to add the stock to their portfolios.

Amid this upward momentum, the stock has successfully navigated market volatility, including in October, with a gain of 22% so far despite sharp corrections in the broader market. Over the past six months, the stock has delivered an impressive return of 106%, while since April 2023, it has surged by a massive 224% to date.

Strong performance in Q2

In the recent September quarter (Q2FY25), the company reported a strong set of numbers, with an 18.1% year-on-year (YoY) jump in revenue to ₹192 crore. Remarkably, the automotive business has achieved its 20th consecutive quarter of outperformance, posting a YoY growth of 18.2%. This growth significantly outpaces the automotive industry’s production volume growth of 10%.

Additionally, EBITDA grew by 37.1% YoY to ₹51 crore, resulting in robust EBITDA margins of 26.6%, attributed to higher sales and improved operational efficiencies. Profit after tax (PAT) surged by 50.9% YoY to ₹29 crore, with margins standing at 15.1%, as per the company's Q2 earnings filing. 

Looking ahead, the company has announced plans for a new global program in exports, set to launch in North and South America and Europe by June 2025. It has also secured a big client or manufacturing badges during the quarter, which analysts estimate could contribute ₹3-4 billion to the topline.

Also, with the onboarding of new clients like FCA Italy, Stellantis US & Brazil, and Chrysler, SJS aims to increase its export contribution to 14-15% over the next three years.

While analysts expect that exports will yield slightly higher margins, the growing business in the consumer segment, including clients like Visteon and Whirlpool, will further support margin growth.

Furthermore, the introduction of a new business segment involving optical cover glass is projected to increase the existing kit value of passenger vehicle systems (PVS) from ₹5,000 per vehicle to between ₹8,000 and ₹10,000 per vehicle, according to analysts. 

Brokerages lift target price for stock post Q2 

Domestic brokerage firms have revised their target prices upward for the stock following the Q2 results. LKP Securities believes that the company's trend of outperforming the industry is set to continue.

The recent addition of a significant export client, along with the expansion of its consumer segment and capacities at Exotech and the introduction of the high-margin Cover Glass product, position SJS for further growth, it stated. 

Additionally, it said the company has eliminated its entire debt of ₹300 million, making it debt-free. This move will lower interest costs and positively impact the bottom line. In light of these favourable developments, LKP Securities has lifted its target price to ₹1,346 and maintained a 'buy' rating.

Similarly, JM Financial has also raised its target price for the stock to ₹1,350 per share, up from an earlier target of ₹1,175, while maintaining its 'buy' rating.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.