The supply shock due to the war in West Asia has led to an increase in costs for Suprajit Engineering, which the company plans to pass on. Shares of Bengaluru-based auto components manufacturer Suprajit Engineering jumped to the day’s high before cooling off after Founder and Chairman K Ajith Kumar Rai hinted at more price hikes. Rising commodity prices, partly driven by uncertainty in West Asia, remain a challenge for the company. However, Suprajit has been working with customers to recover the additional costs through price adjustments.
“The timing is the issue,” Rai said, explaining that the company expects to pass on most of the additional costs between the second and third quarters. Some price increases have already taken effect, while the remaining adjustments are expected to be completed in the next quarter. The stock was trading at ₹482.25 at 11:32 am on the NSE and has gained more than 10% over the past year. Management is confident that pricing pressure will not affect growth. “As you have seen, the GST changes have very positively impacted the Indian automotive industry, and all the automotive manufacturers are growing at 20% plus kind of a growth.
The same thing is to be expected in our business also. We are closely connected with them.
Both our domestic and global business is pretty strong as we speak,” Rai explained. Suprajit Engineering has been beefing up its global operations by consolidating its Stahlschmidt Cable Systems (SCS) and light duty cable (LDC) entities, which concluded in March last year.
“Our global cables margins from the previous year quarters of 5-6% has jumped to 12%,” he added. Despite increasing competition, Suprajit continues to secure new contracts across multiple geographies, including China, India, Morocco and Matamoros in Mexico. The company recently announced several business wins, including a contract with a lifetime value of more than $35 million and another with an annual value of around $12 million to $14 million. Automotive contracts typically involve projected production volumes, while actual volumes can change by the time a programme reaches commercial production.
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As a result, the company does not treat the projected order book as fixed revenue. The company is the world’s third-largest maker of control cables by volume (producing over 300 million cables a year), which it sells to carmakers. Watch accompanying video for more
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(Edited by : Sriram Iyer)
