SJS Enterprises - In a sweet spot for driving premiumization ?

With Indian consumers preferring aesthetics over basic functionalities, SJS is placed in an enviable position where they are a key driver in enabling of aesthetics in Indian Auto Industry

SJS Enterprises (SJS) is one of the leading players in decorative aesthetics Industry catering to 2Ws (34%), PVs (40%) and consumer appliance segments(21%) and others (FMCG, Sanitaryware, Healthcare, Telecom, EMS) (5%). Market size of Decorative Aesthetics is ~2000 crores, whereas for exports it is closer to ~22000 crores.

Prior to 2021, the company was primarily a decorative printing brand. Post acquistion of Exotech and Walter Pack the company has built capabilities in chrome plating and IML/ IMD and IME’s.

What does SJS do ?

SJS produces decals, logos, 2D appliques and domes to advanced products such as 3D lux logos/badges, 3D appliques, lens, mask assemblies, optical plastics, IMEs and IMLs/IMDs.

In 2 Wheelers, the company’s bulk of revenues comes from Logo’s, Badges and Body Graphics.

Key customers in 2 wheelers are TVS, Honda, Bajaj, Royal Enfield, Yamaha and Ola.

Let’s take an example of a legacy Bajaj Pulsar 150 CC bike and what can SJS manufacture for Pulsar 150

1. Bajaj and Pulsar Logo on the body of the bike

2. Decals including 150 written on the front and the back along with decals on headlight and rims.

3. Bajaj logo on Engine.

Along with the above example, SJS has introduced newer generation and future ready products for 2W as seen below.

• Currently content per vehicle in 2W is 300-500 rupees.

• The key new and future innovations driving increase in content per vehicle in 2W

• 3D Speedometers replacing 2D Speedometer & Cover glass for digital screens in 2W. Depending on adoption content per vehicle may increase to 450-1000 rupees a vehicle.

• However, important thing to note is 2 W are constrained by size and there is only limited scope of how much a company can innovate and increase content per vehicle as 2W size has remained constant for decades.

• With SJS having a very healthy share in 2W and especially bikes, growth in 2W is broadly led by underlying 2W volume growth.

Passenger vehicles -

Passenger vehicles have seen a big shift to SUV’s from Hatchbacks and Sedans. We wrote about the Passenger Vehicles Industry to check out what’s driving and who are the beneficiaries.

Larger the car, leaves more room for aesthetics resulting in disproportionate growth for decorative aesthetics player like SJS.

In 4 wheelers the company supplies to Mahindra, Maruti , Tata, Kia, Hyundai, Morris Garage, Volkswagen, Skoda India and Stellantis.

In fact Mahindra is the largest client of the company contributing ~14-15% of revenues.

Let’s take Mahindra XUV 700 and see what SJS can manufacture -

On the exterior -

1. Front side SJS can manufacture the logo along with the chrome plating

2. On the back-side, Logo’s along with model and rear badges such as XUV 700 and AX7

On the interior side -

1. SJS can manufacture logos and illuminated logos on steering wheel

2. In-mold decoration

3. 3D Appliques

4. Cover glass on screen

Below is the complete portfolio of SJS in PV -

As seen just by sheer components, PV is a much more exciting market for SJS. Current kit value for a PV is ~INR 2400-3000 per vehicle, though future kit value can increase materially to ~INR 7000-12000 per vehicle which makes PV key driver for growth for the company.

Consumer Discretionary and Others -

The company manufactures primarily logos and chrome plating for Consumer Discretionary companies.

Key customers in Consumer Goods include Whirlpool (Global), Samsung, Godrej, Eureka Forbes, Legrand

The company also provides logo’s, decals and other decorative aesthetics to EMS, Telecom, Sanitaryware and FMCG companies.

EMS / Telecomm - Dixon, Syrma, Neolync, Seoyon, Wangda, Optiemus.

Sanitaryware, FMCG, others – RIL, Sensacore, Geberit, Roca, Litemed.

How has company fared in 9M FY25 -

• The company has grown slightly slower than 2W industry owing to a higher bike mix which has grown slower.

• In PV’s the company has grown at 38% v/s 3% for the industry resulting in ~24% volume growth for SJS v’s 11.2% for the Industry

What can drive growth for SJS Enterprises -

• Increase in SUV market share and increase in content per vehicle

• The company has committed capex of ~170-180 crores of capex over next 2 years primarily in increasing capacities in Exotech (~80 crores) and Cover glass (~40 crores)

  • Exotech is currently running at 95% utilization, hence incremental capacities should be utilized swiftly.

  • In cover glass, the company will make the cover glass that comes on top of display screen, which give you some very special properties like anti-reflection, anti-glare, antifingerprint. Cover glass can be a big opportunity roughly from maybe Rs.700 a vehicle to close to about Rs.4,000 a vehicle

• Increasing Pie of exports from 7% to 13-15% in next 2-3 years

Key Risks -

• Labour Issues - SJS has had a major strike in 2024 with workers complaining on poor working condition and wrongful termination, both fairly serious concerns.

• Material Slowdown in anchor clients -

  • Mahindra and TVS have been amongst the top anchor clients for SJS Enterprises and they continue to outperform their respective markets. However, any change in the above scenario will h

• Failure to Innovate -

  • Innovation and acceptance is the backbone in decorative aesthetics segment, and the segment has the highest disruption amongst ancillary players.

Conclusion - Broadly SJS stands in a sweet spot where market size is small and fast growing, there is no EV risk and is amongst the key beneficiaries in the premiumization trend.

Disclosure - We are not registered under SEBI. All information above is based on public sources and due diligence conducted by us. We may or may not have invested in stocks which we have written about.

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For other posts - Kindly refer to -

Auto Industry -

Tata Motors - https://cashcows.substack.com/p/tata-motors-global-auto-behemoth

Automobile Primers -

2 Wheelers - https://cashcows.substack.com/p/all-you-need-to-know-1-automobile

4 Wheelers - https://cashcows.substack.com/p/all-you-need-to-know-2-automobile

CV - https://cashcows.substack.com/p/all-you-need-to-know-2-automobile-686

Tractors and Others - https://cashcows.substack.com/p/all-you-need-to-know-44-agri-and

Other companies -

Kiri Industries - https://cashcows.substack.com/p/kiri-industries-where-cash-market

Hindustan Construction Company (HCC) - https://cashcows.substack.com/p/hcc-highway-to-heaven

IGI Limited - https://substack.com/home/post/p-159670347

Vishnu Chemicals - https://cashcows.substack.com/p/vishnu-chemicals

Panacea Biotech - A global vaccine powerhouse in making - https://substack.com/@cashcows/p-158207990