Diversification of Product Portfolio to Fuel Growth prospects: Exports to be a key driver - Aided by higher penetration in the passenger marketto luxury OEMs like BMW, Mercedes and Nissan, Suprajit has procured new orders for their cables division which is expected to be recorded in FY18E. Currently, thegeographical mix for SEL (incl Phoenix) stands at 65.0% domestic and 35.0% global, as compared to 34.0% for exports during Q4FY16.

Valuation and Outlook : At CMP of Rs. 191, the stock is currently trading at 11.9x FY18E EV/EBITDA. With increasing exports and the synergies expected to arise on account of Phoenix acquisition, we value the company at 13.5x EV/EBITDA having a target price of Rs.224 with an upside of 17%. Therefore, we recommend “BUY” rating on SEL with a target price of Rs.224 having an upside potential of 17%.