Jash Engineering - Is it a multibagger

Stock Opportunities Untested - but worth a good look
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I am starting a new thread on Jash Engineering…
Find it really interesting and am waiting for insights from other members.

This company got listed in October 2017…
http://www.jashindia.com/ =They have been in this industry for 60 years.
Sound management - please let me know if that is not the case…

It is a leading manufacturer of water and sewage treatment equipment, plans to raise ₹58 crore through an initial public offering (IPO) on the NSE Emerge, the SME platform of the NSE.

The company’s products are approved by major municipal corporations, sewerage boards, consultants and large engineering, procurement and construction (EPC) companies in India and over 25 other countries such as the US, the UK, West Asia, Hong Kong, Singapore and Malaysia.

The company boasts clients such as NTPC, BHEL, L&T and SAIL and has four modern manufacturing facilities in Central India.

The company issued 40 lakh shares through the IPO in a price band of ₹115-120 a share. The IPO comprised a fresh issue of 22.60 lakh shares and an offer-for-sale of 17.40 lakh shares.
Link intime were the registrars to the issue. http://www.linkintime.co.in
https://www.youtube.com/watch?v=xPjAixzfLvc = the IPO video =It is in HINDI.

Out of the ₹58-crore IPO, the company will use ₹23 crore for capital expenditure and working capital purposes and ₹4 crore for general corporate purposes; ₹31 crore would be mopped up through the OFS = AS PER THE RHP.

L D Amin, Chairman, said through a series of acquisitions and technical joint ventures, the company has created a strong revenue growth in the international market such as West Asia and the US and has transformed Jash into a global player in water control gates, screens and valves industry.

The company registered revenue of ₹161 crore last fiscal.

CHECK THE PRESENTATION HERE:
or here: https://www.youtube.com/watch?v=uIlWVRlkpGg
Claims they have 70% plus market share for watergates. Exports to 30 countries worldwide and has subsidiaries in 4 countries.

They have a US subsidiary= http://www.jashusa.com/
Acquired Mahr Maschinenbau -Austria and has 10 other international tie-ups.Check the presentation.

Some questions:

  1. has anyone met the company promoters and can shed more lightstrong text
  2. What is the market size and margins for the various products they manufacture: Water control gates, Mechanized screening systems, Screening conveying and washing systems, Knife gate valves, Water hammer control valves, Energy dissipating valves, Archimedes screw pumps, Micro hydro turbines, Clarifiers, Clariflocculators, Flash Mixers, Degritters, Aerators, Thickeners, Gravity Decanters, Trickling Filters, Digester Mixers, DAF Units and solid handling valves
  3. I have the projections which I have based on my understanding? Has anyone tried to analyze their results and carried out some estimates
  4. Is there any broking report or research report on Jash Engineering

Not invested.

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It looks like a good company. A couple of friends have visited their
plants. And liked them very much. Their products are also good. I hope to
visit them soon. Haven’t heard anything negative yet.

Disc : Invested.

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For a market leader who create specialised tools with no real competition, why profit margin is less than 10%?

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thats the only question i could not answer

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In all SME IPOs one trend is clear , sudden increase in profits just before the IPO.

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The sales have increased by 30% and the PAT has increased by 25%. Most of the companies do this during the IPO or FPO or QIP. Any idea when the result is going to be or the analyst meet

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I could not find the financials for 1st and 2nd quarter. The split or breakup would be helpful to figure out the sudden spurt in sales and profitability.

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Whenever there is OFS element in IPO , this happens for sure :slight_smile:

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Can anyone share the meeting minutes and the results of the current quarter for Jash Engineering. I could not find it on their website.
If you have the link for the same, please send it across.
Thanks in advance.

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If any1 following monthly update from company, execution has improved. Order book remain stagnant around 190cr, so we can take executed orders=orders received… Means a healthy h2

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Niteen S Dharmawat (@niteen_india) Tweeted:
Gave my views in Alpha Ideas 20-20 today on one of the SME stocks.

Aurum Capital’s Pick: Jash Engineering https://t.co/5VQOwyg1kV https://twitter.com/niteen_india/status/1023254569386618880?s=17

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Water infra is going to be big necessity in the near future, it is being undermined at present, already a lot of epc players are getting onto irrrigation and sewage etc. Jash is a much more capital effecient way to play this theme with them being the equivalent of a pick and shovels manufacturer in the gold rush.

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Jash is trying to deleverage from India. Hence the buy of Rodney Hunt. Their plan is to take exports to 50% in next few years. Rodney Hunt is currently burning money, but a turnaround seems on the way. They can break even if Rodney Hunt does revenue of 13-15 m USD. Which maybe possible next year. They have approvals from municipal corps around the world. Company is quiet transparent and notifies of order book to exchanges. Stock has moved to main board now.

Disc : Holding and no transaction in last 30 days.

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hi @jitenp bhai, im sure the latest results have caught everyones attention, 10cr 9 month net profit is definitely an achievement. do you have any insights on the company’s performance and how Rodney Hunt is progressing?

Thanks

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Rodney Hunt progressing well. This quarter very little loss. Next year is when I think it should become profitable.

Disc: Holding and no transaction in last 30 days.

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OUTCOMEJASH2562020.pdf (7.3 MB)

Results Out!!

Consolidated yearly Turnover 277 Cr vs 247 Cr
Consolidated yearly PAT 20 Cr vs 7.69 Cr
Consolidated Yearly EPS 16.98 vs 6.5

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JASH_26062020121620_JASHFQFINAL2562020.pdf (331.2 KB)

Jash Engineering aspires to achieve PAT of around 12% from current levels of 7% on consolidate level by 2022-23 as indicated in this document.
Also management indicated Sales growth of 15 to 20% in concall.

Considering this, it seems that this stock has lot of value in it.

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stumbled upon this. Looks appealing at a first glance and need to research the industry and products. Will keep posts updated here :slight_smile:

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Alright folks I’m back with the research on the company. Overall I strongly feel that the company at the very least deserves a higher share of eyeball on the forum than what it is getting. I’m penning down the insights on my research to kick-start next rounds of brainstorming

So here it goes

What is the Company?

  • The company is a strong multi-geography based supplier of engineering equipment related to waste water management, storm water management, valves, Hydropower etc. Operates through subsidiaries as Shivpad, Rodney hunt, Mahr Maschinenbau and others to gain a foothold in US, European, Middle East and South East Asian markets.

Products
The company has presence in 5 product categories and is soon launching a 6th product category developed in collaboration with Invent AG (german co.). Jash is the only Indian manufacturer for all these product categories providing it with a knowledge leverage.

3 key strategic advantages

  • Empanelled with municipal corporations
  • Product expertise
  • Strong order book (almost 1.5 years revenue visibility)

Now what is working for the company?

  • Strong financial growth even with a COVID19 impact that resulted in non-realization of 20 crores
  • Rodney hunt getting back to profitability
  • Peak revenue capacity of 500 crore vs. 290 crore(FY20). Capex plans already operationalizing
  • Strong growth from Singapore and Asia.
  • Increasing demand of wastewater management. Govt. projects such as Namami ganga, projects coming from Mumbai municipal corporation
  • New engineering drawing technology which is expected to cut delivery period and improve profitability

Key things to look out for

  • Cash flow risk from clients (Govt.)
  • Growing debt
  • Pledged shares - 3.4%
  • Foreign competition as its a growing market
  • Risk of impairment of investment in subsidiaries

Now I’m working on developing the financial model of the company to check for underlying value and understanding financial performance.

Warm regards
Uzi

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I get a further good feeling about the company on evaluation of financials/intrinsic value. At CMP of 150 it appears resonably undervalued (Please do your own analysis and not take mine at face value).

However there are certain questions that I hope to get answers to for which happy to collaborate with peeps here

I’m replicating the questions and topics that I could get following my stock research on Jash. Please do feel free to use them and help in further research

General

  • Is your business model limited to only selling engineering equipment’s? What about the after sales service or replacement business? What is the life cycle of the product?
  • How does Rodney Hunt fit into the acquisition
  • Foreign subsidiaries are loss making- Any comment
  • What’s the nature of related party transactions of Purchase and sale with Micro Flat Datums , Jash precision tools

Operational efficiencies

  • Why are changes in working capital is usually negative? Why aren’t they able to get the trade receivables? Why are inventories increasing? What is the plan here to improve this parameter as this is reducing the cash flow?
  • Are you seeing an increase in cash receivables timeline since customers are typically municipality in FY21?
  • What is guidance on peak revenue and profitability- Also how much coming from Rodney Hunt?
  • What is the guidance on sustainable EBITDA, PAT margins – have seen a lot of volatility here?

Growth

  • its expected that you will spend 22-23 crores/yr upto FY23. Is that on target? What is the breakdown of the capex spend?
  • What is the typical maintenance capex/yr?
  • Status on – Mumbai municipality order flow (storm management), Namami Ganga. Revenue Potential from namami ganga and Mumbai municipality?

Order book

  • Status of overall order book? Source of growth? Most profitable customers?
  • Where is the export demand order book of 220 cr coming from? Ask more details on the Order book?
  • FY21 expectations from Rodney Hunt/US business?
  • It was mentioned that over 75 crores worth of orders expected from Singapore over next 2 years. What’s the status of that in FY20 and FY21 as on today?

Cheers
Uzi

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