Jamna Auto Industries Ltd. (JAI) is a market leader in the CV suspension leaf
spring segment (90% of sales), including products like the conventional leaf
spring and parabolic leaf spring.
JAI currently has a 64% market share in the conventional leaf springs segment
and a market leader in the parabolic leaf spring segment. Being the industry
leader makes JAI a key beneficiary of the ongoing domestic MHCV cycle
The company is focused on capturing the rising content-per-vehicle trend and
hence it has forayed into the Air Suspension and Lift Axle segments (10% of
consolidated sales) where its main client is Ashok Leyland for the heavy
Opportunity Size: -
Domestically, considering the 2.3 lakh MHCV run-rate in FY15 the overall leaf
spring OEM opportunity stands between INR 1500 cr to INR 1800 cr .
Post GST implementation, aftermarket will offer an opportunity that is 4x of the
OEM market opportunity.
Share Holding Pattern (%)
Post a 2-year downturn, the MHCV industry in India is registering a recovery. JAI is
the largest player in the domestic leaf spring industry with 64% market share whilst
several other small companies contribute to the remaining 36% share. JAI is
expected to be a significant beneficiary of the CV cycle recovery in India.
JAI’s multiple plant location strategy in proximity to CV OEM customers has helped
the company maintain its dominance in the leaf spring industry. At present, the
company has six facilities located close to major CV manufacturing hubs in India
and this has helped JAI gain a significant share of business (SOB) with leading CV
OEMs. Apart from scale, the strategic location of its plants has helped it to manage
cost efficiently by reducing freight expenses.
Additionally, the company has forayed into the air suspension and lift axle segment
via a technology tie-up with Ridewell, USA. Implementation of GST (Goods and
Services Tax), will open up a significant aftermarket opportunity (i.e. ~4x OEM
industry) for organized suspension leaf spring manufacturers such as JAI.
Source - Edelweiss
Market Cap - 1000 crs
Over the past 10 yrs-
Sales up from 181 crs to 979 crs
Operating profit up from 16 to 61 crs
Net profit up from 1.8 to 30 crs
Debt 63 crs . Debt/equity ratio 0.32
Tax payout for the fiscal is 10 crs on PBT of 39 crs which is 25% tax payout ratio
Cash flow from operations have been positive for the last 6 yrs.
EPS has been in single digits over the past 10 yrs except 2011. This is a negative
CWIP is negligible…
PE is 22 and P/BV is 4.8 both of which are on the higher side. No margin of safety.
Share prices are almost at their 52 week high.
Promoters holding at 43% is low.
Caters entirely to the CV business which is very cyclical.
Fluctuations in steel prices affect margins
your suggestions on this stock please