Interesting times for the sister company of JBM Auto - Jay Bharat Maruti.
In case PV sales continue to do well during the festive period, the company could be looking at the dual engine of sales growth + margin expansion.
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With 90% of sales coming from Maruti (they supply sheet metal assemblies, welded assemblies and rear axles) growth here is dependant on if Maruti sells well in the next few months (the behemoth also has a 29%stake in the company)
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In the last year, Greenfield Capex done in Gujarat to serve which could mean good operating leverage + scope for growth cycle if demand picks up. Also indicates long term partnership with Suzuki plant in Gujarat.
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Margins are at cycle lows of 7% with pass on to OEMs happening with lag. This could increase to median margin of 8, even 9% as commodity prices cool off and lag works the other way round
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Valuations still seem very reasonable. Price to sales at 0.3x is at median PS versus 0.7-0.8x given to the company in good times/periods where growth is anticipated
Disclosure : Invested in Jay Bharat Maruti and biased. Posted here as this is the sister company of the group and there is no separate thread on Jay Bharat Maruti.