Jupiter Wagons Ltd (previously CEBBCO)

[Nimit]

Some interesting data from JW QIP 2023.

Aggregated capacities 30 to 35K.
I know that Titagarh is expanding its capacities by 4k or something, not sure about texmaco and others.

A possible 90K wagon tender breakdown is 50K given last year and another 30 to 50K tender which IR plans to float (as per titagarh and jw concall, both seem confident of bagging the upcoming tender).

The requirement numbers looks small given the increasing capacities and the tenders already awarded by IR. The private wagon requirement is small 20% of IR’s demand.

Question: Will wagon manufacturing companies continue running at 100% capacities beyond FY25?

[rupaniamit]

Below are two mind maps for JWL that I created while trying to understand the business and it’s industry dynamics; 1) High Level Business Mind Map 2) Q4FY23 Concall My KTAs. It is not detailed and comprehensive, but should be good enough to get high level understanding of the business at its current juncture for someone who is looking at the business for first time.

Disc: no position

[tushar_raghatate]

If you’re scratching your head over the railway theme, these links will provide a comprehensive explanation of the tailwind and the reasons behind the government’s increased capital expenditure (capex) allocation to the sector. It’s not just a short-term, 2-3 year theme; rather, it’s a theme that will span over a decade.
Link>> https://indianrailways.gov.in/NRP-%20Draft%20Final%20Report%20with%20annexures.pdf
Disclosure- Invested

[tushar_raghatate]

Brief about upcoming triggers -Company and Sector Outlook with Vivek Lohia, MD of Jupiter Wagons Ltd - YouTube
Disc- Invested

[asarun]

I started looking at this, and it’s pretty crazy that the stock price has gone up to 180 rupees when the QIP was done at 103.75 less than two months back! Even with the strong growth projections, there seems to be little margin of safety at this level.

[coolcarney]

Please let us know your rationale for selling, if any. Do you think it’s overpriced now?

[ashishram]

It ran up more than 100% in 3 months. I feel has to cool down a bit. Also results should be around the corner so need to wait and watch. Even I have sold 50% and waiting for it to cool down a bit.

[basumallick]

ANNUAL REPORT SUMMARY - 2023

About the company:

Jupiter Wagons Limited (JWL) is an integrated railway engineering company that primarily manufactures freight wagons for the Indian Railways. Over time, they have diversified into the manufacturing of application-based load bodies on commercial vehicles, braking systems, and marine containers for domestic and international use.

It was incorporated in 2006 and is a part of the Kolkata-based Jupiter Group. JWL has manufacturing facilities located in Kolkata, Jamshedpur, Indore, Jabalpur and Baddi.

Their wagon manufacturing capacity has been raised from 6,000 to 8,000 units per annum and is further growing towards 10,000 units per year. They manufacture various components of a typical wagon like couplers, bogies, draft gears, CRF sections, etc.

Product Portfolio:

Rail Mobility Business

• Wagons
• Covered Wagons
• Container Carrier Wagons
• Cement Wagons
• Car Carrier Wagons
• Coil Carrier Wagons

Track Solutions

• CMS crossings for Indian Railways
• Weldable CMS crossings for IR & DFC
• Explosion hardenable AREMA frogs (CMS crossings) for North American railroads
• Weldable CMS crossings for European Railways

Wagon and Passenger Coach Accessories

Wagon Accessories

• Alloy steel cast bogies
• High tensile centre buffer couplers
• High-capacity draft gears

Passenger coach accessories

• Fabricated bogies
• Balanced draft gears
• Axle-mounted disc brake system
• Brake disc and split brake disc

Road and Multimodal Mobility Business

Commercial Vehicles

• Load bodies for commercial vehicles (tippers, trailers, tankers etc) for mining, infrastructure, and construction etc
• Troop carrier and water bowser for defence sector Fire engines
• Ambulance & Municipal applications
• Light recovery vehicles

Containers

• ISO Marine containers
• Refrigerated containers
• Special purpose containers
• Truck mounted containers

Partnerships:

Tatravagonka Poprad has built over 100 years of experience in freight wagon production, endurance, and commitment. Tatravagonka has more than 40% of the European market share and an annual turnover of over € 350 million.

Budamar Logistics provides logistical support. It is a European leader in logistics, freight forwarding and multimodal transport. The company has experience in serving marquee customers with its diversified service portfolio.

Green Power Motor Company was founded in 2010 with the goal of increasing EV adoption by making battery-electric buses and trucks affordable, durable, and simple to deploy. Green Power provides commercial vehicles for delivery, public transportation, schools, vanpools, micro-transit, shuttles, and other applications. Products are ready and being tailored to the Indian market.

LAF has been in business for over 80 years and is in over 120 countries currently. LAF designs, develops and manufactures traction automatic couplers, drawbars, draught gear, heavy-duty traction devices, and buffers for both public and private railway networks. LAF owns Lloyds ABC Coupler and has a repository of over 6,000 coupler designs from around the world.

CAF is a pioneering company in railway mass transit systems for passengers, based out of Spain with a strong global footprint. Jupiter has established MOU as an Indian manufacturing arm for CAF, aiming at various metro urban mass rapid transit systems in India.

DAKO -CZ is a leading manufacturer of pneumatic, electromechanical, and hydraulic brake systems for rolling stock. The company is based in Temonice, Czech Republic, and has an annual turnover of 61 million Euro, 77% of which comes from foreign orders. The joint venture will provide high-speed passenger train brake systems in India. Indian Railways has already approved an axle-mounted disc brake system.

Kovis Livarna is a company with a long history in the foundry industry. Their expertise is in the production of castings from grey and nodular cast iron. This joint venture’s products include brake discs, axles, and gearboxes for railway rolling stock. Indian Railways has already approved brake discs.

Talleres Alegra is a 108-year-old company that specialises in the production of railway track materials and equipment. Continuous improvement in the design, manufacture, and technical assistance of fixed track material for both conventional lines and metres, trams, and high-speed lines. The joint venture will produce Weldable Cast Manganese Steel (CMS) Crossings for both BG (Broad gauge) and Metro. The JV has a ₹ 200 crs order book.

TSAW Drones is a drone technology company established on June 26, 2019. It aims to provide safe, efficient, and effective drone solutions for various industries, including agriculture, surveillance, logistics, and surveying, to name a few.

Acquisition in FY2022-23

Selected as the successful resolution applicant of Stone India Limited which used to supply engineering products to Indian Railways. Stone India Limited is in the brake systems and train lighting alternators segment and it has been a vendor for locomotive brake systems for the railroad industry.

Outlook for FY 2023-24 and Ahead:

Wagon and rail components

The Indian Railways placed the highest-ever order for about 72,000 wagons last year and reportedly another 40,000 wagons to come with which railways look to be poised to increase the share of railways in freight transportation from about 27 per cent to 45 per cent by 2030.

The allocation towards rolling stock has more than doubled Y-o-Y to 7,581 crores in the union budget 2023-24 from 15,158 crs (revised budget) in 2022-23. Indian Railways has recorded the best-ever performance in its recorded history in terms of the output from the Freight Business in the financial year 2022-23.

Along with excellent performance in transporting coal to the Powerhouses, an increase in automobile loading has been another highlight of the Freight Business in FY2022- 23 and 5527 rakes were loaded in FY2022-23, as compared to 3344 rakes last year i.e., a growth of 65%.

Private sector ownership of wagons is on the rise driven by some of the recent schemes announced by the Indian Government. Industries such as cement, coal, steel, automobiles etc. which have a large freight movement through rail have been procuring wagons from domestic manufacturers.

There is also potential to transport CV parts and two-wheelers through the railway network which will add to wagon procurement by automobile manufacturers and logistics companies. Further, defence services are also proposing to procure wagons for the transportation of utilities etc.

Load body and components for Commercial Vehicles

Commercial vehicle (CV) industry volumes are to grow by 7-10% in FY2024, supported by replacement demand, pick-up in mining, infrastructure, and construction activities, and overall healthy fleet utilisation levels. This is despite the 5% YoY and 41% sequential contraction in volumes in April 2023 due to expected price increases with the transition to BS6 2.0 and associated pre-buying in March 2023.

Containers

The container manufacturing facility is principally targeting to manufacture Hi-Tech and Special containers like power packs, data centres, refrigerated containers etc. However, ISO and domestic containers will continue to be produced for both national and international customers.

Container manufacturing requires a special grade Corten-A steel which was not manufactured on a large scale in India. This is being changed by the government through its policies currently.

In the last two years, the company has established itself as a market leader in Specialised Container manufacturing. The company has entered strategic manufacturing of Data Centres.

For Amperehour, Singapore, Schneider and Delta, Taiwan new prototypes have been successfully developed by the company. By year-end, the company would be the market leader in manufacturing and a one-stop manufacturing hub for specialised containers for America/ EU/ Southeast Asia & Australia.

[sagarika_mukherjee]

Why is the stock correcting every day ? Any new concern or risk? Also what are the risks associated with the order book growth slowing down in future? Like is the momentum for railways related order book near its peak or still further away from it?

[basumallick]

The reverse question could be asked when the stock was going up everyday. But no one asks that question.

Instead of focusing on the price it maybe better to focus on the happenings in the business.

[sagarika_mukherjee]

Some relevant data as given in National Rail Plan

Figures (INR cr)

[Kuber_Chauhan]

I dont know how much it makes sense, but when a stock corrects i usually put my fundamental hat and think from the business point. If everything is well. Then no need to panic.

[sagarika_mukherjee]

Yeah and from the data I pasted - It shows an increasing demand outlook - of course, execution is important on ground - but the forecast is showing an increasing demand outlook. Also everything depends on the government / party coming to power for not just next term but several terms after that.

[jitendrajain17]

I worked on some hypothesis and exited my position @407 (entry price was around 200 just before Q1 results). My thought for exit was as below:

Company posted an excellent set of Q1 numbers. This along with Railway’s Mega theme, stock was continuously one way ride from 200 to 400+. QIP plans were in works and it was expected that soon company may announce the same post board approval.

1. Company’s last QIP was raised at around Rs 120 and it’s 52 week’s low is around Rs 70-80. Any incoming investor would expect for decent upside and hence at peak price Rs 400+ it was significantly higher than QIP raised 4 months back.
2. Nearest competitor Texmaco rail has market cap of Rs 4000 Cr (against JWL’s peak valuation of Rs 15000 Cr). Texrail has also announced the QIP of Rs 1000 Cr which would be ~20-25% stake dilution for incoming investor compared to 5% stake in JWL at peak price. So, from investor’s point of view, Rs 400+ may appear stretched price.
3. While JWL has many pluses compared to texrail including significantly better margins, diversified future revenue streams, good steps in terms of technology tie up for making brakes, wheels etc along with getting into last mile connectivity through commercial EV etc, however, texrail is also working on efficiency, tie ups with European companies, tie up with Hindalco and on top of it is part of Birla Group.

For any upcoming investor, there would be comparison between the two wherein they would weigh their options to make a deal. Basis inputs from last concall of JWL and all above factors I felt that post QIP announcement price may correct to pave the way for investor to come in at a price wherein it becomes attractive to them (JWL’s float is low i.e; around 8% due to which price movement is always expected to be sharp).

Basis my estimation, I worked out a price of ~Rs 275-280 and hence exited on subsequent day of QIP announcement. Exit was also as I got almost 100% returns (for my initial tranche’) in ~1.5 month.

Now, I think even to get this estimated price, stock has to come down to this level and then stay for sometime to meet the criterion of SEBI (QIP price can not be lower than average price of last 2 weeks). Even as on date, average price for 2 weeks is around Rs 350/- which to me looks high from investor’s point of view. I will closely monitor the price in upcoming week and decide re-entry.

I could be wrong for this hypothesis though this worked for me. Thanks.

[chikspat]

Jupiter Wagons Ltd published investor presentation today.
Link: https://www.bseindia.com/xml-data/corpfiling/AttachLive/9714cdf2-d1f1-418f-9bf5-bae96b7e7cb8.pdf
Summary of important points:

Industry Overview:

1. Railway Freight and Passenger Growth: expected increase in railway freight volumes and Indian Railway capital expenditures over the years. Passenger volumes have also been steadily increasing.
2. Metro Rail Projects: The government plans to extend metro railway services to multiple cities, offering a significant financial opportunity. In the Union budget for 2023-24, substantial funds have been allocated to metro projects.
3. Market Growth: The government expects substantial investment in Indian railways from 2018 to 2030, with a significant increase in market share and the demand for goods movement.
4. Logistics Cost: India aims to reduce logistics costs as a share of GDP, bringing it in line with global averages.
5. Freight Corridors: Indian Railways is focusing on building new freight corridors, with increased investments and traffic flows on the Eastern and Western corridors.
6. Government Initiatives: Various government schemes and initiatives are discussed, including liberalized special freight train operations, automobile freight train operator schemes, wagon leasing schemes, and general purpose wagon investment schemes.
7. Latest Government Initiatives: Recent government initiatives include the Gati Shakti Mission, redevelopment of railway stations, and a project to ease operations and reduce congestion.

Company Overview:

Products:

• Jupiter Wagons offers a diverse product range that includes wagons and their accessories, passenger coach accessories, load bodies for commercial and heavy vehicles, containers, CMS crossings, weldable CMS crossings, brake systems, brake discs, and electric light commercial vehicles.

Global Presence:

• Jupiter Wagons serves major players in the railway segment and also exports its products to North America and Europe.

Strong Product Portfolio:

• Jupiter Wagons has a robust product portfolio, including various types of wagons, passenger coach and wagon accessories, brake systems, brake discs, CMS crossings for Indian Railways, draft gear, passenger couplers, alloy steel cast bogies, tippers, heavy fabrications, ISO marine containers, and more.

The company’s diverse product offerings and experienced leadership team make it a key player in India’s railway sector.

*Manufacturing facilities and existing and proposed JVs:
Madhya Pradesh:

• Indore: Plant 1 focuses on manufacturing load bodies for commercial vehicles.

Jharkhand:

• Jabalpur: Jupiter Wagons has a Joint Venture (JV) and three plants in Jabalpur.

  • Plant 1: Specializes in producing load bodies for commercial vehicles.
  • Plant 2: Concentrates on the production of wagons.
  • Plant 3: Manufactures load bodies for commercial vehicles and containers.
    Kovis JV:

• A specialized facility for producing brake discs for high-speed passenger coaches.

West Bengal:

• Kolkata: The company has four plants in Kolkata, each with its unique focus:
  • Plant 1: Manufacturing wagons, couplers, draft gears, CMS crossings, bogies, and CRF sections.
  • Plant 2: A joint venture with Dako for producing brake systems.
  • Plant 3: A joint venture with Talleres Alegria, specifically for CMS crossings.
  • Plant 4: Implementation of an order from Stone India under the NCLT (National Company Law Tribunal) is in progress.

These state-of-the-art manufacturing units demonstrate the company’s significant manufacturing capabilities, covering a wide range of railway and commercial vehicle components.

Existing Joint Ventures:

1. JWL - Kovis (50:50) Joint Venture:

• JWL has a joint venture with Kovis, focused on manufacturing brake discs, axles, gearboxes, castings, and components for railway rolling stock. This venture is operational and has received approvals from the Indian Railways.

2. JWL - Dako-CZ (50:50) Joint Venture:

• Another joint venture with Dako-CZ, this one is aimed at designing, manufacturing, and supplying brake systems for high-speed passenger coaches and freight wagons in India. The venture has received orders and is expected to start supplying products to JWL.

3. JWL - Talleres Alegria (50:50) Joint Venture:

• JWL collaborates with Talleres Alegria to manufacture weldable CMS crossings. They have received significant orders from Indian Railways for this product.

4. JWL - RITES Joint Venture ( Now Navaratna company):

• JWL has signed an MoU with RITES to participate in global rolling stock projects, including the bidding for freight wagons in Zimbabwe and other nations. They aim to secure further tenders for export orders.

Proposed Initiatives:

1. Green Power Electric Commercial Vehicles (MOU 50:50):

• JWL has signed an MOU with GreenPower, a subsidiary of GreenPower Motor Company, to develop electric commercial vehicles. They are currently working on e-LCVs (Light Commercial Vehicles) and expect to achieve certification in Q3FY24.

2. CAF Metro Coaches (MOU 50:50):

• JWL has partnered with CAF, a CIM group company, to collaborate on the development of high-speed passenger train technology in India. They are also working on manufacturing center buffer couplers with balanced draft gears for Linke Hofmann Busch coaches.

3. Partnerships with Global Leaders:

• JWL has established partnerships with various international companies, including Colway Ferroviaria S.L. (Spain) for manufacturing high-speed passenger coach interiors and modern toilet systems, and Tatravagonka (CSG Group, Czech Republic, and Budamar Logistics, Slovakia) for manufacturing wagons.

[vikashkota]

Q2 FY24 results Key development.

1.The capacity of existing foundry at Kolkata Unit will be increased from 2,500 metric tonnes at present to 3,000metric tonnes by the conclusion of this fiscal year. The wagon manufacturing capacity has been increased to ~700 wagons per month at present. Once the expanded capacity of foundry is made available, it is expected that production capacity will increase to 800 wagons per month.

2.A new foundry is scheduled to be established in Jabalpur over the course of next 18 months with a capacity of 2,000 tonnes, catering to both captive use and exports. This initiative is expected to yield cost savings in freight expenses.
3.Indian Railway tender for 20,000 wagons has been issued and the timeline for submission is mid of Nov,23.
4.With handover and integration activities nearing completion, it is anticipated that Stone India will initiate its operational activities in Q4FY24.
5. Electric Mobility: the vehicle is scheduled for testing in November, and we are progressing as planned for its commercial launch in the fourth quarter of this fiscal year.

[Arka]

Jupiter Wagons Limited has released its financial results for the second quarter (Q2) and half-year (H1) of the fiscal year 2023-24.

Financial Performance (Q2 & H1 FY24):

• Revenue for Q2FY24 increased by 111% year-on-year (YoY) to ₹87,930 lakh.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for Q2FY24 increased by 143% YoY to ₹12,117 lakh, with an EBITDA margin of 13.8%.
• Profit After Tax (PAT) for Q2FY24 increased by 229% YoY to ₹8,158 lakh, with a PAT margin of 9.3%.
• Earnings Per Share (EPS) for Q2FY24 was ₹2.04 per share.

Performance Highlights for H1FY24:

• Revenue for H1FY24 increased by 129.2% YoY to ₹1,63,248 lakh.
• EBITDA for H1FY24 increased by 172% YoY to ₹21,851 lakh, with an EBITDA margin of 13.4%.
• PAT for H1FY24 increased by 280% YoY to ₹14,518 lakh, with a PAT margin of 8.9%.
• EPS for H1FY24 was ₹3.66 per share.

Outlook and Key Developments:

• The company continues to experience strong demand in the production of wagons for both public and private customers.
• Capacity expansion is planned for the foundry in Kolkata and a new foundry in Jabalpur, which is expected to yield cost savings in freight expenses.
• The Indian Railway tender for 20,000 wagons has been issued, and production capacity is set to increase.
• Stone India is expected to initiate operational activities in Q4FY24.
• Electric Mobility vehicle testing is scheduled for November, with commercial launch planned for the fourth quarter of the fiscal year.

[avneesh]

Q2 FY2024 Notes:

• Increasing the wagon capacity from 700 per month to 800 per month by the end of this FY at the Kolkata plant.

• By the end of next FY, the Jabalpur plant will become operational and wagon capacity will reach 1000 per month.

• Margins will increase because of backward integration. Adding wheelset manufacturing capacity and starting a freight brake business in Stone India.

• New businesses: Launching EV in next two quarters with better range, payload and battery capacity.

• Drone business is under planning and discussion.

• 700 crores QIP planned in next 12 months leading to equity dilution (Maybe will provide support to the stock price?).

• Current order book on wagons: 13,500 wagons worth of 5300 crores

• Expected orders: 20,000 wagons tender by Indian railways in mid-November. 10,000 export wagon tender expected soon.

• Management is expecting 25-30% of these tenders.

[jitendrajain17]

While the numbers for Q2 have been quite good, I think market is still waiting for the clarity on QIP as the same is expected to be at lower than current level. I would wait for clarity on this front to re-enter

[avneesh]

From the recent concall:

It is very difficult because the QIP or number of the rate will be derived from the Stock
Exchange closing prices of the last two weeks when we will launch the QIP, so it is very
difficult to tell you the percentage dilution.

QIP price will be decided on the average price of the last two weeks. So, if the market (big investors) pushes the price downwards for QIP. Then it might be the best time to buy the company.