Jamna Auto Industries Ltd. share price target

Jamna Auto reported dismal set of Q1FY18 result due to slowdown in MHCV segment on account of GST implementation. Total income and Net profit declined by 18.5% and 35.9% on YoY basis. However, we expect demand for MHCVs to revive in H2FY18, given bright outlook for the Indian economy and falling interest cost.

Jamna Auto Inds Ltd (JAI) is the largest manufacturer of leaf springs (both conventional and parabolic leaf springs) in domestic M&HCVs segment having around 70% market share. The...

Maintain BUY with a revised TP of Rs 303 based on 17x Jun-19E (earlier 15x). Jamna Autos (JMNA) 1QFY18 performance came in below estimates, owing to lower volumes (-19% YoY). Surprisingly however, gross margin was stable inspite of high raw material costs, owing to a richer product mix (parabolics share at 24% vs 22% in 1QFY17). JMNA has consistently outperformed the domestic CV industry. Also, with facilities located in close proximity to OEM plants, JMNA not only cuts down logistics costs, but also makes it tough for new entrants to garner business from these plants.

Jamna Auto Industries (JAI) had an encouraging Q4FY17, as its topline observed a y-o-y growth of around 5%. Despite 3% y-o-y drop in M&HCV production during Q4FY17.

Jamna Auto reported in line revenue growth, however earnings beat our estimates. Total income and Net profit surged by 5.1% and 26.7% on YoY basis. We remain positive on the company's business given bright outlook for the Indian CV industry, implementation of GST and its dominant market share in the leaf spring industry.

Jamna Autos (JMNA) 4QFY17 EBITDA margin at 14.5% (-120 bps YoY) was above estimates, driven by strong operating leverage. Net revenue at Rs 3.9bn ( 5% YoY) was also above estimates, owing to 3% YoY volume growth and 2% YoY net ASP improvement.

Swaying fortunes of Indian CV industry, most prominently M&HCV; sector, have decidedly bewildered manufacturers and investors alike for a couple of years of sturdy growth of M&HCV; industry - ~30% in FY16 and 16% in FY15- was followed by near naught growth last fiscal. After robustly growing (+14.5%) in Q1, M&HCV; industry went wayward in following...

Jamna Auto reported good set of numbers, despite slowdown in Commercial vehicles volume, hit by demonetization. Total income and Net profit surged by 8.5% and 34.8% on YoY basis, led by 12% growth in leaf springs volumes.

Jamna Autos (JMNA) 3QFY17 EBITDA margins at 12.5% (-20 bps YoY) were above estimates, despite the effect of demonetisation during the quarter. Operating leverage gains and a richer mix (parabolic springs) aided the sharp margin expansion on. Gross margins contracted by 294bps YoY led by sharp rise in steel prices.

We initiate coverage on Jamna Auto Inds. Ltd. as a part of our ?CUB??series. Under the ?CUB??series banner, we are covering small-cap companies with robust long-term growth potential.