JBM Auto Ltd. share price target

JBM Auto (JBMA) reported in line performance in 1QFY21. Net revenue declined 75% YoY to Rs 1.3bn (vs est. Rs 1.37bn) led by de-growth in component and tooling division (-86%/-37% YoY)...

JBM Auto (JBMA)'s reported strong operating margin at 11.6% (+39bps YoY) amid challenging environment led by better product mix (increase in revenue from tooling and bus division) and cost control measures. Net revenue fell by 21% YoY to Rs. 4.75bn led by de-growth in component division (-38% YoY) was partially compensated by ramp up in the bus business and a robust growth in the tooling business. The company is taking various cost optimization initiative such as reduction in manpower cost (Shift management) and administrative...

JBM Auto (JBMA)'s results were better than estimates in 4QFY19 (revenue +8%, PAT+13% YoY), despite challenging environment in the PV segment, due to a strong revival in the bus business and a robust growth in the tooling business. We are positive on the stock based on 1) new order wins in the sheet metal business, from M&M;, Tata Motors, and VECV; 2) encouraging revenue potential in the tooling business (high margin +30%), given rising localization and outsourcing of tooling requirements by large global OEMs (cost-benefit of 25% in India); and 3) increasing economies of...

We value the stock at Rs.425 (15x Dec-20E EPS) and maintain BUY JBM Auto (JBMA) delivered inline numbers in 3Q (revenue +9%, PAT+18%) amidst a challenging environment for the PV segment. We re-iterate our Buy rating on the stock, based on 1) New order wins in the sheet metal business from M&M;, Tata Motors and VECV 2) Encouraging revenue potential in the tooling business (high margin+30%), owing to rising localization and outsourcing of tooling requirements by major global OEMs (cost-benefit of 25% in India) and 3) Increasing economies of scale in the bus division, which will foster margins and profitability going ahead.

We value stock at Rs. 560 (17x Sept-20E EPS) and maintain BUY. JBM Auto (JBMA) delivered decent numbers in 2Q amid challenging environment for PV segment. Consolidated Revenue (Standalone+JBMAS) rose 10% YoY to Rs. 4.5bn led by strong growth in tooling (+24%YoY) and bus division. Despite slowdown in PV sales core sheet metal business grew by 3% YoY led by new business acquired from Tata Motors, M&M;, Fiet and Toyota. EBITDA grew 8% YoY to Rs 547mn with margin at 12%(-30bps YoY). APAT came at Rs 209mn (+10% YoY)

We value stock at Rs. 560 (18x FY20E EPS) and maintain BUY. JBMA recorded strong PAT growth(+26% YoY, +40% including amalgamation effect) led by jump in JVs (JBM MA Automotive ltd) profit driven by new business of Jeep compass(Fiat) and Yaris (Toyota). Consolidated Revenue (Standalone+JBMAS) rose 11% to Rs. 4.2bn led by strong growth in tool room division (+225%YoY) marginally offset by muted growth in sheet metal component division (+5% YoY). EBITDA grew 10% YoY to Rs 513mn with margin at 12.2%(-21bps YoY) impacted by fall in revenue from FORD in sheet metal division.

Foray into various divisions beginning from auto components division to establishing the bus division as an OEM and moving ahead as an electric vehicle fore-runner. PV segment- well poised for future growth The PV segment, in particular, is set to cruise smoothly in India on the back of lower car penetration, increasing affordability and rising disposable income. At present, PVs currently constitute 13% of total automobile sales volumes compared to 81% for the two-wheeler (2W) segment. There is a massive long term growth potential for the PV segment. JBM is in the sweet spot to capture this growth as it generates around 75 % of its revenue from this segment....

We value stock at Rs. 560 (18x FY20E EPS) and maintain BUY JBMA posted strong numbers in 4QFY18. Consolidated Revenue (Standalone+JBMAS) at Rs. 4.47bn (+16% YoY) led by strong growth in sheet metal component division (+16% YoY) and tool room division (+20% YoY) marginally offset by fall in revenue from bus business (-19% YoY). Revival in tooling business (high margin business) and higher oplev helped EBITDA jump 34% YoY to Rs 583mn with improved margin of 13% (+172bps YoY). APAT stood at Rs 202mn (+49% YoY)

We value the stock Rs. 560 (18x FY20E EPS) and recommend to BUY. JBM Auto (JBMA), which makes sheet metal (body-in-white and chassis), tools and dies is likely to continue delivering strong earnings growth, helped by i) faster growth in PV's segment, ii) growing revenue pie from Ford, Tata Motors, M&M;, RE and VECV, and iii) benefits of oplev. During 9MFY18, consolidated EBITDA and APAT jumped 20/23%, respectively owing to strong traction in its core business (sheet metal) and revival of JVs profitability (especially from MA Automotive owing to acquisition of new business of Jeep Compass from Fiat).

Our fair value for the stock is Rs 498 (16x Sept -19E EPS). We recently interacted with the management of JBM Auto Ltd (JBMA). The company is into the manufacturing of sheet metal (body-in-white and chassis) tools and dies. JBMA serves key segments including 4Ws (75% of revenue), CVs (10%), 2Ws (7%) and Tractors (8%). The company will to benefit from the robust growth in the PV segment, and also from the growth of its key customers like Ford, Renault, VECV, HCIL, TAFE, RE and HMSI. This, coupled with a rise in capacity utilisation at its plants (Indore, Pathredi, Sanand), should drive the companys revenues and earnings. Also, a ramp up in the Bus business will aid growth in the bottom-line.

Consolidated revenues increased by 4.8% QoQ/9.2% YoY at Rs. 4518 Mn in Q2FY17 and Rs. 8826 Mn in H1FY17 up by 13.4% YoY majorly driven by the component division sales which recorded sales of Rs. 4289Mn, up by 11.6% QoQ/ 7.8% YoY in Q2FY17. EBITDA margins improved by 198bps at 11.4% in this quarter driven by inventory gains. PAT rose by 5.1% QoQ/ 6.3% YoY due to reduction in finance costs and income from investments. Furthermore, exceptional item of Rs. 111Mn during Q1FY17 represents receivables against a claim made for compensation.

JBM Auto Limited, established in 1996, is the flagship company of the USD 1.35 Billion diversified JBM Group. The Company is an automotive company that manufactures key auto systems and city buses. The Company over the last two decades has focused on technological excellence and is supplying products to almost all major OEMs in India. JBM Auto aims to be a pioneer for initiatives related to sustainable transportation solution aiding towards passenger comfort and safety.

They initiate coverage JBM Auto as a BUY @218 with a target of Rs 280 representing a potential upside of 28% from the buy price, JBM Auto share price is trading at a PE of 16.8.

Revenues are expected to grow at CAGR of 7.5% between FY15-18E driven by a combination of auto-sector performances. However, we expect the traction mainly from M&HCVs and the newly manufactured Low-flat buses. However, the 9MFY16 revenues have declined by 7% as compared to the previous year because of whichwe expect revenues to slightly increase by 1.9% in FY16E as we have accounted revenues from buses for Q4FY16E and by 11.0% in FY17E and 12.5% in FY18E expecting positive momentum in the passenger and commercial vehicle segment.

JBM Auto is the flagship company of the JBM Group and was set up in 1990, mainly to manufacture tools, dies and moulds at Faridabad. It also established a press shop for manufacturing sheet metal parts and welded sub-assemblies to meet the growing stringent quality requirements of automobile industry. JBM is engaged in the manufacturing of tools, dies and moulds. It operates in three segments: Sheet Metal Division (for manufacturing sheet metal components, assemblies, subassemblies), Tool Room Division (for manufacturing tools, dies and moulds) and Special Purpose Vehicle (SPV) division (for development and assembly of SPV. JBM's manufacturing facilities and tool rooms are strategically located in close proximity of leading automobile hubs of India at Faridabad, Chennai, Kosi, Greater Noida, Nashik, Chennai, Sanand and Pune. JBM products are...