CD Equisearch recommended hold rating on Jamna Auto Industries with a target price of Rs 70 in its research report dated October 30, 2017.
CD Equisearch's research report on Jamna Auto Industries
Partly reflecting the tepidness in Indian CV industry in Q1(9.1%), particularly in M&HCV segment (-31.8%), primarily CV industry reliant Jamna Auto posted 18.5% drop in income from operations, one of the weakest showings in several quarters. Poor revenue booking also stoked operating profits, which nosedived by 47% y-o-y. OPMs as a consequence declined to the lowest in eight quarters at 11.2% compared to 17.3% in the same quarter a year ago.
On back of infrastructural investments, Indian M&HCV industry has only recently reflected strength. But current stock valuation barely leaves room for error for unexpected changes / shifts in industrial demand. So the stock merits a hold rating with price target of Rs 70 (previous target: Rs 55) based on 21xFY19 earnings (peg ratio: 1.5; high PEG ratio justified on recovery phase of M&CV cycle) over a period of 6-9 months.
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