Shares of JTEKT India, a manufacturer of steering systems, are higher by as much as 10 percent in trade on August 28 after investors placed bets on increased orders from Maruti Suzuki for its export-focused SUV, the e-Vitara, for which the ancillary player is a complete supplier.
Shares of JTEKT India clocked their best day since May 2023 on very high volumes that have taken the stocks above its 100 and 200-Day Moving Averages.
On August 26, Maruti Suzuki inaugurated its electric vehicle (EV) and battery plant in Hansalpur, Gujarat, as well as launched Maruti Suzuki’s first electric vehicle, the e-Vitara, which will be exported to over a hundred countries. Maruti Suzuki has invested about Rs 21,000 crore in the Gujarat facility and plans to invest additional Rs 3,100 crore to add a fourth production line.
The company is largely into the manufacturing of high-performance manual steering gear, hydraulic and electric power steering, and other allied components, with leading car companies as clients, including Maruti Suzuki, Toyota, Tata Motors, Mahindra, Honda, Renault, Nissan and others.
JTEKT India is a 100% supplier for this new SUV model, e-Vitara, that has been unveiled for exports. "...whatever exports and domestic production will happen, we will be supplying for that. And the good news is that we are a complete system supplier for this particular product. We will be supplying manual gear. We will be supplying Chemical Process System (CPS), and we will be supplying Constant Velocity Joints (CVJ) also. And we are very hopeful for that. Our lines are ready. We are ready with our production facilities," Rajiv Chanana, CFO, JTEKT India said during the March quarter earnings call.
In anticipation of an increased order flow from Maruti, JTEKT India has already started work on expanding capacity. Maruti Suzuki contributes 56 percent to JTEKT India's annual revenue. As a component supplier, JTEKT India will be heavily dependent on its OEM's performance and the overall demand outlook.
The auto parts maker is looking to ramp up its Constant Velocity Joints (CVJ) business, for which the company has set up a new line at a capex of Rs 100 crore. Assuming a capex of Rs 300 crore for FY26, JTEKT India said it will end up with about Rs 760 crore of capex over a three-year period.
"...currently we are at around 5% market share (in CVJ). I think we should be expanding to within a year or so. We expect that we may touch 7.5%, 10% kind of a number," CFO Chanana said in June. So far, the company has been talking only to Maruti and Toyota, but the management is confident of attracting other customers too.
"...we want to expand that to not only to Maruti and Toyota, we need to expand to other customers also. So, this is where we are struggling, and we are working, and we want this to be a big success story for India. And this is a possibility, and we are very, very hopeful about expanding CVJ."
Japan's JTEKT Corporation is a majority shareholder in the company with which it has a technical collaboration.
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