Buy Jamna Auto Industries; target of Rs 140: LKP Research

LKP Research's research report on Jamna Auto Industries

Jamna Auto Industries (Jamna) is a beneficiary of the ongoing positivity in the CV cycle. Going forward, we expect CV demand to improve on favorable base, momentum in economic activities and government infra initiatives. In addition to CV recovery, Jamna’s new product additions in the suspension segment, improvement in parabolic springs mix and focus on after-market segment should aid in reporting strong topline CAGR of 27% over FY22-25E. Management’s cost reduction measures taken in the last 24 months and utilization improvement benefit to aid in strong bottom line growth for the company with 34% CAGR over the same period. The company has achieved the earlier set target and is on track to achieve the newly set target across various parameters in the business.

Outlook

At the current market price, the stock is trading at 14.2x FY25E EPS of ₹7.7. Considering sustained strong EBITDA margins performance, increase in value content per vehicle supported by new product launches in the suspension segment, lean fixed cost structure, anticipated higher share of after-market (which is non-cyclical), and strong balance sheet, we recommend a BUY on the stock with a target price of ₹140.

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