Buy Jamna Auto Industries; target of Rs 41: CD Equisearch

CD Equisearch's research report on Jamna Auto Industries

After some 29% decline in sales in Indian CV sales in FY20 accentuated by economic slowdown, drying up of infrastructure projects and revised axle norms, Indian CV industry is staring at no less bad 26-28% fall in sales in the current year according to Crisil Research. Revised axle norms increase the freight capacity at a time when freight demand showed little signs of uptick. Crisil Research further reckons that transporters backed off from making new purchases of trucks not least due to higher down payment demand of NBFCs. Also resale value of trucks in the second hand market was affected by prevailing liquidity crunch faced by NBFCs.

Outlook

Although track record would help surmise its competitive positioning but it would barely help in guessing the turnaround of the Indian CV industry. Weighing odds, we advise buying the stock with a revised target of Rs 41 (previous target: Rs 74) based on 25x FY22e earnings.

Jamna Auto Industries 22072020-cd