JUGANOO – Multibagger Idea

12 November 2010 
Jamna Auto Industries Ltd.

INVESTMENT IDEA

Jamna Auto Industries Ltd. Result Update

The latest Qtr and H‐1 results are in line with our expectations 
Web: www.jaispring.org
and we are confident of significant improvements in H‐2 , due 
to full operation of Jamshedpur plant. We are expecting 14/‐ 
Risk Low EPS for full year and raise target to Rs 210/‐ for 12 months. 
 The  company  has  plants  at  –  Chennai,  Malanpur  & 
Price (Rs.) 147 Jamshedpur; it also plans to increase its capacity by setting 
Market Cap (Rs.Crs.) 537 up two plants at Pune & Lucknow.  The Jamshedpur plant 
52 High / Low (Rs.) 174/42.05 is likely to be fully operational by Oct. ’10; which will help 
Sales/MCap 1.23 to  capitalize  on  the  rising  demand  for  leaf  &  Parabolic 
springs.  
Book Value (Rs.) 26.3
 All  major  domestic  and  foreign  CV  players  are  its  clients, 
BSE 520051 viz.  ‐  TATA,  Ashok  Leyland,  Volvo,  Eicher,  GM,  Toyota, 
NSE - Daimler, Suzuki and Swaraj mazda.  
Reuters JMNA.BO  The  product  mix  of  the  company  comprises  92%  of 
Bloomberg JMNA.IN conventional and 8% for parabolic springs. With increased 
awareness  about  the  advantages  of  parabolic,  there  is 
likely major shift in OEM demand for parabolic springs. It is 
Key Financials Consolidated expanding capacities for Parabolic springs, which will add 
(Rs Crores) FY09 FY10 %chg more volumes with better margins.   
Gross Sales 520.60 661.48 27.1  Company will look at exports markets also as capacities are 
PBIDT 21.87 57.24 161.7 ramped  up.  UD  Truck  Corp.  Japan  has  already  issued  LoI 
Interest 35.54 26.17 -26.4 for supply of leaf springs to its Japanese plant. Company 
has  engaged  Japan  Institute  of  Plant  Management,  for 
Depreciation 9.47 14.35 51.5
adopting  best  manufacturing  practices.  It  is  also  cutting 
Net Profit -19.63 11.04 L to P costs  aggressively  including  finance  costs.  Despite 
EPS (Rs) 0.00 3.02 L to P significantly  higher  volumes  –  interest  costs  are  down  in 
CEPS (Rs) 0.00 6.95 L to P FY’10 and stable in Q‐1. 
F.V. (Rs) 10.00 10.00 0.0  On  the  back  of  strong  demand  in  the  commercial 
vehicle segments, expanding capacities and improving 
Equity Capital 36.53 36.54 0.0
efficiencies; the company is likely to show significantly 
PE (x) 0.00 48.65 0.0 better bottom line performance in current and coming 
years. We expect FY’12 earnings to be around Rs 20/‐ 
Half Yearly Results Consolidated and look for sustained growth going forward. Buy with 
(Rs Crores) H1FY10 H1FY11 % chg target of Rs 210 in 12 months.
Gross Sales 274.41 457.23 66.6 Technical Trend
PBIDT 31.22 54.95 76.0 JAMNA AUTO INDS (124.000, 124.600, 120.000, 124.600, +5.90000)
145
140

Net Profit 6.31 18.56 194.1 135

130
125
120

Equity 36.53 39.20 7.3 115

110
105
100

EPS 1.73 4.73 174.1 95

90
85
80
75
70
65
60

Shareholding Pattern 55
50
45

(%) Jun-10 Sep-10 chg 40

35
30
25

Foreign 34.28 35.72 1.44 Relative Strength Index (60.7545)

20

90
80

Institutions 0.14 0.14 0.00 70

60
50

4.46
40

Corp. Holding 4.12 -0.34 30

20
Volume (11,937) 60000
50000

Promoters 44.75 44.41 -0.34 40000

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Public&Others 16.36 15.62 -0.74 ugust September October November December 2010 February March April May June July August

Anand Rathi Research

 JUGANOO – Multibagger Idea
12 November 2010 
Jamna Auto Industries Ltd.

INVESTMENT IDEA

Jamna Auto Industries Ltd. Background

Jamna  Auto  Industries  Limited  is  the  largest  manufacturer  of 
tapered Leaf and Parabolic Springs for Commercial Vehicles (CVs) 
in  India,  having  close  to  66%  of  market  share  in  OEM’s.  It  has 
technical tie up with NHK of Japan.  The company has an installed 
capacity  of  1,44,000  mtpa  [Chennai  &  Malanpur  plants]  and 
plans to increase its capacity by setting up two plants at Pune & 
Lucknow.    The  Jamshedpur  plant  is  likely  to  be  fully  operational 
by Oct. ’10; which will help to capitalize on the rising demand for 
leaf  &  Parabolic  springs.  All  major  domestic  and  foreign  CV 
players are clients, viz. ‐ TATA, Ashok Leyland, Volvo, Eicher, GM, 
Projections Toyota, Daimler, Suzuki and Swaraj mazda. 
Key Financials Company  plans  for  higher  penetration  in  domestic  and  overseas 
(Rs Crores) FY10 FY11E FY12E replacement market segments as part of overall de‐risk strategy. 
Gross Sales 661.48 1050.00 1450.00 The product mix of the company comprises 92% of conventional 
PBIDT 57.24 128.00 170.00 and 8% for parabolic springs. With increased awareness about the 
advantages of  parabolic springs [light weight & flexible], there is 
Other Income 3.04 5.00 7.00
likely major shift in OEM demand for parabolic springs. Company 
Interest 26.17 29.00 40.00
is  expanding  capacities  for  Parabolic  springs  and  expects  much 
Depreciation 14.35 30.00 33.00 higher  contribution  from  this  segment,  adding  to  volumes  and 
Tax 5.68 12.00 22.00 better margins.  
Net Profit 11.04 51.00 75.00 At  present  exports  forms  small  part  due  to  capacity  constraints, 
EPS (Rs) 3.02 13.96 20.53 once,  new  facilities  goes  in  to  production,  company  will  look  at 
CEPS (Rs) 6.95 22.17 29.56 exports markets also. UD Truck Corp. Japan has already issued LoI 
F.V. (Rs) 10.00 10.00 10.00 for  supply  of  leaf  springs  to  its  Japanese  plant.  Company  has 
engaged Japan Institute of Plant Management, for adopting best 
Dividend (%) - 10.00 15.00
manufacturing  practices. It also has a wholly owned subsidiary – 
Equity Capital 36.54 36.54 36.54
Jai Suspension Systems Ltd. 
PE (x) 46.34 10.03 6.82 Company is undergoing major expansions and hence, didn’t find it 
prudent  to  declare  dividend.  It  is  also  cutting  costs  aggressively 
including  finance  costs.  Despite  significantly  higher  volumes  – 
interest costs are stable in Q‐1. 
Risks and concerns
High  focus  on  single  product  risk  is  mitigated  by  focus  on  new 
generation  parabolic  springs,  plus  introduction  of  new  products 
like  –  Air  suspension,  Bogie  suspension  and  Leaf  Axles.  Risk  of 
OEM  concentration  of  sales  is  tackeled  by  expanding  reach  in 
replacement markets and export markets. 
Recommendation
On  the  back  of  strong  demand  in  the  commercial  vehicle 
segments,  expanding  capacities  and  improving  efficiencies;  the 
company  is  likely  to  show  significantly  better  bottom  line 
performance  in  current  and  coming  years.  We  expect  EPS  of 
around Rs 20 in FY’12. Buy with target of Rs 210 in 12 months.
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