Jamna Auto Industries (JAI) is one amongst the some auto component stocks that continued to trade at reasonable valuations, despite the rally in the last two years. This was possible because of good earnings growth from the cyclical upturn in auto sale.
The company is mainly engaged in the supply of springs and other suspension products to commercial vehicles (CV). With more steam left in the medium and heavy CV (MHCV) segment, the company is doing well to track a few more quarters of strong earnings growth. Jamna Auto share price at present trades at a reasonable 20 times its trailing 12 month earnings. As of now the stock is currently trading at Rs. 199.25.
This is pretty cheap as compared to other CV suppliers including ZF Steering Gear (33 times), Wabco India (56 times) and Automotive Axles (28 times).
Advantages from CV up-cycle
MHCV sales have picked pace in the last two fiscals and kept up its double-digit growth in the beginning of the year as well. Jamna Auto will benefit as it holds 66 per cent market share in supplies to including Mahindra and Mahindra, Ashok Leyland, Tata Motors, Bharat Benz, Izuzu, and Volvo. Jamna Auto share price is Trading at its 52 week high and opened and the stock volume spurt by more than 2.28 times.
The company has extended its product portfolio to include parabolic springs, lift axles and air suspension systems. With LCVs using parabolic springs, the company is going to benefit from a pick up in LCV sales in the latest months to come. Jamna Auto supplies lift axles to Ashok Leyland and air suspensions to SML Izuzu. The company aspires to increase its revenue mix from these new products to 33 per centfor the years to come. This provides chance for margin expansion as their value-added nature bestows the company with higher pricing power. Margins will also be helped by higher sales in the replacement markets. Jamna Auto is desires to improve its presence in the aftermarket segment, which presently brings about 15-20 per cent of the total revenue.
Jamna Auto Financials:
Jamna Auto is a multibagger as identified by Dynamic Levels research team for this quarter. The closest support for Jamna Auto share price reads at Rs. 180. For further details kindly refer to the Jamna Auto share price history.
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