Multibagger Alert: This auto ancillary company has given returns of 101.8% in the past year!

Multibagger Alert: This auto ancillary company has given returns of 101.8% in the past year!

by 5paisa Research Team Last Updated: Dec 12, 2022 - 01:36 pm 43.8k Views
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On a YTD basis, the stock has given a return of 82.41%.

Leading spring manufacturer and supplier to commercial vehicles (CV) majors, Jamna Auto Industries Limited turned multibagger and has given investors a stellar return of 101.8% in one year. The share price stood at Rs 55.5 on December 10, 2020, and since then, the stock has more than doubled investor wealth.

Headquartered in New Delhi, Jamna Auto Industries engages in the manufacture and sale of automobile suspension products. The company is the largest manufacturer of suspension springs for commercial vehicles in India, and the third-largest in the world. The company counts the likes of Tata Motors, Ashok Leyland, Volvo, and Bharat Benz as its customers.

In Q2FY22, the consolidated revenue of the company increased 88.62% YoY and 19.15% QoQ to Rs 351.90 crore. Sales growth was primarily driven by MHCV production which was 57,220 units compared to 28,810 units in Q2FY21 up by 99% YoY. During the quarter, the company was able to maintain gross margins sequentially (13 bps; 37%) despite raw material pressures, primarily on the back of its ability to pass through prices and a superior product mix. The company’s sales mix in Q2FY22 was OEM 77% and New Markets 23% compared to OEM 71% and New Markets 29% in FY21. As a result, the company reported a strong operational performance with PBIDT (Ex OI) rising 41.64% YoY to Rs 12.62 crore, whereas, PAT rose 233.37% YoY to Rs 27.07 crore. The company remains debt-free as of September 30, 2021, and has a surplus cash position of Rs 58.3 crore.

Like other auto component manufacturers, Jamna Auto bore the impact of the slowdown but has come back on investors' radar as a rebound in vehicle sales in the CV market. This is being led by a rapid increase in the demand from e-commerce for faster deliveries and pick up in the construction & mining segment. The deep chips shortage issue that auto companies faced over a couple of quarters is gradually resolving, and auto ancillary companies such as Jamna Auto are benefiting.

The average age of the truck fleet stands at 9.5 years which is an all-time high. As fears of a Covid third wave recede, replacement demand should kick in strongly and this should augur well for auto and auto component manufacturers alike.

Meanwhile, Jamna Auto has introduced several new products in the aftermarket which will help to increase content per vehicle which includes Springs allied products U-Bolt, Center Bolt, Bush, Hanger Shackle and Spring Pin; Lift Axle allied products - mainly Air bellow/ spring and Trailer suspension systems.

At 1:50 pm on Monday, the stock of Jamna Auto Industries was trading at Rs 112.75, up by 0.67% or Rs 0.75 per share on BSE. The 52-week high of the scrip is recorded at Rs 117.80 and the 52-week low at Rs 50.05 on the BSE.

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