Jamna Auto Industries is India’s market leader in automotive suspension solutions and is the second largest producer in the world of multi-leaf springs. It has plants at various locations in India.
The promoters, the Jauhar family, own 50% stake in the company.
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Industry:
Indian CV manufacturers feel that the need to replace ageing fleet and a revival in the economy may generate demand for close to half a million light-medium and heavy-duty trucks worth $10 bn over the next 12-18 months.
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Policies such as the scheme for scrapping old vehicles and production-linked incentives will also play a role in driving the demand for commercial vehicles.
The average age of India’s truck fleet is at a record high. The proportion is replacement demand is at 35%
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It has a leadership position in the domestic leaf and parabolic spring market, aided by scale & strategic proximity to its customers across its manufacturing locations in India. This has helped them to maintain a dominant share with most CV OEMs (market share of 65-70%)
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Strengths:
Strong business position:
JAI is the market leader in the domestic M&HCV OEM market for leaf springs, with a dominant share of its business coming from two of the leading CV OEMs, TML and ALL. JAI is expected to maintain its dominant position in the market.
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Sales mix-
In recent years, JAI has witnessed a growth in revenue contribution from the higher value-accretive products such as parabolic springs. The contribution of parabolic springs to JAI’s sales revenue has improved gradually to nearly ~28% in FY22 from 9% in FY11.
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Strategic proximity to OEM customers–
JAI’s manufacturing plants are spread across 8 locations in 🇮🇳, which are near all its customer locations. Its competitors have a limited presence in terms of geographical footprint which is reflected by its dominant market position
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Comfortable credit profile –
JAI continues to maintain a comfortable credit profile, evident from healthy coverage indicators and capital structure, with interest coverage of 19.8 times in FY2021 (73.4 times in 9M FY2022) and TOL/TNW of 0.5 times as on March 31, 2021
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Challenges:
• Cyclicality–
JAI has dependence on the M&HCV segment, which exposes it to the inherent cycle nature of the underlying industry.
Its ability to scale up to a level that can offset any sharp decline in volumes during downturn, is yet to be demonstrated.
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Concentration Risk:
JAI’s 2 major customers contributes ~57% & ~60% to its sales revenue in FY21 & FY22 respectively, with VE Commercial Vehicles Ltd & Daimler being JAI’s other leading OEM clients. This results in high client concentration risk.
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Liquidity:
The company does not have any long-term debt repayments & continues to enjoy healthy financial flexibility.
It is expected to generate healthy cash accruals, going forward, which is likely to further strengthen its liquidity profile.
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In FY22, it generated 79% of its sales from OEMs, followed by 20% and 1% from replacement and export segments.
The company’s leaf springs, drive more than 90% to its sales. Its top 3 clients, ALL, TML and Daimler India accounted for ~68% of its turnover in FY2022
Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer recommendations and conversions through relevant Mobile Advertising. It aims to enhance returns on marketing investment through contextual mobile ads.
MTAR Technologies develops and manufactures components for the defense, aerospace & nuclear sectors. It was incorporated in 1970 to serve the technical & engineering needs of the Indian government in the post embargo regime.
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Client Base:
The company has a renowned client base, including reputed players such as Bloom Energy Corporation, ISRO, NPCIL, and DRDL.
It has established relationship with its customers and has been receiving repeat orders from its clients.
Incorporated in 1969, UPL manufactures, markets, & distributes crop protection products, intermediates, speciality chemicals & other industrial chemicals.
UPL ranks among the Top five generic agro-chemical companies in the world.
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Crop Protection Market:
The crop protection market is directly correlated to agricultural production. India is the world’s 5th largest agrochemical market. With the market size of ~$3.3Billion. It also has the fastest growth rate amongst the top 20 markets (~9%)
MIL was incorporated in 1979 as a pvt ltd company by Mr Irshad Mirza (Chairman). It manufactures footwear, finished leather apparels. The company has established brands like RedTape, Mode, Bond Street and Oaktrak. MIL also operates in the overseas market.
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Industry Backdrop:
India is the 2nd largest global producer of footwear after China, accounting for ~ 10% of the annual global production of ~22Bn
pairs.
The industry is seeing huge traction in tier II & III cities.