Jamna Auto Industries showcases good growth potential
Jamna Auto Industries Ltd. (JAI) is a manufacturer of auto suspension products such as parabolic/tapered leaf spring, lift axle and air suspension. It operates in the OEM and CV segment.
On the consolidated financial front, total income from operations dropped 9 per cent to Rs. 542.84 crore in Q4FY19 from Rs. 596.67 crore in Q4FY18. EBITDA plummeted 22.6 per cent to Rs. 70.61 crore in Q4FY19 from Rs. 91.27 crore in Q4FY18. PAT declined 28.6 per cent to Rs. 33.37 crore in Q4FY19 from Rs. 46.72 crore in Q4FY18. As a result, EPS dropped 28.6 per cent to Rs.
The company posted a positive set of numbers for the year ended 31st March, 2019. Consolidated income from operations rose 22.8 per cent YoY to Rs. 2,134.81 crore in FY19 from Rs. 1,738.12 crore in FY18. EBITDA showcased a growth of 25.72 per cent YoY to Rs. 287.67 crore in FY19 from Rs. 246.53 crore in FY18. Consequently, PAT increased 9.68 per cent YoY to Rs. 137.45 crore in FY19 from Rs. 125.31 crore in FY18. EPS rose to Rs. 3.45 in FY19 from Rs. 3.15 in FY18, posting a growth of 9.52 per cent.
During the 4th quarter of FY19, the decline in revenues is attributable to a weaker product mix. Furthermore, the shift in demand towards lower tonnage vehicles, weak revenue from parabolic springs and lift axle, as well as subdued aftermarket sales also contributed to low revenues.
Although the near-term outlook for the company's earnings prospects is weak, there is ample potential for growth from H2FY20 onwards. The segments of e-commerce, logistics and mining are progressing. Moreover, purchasing ahead of the implementation of BS-VI norms and a prospective vehicle scrappage scheme in FY21 will bolster CV growth. JAI's close proximity to OEM plants will keep logistics costs low and curb the entry of new players. In doing so, the company has a better chance of retaining its market share in the OEM space.
By means of expansion into aftermarkets and improvements to the product basket, the company intends to strategically lower the risk of its business model. Plans are being made to add products such as lift axles, air suspension, stabilizer bars and u-bolts to the product portfolio. The present capacity utilization levels are nearly 85 per cent. JAI endeavors to enhance capacity utilization by employing internally accrued funds.
On Friday, the shares of JAI opened at Rs. 52.50, and hit a high and low of Rs. 53.50 and Rs. 51.10, respectively. The stock closed at Rs. 51.60, down 2.92 per cent.