Jamna Auto- Upflag Breakout Followed by Consolidation NR

2022年8月18日

Jamna Auto Industries is a manufacturer of suspension products i.e., leaf and parabolic springs for CV industry –
having eight manufacturing plants with a total installed capacity of 3 Lac MT spread across the country. About the
product and market segmentation – 63% contributed by OEMs while 37% by new markets in terms of products while
77%/23% by OEMs and new markets (after-market + exports) respectively in terms of markets. Coming to the client
concentration – Ashok Leyland and TATA Motors are the largest clients contributing to more than 60% to the top-line.

Industry Specific Factors
• Government’s push on infrastructure development to augur well for commercial vehicles
• Pick up in replacement demand because of implementation of new scrappage policy (making automated testing
compulsory for the vehicle from Apr’ 23) along with prevailing higher freight rates.
• During the CV upcycle, typically the tonnage growth would be higher as compared to the volume growth leading
to higher content consumed per vehicle – 19-21% of tonnage CAGR over FY22-27 for the CV industry as
compared to 13-15% of volume CAGR (for FY17-22 it stood at 0% and -3% respectively as per various industry
reports).
• Opportunity for market share gains in the after market for organized players due to shift from unorganized to
organized players (the size of after-market is estimated at Rs. 2,500 crore) – after-market being fragmented
because of the presence of the smaller players; Jamna has been expanding reach over the years with number of
touchpoints 16k touchpoints as compared to 13k in FY19 along with expanding product offerings – over 5k as
compared to 2k in FY19

Company Specific Factors:
• Ambitious target to generate 50% of the top-line from new markets and new products by FY26 (stands at 23%
and 37% respectively as of FY22) along with 50%+ RoCE – higher share from new markets leading to lower
volatility
• First mover advantage within parabolic spring which offers better suspension as compared to leaf springs –
leading to over 90% market share within the segment which enables Jamna Auto to have a pricing power (the
industry share in the parabolic spring stands over 25% from 15% in FY15 while the rest dominated by leaf
springs)
• Technology transfer agreement with Ridwell Corporation for design and manufacture of air suspension and lift
axles enables it to launch better products giving superiority as compared to the peers
Multi-year CV cycle led by the higher capex outlay by the government along with private capex revival along with shift
towards parabolic springs where Jamna Auto enjoy a dominating position, shifting towards higher share from the after
market through product offerings and increasing number of touchpoints are the primary factors to include Jamna Auto
Industries in the portfolio.