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IDBI Capital
Jamna Auto (Accumulate)
Target: ₹74
CMP: ₹69
Jamna Auto (JAI) Q3-FY21 consolidated results were above our estimates on all parameters. Revenue for the quarter stood at ₹343 crore vs our estimate of ₹310 crore on account of M&HCV goods production increase of 44 per cent y-oy/102 per cent q-o-q to about 55,000 units and price hikes by the company.
EBITDA margin for the quarter stood at 14.9 per cent vs 12.9 per cent and against our estimates of 10.5 per cent due to lower operating expenses. We build volume growth of 41 per cent/21 per cent for FY22/FY23, respectively, on account of lower base and strong replacement demand, led by the scrappage policy that is expected to help the entire industry for multi-year upcycle which would also help JAI to reap the benefits.
We believe positive macro factors, vaccination programme in place, higher infrastructure and economic activities would help to improve the fleet operator’s profitability. We build revenue/earnings growth of 30 per cent/53 per cent and 15 per cent/28 per cent for FY22/23, respectively.
Due to a recent increase in share price, we revise our rating to ‘Accumulate’ (earlier ‘Buy’) and arrive at a target price of ₹74 (earlier ₹58) based on PER of 25x FY23 EPS.
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