Monday, July 7, 2008

Stock Idea: Jamna Auto

Jamna Auto manufactures automobile springs, spring leaves and automobile coil springs. Two of its group companies - Jai Parabolic Springs and MAP Springs were merged into Jamna Auto and the current results, reflects this merged performance, which could also explain the spurt in the top and bottomlines.
For the year ended 31st March 2008, the company recorded a very healthy 69% jump in net sales at Rs.471.22 crore. Despite the 62% jump in total expenses, EBIDTA rose by a fantastic 135%. Interest outgo shot up by 118.5% and depreciation rose 108%. Despite this, the company’s PBT rose by an unbelievable 187% at Rs.20.42 crore. And the jump in PAT was phenomenal, it jumped by 219% at Rs.20.14 crore. Apart from the merger adding to the performance, the fact that the company has shifted from conventional leaf springs to high margin parabolic springs
In November 2007, the company acquired Leaf manufacturing facilities of Tata Motors' at Jamshedpur, and has entered into strategic supply arrangement with them. The group would invest Rs 120 crore in expansion. Of this, Rs 75 crore would be invested in expanding the Jamshedpur plant, which would house the plant and machinery bought from Tata Motors.
It is investing another Rs.10 crore in a greenfield plant at Uttaranchal and another Rs.15 crore in an R&D centre in Chennai.
Clearwater Capital Partners — a private equity player — has invested Rs.40 crore of equity in the company in June 2007 at Rs.72 per share. It holds a 24.15% in the company.
Currently quoted at Rs.44, hold on to this stock.


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