Outlook and valuation
Jamna is in a sweet spot considering the robust demand for MHCVs and its positioning as the #1 player in India and #2 player in the world. Additionally, the strong current demand for parabolic leaf spring in which Jamna is the unanimous leader is finding itself to be the most favored vendor. Being a formidable force in the OEM market and a challenger to the unorganized players in the Aftermarket industry the company has anchored its position well in the auto ancillaries space of the market. Steady shift to the high margin lift axles and parabolic leaf springs from the conventional ones would lead to margin escalation. With superior return ratios and clean balance sheet, we believe Jamna will post phenomenal growth hereon and will trade at a premium to its own historical multiple of 15x. We maintain our BUY rating on the stock with higher estimates and target price of Rs 113.