JUGANOO – Multibagger Idea 12 November 2010 Jamna Auto Industries Ltd.

INVESTMENT IDEA

Jamna Auto Industries Ltd. Result Update The latest Qtr and H‐1 results are in line with our expectations Web: www.jaispring.org and we are confident of significant improvements in H‐2 , due to full operation of plant. We are expecting 14/‐ Risk Low EPS for full year and raise target to Rs 210/‐ for 12 months.  The company has plants at – , Malanpur & Price (Rs.) 147 Jamshedpur; it also plans to increase its capacity by setting Market Cap (Rs.Crs.) 537 up two plants at & Lucknow. The Jamshedpur plant 52 High / Low (Rs.) 174/42.05 is likely to be fully operational by Oct. ’10; which will help Sales/MCap 1.23 to capitalize on the rising demand for leaf & Parabolic Book Value (Rs.) 26.3 springs.  All major domestic and foreign CV players are its clients, BSE 520051 viz. ‐ TATA, , , Eicher, GM, , NSE - Daimler, and Swaraj mazda. Reuters JMNA.BO  The product mix of the company comprises 92% of Bloomberg JMNA.IN conventional and 8% for parabolic springs. With increased awareness about the advantages of parabolic, there is likely major shift in OEM demand for parabolic springs. It is Key Financials Consolidated expanding capacities for Parabolic springs, which will add (Rs Crores) FY09 FY10 %chg more volumes with better margins. Gross Sales 520.60 661.48 27.1  Company will look at exports markets also as capacities are PBIDT 21.87 57.24 161.7 ramped up. UD Truck Corp. Japan has already issued LoI Interest 35.54 26.17 -26.4 for supply of leaf springs to its Japanese plant. Company has engaged Japan Institute of Plant Management, for Depreciation 9.47 14.35 51.5 adopting best manufacturing practices. It is also cutting Net Profit -19.63 11.04 L to P costs aggressively including finance costs. Despite EPS (Rs) 0.00 3.02 L to P significantly higher volumes – interest costs are down in CEPS (Rs) 0.00 6.95 L to P FY’10 and stable in Q‐1. F.V. (Rs) 10.00 10.00 0.0  On the back of strong demand in the commercial vehicle segments, expanding capacities and improving Equity Capital 36.53 36.54 0.0 efficiencies; the company is likely to show significantly PE (x) 0.00 48.65 0.0 better bottom line performance in current and coming years. We expect FY’12 earnings to be around Rs 20/‐ Half Yearly Results Consolidated and look for sustained growth going forward. Buy with (Rs Crores) H1FY10 H1FY11 % chg target of Rs 210 in 12 months. Gross Sales 274.41 457.23 66.6 Technical Trend

PBIDT 31.22 54.95 76.0 JAMNA AUTO INDS (124.000, 124.600, 120.000, 124.600, +5.90000) 145 140 135 Net Profit 6.31 18.56 194.1 130 125 120 115 Equity 36.53 39.20 7.3 110 105 100 95 EPS 1.73 4.73 174.1 90 85 80 75 70 65 60 55 Shareholding Pattern 50 45 40 (%) Jun-10 Sep-10 chg 35 30 25 20 Foreign 34.28 35.72 1.44 Relative Strength Index (60.7545) 90 80 70 Institutions 0.14 0.14 0.00 60 50 40 Corp. Holding 4.46 4.12 -0.34 30 20 Volume (11,937) 60000 50000 40000 Promoters 44.75 44.41 -0.34 30000 20000 10000 x10 10 17 24 31 7 14 22 29 5 12 20 26 3 9 16 23 30 7 14 21 29 4 11 18 25 1 8 15 22 2 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14 21 28 5 12 19 26 2 9 16 2 Public&Others 16.36 15.62 -0.74 ugust September October November December 2010 February March April May June July August

Anand Rathi Research

JUGANOO – Multibagger Idea 12 November 2010 Jamna Auto Industries Ltd.

INVESTMENT IDEA

Jamna Auto Industries Ltd. Background Jamna Auto Industries Limited is the largest manufacturer of tapered Leaf and Parabolic Springs for Commercial Vehicles (CVs) in , having close to 66% of market share in OEM’s. It has technical tie up with NHK of Japan. The company has an installed capacity of 1,44,000 mtpa [Chennai & Malanpur plants] and plans to increase its capacity by setting up two plants at Pune & Lucknow. The Jamshedpur plant is likely to be fully operational by Oct. ’10; which will help to capitalize on the rising demand for leaf & Parabolic springs. All major domestic and foreign CV players are clients, viz. ‐ TATA, Ashok Leyland, Volvo, Eicher, GM, Projections Toyota, Daimler, Suzuki and Swaraj mazda. Key Financials Company plans for higher penetration in domestic and overseas (Rs Crores) FY10 FY11E FY12E replacement market segments as part of overall de‐risk strategy. Gross Sales 661.48 1050.00 1450.00 The product mix of the company comprises 92% of conventional PBIDT 57.24 128.00 170.00 and 8% for parabolic springs. With increased awareness about the advantages of parabolic springs [light weight & flexible], there is Other Income 3.04 5.00 7.00 likely major shift in OEM demand for parabolic springs. Company Interest 26.17 29.00 40.00 is expanding capacities for Parabolic springs and expects much Depreciation 14.35 30.00 33.00 higher contribution from this segment, adding to volumes and Tax 5.68 12.00 22.00 better margins. Net Profit 11.04 51.00 75.00 At present exports forms small part due to capacity constraints, EPS (Rs) 3.02 13.96 20.53 once, new facilities goes in to production, company will look at CEPS (Rs) 6.95 22.17 29.56 exports markets also. UD Truck Corp. Japan has already issued LoI F.V. (Rs) 10.00 10.00 10.00 for supply of leaf springs to its Japanese plant. Company has engaged Japan Institute of Plant Management, for adopting best Dividend (%) - 10.00 15.00 manufacturing practices. It also has a wholly owned subsidiary – Equity Capital 36.54 36.54 36.54 Jai Suspension Systems Ltd. PE (x) 46.34 10.03 6.82 Company is undergoing major expansions and hence, didn’t find it prudent to declare dividend. It is also cutting costs aggressively including finance costs. Despite significantly higher volumes – interest costs are stable in Q‐1. Risks and concerns High focus on single product risk is mitigated by focus on new generation parabolic springs, plus introduction of new products like – Air suspension, Bogie suspension and Leaf Axles. Risk of OEM concentration of sales is tackeled by expanding reach in replacement markets and export markets. Recommendation On the back of strong demand in the commercial vehicle segments, expanding capacities and improving efficiencies; the company is likely to show significantly better bottom line performance in current and coming years. We expect EPS of around Rs 20 in FY’12. Buy with target of Rs 210 in 12 months. DISCLAIMER This report has been issued by Anand Rathi Share & Stock Brokers Ltd (ARSSBL), which is regulated by SEBI. The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities, options, future or other derivatives related to such securities (“related investment”). ARSSBL and its affiliated may trade for their own accounts as market maker/ jobber and /or arbitrageur in any securities of this issuer(s) or in related investments, and may be on the opposite side of public orders. ARSSBL, its affiliates, directors, officers, and employees may have a long or short position in any securities of this issuer(s) or in related investment banking or other business from, any entity mentioned in this report. This research report is prepared for private circulation. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial situation and the particular needs of any specific investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report.

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