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Systematix Research Report
Jupiter Wagons Ltd. delivered yet another strong revenue/Ebitda growth of 111%/143% YoY (+16.7%/+24.7% QoQ) led by strong execution of wagons which increased 115% YoY to 1,850 wagons.
Though gross margin contracted 333/70 basis points YoY/QoQ to 21.8% in Q2 FY24, Ebitda margin expanded 181/87 bps to a strong 13.7% gaining from economies of scale and fixed cost absorption.
Order book stood at Rs 59.5 billion at the end of Q2 FY24 from Rs 62.1 billion at the end of Q1 FY24 and Rs 50.3 billion at the end of Q2 FY23. Out of the total order book, wagons remain around 89% (Rs 53 billion for ~13,500 wagons) where 80% belongs to private players and the rest 20% to Indian Railways.
Indian Railwyas has floated a tender for 20,000 wagons, in which the company expects to be awarded similar to its market share (~25-30%). Jupiter Wagons is looking to add its foundry capacity at Kolkata to 3000 million tonne from the current 2500 mt which would expand its wagon manufacturing capacity to 800 wagons/month from the current 700 wagons a month.
Also, it is setting up a new foundry at the Jabalpur plant (~2000 mt capacity) which would help save logistics costs and expand the capacity to ~1000 wagons a month.
The management also contemplated its plan to set-up a wheel-set manufacturing capacity (~30% of wagon cost) to reduce the dependency on imports and would help augment the margins significantly.
We raise our FY24E/FY25E Ebitda estimates upwards by 9.5%/34% on the back of enhanced execution capabilities and added revenue from recently acquired Stone India and E-LCV from FY25E.
We forecast a strong Ebitda/profit after tax compound annual growth rate of 67%/101% during FY23-FY25E.
We maintain 'Buy' with a revised target price of Rs 365 from the earlier Rs 288 based on an unchanged price-to-earnings ratio multiple of 30 times on FY25E.
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