Jamna Auto- Upflag Breakout Followed by Consolidation NR
Jamna Auto Industries is a manufacturer of suspension products i.e., leaf and parabolic springs for CV industry –
having eight manufacturing plants with a total installed capacity of 3 Lac MT spread across the country. About the
product and market segmentation – 63% contributed by OEMs while 37% by new markets in terms of products while
77%/23% by OEMs and new markets (after-market + exports) respectively in terms of markets. Coming to the client
concentration – Ashok Leyland and TATA Motors are the largest clients contributing to more than 60% to the top-line.
Industry Specific Factors
• Government’s push on infrastructure development to augur well for commercial vehicles
• Pick up in replacement demand because of implementation of new scrappage policy (making automated testing
compulsory for the vehicle from Apr’ 23) along with prevailing higher freight rates.
• During the CV upcycle, typically the tonnage growth would be higher as compared to the volume growth leading
to higher content consumed per vehicle – 19-21% of tonnage CAGR over FY22-27 for the CV industry as
compared to 13-15% of volume CAGR (for FY17-22 it stood at 0% and -3% respectively as per various industry
reports).
• Opportunity for market share gains in the after market for organized players due to shift from unorganized to
organized players (the size of after-market is estimated at Rs. 2,500 crore) – after-market being fragmented
because of the presence of the smaller players; Jamna has been expanding reach over the years with number of
touchpoints 16k touchpoints as compared to 13k in FY19 along with expanding product offerings – over 5k as
compared to 2k in FY19
Company Specific Factors:
• Ambitious target to generate 50% of the top-line from new markets and new products by FY26 (stands at 23%
and 37% respectively as of FY22) along with 50%+ RoCE – higher share from new markets leading to lower
volatility
• First mover advantage within parabolic spring which offers better suspension as compared to leaf springs –
leading to over 90% market share within the segment which enables Jamna Auto to have a pricing power (the
industry share in the parabolic spring stands over 25% from 15% in FY15 while the rest dominated by leaf
springs)
• Technology transfer agreement with Ridwell Corporation for design and manufacture of air suspension and lift
axles enables it to launch better products giving superiority as compared to the peers
Multi-year CV cycle led by the higher capex outlay by the government along with private capex revival along with shift
towards parabolic springs where Jamna Auto enjoy a dominating position, shifting towards higher share from the after
market through product offerings and increasing number of touchpoints are the primary factors to include Jamna Auto
Industries in the portfolio.
having eight manufacturing plants with a total installed capacity of 3 Lac MT spread across the country. About the
product and market segmentation – 63% contributed by OEMs while 37% by new markets in terms of products while
77%/23% by OEMs and new markets (after-market + exports) respectively in terms of markets. Coming to the client
concentration – Ashok Leyland and TATA Motors are the largest clients contributing to more than 60% to the top-line.
Industry Specific Factors
• Government’s push on infrastructure development to augur well for commercial vehicles
• Pick up in replacement demand because of implementation of new scrappage policy (making automated testing
compulsory for the vehicle from Apr’ 23) along with prevailing higher freight rates.
• During the CV upcycle, typically the tonnage growth would be higher as compared to the volume growth leading
to higher content consumed per vehicle – 19-21% of tonnage CAGR over FY22-27 for the CV industry as
compared to 13-15% of volume CAGR (for FY17-22 it stood at 0% and -3% respectively as per various industry
reports).
• Opportunity for market share gains in the after market for organized players due to shift from unorganized to
organized players (the size of after-market is estimated at Rs. 2,500 crore) – after-market being fragmented
because of the presence of the smaller players; Jamna has been expanding reach over the years with number of
touchpoints 16k touchpoints as compared to 13k in FY19 along with expanding product offerings – over 5k as
compared to 2k in FY19
Company Specific Factors:
• Ambitious target to generate 50% of the top-line from new markets and new products by FY26 (stands at 23%
and 37% respectively as of FY22) along with 50%+ RoCE – higher share from new markets leading to lower
volatility
• First mover advantage within parabolic spring which offers better suspension as compared to leaf springs –
leading to over 90% market share within the segment which enables Jamna Auto to have a pricing power (the
industry share in the parabolic spring stands over 25% from 15% in FY15 while the rest dominated by leaf
springs)
• Technology transfer agreement with Ridwell Corporation for design and manufacture of air suspension and lift
axles enables it to launch better products giving superiority as compared to the peers
Multi-year CV cycle led by the higher capex outlay by the government along with private capex revival along with shift
towards parabolic springs where Jamna Auto enjoy a dominating position, shifting towards higher share from the after
market through product offerings and increasing number of touchpoints are the primary factors to include Jamna Auto
Industries in the portfolio.
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