Multi Baggers

Jay Bharat Maruti, which is joint venture of JBM Group with MUL, incorporated in 1987 is the largest sheet metal component supplier in the country. The company has technical collaboration with Japanese firms Bellsonica Corporation; Daiwa Excel; Hamamatsu Pipe Co and Yorozu Corporation. Almost 88% of sales of JBML are to MUL, which is the leading car manufacturing company in India with a dominant 47% market share. For the new models such as Maruti Swift, JBML is the single source supplier to MUL for sheet metal components. The company is looking ahead to supply to Suzuki Japan (for Swift) as well.

We have have kept a 'buy' rating on Jay Bharat Maruti Ltd with a price target of Rs 150. FY07 EPS estimated at Rs 11.7, Cash EPS at Rs 39.5. MUL's and Suzuki's new car manufacturing plant which is slated to be completed by end of FY06 as well as MUL's plans for making further inroads in the diesel car market augurs well for the future growth prospects of JBML. We expect JBM to record 7.8% & 12% growth in revenues in FY06 & FY07 respectively. We estimate FY06 & FY07 PBT to rise by 6.1% & 16.6% to Rs 167.3 mn & Rs 195.1 mn respectively.

At the current price of Rs 109, the stock is available at a very attractive PER of 10.8x & 9.3x FY06E & FY07E earnings of Rs 10 & Rs 11.7 and is quoting at an EV/Cash Profit of 4.6x and 3.9x for FY06E and FY07E respectively. We are positive on the longterm prospects of the company and believe at Rs.109, it offers a lot of value considering its strong CEPS of Rs.33.9 & Rs 39.5 or FY06E & FY07E.

Note: The recommended price has been adjusted to Rs 54.50 to adjust for the 1:1 bonus.