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SYNOPSIS

JMT Auto Ltd in manufacturing

Automobile components ranging

from Engine components

During the quarter, the robust

growth of Net Profit is increased by

144.38% to Rs. 58.26 million.

JMT Ltd got AS 9100 Certification

in Quality Certification to

Manufacture Aerospace Parts.

JMT Auto Ltd has recommended a

dividend of Re. 1.00 (@ 10.00%) on

each equity share for the year 2011-

12.

Net Sales and PAT of the company

are expected to grow at a CAGR of

19% and 39% over 2011 to 2014E

respectively.

Years Net sales EBITDA Net Profit EPS P/E

FY 12 3634.46 634.45 160.83 11.17 5.55

FY 13E 4288.66 758.65 217.05 15.08 4.11

FY 14E 4889.08 869.30 262.75 18.25 3.40

Stock Data:

Sector: Auto Component

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 76.90/48.20

Volume (2 wk. Avg.) 4312.00

BSE Code 513691

Market Cap (Rs in mn) 892.49 Share Holding Pattern

1 Year Comparative Graph

BSE SENSEX JMT AUTO LTD

C.M.P: Rs. 62.00 Target Price: Rs. 70.00 Date: June 25th, 2012 BUY

JMT Auto Limited Result Update: Q4 FY 12

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Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

JMT Auto Ltd 62.00 892.49 11.17 5.55 0.68 5.00

Bosch 8760.00 277128.30 377.08 23.41 5.86 500.00

Suprajit Engineering 24.00 288.05 3.27 7.34 2.10 45.00

Shivam Auto 120.00 118.50 18.63 6.36 1.01 25.00

Investment Highlights

Q4 FY12 Results Update

JMT AUTO Ltd has reported net profit of Rs 58.26 million for the quarter ended on

31st March, 2012 as against 23.84 million in the same quarter last year, an

increase of 144.38%. It has reported net sales of Rs 966.26 million for the quarter

ended on 31st March, 2012 as against Rs 846.72 million in the same quarter last

year, a rise of 14.12%. Total income grew by 17.83% to Rs 100.54 million from

Rs.853.40 million in the same quarter last year. During the quarter, it reported

earnings of Rs 4.05 a share.

Quarterly Results - Standalone (Rs in mn)

As At Mar-12 Mar-11 %change

Net sales 966.26 846.72 14.12%

PAT 58.26 23.84 144.38%

Basic EPS 4.05 1.66 144.38%

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Break up of Expenditure

Recommends Dividend

JMT Auto Ltd has recommended a dividend of Re. 1.00 (@ 10.00%) on each

equity share for the year 2011-12.

Company Profile

JMT Auto Ltd established in the year 1987, under the inspiring guidance of Mr.

Rajeev Singh Dugal, JMT Auto Limited, formerly known as Jamshedpur Metal Treat

Limited is one of the leading Auto component manufacturers in Eastern region with

manufacturing facilities spread across 3 locations in India viz., Jamshedpur

(Jharkhand), Dharwad (Karnataka), and Lucknow (Uttar Pradesh)

The Company identified Auto Components as it’s key business area and acquired core

competency in manufacturing 1200 Automobile components ranging from Engine

components, Gears, Shafts, Pins, Bushes, Idler Bearings, Carrier Housing, Gear Rings,

Axles, Synchro Cones, Carriers, Gear Box Assemblies, Seal wear rings, Oil Pump

Cover ,Drums Sleeves, Carrier Assemblies, Pipe Assemblies, Flywheel Assemblies, Sear

Wear ring, Cone And Cup(Heat Treatment),Bushes, Oil Pump Gear, Seat Valve, Lever

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Rocker Assembly, Steering Spindle, Assemblies, Engine Gears, Spindles, Drums for

light, Medium & Heavy Commercial Vehicles, Tractors and Diesel Engines.

JMT has enhanced its versatility in machining by installing 9- AXIS INTEGRIX e-420

H II series machines for machining 3000 mm long components complimented with

VMC, CMM, and Deep Hole drilling which on commencement of production will enable

JMT to address global market opportunities even more aggressively and capture larger

market share and it continues to pursue opportunities for inorganic growth that would

result in an enlarged geographical presence and customer base.

JMT has been investing in creating diversified manufacturing capabilities aided by

highly sophisticated technology, world-class capacities and other capabilities. Our

facilities include, fully automated forging and machining lines, Heat Treatment and

Foundry.

JMT is the first Company in Jharkhand to have received the prestigious AS 9100

Certification in Quality Certification to Manufacture Aerospace Parts

Global Market

The following are the business areas

• USA

• Belgium

• South East Asia

• Brazil

• Germany

• Italy

• Mexico.

Products

The following are the products of the company

• Engine Components

• Gear Components

• Axle Components

• Excavator Components

• Other Components

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Clients

� Domestic Clients

� International Clients

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Financial Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY11 FY12 FY13E FY14E

Description 12m 12m 12m 12m

Net Sales 2917.67 3634.46 4288.66 4889.08

Other Income 20.18 65.88 72.47 79.71

Total Income 2937.85 3700.34 4361.13 4968.79

Expenditure -2424.63 -3065.89 -3602.48 -4099.49

Operating Profit 513.22 634.45 758.65 869.30

Interest -186.06 -203.52 -223.87 -246.26

Gross profit 327.16 430.93 534.78 623.04

Depreciation -181.79 -195.57 -215.13 -236.64

Profit Before Tax 145.37 235.36 319.66 386.40

Tax -47.19 -74.53 -102.61 -123.65

Profit After Tax 98.18 160.83 217.05 262.75

Equity capital 143.95 143.95 143.95 143.95

Reserves 1023.37 1167.49 1384.54 1647.29

Face value 10.00 10.00 10.00 10.00

EPS 6.82 11.17 15.08 18.25

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12E

Description 3m 3m 3m 3m

Net sales 875.76 947.72 966.26 1086.08

Other income 3.81 20.29 39.28 2.74

Total Income 879.57 968.01 1005.54 1088.82

Expenditure -733.67 -782.41 -845.90 -918.28

Operating profit 145.90 185.60 159.64 170.54

Interest -54.34 -69.58 -41.83 -43.92

Gross profit 91.56 116.02 117.81 126.62

Depreciation -48.60 -49.46 -47.63 -52.39

Profit Before Tax 42.96 66.56 70.18 74.22

Tax -15.27 -28.78 -11.92 -23.97

Profit After Tax 27.69 37.78 58.26 50.25

Equity capital 143.95 143.95 143.95 143.95

Face value 10.00 10.00 10.00 10.00

EPS 1.92 2.62 4.05 3.49

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Key Ratios

Particulars FY11 FY12 FY13E FY14E

No. of Shares(in mn) 14.40 14.40 14.40 14.40

EBITDA Margin (%) 17.59% 17.46% 17.69% 17.78%

PBT Margin (%) 4.98% 6.48% 7.45% 7.90%

PAT Margin (%) 3.37% 4.43% 5.06% 5.37%

P/E Ratio (x) 9.09 5.55 4.11 3.40

ROE (%) 8.41% 12.26% 14.20% 14.67%

ROCE (%) 26.03% 29.40% 31.26% 31.99%

Debt Equity Ratio 1.29 1.15 1.04 0.93

EV/EBITDA (x) 1.74 1.41 1.18 1.03

Book Value (Rs.) 81.09 91.10 106.18 124.43

P/BV 0.76 0.68 0.58 0.50

Charts:

Net Sales & PAT

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P/E Ratio

Debt Equity Ratio

10

EV/EBITDA Ratio

P/BV Ratio

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Outlook and Conclusion

At the current market price of Rs.62.00, the stock is trading at 4.11 x FY13E

and 3.40 x FY14E respectively.

Earning per share (EPS) of the company for the earnings for FY13E and FY14E

is seen at Rs.15.08 and Rs.18.25 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 19% and

39% over 2011 to 2014E respectively.

On the basis of EV/EBITDA, the stock trades at 1.18 x for FY13E and 1.03 x for

FY14E.

Price to Book Value of the stock is expected to be at 0.58 x and 0.50 x

respectively for FY13E and FY14E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.70.00 for Medium to Long term investment.

Industry Overview

Indian auto component industry is robustly driven by the growth in demand for

automobiles. The sector has become a lucrative business proposition for global

players, majorly owing to two factors. First, needless to say, the demand for

automobiles is increasing day by day in the country. India, a market with high

potential for the automobiles sector, is expected to witness a three-fold increase in

demand for automobiles by 2020. Secondly, all major global auto-makers are

establishing their bases here due to highly positive business environment, favourable

policies and government support.

According to a study by UK-based global financial advisory firm-Rothschild, India

would become the third largest auto industry by volumes after China and the US by

2015. This would give immense support to the growth of ancillary sector as well.

Major developments, investments and Government initiatives relating to the sector are

discussed hereafter.

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Indian Auto Components Industry Profile

According to a recent study by the Automotive Component Manufacturers' Association

of India (ACMA), original equipment manufacturers (OEMs) account for 41 per cent of

the auto components consumed in the Indian aftermarket.

The study estimated current size of Indian components business at Rs 24,800 crore

(US$ 4.87 billion), 49.7 per cent of which is formed by two-wheeler segment.

Passenger vehicles, commercial vehicles and three-wheelers follow with 24.7 per cent,

23.1 per cent and 2.5 per cent of the share respectively.

According to Arvind Kapur, President, ACMA, a large market in Indian spares business

is dominated by organised, semi-organised and a number of small, unorganised

players. He thus acknowledged the need for a process of accreditation to ensure better

customer service.

The study further projected that OEM-authorised network of service stations would

account for 20-30 per cent of the Indian auto components market by 2017 while that

of multi-brand organised service chains would grow to 5-10 per cent from 1-2 per

cent. Similarly semi-organised service centres’ and unorganised garages’ market share

would be 20-30 per cent and 45-55 per cent, respectively, in 2017.

India – The Global Auto Hub

Canada is looking for substantial investment opportunities in Indian auto components

market through the comprehensive economic partnership agreement (CEPA) which is

being discussed and negotiated by the two Governments. The agreement is likely to get

finalised by 2013. If fructified, the agreement would facilitate an annual increase of

economic output in two countries by almost US$ 6 billion and boost the two-way trade

by 50 per cent.

UK sees immense potential in the Indian auto ancillary sector, especially in the city of

Rajkot as it is known for auto components manufacturing. Peter Beckingham, British

Deputy High Commissioner for Western India, also indicated possible ventures

between UK and Rajkot companies in near future.

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According to industry sources, Rajkot's auto component industry, with over 500

manufacturers aggregating a net turnover of around Rs 1,500 crore (US$ 294.5

million), grows at an annual rate of 15-20 per cent.

Furthermore, 60 French automobile component suppliers are contemplating on

business opportunities to set up a vendor park near Sanand in Ahmedabad district.

The proposed vendor park would accommodate tier-1 and tier-2 auto-component

suppliers who would supply spares to the recent auto entrants in the State and even

to others.

Sanand is already home to a number of global auto-makers, like Ford and Peugeot.

Indian Auto Components Industry: Key Developments and Investments

Global private equity (PE) firm Actis PE has bought 10-13 per cent stake in Indian

auto component manufacturer Endurance Technologies for about US$ 71 million.

Endurance Technologies is a part of the automotive component major Endurance

Group and caters to companies like Bajaj, Yamaha, Suzuki, Honda Motorcycles and

Scooters and Royal Enfield. Global car makers such as Daimler, Audi, Fiat and

Porsche are the company's customers in passenger car segment.

German auto component maker Schaeffler Group is on an expansion spree in India.

The company plans to invest over Rs 1,000 crore (US$ 196 million) during 2012-15 in

the country to set up a manufacturing facility and to expand its existing plants. To

support its growth, the company would also double the number of its engineers and

recruit 1, 200 employees in the country.

Federal-Mogul's new facility in Chennai will commence its operations by March 2012.

The plant, being set up for producing braking and friction materials, will initially focus

on after market products like linings and brake pads. Federal Mogul is a global

automotive components manufacturer.

Government Initiatives

The Government of India is in the process of forming a National Automotive Board

(NAB) which would become a formal set-up to look into the issue of recall of vehicles

and hence improve manufacturing standards. The prospective body, to oversee

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technical and safety aspects of vehicles, will have representatives from all the nodal

ministries and automotive bodies such as the Automotive Research Association of

India (ARAI).

The Government of Gujarat has always been on a high to promote its industrial space

especially it's the automobile sector. In order to boost the State Government's efforts

in this regard, Gujarat Government's Industrial Extension Bureau, along with

Automotive Components Manufacturers Association, French Vehicles Equipment

Industries (FIEV) and French auto-major Peugeot, organised a seminar and business

meeting on January 9, 2011 wherein 60 French automobile component makers were

briefed on opportunities to set up vendor park near Sanand (Gujarat's auto hub) in

Ahmedabad district.

Similarly, the Government of Gujarat has also announced its plan to disburse 240

acres of land at Sanand to the All India Plastic Manufacturers Association (AIPMA) to

set up a plastic park that could attract an investment of about Rs 5000 crore (US$

981.65 million). The Government's move marks its eye for detail as the measure has

come in the light of the fact that a finished car would require about 150 kgs of plastic.

Road Ahead

Ratings agency Fitch has maintained a stable outlook towards the Indian auto

components industry for the year 2012. The industry is expected to perform well owing

to OEM’s robust demand for localised spares.

According to a report by ACMA, the Indian auto component industry would garner

US$ 113 billion of turnover by 2020-21, growing at a compounded annual growth rate

(CAGR) of 11 per cent through 2011-21. Not only domestic demand, India is poised to

scale new heights in terms of exports as well as the report estimates exports to be

worth US$ 29 billion by 2020-21, growing at a CAGR of 18.8 per cent through the

forecast period

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______________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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