Jupiter Wagons Limited : Railway stocks have seen a boom in the market over the past year. One of the main reasons could be the Union budget. In the push towards enhancing infrastructure, the Union Ministry of Railways has secured an allocation of ₹2.55 lakh crore for the financial year 2024-25. This marks a significant increase of 5.8% compared to the previous year’s allocation of ₹2.41 lakh crore. 

This boost in funding underscores the government’s commitment to investing in the railway sector, aiming to improve and expand the country’s rail network. Amidst that, one such company that is booming high is Jupiter Wagons Limited (JWL). From its beginnings as a wagon manufacturer, JWL has transformed into a diversified leader in railway engineering, propelling itself on the tracks of India’s booming infrastructure development.

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Jupiter wagons are one such railway stock that has been rising tremendously. The company’s stock has given a tremendous return of 1,644.49% in just three years. After the acquisition of CEBBCO in 2019, Jupiter Wagons saw massive growth in its revenue. In 2022, the company did a reverse merger with CEBBCO and got listed on NSE and BSE. 

Let’s embark on a journey to explore its business landscape, dive into its product portfolio, examine its customer base and financials, and finally, have a look at its order book and prospects.

Business Overview: A legacy of excellence

Jupiter Wagons Limited, an integrated railway engineering company, started in 1979. Initially focused on steel castings and components, it swiftly moved to wagon manufacturing in 2006, seizing the continuous demand for freight wagons from Indian Railways. 

In 2019, Jupiter Wagons Limited (JWL) underwent a significant transformation with the acquisition of Commercial Engineers & Body Builders Co Ltd (CEBBCO) through a stressed asset sale. This strategic move not only doubled Jupiter Wagons Limited’s production capacity but also diversified its product portfolio, strengthening its position in the competitive Indian railway manufacturing market.

During the stressed asset auction, Jupiter Wagons Limited acquired a 68% stake in CEBBCO for approximately Rs 100 crore. The remaining 18% was acquired by Tata Capital and Axis Bank. Such acquisitions involve selling assets pledged as collateral due to loan defaults, referred to as “stressed assets,” which often result from financial difficulties.

This acquisition doubled JWL’s production capacity to 6,000 wagons per year, making it one of the largest wagon manufacturers in India. In 2023, JWL merged with Stone India, a leading manufacturer of braking systems, further solidifying its position as a multi-faceted railway solutions provider. Today, Jupiter Wagons Limited operates five strategically located manufacturing facilities across India, boasting an annual production capacity of 10,000 wagons.

Product Portfolio: A diverse arsenal for railway needs

JWL’s product portfolio mirrors the diverse needs of India’s dynamic railway network. Its core strength lies in wagon manufacturing, encompassing covered wagons for general goods, container carrier wagons for intermodal transportation, cement wagons for bulk loads, car carrier wagons for automobiles, and coil carrier wagons for steel transportation.

Beyond wagons, Jupiter Wagons Limited offers a suite of track solutions like crossing systems and wear-resistant components. It also ventures into the manufacturing of wagon and passenger coach accessories like bogies, couplers, and draft gears.

With its recent acquisition of Stone India, Jupiter Wagons Limited adds braking systems to its arsenal, aiming to become a one-stop shop for railway requirements. The company is also expanding its horizon in the manufacturing of electric vehicles with their launch scheduled in the fourth quarter of FY2024. 

Customer Base: A network of trust and collaboration

JWL’s primary customer is, unsurprisingly, the Indian Railways, the world’s fourth-largest rail network. Over the years, Jupiter Wagons Limited has nurtured a strong relationship with the Indian Railways, consistently meeting their diverse wagon requirements and earning their trust through quality and timely deliveries.

Beyond the national carrier, JWL also caters to private freight operators and infrastructure companies, supplying them with specialized wagons and track solutions. This diversified customer base provides JWL with greater stability and resilience in the face of market fluctuations. The company has orders from various big players in the market like Tata Motors, Mahindra, Adani Group, Reliance Industries, Tata Steel, and the obvious one Ministry of Railways.

Financials: A strong track record of growth

JWL’s financial performance reflects its consistent growth trajectory. The company’s revenue has almost doubled in the past three years, reaching Rs. 2,06,8 Crore in FY23 compared to Rs 1,178.35 Crore in the previous year.

Contributing to this upward swing are JWL’s diversification efforts, the expanding Indian railway infrastructure market, and its focus on operational efficiency. The company’s stock gave a return of 285% in one year and a 75.90% CAGR over the last 4 years. EBITDA of ₹ 259 Crore was higher by 120% on a year-on-year basis and the EBITDA margin has expanded 260 basis points from 9.9% in FY22 to 12.5% in FY23.

The company profit after tax stood at ₹ 125 Crore and saw a growth of 151% on a year-on-year basis. The ROE of the company for FY23 is 15.85% as compared to 7.52% in FY22 showcasing a growth of 111%.  The ROCE of the company stood at 21.70% for FY23 as compared to 11.71% in FY22 showcasing a change of 85%. The company recorded the highest-ever annual revenue, EBITDA, and profit after tax in the fiscal year 2023. The orderbook of the company is also giving a positive outlook for the year 2024 as they are diversifying into new segments. 

Orderbook: A promising vista for the future

JWL’s order book paints a positive picture of its future. According to Dalal Street Investment Journal, the company’s order book stands at Rs 7076.31 crore as of 1st February 2024. i.e. the third quarter of 2024. 

This offers clear revenue visibility for the next two years. This includes significant orders from the Indian Railways for various wagon types, indicating their continued trust in JWL’s capabilities.

Recent big orders

On 4th January 2024, The company received an order of 697 numbers of Bogie opens Military Wagons for a contract value of Rs. 473 Crores approximately from the Ministry of Defense. Jupiter Wagons stock closed at Rs 333.65, a rise of over 5%, after the announcement of this order. The company also received a big order on 14th December 2023 for the manufacturing and supply of 4000 BOXNS wagons from the Ministry of Railways at a staggering value of Rs 1,617 crores.

On 5th January 2024, The company also secured an order from a major automaker for manufacturing and supplying 4 rakes of Double Decker Automobile Carrier Wagons. The order total is approximately Rs 100 crore
JV Company Jupiter Wagons Limited DAKO CZ India Ltd. has received an order totaling approximately ₹11,200 lakhs for axle-mounted disc brake systems from Indian Railways.

Prospects of the company

Jupiter Wagons’ future holds multiple diversification plans extending far beyond its traditional wagon manufacturing business. Here’s a breakdown of the exciting new avenues they’re pursuing:

Riding the national wave of energy transition, Jupiter is setting its sights on the thriving EV market with their launch scheduled in the fourth quarter of FY2024.The company is also expanding its horizons in Metro rails, with approved projects stretching over 3470 km.  Their strategic partnership with CAF, a global leader in urban transportation solutions, strengthens their position to tap into this rapidly expanding market.

Jupiter has an open market for brake systems and brake discs and with that, they see promising growth in this segment. To mark foot into the brake market, Jupiter recently acquired Stone India Limited. Overall, Jupiter Wagons’ future appears dynamic and multifaceted. By capitalizing on emerging trends like EVs, metro rails, brake systems and expanding their core business, they have a good portfolio of diversification plans with some of them already in process. 

Challenges: Navigating the junction

Jupiter Wagons faces a critical juncture as it expands beyond traditional wagon manufacturing. Amidst competition from established players like Titagarh Wagons and BEML, securing market share requires innovative offerings. Scaling operations across diverse sectors demands strategic financial management, balancing substantial investments with profitability. In the evolving electric vehicle sector, proactive adaptation to technological and regulatory changes is vital. 

Success in the drone venture hinges on navigating dynamic regulations. Executing ambitious plans requires intense planning and effective risk management to mitigate potential delays or setbacks that could impact their overall growth.

Conclusion

Jupiter Wagon, from being a wagon manufacturer to its current position as a diversified railway solution. The company seems to have a bright future ahead, but the path is bumpy. Overcoming these challenges will determine if they can transform from a wagon maker into a diversified leader in India’s dynamic infrastructure and technology scene. It’s a story still being written, with twists and turns yet to come.

Additionally, successfully integrating the operations of Stone India and scaling up its new ventures will be crucial for JWL’s long-term success. However, Jupiter Wagons Limited’s strong brand reputation, diversified product portfolio, robust order book, and focus on innovation equip it to navigate these challenges and capitalize on the growing opportunities in the Indian railway sector. Was this article informative? What are your thoughts on the company’s prospects? Do let us know your views below in the comment section!

Written by Akshita Maloo

By utilizing the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


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