JBM Auto is a manufacturer of welded subassemblies and sheet metal component which are majorly used by automobile plants. Presently the company has three manufacturing plants in Nasik, Noida and Gurgoan. The company mainly caters to auto manufacturers.
When we look at the financial performance of the company it has performed extremely well posting an Earnings per share of about rupees 20 for FY11 with a topline of around rupees 750 crore during the same period. In quarter one the company posted a topline of Rs 200 crore with a earnings per share of close to around rupees 5.15 per share.
The company has a very healthy share holding pattern with promoters holding a 62 per cent in the company and 5 HNI’s are holding around 25 per cent. A total of 87 percent pegged in the hands of Promoters and HNI’s. JBM Auto has a book value of around rupees 115. Considering the book value of the company the share price should rise to rupees 125 by the end of FY12 and this will be a price to book of Rs 0.4 with a price to earnings (PE) of less than 3 multiple. Considering all the above factors we think that the stock is a definite buy and in a short period of 4-6 months it should give you 30-40 percent returns.
“Bell the bull says: Currently there are 8 to 10 listed companies in the sheet metal component sector and most of the companies are trading at a PE of 5-6 times from their earnings.”