Top 2 Stocks to Invest today in Small Cap, Basis of

recommendation and detailed company and industry

analysis

Presented By-
Varun Tanwar
Shivangi
Manoj Kumar
Ronak
Ritesh Surana
Renu Sharma
© Top 2 Stocks to Invest today in Small Cap
Jamna Auto Industries Ltd
COMPANY OVERVIEW KEY VALUATION METRICS
• Started the Tapered Leaf Spring business in 1954 in a small shop in • Share Price (13 Sep ‘18) • Enterprise Value (EV)
Yamuna Nagar which was converted in the company form in the year 80.40 3168.28
1965 • 52 Week High • EV / Revenue
• India's largest, and amongst world's third largest, manufacturer of 102.95 1.82x
• 52 Week Low • EV / EBITDA
tapered leaf springs and parabolic springs for automobiles. 12.8x
49.60
• Company was first to introduce parabolic springs in India. • P/ E
KEY VALUATION
• Market Cap METRICS Turnover (%)
• adding Lift Axle and Air Suspension products under technical 21.55x
•32.11B
Revenue 1738
collaboration with Ridewell Corporation, USA.
• EBITDA 246
Margin (%) 14.14% Jamna
MANAGEMENT  Individual/HUF 31%
Auto
• Randeep Singh Jauhar, VC & 12.39% • EBIT 204
ED  MAP Auto Ltd Margin (%) 11.75% 69%
• Pradeep Singh Jauhar, MD & 32.38% • EPS 3.15 Others
CEO • Public
• Surinder Pal Singh Kohli, ED 52.12%
• Sunil Laroiya, VP (International  Mutual Fund KEY DEVELOPMENTS
Business) and Head R&D 6.9% • In 2009, Started Assembly unit at Uttarakhand (under subsidiary)
 Foreign Portfolio Investor • Promoters and Clearwater Capital Partners infused fresh equity,
KEY 7.27% prepayment of term loans brought down debt and Shares of the
SHAREHOLDERS Non- Institution
Company listed in NSE
80
• Promoter & Promoter Grp 37.62%
• Supplies to UD Trucks Corporation, Japan (Volvo subsidiary),
47.88%0 Mahindra Navistar Automotives Ltd and Ashok Leyland Nissan Vehicles
18 18 18 17 17 17 17 17 16 16 16 16 15 15 15 15 14 Ltd started
ep- un- ar- ec- ep- un- ar- an- ct- ul- pr- an- ct- ul- pr- an- ct- • Received Silver Award from Ashok Leyland Ltd. for best in class
J J
0-S 4-J 9-M 9-D 2-S 8-J 0-M 2-J 5-O 8- 1-A 2-J 4-O 17- 3-A 1-J 3-O performance in RAMP UP in development and supply of Lift Axles
1 1 1 1 2 2 3 1 1 1 2 2 2

© Top 2 Stocks to Invest today in Small Cap

 Sector Overview
Sector Overview

• The automobile sector has been on a strong up move for the last 1 year.
• the Indian auto component industry grew by 13 per cent during FY18,
• Domestic CV volumes registered a year-on-year (YoY) growth of 19.9 percent in FY18, much higher than overall industry growth of
14.2 percent.
• The Industry is likely to continue to grow at 10-12 per cent annually.
• the domestic OEM segment can be expected to witness a broad-based 10 per cent volume growth during FY19
• two largest markets for Indian auto components exports are the US and Europe, accounting for about 60 per cent of sector's
shipments

Challenges

• slowing down of investment in the OEM auto sector and sharp rise in imports mainly from ASEAN countries.
• With regard to the market again there are two issues: the slowdown in North American/European markets and a demand slump in
the short run because of a sharp switch in customer preference for diesel engines due to an equally sharp rise in fuel costs.
• recent increase in interest rates has further skewed the picture against India as an investment destination , which has forced the
companies to put their scaling plans on hold.

© Top 2 Stocks to Invest today in Small Cap

 Past Performance
Turnover EBITDA & EBITDA Margin (%) EBIT & EBIT Margin (%)
15.5 14.1 12.1 11.7
1,25 1,29 1,738 13.2 5% 9.59 9% 5%
2% 246
4% 204
6 2 8.81 205 5.92 % 158
1,095
% 166 120
%
97 65

2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018

PAT & Profit Margin (%) Debt / Equity Ratio Net Debt / EBITDA
8.12 0.18 0.67
% 7.21
125
5.69 105 % 0.13
% 0.11 0.36
2.68 72 0.25
%29 0.04 0.09

2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018

© Top 2 Stocks to Invest today in Small Cap

DU Point Analysis & Stock performance vs Index
Particulars/Years 2015 2016 2017 2018

Return on Equity (%) 14.96% 26.61% 31.55% 29.56%

Net Profit Margin (%) 2.68% 5.69% 8.12% 7.21%

Asset Turnover Ratio (x) 2.21 2.60 2.30 2.20

Leverage (x) 2.53 1.80 1.69 1.86

500%
400%
300%
200%
100%
Jamna Auto
0%
BSE Benchmark
-100%
10-Nov-15
14-Dec-15

16-Feb-16

26-Apr-16
26-May-16

30-Aug-16

14-Mar-17

18-May-17

22-Aug-17
22-Sep-17

27-Nov-17
28-Dec-17

12-Sep-18
3-Sep-15

14-Jan-16

18-Mar-16

27-Jun-16
28-Jul-16

3-Oct-16
4-Nov-16
7-Dec-16

8-Feb-17

17-Apr-17

19-Jun-17
20-Jul-17

26-Oct-17

30-Jan-18
5-Mar-18
6-Apr-18

8-Jun-18
10-Jul-18
9-Aug-18
8-Oct-15

6-Jan-17

9-May-18
© Top 2 Stocks to Invest today in Small Cap
 Peer Comparison
P/E Ratio Turnover (CAGR) EBIT (CAGR)
66.1 18.1 80.7
7 16.65%
2% 5%
11.7 41.81 9.59% 46.64%
21.55 1 - 13.78%
Benchmark (23.98) - 9.75
6.64
% %

PAT (CAGR) EPS (CAGR) D/E Ratio (31st Mar 18)

105. 106. 0.8
54% 35% 0.41 0.54
62.16% 8.42 65.10%
21.8 0.11
% 15.38% 9% 16.51%

© Top 2 Stocks to Invest today in Small Cap

 Company News And Updates

• Jamna Auto (JAMNA) posted strong numbers for 1Q. Revenue jumped, driven by strong growth in M&HCV truck segment (led
by favorable base effect due to GST issue last year).

• JAMNA is a key beneficiary of the shift in CV demand towards high-tonnage vehicles

• JAMNA will continue to trade at premium vs its historical multiple(15x)

• EBITDA margin contraction was driven by significant rise in raw material (RM) prices, which was partially offset by reduction in
staff and other operating costs.

• The company plans to increase its revenue share from margin lucrative non-conventional products and content per vehicle
coupled with surge in after-market sales. Consequently, expect revenues for the company to witness 20.6% CAGR over FY17-
FY20E.

© Top 2 Stocks to Invest today in Small Cap

 SWOT Analysis

 India’s No 1 Spring Manufacturer  Innovation in Spring & Suspension

 Technological Competence- System
Collaboration with Ridewell  Diversify Products other than
Corporation, U.S. and Tinsley Bridge, Springs and Axles
U.K  Expand Locations with
 Strong Distribution Network Largest Manufacturing Plants and Assembly
After Market presence for springs in Units
India Strength Opportunity  De-Risk Markets

Largely dependable on OEM’s  New Technological advances

Only concentrated to Springs and
Axles
Weakness Threats replacing Humans with Robots
 New players and high competition
in the market

© Top 2 Stocks to Invest today in Small Cap

NOCIL Ltd

COMPANY OVERVIEW KEY VALUATION METRICS

• Part of the AMG (Arvind Mafatlal Group) of Industries, a well-known • Share Price (13 Sep ‘18) 165.90 • Enterprise Value (EV)
Business House of India having diversified business interests. • 52 Week High 3119.73
• Commenced Rubber Chemicals production in the year 1975. 236.40 • EV / Revenue
•Involvement in the Rubber chemicals business spans over 4 decades. • 52 Week Low 3.2x
133.00 • EV / EBITDA
• Largest Rubber Chemicals Manufacturer in India.
• Market Cap 11.2x
27.38B • P/ E
MANAGEMENT • Promoter & Promoter Gr KEY VALUATION METRICS PAT (%)
16.48x
• Hrishikesh A Mafatlal, Chairman 35.06% • Revenue 967.64
 Mafatlal Industries Ltd. 14 2015
• S R Deo, MD • EBITDA 277.2
15.73% 42 %
• R. M. Gadgil, President- Margin (%) 29% 19 2016
Marketing  Suremi Trading Pvt Ltd. % %
• EBIT 254.29
• P. Srinivasan, CFO 12.32% 24 2017
• Public Margin (%) 26%
• Chinmoy Nandi - VP (R&D) %
• EPS 10.25 2018
64.94%
KEY SHAREHOLDERS  Mutual Fund/FPI
13.05% KEY DEVELOPMENTS
200  Ashish Kacholia • The Arvind Mafatlal Group took over MIINDIA Chemicals in 1976, and
4.09%
turned it around totally.
100 Bodies Corporates
• The company has been the largest manufacturer of rubber chemicals
6.04%
0 in India for more than two decades. 
•Employs state-of-the-art technology for the manufacture of the entire
18 18 18 17 17 17 17 17 16 16 16 16 15 15 15 15 14
ep- un- ar- ec- ep- un- ar- an- ct- ul- pr- an- ct- ul- pr- an- ct- range of chemicals for tyre and other rubber industries.
J J
-S -J -M -D -S -J -M -J -O 8- 1-A 2-J 4-O 17- 3-A 1-J 3-O •A new plant has been constructed in Dahej, Gujarat, which produces a
10 14 19 19 22 28 30 2 5 1 1 1 2 2 2 key intermediate.

© Top 2 Stocks to Invest today in Small Cap

 Sector Overview

Sector Overview

• Indian rubber industry registered an annual turnover of $ 12,700 million in the year 2015-16, with the tyre sector contributing to $7,600 million, non-
tyre sector $ 5,100 million and export $ 2,300 million.
• Auto Tyres & Tubes consumes the largest share of rubber (61%) in India, followed by Cycle Tyres & Tubes (10%), Dipped Goods (8%), Tyre
Retreading Material (6%),
• The quality of Indian rubber products has been globally accepted as exports have been growing at more than 20% YOY for the past more than 10
years.
• rubber processing chemicals market is projected to grow at a CAGR of 7.5% by 2023 in India, predominantly on the back of growing tire
manufacturing base in the country.
• Declining raw material prices and growing export opportunities for rubber processing chemical providers are some of the other factors that would
fuel the country’s rubber processing chemicals industry during the forecast period.
• The domestic specialty chemical sector is to grow by about 10 per cent annually to almost double the market size by FY25, driven by growth in
end-user industries.

Challanges

• Increased imports due to inverted duty structure causing harm to rubber industry
• sharp changes in oil prices due to an unfavorable macroeconomic scenario, uncertainty about feedstock procurement and an uptick in global
capacity expansion may have a negative impact on the rubber and chemical sector.

© Top 2 Stocks to Invest today in Small Cap

 Past Performance
Turnover EBITDA & EBITDA Margin (%) EBIT & EBIT Margin (%)

968 28.6
277 26.2
715 742 19.7 22.5 5% 19.9 8%
254
719
1% 17.4
4% 167 13.6 0% 9%
16.10%
116 141 7% 124 148
98

2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2017 2018

PAT & Profit Margin (%) Debt / Equity Ratio

17.4 0.12
169
2%
13.0
10.8 5%
7.89 7% 97
%57 78
0.03
0.01
0

2015 2016 2017 2018 2015 2016 2017 2018

© Top 2 Stocks to Invest today in Small Cap

DU Point Analysis & Stock performance vs Index
Particulars/Years 2015 2016 2017 2018

Return on Equity (%) 13.76% 16.65% 10.63% 16.24%

Net Profit Margin (%) 7.97% 11.06% 13.28% 17.79%
Asset Turnover Ratio (x) 1.35 1.49 0.82 0.94
Leverage (x) 1.82 1.45 1.27 1.29

500%
400%
300%
200%
100%
NOCIL
0%
BSE Benchmark
-100%
10-Nov-15
14-Dec-15

16-Feb-16

26-Apr-16
26-May-16

30-Aug-16

14-Mar-17

18-May-17

22-Aug-17
22-Sep-17

27-Nov-17
28-Dec-17

12-Sep-18
3-Sep-15

14-Jan-16

18-Mar-16

27-Jun-16
28-Jul-16

3-Oct-16
4-Nov-16
7-Dec-16

8-Feb-17

17-Apr-17

19-Jun-17
20-Jul-17

26-Oct-17

30-Jan-18
5-Mar-18
6-Apr-18

8-Jun-18
10-Jul-18
9-Aug-18
8-Oct-15

6-Jan-17

9-May-18
© Top 2 Stocks to Invest today in Small Cap
 Peer Comparison
P/E Ratio Revenue (CAGR) Gross Profit Margin (CAGR)
20.5Benchmark (26.16) 12.87% 32.8
9 24.43 6.90 35.88% 2%
16.48 %
6.77 2.78% 2.69
- % 3.21%

NOCIL Ltd Supreme GHCL Ltd Finolex Ind NOCIL Ltd

1.87
Supreme GHCL Ltd Finolex Ind NOCIL Ltd Supreme GHCL Ltd Finolex Ind
Petro %
Petro Petro

Operating Profit Margin (CAGR) Net Profit Margin (CAGR) EPS (CAGR)
31.2 42.4 62.49%
39.6 34.0
8% 44.82% 5%
27.71% 24.4 8% 1%
15.54%
9%
4.10 11.98%
15.09%
%
NOCIL Ltd Supreme GHCL Ltd Finolex Ind NOCIL Ltd Supreme GHCL Ltd Finolex Ind NOCIL Ltd Supreme GHCL Ltd Finolex Ind
Petro Petro Petro

© Top 2 Stocks to Invest today in Small Cap

 Company News and Updates
• NOCIL Ltd's Q1FY19 standalone net profit rises 46.74% yoy : NOCIL Ltd's Q1FY19 standalone net profit rises 46.74%
yoy

• NOCIL Ltd's Q4FY18 standalone net profit rises 143.66% yoy to Rs50.95cr : Beats Estimates , The company’s
standalone revenue stood at Rs275.87cr, up 44.58% yoy and 10.67% qoq.

• Company Announces A dividend or 2.5Rs (25%) Per share- Apr 2018

• NOCIL LTD. Listed as one of India's top efficient companies by Business Today these companies have consistently
increased their net profit margins in the last five quarters between December 2016 and December 2017.

• NOCIL: BUY| Target Rs260| Stop Loss Rs205| Return 15%

• NOCIL Ltd's Q3FY18 standalone net profit rises 80.67% yoy to Rs44.97cr . The company’s standalone revenue stood at
Rs249.27cr, up 40.58% yoy and 9.52% qoq.

© Top 2 Stocks to Invest today in Small Cap

 SWOT Analysis

Strength
Largest Rubber Chemicals Manufacturer in India Strong Marketing & Distribution Service Network

Opportunity
Rising Income levels & increase in Motor Vehicle ownership rates,
especially in developing nations would need additional consumption of Every year 40K additional demand for Rubber Chemicals is created
Rubber Processing chemicals

Weakness
Only 2 Manufacturing Units

Threat

© Top 2 Stocks to Invest today in Small Cap

© Top 2 Stocks to Invest today in Small Cap