Jupiter Wagons Jul-24

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Questions and Answers

What primary factor contributes to the company's competitive advantage in the specialized wagon market?

  • Lower production costs due to outsourcing.
  • Reliance on established wagon designs from competitors.
  • Forward integration in design capabilities and strategic partnerships. (correct)
  • Extensive marketing campaigns targeting new clients.

Which of the following best describes the company's strategy for sustaining and improving EBITDA margins?

  • Expanding wheel and braking business contributions, and delivering specialized wagons. (correct)
  • Reducing investment in new wagon designs.
  • Increasing reliance on a single key supplier.
  • Focusing solely on high-volume, low-margin wagon production.

How does the company plan to leverage backward integration to enhance its financial performance?

  • By focusing on short-term projects.
  • By reducing the scale of its operations.
  • By outsourcing key components of its production process.
  • By improving control over the supply chain and costs. (correct)

What factor is believed to have influenced the Commercial Vehicle segment, leading to adjustments in demand?

<p>An election year/quarter. (B)</p> Signup and view all the answers

What can be inferred about the company's approach to product innovation in the wagon market?

<p>The company is actively developing innovative and specialized wagon designs. (D)</p> Signup and view all the answers

What impact is the wheel business expected to have on the company's financial performance?

<p>The wheel business is expected to contribute significantly to revenue and margins. (A)</p> Signup and view all the answers

By what time frame does Vivek Lohia expect Jupiter Wagons to begin rolling out their electric vehicles (EVs)?

<p>End of October. (C)</p> Signup and view all the answers

Beyond design capabilities, what other element gives the company an advantage over its competition?

<p>Backward integration of manufacturing processes. (D)</p> Signup and view all the answers

What level of localization is Jupiter Wagons aiming for with the production of its electric vehicles (EVs)?

<p>More than 80% localization. (A)</p> Signup and view all the answers

What financial benefit will Jupiter Wagons' electric vehicles (EVs) be eligible for due to their level of localization?

<p>FAME subsidy. (C)</p> Signup and view all the answers

What is the significance of the company starting supplies for new wagon types like fly ash and auto rake wagons?

<p>It demonstrates the company's ability to meet diverse market needs and potentially improve margins. (D)</p> Signup and view all the answers

What is the current gross debt of Jupiter Wagons on a consolidated basis?

<p>INR 450 Crore. (C)</p> Signup and view all the answers

What is the relationship between specialized wagon deliveries and the company's financial outlook?

<p>The delivery of specialized wagons is expected to result in improved profit margins. (A)</p> Signup and view all the answers

What revenue target did Jupiter Wagons set for its brake segment in FY'25?

<p>INR 300 crores to INR 400 crores. (C)</p> Signup and view all the answers

According to the call, what is the value of Kovis and Dako's execution in the current quarter?

<p>INR 35 crores (A)</p> Signup and view all the answers

When does Vivek Lohia anticipate the completion of the expansion project?

<p>Q3FY25 (A)</p> Signup and view all the answers

What is Jupiter Wagons' current focus regarding lithium-ion battery technology?

<p>Developing the right technology and securing certifications. (B)</p> Signup and view all the answers

What is the company's projected production target for wagons for the entire year?

<p>10,000 wagons (A)</p> Signup and view all the answers

What is Jupiter Wagons' strategy regarding lithium-ion battery technology?

<p>Backward integrating to produce lithium-ion batteries. (C)</p> Signup and view all the answers

According to Vivek Lohia, which factor is expected to significantly boost the demand for the company's EV product?

<p>Significant price advantage for last-mile connectivity (B)</p> Signup and view all the answers

In which market segment does the company initially plan to focus its electric vehicle sales?

<p>B2B and aggregators (A)</p> Signup and view all the answers

What information does Shrinidhi Karlekar from HSBC seek regarding Jupiter Wagons' wheelset business?

<p>An overview of the market demand, segmentation, and Bonatrans' role in the wheelset sector. (C)</p> Signup and view all the answers

What does Vivek Lohia confirm regarding the company's expansion plans?

<p>The expansion is on track and will be completed by October, as previously mentioned. (B)</p> Signup and view all the answers

What is the company's outlook on competition in the electric vehicle segment they are entering?

<p>They expect limited competition, positioning them favorably. (C)</p> Signup and view all the answers

When does the company plan to start building its order book for the EV product?

<p>They are already in discussions and expect to build it very shortly. (B)</p> Signup and view all the answers

What key element is Jupiter Wagons prioritizing in their approach to lithium-ion battery technology before broader implementation?

<p>Developing the appropriate technology and obtaining necessary certifications. (A)</p> Signup and view all the answers

What is the expected number of EV units the company plans to produce in the initial financial year?

<p>500 units (D)</p> Signup and view all the answers

Which aspect of the wheelset market is Shrinidhi Karlekar particularly interested in understanding?

<p>The breakdown between cast and forging methods in wheelset manufacturing. (A)</p> Signup and view all the answers

What factor, other than market demand, has historically impacted the company's production?

<p>Weather-related issues (D)</p> Signup and view all the answers

What is the significance of Bonatrans in the context of the wheelset business, according to Shrinidhi Karlekar's question?

<p>The question seeks to understand Bonatrans' role and impact within the domestic wheelset market. (B)</p> Signup and view all the answers

What reassurance does Vivek Lohia provide regarding the company's production capabilities?

<p>The company has overcome previous disruptions and expects a strong recovery in the coming quarter. (C)</p> Signup and view all the answers

Which of the following statements best reflects Vivek Lohia's outlook on achieving the disclosed financial targets?

<p>They are confident in achieving the numbers, supported by incremental orders from Dako and Kovis and the upcoming commercial production at Stone India. (A)</p> Signup and view all the answers

How does Bonatrans distribute its wheelsets across different sectors, according to Vivek Lohia?

<p>Across various segments, including Indian Railways (LHB applications), metro projects, and other wagon manufacturers. (B)</p> Signup and view all the answers

Based on the discussion, what is the estimated internal wheelset requirement for Jupiter Wagons, considering their wagon production plans?

<p>50,000 - 60,000 wheelsets (A)</p> Signup and view all the answers

When does Vivek Lohia expect Stone India to commence commercial production?

<p>Within the next couple of months (C)</p> Signup and view all the answers

What approximate value of orders does Vivek Lohia mention Dako already has?

<p>INR 100 crores (C)</p> Signup and view all the answers

Apart from captive use, which sectors does Bonatrans supply wheelsets to?

<p>To Indian Railways for LHB applications (B)</p> Signup and view all the answers

Which companies' businesses are included in the financial target of INR 200 to INR 250 crores mentioned by Vivek Lohia?

<p>Dako, Kovis, and Stone India (C)</p> Signup and view all the answers

Approximately when did Vivek Lohia mention the financial target of INR 200 crores to INR 250 crores would be achieved?

<p>FY '24-'25 (B)</p> Signup and view all the answers

According to Vivek Lohia, what is the current estimated size of the global container business?

<p>More than 5 gigawatts (C)</p> Signup and view all the answers

What is the projected growth of the global container business in the next 3 years, according to Vivek Lohia?

<p>It will double to about 10 gigawatts. (A)</p> Signup and view all the answers

Which country is currently the most significant player in the global container business, as stated by Vivek Lohia?

<p>China (A)</p> Signup and view all the answers

What is the Indian government's current focus regarding the container business, according to Vivek Lohia?

<p>Pushing for India to develop its own capacities (A)</p> Signup and view all the answers

Aakash mentions that Jupiter's container revenue was INR130 crores to INR140 crores last year. What specific guidance does Vivek Lohia provide on whether this number can increase by FY'26, FY'27?

<p>He declines to give a specific number but expresses optimism about significant contribution to revenues. (D)</p> Signup and view all the answers

Aakash inquires about the potential CAGR for non-Wagon revenue (excluding wagons). What growth rate does Vivek Lohia suggest is comfortable?

<p>Vivek Lohia doesn't provide a specific CAGR figure. (A)</p> Signup and view all the answers

By what year does Vivek Lohia expect the non-Wagon business to contribute to more than 50% of Jupiter's revenues?

<p>2028 (D)</p> Signup and view all the answers

Which of the following is included in the non-Wagon revenue that Vivek Lohia refers to?

<p>Brake systems and wheels (B)</p> Signup and view all the answers

Flashcards

Private Sector Demand

The total demand for goods and services in the private sector, currently strong and increasing.

Specialized Wagons

Wagons designed for specific needs, such as fly ash transport and auto rakes.

Competitive Intensity

The level of competition within a market affecting businesses.

Forward Integration

A strategy where a company expands its control over the supply chain closer to the end customer.

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Backward Integration

When a company takes control of its suppliers to ensure production stability.

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EBITDA Margin

Earnings before interest, taxes, depreciation, and amortization expressed as a percentage of revenue.

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Wheel Business Contribution

The positive impact of the wheel manufacturing segment on overall company profits.

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Margins Sustainability

The ability to maintain profit margins over time despite market changes.

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Q3FY25 Completion

The company plans to complete its expansion by the third quarter of FY25, ensuring no delays beyond 2024.

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Lithium-Ion Battery Initiative

The company is focusing on lithium-ion battery technology and plans to backward integrate for production.

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Technology Development

The organization is currently refining the necessary technology and seeking certifications for new battery production.

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Market Demand for Wheelsets

The Indian market demand for wheelsets is growing, with a focus on both cast and forged types.

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Incremental Demand

The expected increase in market demand for wheelsets to fuel business opportunities domestically.

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Bonatrans Role

Bonatrans is involved in the wheelset market, which helps gauge competition and opportunity.

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Expansion Plans

The company confirmed its expansion plans are on track and will not extend into FY25, targeting completion by October 2024.

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Dako Business Orders

Orders related to the Dako business approximating INR 100 crores.

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Indian Railways Tenders

New orders issued by Indian Railways for upcoming projects.

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Kovis Business Expansion

Monthly increase in orders for the Kovis business segment.

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Stone India Production

Stone India expected to start commercial production in upcoming months.

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Bonatrans Wheelsets

Wheels supplied by Bonatrans for various applications, not just captive use.

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LHB Applications

Wheelsets provided to Indian Railways for LHB (Linke-Hofmann-Busch) coaches.

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Wagon Production Plan

Planned production of 15,000 to 20,000 wagons requiring 50,000-60,000 wheelsets.

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Captive vs. External Use

Distribution of produced wheelsets between internal (captive) use and sales to others.

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EV Business Update

The current status and developments in the electric vehicle sector.

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Localisation in EVs

The practice of manufacturing vehicles with a high percentage of local parts.

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FAME Subsidy Eligibility

Qualification for the Faster Adoption and Manufacturing of Electric Vehicles subsidy.

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Stone India Developments

Recent updates on Stone India regarding railways and licenses.

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Net Debt Figure

The total debt minus cash and cash equivalents owed by the company.

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Brake Segment Revenue Target

The goal of achieving INR 300-400 crores in revenue from the brake division in FY'25.

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Order Book Execution

The value of orders completed within a specific timeframe.

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Incremental Orders

Newly received orders that add to the existing order book.

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Production Targets

Aim to produce 10,000 wagons within the year despite disruptions.

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EV Pilot Exercise

Initial testing phase for electric vehicles before full launch.

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Market Demand for EVs

High interest and need for electric vehicles in the market.

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B2B Segment Focus

Targeting business-to-business sales for electric vehicles.

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Order Book Expectations

Anticipated demand and contracts for future electric vehicle sales.

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Production Timeline

Schedule for when electric vehicle units will be produced.

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Competition Analysis

Assessment of rivals in the electric vehicle market.

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Initial Production Units

First batch of 500 electric vehicles scheduled for this financial year.

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Total Addressable Market

The total revenue opportunity available for a product or service in a market.

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Gigawatt Business

A business segment measured in gigawatts, an indicator of energy capacity.

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Projected Growth

Estimates of future performance based on current trends.

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Indian Market Potential

The expected opportunities for business growth in India.

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Non-Wagon Revenue

Income generated from products and services outside of wagon manufacturing.

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CAGR

Compound Annual Growth Rate; a measure of an investment’s growth rate over time.

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Future Revenue Contribution

The expected share of revenues from a specific business segment in the future.

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Revenue Focus Areas

Specific segments of a business that are prioritized for growth.

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Study Notes

Jupiter Wagons Limited Q1 FY25 Earnings Conference Call

  • Date: July 26, 2024
  • Management: Vivek Lohia (Managing Director), Puneet Saboo (Vice President, Finance)
  • Q1 FY25 Financial Highlights:
    • Total Income: INR 90,219 lakhs (19% YoY increase)
    • EBITDA: INR 12,886 lakhs (32% YoY increase)
    • EBITDA Margin: 14.4% (up from 12.9% in Q1 FY24)
    • PAT: INR 8,923 lakhs (40% YoY increase)
    • PAT Margin: 9.9% (up from 8.7% in Q1 FY24)
    • Consolidated EBITDA Margin: 15.5%
    • Order Book: INR 7,02,834 lakhs as of June 30, 2024

Competitive Landscape and Strategy

  • Competitive Intensity: Significant competition exists, but Jupiter's forward integration, partnerships (GATX, Tatravagonka), and design capabilities provide an edge.
  • Focus on Sustainability and Innovation: The company emphasizes sustainable mobility solutions, including energy-efficient battery solutions for rail coaches, and collaboration with Log9 Materials.
  • Backward Integration: Jupiter is focused on integrating its manufacturing process, specifically with a target to manufacture 1 lakh wheelsets annually.
  • Expansion Plans: Expansion into export markets is planned, with Jupiter aiming for 10,000 wagons produced this year.

Key Business Segments

  • Wagon Manufacturing: Significant order book (INR 10,000 crores), strong growth expected
  • Wheels and Axles (Bonatrans): Focus on forging, increasing capacity (30,000 wheelsets this year), potential for export markets
  • Electric Locomotives (Jupiter Electric Mobility): 6-month trials complete for LFP batteries (lithium-ion phosphate batteries); already received certification for these; aim for 500 units initial production
  • Commercial Vehicles and Container Business: A focus on specific niches (e.g. containers for data centers), and growth opportunities.

Financial Performance and Outlook

  • Debt: Gross debt: INR 450 Crore and Net debt: INR 300 Crore
  • Order Inflows: Order pipeline expected to remain strong despite occasional delays (due to elections, weather or other reasons)
  • Margins: Profit margins are projected to remain sustainable at around 15% or above. The company anticipates improvements from additional contributions in their various business verticals.
  • Revenue Projections: The company projects revenue between INR 5,000 crores and INR 6,000 crores.

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