Interview with Sanjiv Keshri, CFO, Jupiter Wagons

22 Aug, 2023

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Interview with Sanjiv Keshri, CFO, Jupiter Wagons
JWL plans on doing a Rs 250 crore capex for FY24 and FY25 to expand all its businesses combined including wagons, brake systems, etc, expresses Sanjiv Keshri, Chief Financial Officer, Jupiter Wagons.

In Q1FY24, the revenue surged by 155% from last year’s same quarter to Rs 753.19 crore, while the net profit of the company zoomed by 374% from the corresponding quarter last year. What were the contributing factors to the company’s performance?

Jupiter Wagons has ramped up production more than 3 times from 526 wagons in Q1 FY23 to 1,713 wagons in Q1 FY24. The company delivers on its guidance of 550-600 wagons production rate per month.

There has been an increase in value-added products and an improved product mix has aided the increase in revenue. The Company has also commenced supplies of brake assemblies (JV) in Q4 FY23 which continued in Q1 FY24, further contributing to incremental rise in profits. Another fact that stands out for JWL is that the company has managed to ramp up production without compensating for the margins. JWL enjoys an industry-leading EBITDA margin of >13% depicting superior execution skill.

The company has revised the guidance for monthly wagon production to 800 wagons per month by the end of FY24 & to reach a production rate of 1,000 wagons per month by the end of FY25. 

At the moment, what are your top 3 strategic priorities?

Our top 3 priorities are:

  • Scale up and solidify the Wagons business through geographic diversification, customer diversification, enhancement of capacity, and backward integration.
  • Establish and stabilise complementary businesses of containers, Brake Disc and Brake Systems, e-LCVs, Weldable Crossings
  • Revive Stone India by infusing adequate working capital, ensuring captive consumption of the output, and strengthening the offerings. 

Could you provide us with an overview of the factors and strategic considerations that your recent expansion into the Brake Disc business?

JWL aims to establish itself as a comprehensive mobility solutions provider. The joint venture with JWL Kovis India Pvt Ltd has recently initiated the supply of brake discs to the Indian Railways during this quarter. Kovis D.O.O. is a company with a long history in the foundry industry. Their expertise is in the production of castings from grey and nodular cast iron. This JV's products include brake discs, axles, gearboxes, hub etc for railway rolling stock. Indian Railways has already approved brake-disc for high-speed passenger coaches, metro and similar applications. Kovis products are exported globally. Again, this JV will help Jupiter expand its product portfolio and help capture more market value of the railway's capex and replacement demand.

JWL has successfully commenced the delivery of brake discs to the Indian Railways in the current quarter through its joint venture with JWL Kovis India Pvt Ltd. Additionally, JWL has secured export orders, with the supplies set to begin in the third quarter of this financial year. The company is also actively participating in significant tenders from Indian Railways for brake discs.

The Brake discs business of JWL is anticipated to begin generating budgeted revenues in the fiscal year 2023-24, as orders have already been secured and execution is underway. JWL aims to scale up its order bookings, targeting annual revenues of Rs 150 to 200 crores within two years of commencing business. This revenue growth is expected to stem from both domestic and export markets, contributing equally.

Can you shed some light on the company’s capex plans? 

JWL plans on doing a Rs 250 crore capex for FY24 and FY25 to expand all its businesses combined including wagons, brake systems, etc.

Provide us with an overview of the acquisition of Stone India. What were the driving factors behind this strategic move?

Stone India will strengthen JWL's offerings for railways, including brake systems and other engineering products. Stone India is a strong and strategic fit for Jupiter Wagons and will bring significant value.

They have a lot of products in their portfolio, which are still very significant when looking at the freight business as well as the locomotive as well as the other rolling stock business, so will be adding a lot of products from Stone India, which will complement the existing portfolio.

The acquisition has been recently approved by NCLT and Jupiter Wagons is in the process of obtaining a handover of the company. A detailed expansion plan with key focus areas will be prepared in due course.

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