Not IRCON, Or Titagarh, But This Top Railway Stock With RoE Of 22.10% Is Likely To Give 19% Returns Ahead

After impressive gross margin expansion in Q1FY25, this one railway wagon stock is an attractive bet on stock exchanges. The stock has the potential of over 19% returns ahead, while its target price is set at Rs 728 by brokerage Systematic Equities. Who is it? Not popular wagon stocks such as RITES, IRCON, and Titagarh Wagons! But a BSE 500-listed private railway equipment manufacturer, Jupiter Wagons.

Jupiter Wagons' last weekly performance is bearish with a drop of 1.4% on BSE, creating a buy-on-dips opportunity. On August 2nd, the stock price ended at Rs 611.15 apiece with a market cap of Rs 611.15 crore.

YTD, the stock has rallied by over 90.3%, while in a year, it advanced by 188.15%. Further, in 5 years, the gain is a whopping 3,933.11%.

The company has been buzzing after its Q1 results announcement for FY25.

In Q1FY25, the company earned a net profit of Rs 89.23 crore, registering a growth of 40.3% YoY. The company continued to deliver industry-leading margin as its EBITDA Margin improved to 14.4% and achieved a consolidated EBITDA margin of 15.5% in Q1FY25.

Meanwhile, EBITDA stood at Rs 128.86 crore in Q1FY25, up by 32.4% year-on-year. On the top-line front, the company posted a total income of Rs 902.19 crore, increasing by 19.4% YoY.

Post Q1 results, brokerage Systematix said, Jupiter Wagons reported an impressive gross margin expansion of 303bps YoY (+352bps QoQ) to 25.6% which reciprocated to the EBITDA margin of 15.5%, ahead of its assumption of 15% for FY25E. The start of wheelset manufacturing at Bonatrans provided impetus to the EBITDA margin. Bonatrans India witnessed a turnaround with revenue of Rs744 mn in Q1FY25 with an EBITDA margin of 12.5%. EBITDA/PAT from Bonatrans came at Rs93/70 mn against a loss of Rs35/66 mn in Q1FY24.

Further, the brokerage cited that Jupiter Wagons is expecting the launch of E-LCV in Q3FY25 while the commencement of Stone India is also expected in Q3FY25. JWL expects the machining capacity at Bonatrans India to increase to 28,000 wheelsets by the end of FY25 from the current 10,000 wheelsets and to 40k-50k by FY26. Also, it expects the full backward integration at wheelset along with a capacity of 1L wheelset to be achieved by 2027.

The brokerage expects a superior margin over the competition to increase further.

Hence, on the valuation, Systematix said, "We keep our estimates largely unchanged (share capital adjusted to QIP) and introduce FY27E estimates. We forecast a robust revenue/EBITDA/PAT CAGR of 27%/33%/34%, respectively. We raised our TP upwards to Rs728 from earlier Rs535 based on 39x on FY27E. We believe a far superior margin profile, strong revenue growth, and entry into the electric vehicle and Li-ion battery space would continue to command a premium valuation over the peers. We keep BUY on the stock."

Jupiter Wagons Limited (JWL) is a provider of comprehensive mobility solutions, with diverse offerings across Freight Wagons, Locomotives, Passenger Coaches (LHB), Metro Coach, Commercial Vehicles, ISO Marine Containers, and products such as Couplers, Draft Gears, Bogies, CMS Crossings, Brake Disc, Brake System, Wheels, Axles and Wheelsets. JWL has manufacturing facilities located in Kolkata, Jamshedpur, Indore, Jabalpur and Aurangabad with full backward integration to its foundry operations. The Group has established partnerships with leading global companies such as Tatravagonka (Slovakia), DAKO-CZ (Czech Republic), Kovis Proizvodna (Slovenia), and Telleres Alegria S.A (Spain).