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Jupiter Wagons Limited — Q2 FY25 earnings call

Call held 11 Nov 2024

Management summary

Jupiter Wagons reported strong Q2 and H1 FY25 results, with double-digit growth in revenue, EBITDA, and PAT, driven by robust order execution and strategic diversification. The company is making significant investments in electric mobility through the Log9 acquisition and expanding its rail wheel manufacturing capacity with a substantial INR 2,500 crore investment. Management expressed confidence in achieving its annual targets for wagon sales and expects non-wagon segments to contribute significantly to future revenue, with H2 expected to be stronger than H1.

Highlights

Q2 FY25 Revenue from operations reached INR 1,009.04 crores, reflecting a 14.8% YoY growth.
Q2 FY25 EBITDA stood at INR 139.45 crores, marking a 15.5% YoY increase with an EBITDA margin of 13.8%.
Q2 FY25 PAT reached INR 89.36 crores, reflecting an 8.9% YoY increase with a PAT margin of 8.8%.
H1 FY25 Revenue from operations came in at INR 1,888.90 crores, a 15.7% YoY increase.
H1 FY25 EBITDA reached INR 276.13 crores, a 27% YoY increase, with an improved EBITDA margin of 14.8% (up from 13.3% in H1 FY24).
H1 FY25 PAT stood at INR 181.25 crores, marking an impressive 25% YoY increase, with a PAT margin of 9.5%.
Order book stands robust at INR 6,643.36 crores as of September 30, 2024.
Acquired Log9's advanced battery assets for approximately INR 40 crores to strengthen electric mobility and railway battery solutions.

Key financials

3 periods

Headline

Order Book
₹6,643.36 Cr

Q2

Revenue
₹1,009.04 Cr
YoY +14.8%
EBITDA
₹139.45 Cr
YoY +15.5%
EBITDA Margin
13.8%
PAT
₹89.36 Cr
YoY +8.9%

H1

Revenue
₹1,888.9 Cr
YoY +15.7%
EBITDA
₹276.13 Cr
YoY +27%
EBITDA Margin
14.8%
PAT
₹181.25 Cr
YoY +25%

What they filed

Q1 FY27: revenue up 50.6%, net profit up 15.2% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	974	1,000	1,002	411	707 −27%	776 −22%	645 −36%	619 +51%
Expenses	840	859	857	360	619	682	578	553
EBITDA	133	141	145	51	88 −34%	94 −33%	67 −54%	66 +29%
Margin	14%	14%	14%	12%	12%	12%	10%	11%
Other income	8	11	9	14	8	8	9	8
Interest	15	13	14	13	16	15	12	13
Depreciation	8	8	8	9	9	9	9	10
Profit before tax	118	131	131	43	71 −40%	78 −40%	54 −59%	51 +19%
Tax rate	25%	26%	26%	23%	26%	25%	29%	26%
Net profit	89	98	97	33	53 −40%	58 −41%	39 −60%	38 +15%
EPS	2.09	2.31	2.29	0.77	1.24	1.36	0.90	0.89

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Wheel Business
₹160 Cr H1 Revenue

Guidance & targets

Volume

Wagons Sold Volume · FY25 · High confidence close to 10,000

So, in the first 2 quarters, we produced about close to 4,100 wagons. And we are confident of achieving our target we have given a target of about 10,000 wagons. So, we are confident that we will achieve a number which is close to the 10,000 which we have targeted.

— Vivek Lohia, Managing Director
Commercial Vehicles Sold Volume · Calendar Year · High confidence above 1,000

Previously 500 → above 1,000

Yes. As I mentioned earlier, we had mentioned Q3 end. So, we are confident that we will be launching the vehicle by Q3 end. If there is a slippage, it will be maximum by a week or 2 weeks. Beyond that, we do not expect any kind of slippage. and we are again greatly confident that in the calendar year, we will be selling ~ above 1,000 vehicles.

— Vivek Lohia, Managing Director
Brake Systems (Stone India) Volume · Next Fiscal Year · Medium confidence 8,000 to 10,000

So, we are looking to supply at least anything between 8,000 to 10,000 brake systems in the next fiscal year. But again, it depends on how fast we can ramp up production.

— Vivek Lohia, Managing Director
Brake Systems (Dako) Volume · Next Fiscal Year · High confidence 500-plus

And next fiscal year, also, we have placed very strongly in the tenders. So, we expect orders of 500-plus brake systems for the next fiscal year.

— Vivek Lohia, Managing Director
Wagons Sold Volume · Next Year (FY26) · High confidence close to 10,000 cars

Yes, our target next year, as I have told you, we are focusing on supplying close to 10,000 cars.

— Vivek Lohia, Managing Director
Wagons Sold Volume · Next Year (FY26) · High confidence about 12,000 cars

And next year, we are looking to ramp it up to about 12,000 cars.

— Vivek Lohia, Managing Director
EV Vehicles Sold Volume · FY26 · High confidence 1,000

It will be domestic, and it is FY '26 is when we have mentioned the 1,000 vehicles.

— Vivek Lohia, Managing Director

Revenue

Non-Wagon Revenue Contribution Revenue · within the next 4 years · High confidence approximately 50%

and we anticipate that non-wagon revenue will contribute approximately 50% of our revenue within the next 4 years.

— Vivek Lohia, Managing Director
JVs (Kovis, Dako, Stone India) Turnover Revenue · FY25 · High confidence INR 300 crores to INR 500 crores

So, all the 3 JVs combined in FY '25, we are looking at turnover as I've already mentioned earlier, our numbers will be about anything between INR300 crores to INR500 crores of revenues we expect from all the 3 JVs.

— Vivek Lohia, Managing Director
Wheel Business Revenue Revenue · FY25 · High confidence INR 300 crores to INR 400 crores

And this year, we expect to do about close to anything between INR300 crores to INR400 crores of revenue.

— Vivek Lohia, Managing Director
Wheel Business Revenue Revenue · Next Fiscal Year (FY26) · High confidence close to INR 700 crores

And next fiscal year, those numbers are going to go up to about close to INR700 crores.

— Vivek Lohia, Managing Director
Non-Wagon Revenue Contribution Revenue · by FY27 end · High confidence about 50%

By FY '27 end, as we have clearly mentioned that we expect our non-wagon revenues to be close to as much as about 50% of our total revenue book.

— Vivek Lohia, Managing Director

Capacity

Rail Wheelsets Capacity · by FY25 end · High confidence 25,000

Previously 10,000 → 25,000

So, by FY '25 end, our capacity will be close to about 25,000 wheelsets. When we took over the company, it was close to about 10,000 wheelsets. So, from there, we are ramping it up to 25,000.

— Vivek Lohia, Managing Director

Capex

Wheel Capacity Capex Capex · High confidence INR 35 crores to INR 100 crores

We have mentioned that that will be INR35 crores to INR100 crores capex out of -- including GST.

— Vivek Lohia, Managing Director
Total Capex Capex · FY25 · High confidence about INR 500 crores

This year will be about all businesses put together will be about INR500 crores.

— Vivek Lohia, Managing Director

Risks & concerns

Project execution delays for Stone India approvals
medium

Approvals for Stone India's freight brake systems are taking longer than expected due to infrastructure revamp and licensing post-NCLT acquisition, with expectations for approval by FY25 end.

Analyst acknowledged
Working capital intensity and potential for LDs (Liquidated Damages)
low

Management states they are not looking to pile up higher wagon order books beyond 18 months of execution to avoid LDs, indicating a cautious approach to managing long-cycle projects and working capital.

Management acknowledged
Reliance on government tenders for wagon orders
low

Management notes that railway tenders for wagons are expected 'very shortly in the next 4 to 5 months' and that any delay would be 'more welcomed by the industry' to manage existing orders, implying a dependence on government capex cycles.

Management acknowledged

Areas of evasion (2)

Specific breakeven timelines for the electric mobility business
Exact full-year revenue target confirmation (beyond 'achieving targets')

Q&A highlights

2 direct, 1 evasive

Market share impact from Texmaco's acquisition of Jindal Rail Direct

Not really, Texmaco recently acquired Jindal Rail so that number which you are seeing is addition of the Jindal Rail numbers on the Texmaco numbers and it is two quarter numbers which they have added together. So as such, there is no major impact. And on the contrary, if you look at the private market, we are gaining strength every quarter.

Clarifies that Texmaco's reported higher sales are due to an acquisition, not a loss of market share for Jupiter Wagons, and highlights JWL's strength in the private market.

Asked by Garvit Goyal

Delay in Stone India's brake system approvals and production ramp-up Direct

We have already mentioned that it will be by end of FY '25. We have clearly mentioned because you must understand that we took over a company from NCLT. We had to complete infrastructure had to be revamped. We had to order all the machineries afresh and then apply for the licenses.

Explains the reasons for the delay in Stone India's approvals, attributing it to the post-NCLT acquisition challenges and the need for infrastructure and licensing.

Asked by Akash

Breakeven timeline for the electric mobility business (including Log9 acquisition) Evasive

No, I did not give any timelines. What I said that we expect the question was that will it breakeven in 3 years, to which I answered that we expect the breakeven to be much earlier than that. As it is not only vehicles, but there are also a lot of other businesses in that, including BESS, data center, then our vehicle business plus the battery supplies to Indian Railways. So, the question was that whether we will be breakeven in 3 years, our answer was that we expect the breakeven to be much earlier, but again, we cannot substantiate right now in terms of the timelines.

Management avoids giving a specific breakeven timeline for the electric mobility business, despite indicating it would be 'much earlier' than 3 years, suggesting uncertainty or unwillingness to commit to a firm date.

Asked by Kartikeya Kumar Pandey

3 min read 7 chapters

Detailed narrative

Q2 & H1 FY25 Financial Performance Highlights

Jupiter Wagons reported robust financial performance for Q2 and H1 FY25. For Q2 FY25, revenue from operations grew by 14.8% YoY to INR 1,009.04 crores, with EBITDA increasing by 15.5% YoY to INR 139.45 crores, achieving an EBITDA margin of 13.8%. PAT for the quarter rose by 8.9% YoY to INR 89.36 crores. For the first half of FY25, revenue reached INR 1,888.90 crores (15.7% YoY growth), EBITDA grew by 27% YoY to INR 276.13 crores with a margin of 14.8%, and PAT increased by an impressive 25% YoY to INR 181.25 crores.

Strategic Diversification and Acquisitions

The company is actively diversifying its portfolio, notably through the acquisition of Log9's advanced battery assets for approximately INR 40 crores via its subsidiary, Jupiter Electric Mobility. This acquisition aims to strengthen in-house battery production for electric trucks and railway solutions, including Vande Bharat orders. Additionally, Bonatrans India Private Limited was rebranded as Jupiter Tatravagonka Railwheel Factory Private Limited, signaling a strategic focus on becoming a leader in India's rail wheel manufacturing industry.

Rail Wheel Manufacturing Expansion Plans

Jupiter Wagons plans a substantial investment of INR 2,500 crores to establish a new state-of-the-art facility in Odisha. This expansion will significantly increase the annual capacity for forged wheelsets from 20,000 to a projected 100,000 units. Management expects wheel business revenue to reach INR 300-400 crores in FY25 and further grow to approximately INR 700 crores in FY26, with capacity reaching 25,000 wheelsets by FY25 end.

Commercial Vehicle and Battery Business Outlook

The company is bullish on its electric mobility segment, with plans to launch its 1-ton payload truck (2.5-ton GVW) by Q3 end, targeting sales of over 1,000 vehicles in the calendar year. Two additional higher payload trucks (2-ton and 3-ton) are expected to launch within FY26. The Log9 acquisition is crucial for in-house battery production, which constitutes about 50% of an EV's cost, and also supports the railway battery segment, including Vande Bharat orders.

Brake Systems and Joint Venture Performance

Jupiter Wagons' brake systems business, including its JVs Kovis and Dako, shows strong order books. For Stone India, approvals for freight brake systems are expected by FY25 end, with a target to supply 8,000-10,000 brake systems in FY26. Dako expects orders for over 500 brake systems for LHB passenger coaches in FY26. The combined turnover from all three JVs (Kovis, Dako, Stone India) is projected to be between INR 300 crores and INR 500 crores for FY25.

Order Book and Future Growth Trajectory

The company's order book remains robust at INR 6,643.36 crores as of September 30, 2024, representing approximately 18 months of execution. Management is confident in achieving its target of selling close to 10,000 wagons in FY25 and aims to ramp up to 10,000-12,000 cars in FY26. Non-wagon segments are anticipated to contribute approximately 50% of total revenue within the next four years, indicating a balanced and diversified growth strategy.

Capex Plans and Funding

Jupiter Wagons plans a total capex of approximately INR 500 crores for FY25 across all businesses. A significant portion of this, between INR 35 crores and INR 100 crores, is allocated for wheel capacity expansion. Management confirmed that the company does not anticipate taking on incremental debt beyond what has already been mentioned for these expansion projects, indicating a focus on internal accruals and existing funding plans.

This is an AI-generated summary of a publicly available earnings call transcript.

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