The story behind the stock price surge of 1644% in 3 years

Jupiter Wagon Limited : Railroad stocks have enjoyed a boom in the market over the past year. One of the main reasons could be the Union Budget. For infrastructure improvement, the Union Ministry of Railways has set aside an allocation of Rs 2.55 billion for the financial year 2024-25. This is a significant increase of 5.8% compared to the previous year’s allocation of 24.1 billion rupees.

This increase in funding highlights the Government’s commitment to investing in the rail sector, which aims to improve and expand the country’s rail network. One of the fastest growing companies is JWL (Jupiter Wagons Limited). Starting out as a wagon manufacturer, JWL has transformed into a diversified leader in railway engineering, contributing to India’s burgeoning infrastructure development.

Jupiter wagons are one of the railroad stocks that have risen tremendously. The company’s stock returned an incredible 1,644.49% in just three years. Since acquiring CEBBCO in 2019, Jupiter Wagons has seen a significant increase in sales. In 2022, the company underwent a reverse merger with CEBBCO and was listed on NSE and BSE.

Let us begin our journey to explore your business environment, look at your product portfolio, examine your customer base and finances, and finally look at your order book and outlook.

Business Overview: A Legacy of Excellence

Jupiter Wagons Limited, an integrated railway engineering company, was established in 1979. Initially focusing on steel castings and components, the company quickly shifted to wagon manufacturing in 2006 to ensure sustained demand for freight wagons from Indian Railways.

Jupiter Wagons Limited (JWL) underwent major changes in 2019 when it acquired Commercial Engineers & Body Builders Co Ltd (CEBBCO) through asset sale. This strategic move not only doubled Jupiter Wagons Limited’s production capacity but also diversified its product portfolio, strengthening its position in the highly competitive Indian railway manufacturing market.

During the stressed assets auction, Jupiter Wagons Limited acquired 68% stake in CEBBCO for around Rs 100 crore. The remaining 18% was acquired by Tata Capital and Axis Bank. These acquisitions often involve selling assets pledged as collateral as “debt assets” due to loan defaults arising from financial distress.

The acquisition doubles JWL’s production capacity to 6,000 wagons per year, making it one of the largest wagon manufacturers in India. In 2023, JWL merged with Stone India, a leading manufacturer of braking systems, further consolidating its position as a diversified railway solutions provider. Jupiter Wagons Limited currently operates five strategically located manufacturing facilities across India and boasts an annual production capacity of 10,000 wagons.

Product portfolio: a diverse arsenal for your railway needs

JWL’s product portfolio reflects the diverse requirements of India’s dynamic rail network. We are focusing on manufacturing wagons such as covered wagons for general goods, container carrier wagons for intermodal transportation, cement wagons for bulk cargo, car carrier wagons for automobiles, and coil carrier wagons for steel transportation.

In addition to wagons, Jupiter Wagons Limited offers a range of track solutions such as crossover systems and wear-resistant components. The company is also branching out into manufacturing wagon and passenger coach accessories such as bogies, couplers and draft gear.

Jupiter Wagons Limited, which recently acquired Stone India, has added braking systems to its arsenal with the aim of becoming a one-stop shop for railway requirements. The company is also expanding its horizons in electric vehicle manufacturing, targeting launch in the fourth quarter of 2024.

Customer Base: A Network of Trust and Collaboration

JWL’s major customer is, of course, Indian Railways, the world’s fourth-largest rail network. Over the years, Jupiter Wagons Limited has built a strong relationship with Indian Railways, consistently meeting their diverse wagon requirements and winning their trust through quality and timely delivery.

In addition to domestic transport companies, JWL supplies specialized wagon and track solutions to private freight operators and infrastructure companies. This diverse customer base provides JWL with greater stability and resilience despite market fluctuations. The company has received orders from various big players in the market such as Tata Motors, Mahindra, Adani Group, Reliance Industries, Tata Steel and obviously the Ministry of Railways.

Finance: Strong growth record

JWL’s financial performance reflects a consistent growth trajectory. The company’s sales have nearly doubled over the past three years, reaching 10 billion won. 2,068 million in FY23 compared to Rs 1,178.35 Crore in the previous year.

Contributing to this upward trend are JWL’s diversification efforts, expansion of the Indian rail infrastructure market and focus on operational efficiency. The company’s stock returned 285% in one year and recorded a CAGR of 75.90% over the past four years. EBITDA of ₹259 million increased 120% year-on-year and EBITDA margin expanded 260 basis points from 9.9% in FY22 to 12.5% ​​in FY23.

The company’s profit after tax grew 151% year-on-year to ₹125 Crore. The company’s ROE in FY23 was 15.85% compared to 7.52% in FY22, showing a growth of 111%. The company’s ROCE was 21.70% in FY23, a change of 85% compared to 11.71% in FY22. The company recorded its highest ever annual revenue, EBITDA and profit after tax in fiscal 2023. The company’s order book is also diversifying into new segments, giving it a positive outlook for 2024.

Order Book: Promising Outlook for the Future

JWL’s order book paints a positive picture for the future. According to Dalal Street Investment Journal, the company’s order volume stands at Rs 7076.31 crore as on February 1, 2024, i.e. the third quarter of 2024.

This provides clear revenue visibility for the next two years. This includes a significant order from Indian Railways for various wagon types, indicating continued confidence in JWL’s capabilities.

Recent large orders

On January 4, 2024, the company received an order for 697 Bogie Open Military Wagons at a contract price of Rs. About $47.3 billion from the Department of Defense. Shares of Jupiter Wagons closed at Rs 333.65, up over 5% after the announcement of this order. The company has also received a large order from the Ministry of Railways on December 14, 2023 to manufacture and supply 4000 BOXNS wagons worth Rs 1,617 crores.

On January 5, 2024, the company also secured an order from a major automobile manufacturer to manufacture and supply four rakes of Double Decker Automobile Carrier Wagons. The total order amount is approximately 10 billion won.
JV company Jupiter Wagons Limited DAKO CZ India Ltd. has received orders totaling ₹11,200 lakhs for axle mounted disc brake system from Indian Railways.

Company’s outlook

Jupiter Wagons’ future holds a variety of diversification plans that extend far beyond its traditional wagon manufacturing business. Here’s a breakdown of the exciting new paths they’re pursuing:

Riding the national energy transition wave, Jupiter is targeting the EV market with a launch scheduled for the fourth quarter of 2024. The company is also expanding its horizons in metro rail, with over 3,470 km of approved projects. Our strategic partnership with CAF, a global leader in urban transportation solutions, strengthens our position to enter this fast-growing market.

Jupiter has an open market for brake systems and brake discs and sees promising growth in this segment. To enter the brakes market, Jupiter recently acquired Stone India Limited. Overall, the future of Jupiter Wagons appears dynamic and multifaceted. By leveraging new trends such as EVs, metro rail, braking systems and expanding their core businesses, they have a good portfolio of diversified plans with some plans already in progress.

Challenge: Finding intersections

Jupiter Wagons is facing a major turning point as it expands beyond traditional wagon manufacturing. Innovative products are needed to gain market share amid competition from established players such as Titagarh Wagons and BEML. Expanding operations across multiple sectors requires strategic financial management that balances profitability with significant investments. In the evolving field of electric vehicles, proactive response to technological and regulatory changes is critical.

The success of your drone venture depends on navigating dynamic regulations. Executing ambitious plans requires intensive planning and effective risk management to mitigate potential delays or disruptions that could impact overall growth.

conclusion

Jupiter Wagon has grown from a carriage manufacturer to its current position as a versatile rail solution. The company’s future seems bright, but the road there is difficult. Overcoming these challenges will determine whether we can transform from a carriage manufacturer to a diversified leader in India’s dynamic infrastructure and technology sector. The story is still being written, and the twists and turns are yet to come.

Additionally, successfully integrating Stone India’s operations and expanding new businesses will be critical to JWL’s long-term success. However, Jupiter Wagons Limited’s strong brand reputation, diverse product portfolio, strong order book and focus on innovation enable it to meet these challenges and capitalize on the growing opportunities in the Indian railway sector. Was this article helpful? What do you think about the company’s prospects? Let us know your thoughts in the comments section below!

Written by Akshita Malu

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