Domestic brokerage firm Jefferies has cut the target price for railways coach manufacturer Jupiter Wagons to ₹185 from ₹210, citing the company's weak Q1 earnings. The brokerage has maintained an Underperform rating on the stock, cutting FY27E-29E EPS estimates by 6%-20% to reflect the Q1 miss. According to reports from The Economic Times, this revision reflects the company's challenging performance in the recent quarter.
Jupiter Wagons' quarterly EBITDA was 32% below Jefferies' estimate, primarily due to weak wagon and wheelset sales and margins. Wagon sales rose 38% YoY on a low base but were 12% below the brokerage's estimate, partly offset by a 9% YoY rise in realisations. As reported by The Economic Times, wheel and wheelset sales declined 31% and 73% YoY, respectively, while gross margins declined 700 bps YoY on a high base that included specialised wagons. Meanwhile, overheads ahead of the production ramp-up at its electric mobility subsidiary JEM Energy and Stone India resulted in losses at the subsidiaries, according to Jefferies.
The company has an order book of ₹3,000 crore for around 7,000 wagons, with 80% of the orders coming from the private sector. Management has indicated that the order book includes new wagon designs, but design and prototype approvals for these new wagons led to slower execution. According to The Economic Times, visibility on the new 1 lakh-wagon tender remains low, which is a key concern given that 68% of FY28E EBITDA is expected to come from the wagon business. The company's Odisha wheel manufacturing plant is expected to become operational only by the end of FY28, while component manufacturing JVs remain at a nascent stage.
In a base-case scenario, Jefferies estimates a 23% FY26-30E consolidated EPS CAGR and a 15% standalone EPS CAGR, despite weak wagon sales growth and some uptick in container sales. The brokerage expects Jupiter Wagons' wheel manufacturing plant to be commissioned by the end of FY28, which should support consolidated revenue growth and margins. As reported by The Economic Times, the company remains a key beneficiary of Indian Railways' indigenisation initiatives in wheel manufacturing and components, though its electric mobility subsidiary JEM Energy's commercial production of axles and wheels is expected to commence by Q4 FY27 and FY28-end, respectively.
The company has entered into a strategic partnership with Italy's Lucchini RS, where Lucchini, along with SIMEST, an Italian government financial institution, will acquire a 25% stake in the wheel manufacturing subsidiary for ₹290 crore. JEM Energy, a subsidiary of Jupiter Wagons, won a ₹4,000 crore order for two standalone BESS projects in West Bengal, while Stone India received RDSO approval for its freight brake systems. Stone India's component manufacturing JVs remain at a nascent stage, according to Jefferies.
