Epic Research

Jtekt (Accumulate)

CMP: ₹130.90

Target: ₹160-162

Jtekt India, formerly Sona Koyo Steering Systems, is primarily engaged in the manufacture of steering systems and other auto components for the passenger car and utility vehicle manufacturers. Jtekt is a very reputed name in international and domestic space.

Jtekt Japan has purchased ownership from Indian promoters and has streamlined the corporate structure by consolidating steering business under Jtekt Japan. Jtekt India has access to cheap capital and better technology considering the parentage. There were some margin pressures due to higher employee and raw material costs. Management has “Ambitious plans” and the margins have improved in quarterly numbers. We have revised our estimates and believe that bottom line can double in next 12-18 Months. We don’t see too much downside. We recommend accumulating the stock at current levels for conservative target of ₹160-162 based on 7x of FY20 BV.