Top MFs eyeing a 24% stake in Jamna Auto

Deal is likely to be worth 250-300 crore at a premium of 15-20% to current market price of firm's stock

Anirudh Laskar &, Swaraj Singh Dhanjal
Updated30 Nov 2015, 02:01 PM IST
Delhi-based Jamna Auto Industries Ltd is an original equipment manufacturer (OEM) of suspension products and lift axles for medium and heavy commercial vehicles.<br />
Delhi-based Jamna Auto Industries Ltd is an original equipment manufacturer (OEM) of suspension products and lift axles for medium and heavy commercial vehicles.

Mumbai: Private equity firm Clearwater Capital Partners has hired investment bank ICICI Securities Ltd to sell its 24% stake in auto component maker Jamna Auto Industries Ltd, three persons familiar with the development said, adding that Reliance Capital Asset Management Ltd is among top mutual funds and financial institutions that have shown interest.

A deal is likely at 250-300 crore, the persons mentioned above said requesting anonymity.

The Delhi-based company is an original equipment manufacturer (OEM) of suspension products and lift axles for medium and heavy commercial vehicles (MHCVs). Clearwater Capital Partners holds a total of 28% in the company through two of its funds—Clearwater Capital Partners (Cyprus) Ltd and Clearwater Capital Partners Singapore Fund III Pvt. Ltd.

“Talks are under way and a deal could be completed soon. The transaction is likely to be done at a premium of 15-20% to the prevailing market price of Jamna Auto’s stock,” said the first person.

On Friday, the Jamna Auto stock closed at 231, up 0.17%, on BSE, while the benchmark Sensex rose 0.65% 26,128.2 points.

ICICI Securities did not respond to an email, while a top Reliance Capital MF official declined to comment.

“Clearwater has been invested in the company for over seven years now. They think that this is the right time to look at exiting the investment as the stock has moved up significantly in the last one year,” said the second person, requesting anonymity.

“Talks are happening with institutional investors such as Reliance Capital MF and Birla Sun Life AMC. Several other mutual funds are also interested and are in talks,” he said, adding a deal might be concluded in the next few weeks.

A 23 November research report by domestic broking firm Angel Broking recommended the Jamna Auto stock, saying its revenue is estimated to grow at 14% between financial years 2015 and 2018 on account of an uptick in the MHCV-OEM segment and a ramp-up of new products, which include parabolic leaf springs and lift axles.

Operating leverage, better product mix and savings on energy costs will enhance the company’s margins, the report added.

“We expect Jamna Auto’s earnings to grow at a CAGR of 35% over financial year 2015-2018. The company’s return ratios are also estimated to improve on account of margin expansion, better working capital management and lower gearing,” said the report.

Angel Broking said the MHCV industry is in an upcycle and it will maintain a double-digit growth momentum and clock at least 16% compound annual growth rate between financial years 2015 and 2018. Jamna Auto derives around 70% of its revenues from the MHCV-OEM segment and according to Angel Broking, the company will be a beneficiary of the strong demand.

A mutual fund investment advisory expert said demand for automobile equipment manufacturing companies is likely to go up in the medium to long term, which will drive investments in the stocks of such firms.

At present, mutual funds have a combined asset under management of at least 4 trillion in equities.

“Currently, about 3% of mutual fund assets are allocated in equities of auto ancillary firms. This will definitely go up in the coming days with demands for new technologies increasing in the automobile sector. So, it is imperative for mutual funds to consider taking advantage of the imminent growth in this sector,” said the mutual fund advisory expert on the condition of anonymity.

anirudh.l@livemint.com

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.

MoreLess
First Published:30 Nov 2015, 02:01 PM IST
Business NewsCompaniesNewsTop MFs eyeing a 24% stake in Jamna Auto

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    149.70
    07:18 PM | 1 NOV 2024
    1.05 (0.71%)

    Indian Oil Corporation share price

    145.00
    07:19 PM | 1 NOV 2024
    2.3 (1.61%)

    Tata Power share price

    445.20
    07:19 PM | 1 NOV 2024
    5.15 (1.17%)

    Bandhan Bank share price

    183.65
    07:10 PM | 1 NOV 2024
    1.4 (0.77%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Rainbow Childrens Medicare share price

    1,545.00
    06:59 PM | 1 NOV 2024
    -67.25 (-4.17%)

    ICICI Securities share price

    833.45
    06:59 PM | 1 NOV 2024
    -32.85 (-3.79%)

    Vijaya Diagnostic Centre share price

    966.70
    06:59 PM | 1 NOV 2024
    -30.35 (-3.04%)

    Narayana Hrudayalaya share price

    1,235.60
    06:59 PM | 1 NOV 2024
    -36.75 (-2.89%)
    More from Top Losers

    Brigade Enterprises share price

    1,244.80
    07:19 PM | 1 NOV 2024
    71.75 (6.12%)

    PCBL share price

    432.15
    07:17 PM | 1 NOV 2024
    21.35 (5.2%)

    Piramal Pharma share price

    281.85
    07:17 PM | 1 NOV 2024
    13.45 (5.01%)

    Jubilant Pharmova share price

    1,273.00
    06:59 PM | 1 NOV 2024
    60.65 (5%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      80,565.00-790.00
      Chennai
      80,571.00-790.00
      Delhi
      80,723.00-790.00
      Kolkata
      80,575.00-790.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L-0.06
      Chennai
      101.23/L0.43
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Companies

        HomeMarketsloanPremiumMint Shorts