Courtesy: https://www.chittorgarh.com/
Review By Dilip Davda on August 1, 2025
- The company is engaged in manufacturing of steering systems and other advanced automotive components.
• It has technical tie-ups with JTKET Corp. of Japan.
• Though it posted higher top line, its bottom line declined for FY25.
• Based on its recent financial data, the issue appears fully priced.
• Investors may park funds for long-term considering bright prospects for automotive segment.
ABOUT COMPANY:
Jtekt India Ltd. (JIL) (erstwhile known as Sona Steering Systems Ltd.) is a subsidiary of JTEKT Corporation, Japan and is engaged in the manufacturing of steering systems and other advanced automotive components for the passenger car and utility vehicle market in India. The Company gets its technology from JTEKT Corporation, Japan (formally known as Koyo Seiko Co. Ltd.). The Company’s customer base includes major vehicle manufactures in India and overseas. It has seven strategically placed manufacturing facilities located at (i) Gurgaon, Haryana; (ii) Bawal, Haryana; (iii) Dharuhera, Haryana; and (iv) Sriperumbudur, Chennai from where it serves the major auto clusters and important customers in India. The product portfolio of the company includes high performance rack and pinion manual steering gear, hydraulic power steering system, recirculating ball screw assembly, column type electric power steering, tilt and telescopic steering column, intermediate shaft, advanced column and telescopic intermediate shaft, and driveline products which include propeller shaft, case differential and newly launched driveshaft constant velocity joints (“CVJ”).
Introduction of constant velocity joints in Indian market is a step towards its aspiration to increase product portfolio and gain share of important driveline segment of the auto component market. The Company has set up a complete CVJ machining and assembly facility at its existing facility at Dharuhera, Haryana. JTEKT Corporation, its holding company, previously known as Koyo Seiko Co. Ltd., a steering manufacturer, merged on January 1, 2006, with Toyoda Machine Works, Ltd., a machine tool manufacturer. With support from its parent company, the Company is continuously improving the capabilities of in-house technical centre. The main objective of this initiative is to become self-reliant in development of reliable products in India which in turn will help speed up local development, become cost competitive, adopt new technologies and ensure quick response to field issues.
The Company has achieved significant progress in this direction. Its testing facility is equipped to carry out performance, strength and durability tests for manual steer gear, hydraulic power steering, and manual column. The company is in the process to develop testing facility to become self-reliant for all the products manufactured in India. In addition to product testing, the Company is also in the process of expanding facilities in the technical centre for prototype assembly as well as designing. Its engineers on regular basis are deputed to parent company in Japan to learn product designing and other technical aspect of manufacturing.
As of date of the Letter of Offer, JTEKT Corporation (“JTEKT”), JTEKT Column Systems Corporation (“JCS”) and Maruti Suzuki India Limited (“MSIL”) are the Promoters of JIL holding 65.70%, 3.85% and 5.43%, respectively, of the total equity paid up share capital. In addition to the Promoters, JTEKT Bearings India Private Limited (“JBIN”), a promoter group entity, holds 0.004 % of the total equity paid up share capital of the Company. Currently it has around 3400employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 23116407equity shares of Re. 1 each at a fixed price of Rs. 108.10 per share to mobilize Rs. 249.89 cr. The RI is opening for subscription on August 04, 2025, and will close on August 12, 2025. The company is offering RI in the ratio of 1 for 11 to its eligible stakeholders as of the record date of July 25, 2025.
The company is asking for full money on application for number of shares applied. Post allotment, shares will be listed on BSE and NSE. The company is spending Rs. 3.12 cr. for this RI process, and from the net proceeds, it will utilize Rs. 113.51 cr. for construction of infrastructure for setting up of production facility in Gujarat, Rs. 55.37 cr. for capex on purchase of equipment and machinery for Dharuhera facility, Rs. 24.00 cr. for repayment of certain borrowings, and Rs. 53.89 cr. for general corporate purposes.
The RI is solely lead managed by the company itself, and KFin Technologies Ltd. is the registrar to the issue. Systematix Corporate Services Ltd.is the advisor to the issue, as well as the underwriter.
Post RI, company’s current paid-up equity capital of Rs. 25.43 cr. will stand enhanced to Rs. 27.74 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 2998.66 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, it has posted a total income/ net profit, of Rs. 2256.98 cr. / Rs. 105.91 cr. (FY24), Rs. 2409.01 cr. / Rs. 73.45 cr. (FY25). As of March 31, 2025, its NAV stood at Rs. 34.60 per share against Rs. 32.31 per share a year ago period. Though it marked higher top line, its bottom line declined for FY25 indicating pressure on margins. This remains major concern.
DIVIDEND POLICY:
The offer document is silent on its dividend policy. The company has declared dividends of 50% (FY23), 60% (FY24), and 70% (FY25). It will adopt a prudent dividend policy, based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON BSE WEBSITE DATA: SCRIP CODE: 520057 (FV Re. 1).
The scrip last closed on cum-right basis at Rs. 146.05 on July 24, 2025, and opened on an ex-right basis at Rs. 143.90 on July 25, 2025. Since then, it has marked a high/low of Rs. 143.90 / Rs. 125.35. The scrip last closed at Rs. 126.35 as of August 01, 2025. For the last 52 weeks’ it has posted a high/low of Rs. 215.11 / Rs. 104.55.
The promoters’ holding has been constant at 74.98% for the last three quarters ended with June 30, 2025. The counter is currently trading above its RI price to tempt investors.
Conclusion / Investment Strategy
JIL is engaged in manufacturing of steering systems and other advanced automotive components. It has technical tie-ups with JTKET Corp. of Japan. Though it posted higher top line, its bottom line declined for FY25. Based on its recent financial data, the issue appears fully priced. Investors may park funds for long-term considering bright prospects for automotive segment.
Review By Dilip Davda on August 1, 2025
Review Author
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detailed fundamental and financial analysis of companies coming up with IPOs helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
Courtesy: https://www.chittorgarh.com/
