JBM Auto hits over 7-month high in a volatile market; rises 26% in 2 weeks

Shares of JBM Auto rallied 9 per cent to hit over seven month high of Rs 516.45 in Tuesday’s intra-day trade, in an otherwise range-bound market. The stock of auto components & equipments company traded at its highest level since May 6, 2022.

In the past two weeks, it has rallied 26 per cent in an otherwise volatile market. In comparison, the S&P BSE Sensex was down 3 per cent, during the same period. Earlier, the stock hit a record high of Rs 676 on January 24, 2022.

On clarification on increase in volumes, JBM Auto on December 20 said that the volumes in shares of the company are purely market driven.

“The company has made all the necessary disclosure and has not withheld any material/price sensitive information that in our opinion would have bearing on the volume behaviour of the scrip,” the company said.

On December 2, JBM Auto informed that JBM Ecolife Mobility Private Limited, a wholly owned subsidiary of the company, has incorporated a wholly owned subsidiary i.e. TL Ecolife Mobility Private Limited to carry on the business in automotive sector and are yet to commence its business operations.

In the first half (April-September) of the financial year 2022-23 (H1FY23), the company posted strong earnings as consolidated profit after tax jumped 66 per cent to Rs 62.19 crore. Revenue from operations, too, grew 45.7 per cent YoY to Rs 1,894 crore.

JBM Auto is engaged in automotive business, which manufactures and sells sheet metal components, tools, dies & moulds, and buses, including sale of spare parts, accessories & maintenance contract of buses.

The Indian electric vehicle (EV) market is moderately consolidated with the presence of major players in the market due to cheap and readily available manpower. The start-ups are also expanding their presence by raising funds from investors and tapping into new and unexplored cities. Companies are investing a tremendous amount in R&D with the launch of new models to mark their presence in the market.

However, established players in the market are introducing new models to gain a competitive edge over other players.

JBM Auto is a complete end-to-end well to wheel solution-based enterprise in the mobility space, with a presence across auto-components, tooling, and complete ecosystem for buses.

While transport has been instrumental to India’s past growth, it has been accompanied by severe air pollution challenges, with half of 50 most polluted global cities being in India, heavy dependence on oil imports, and rapidly growing carbon emissions. In this context, electric mobility is anticipated to play a major role in India’s transport transition this decade.

"The government has been steadily moving towards a shared connected and electric mobility ecosystem to achieve its stated goals on emission reductions, energy security, and industrial development. To drive EV adoption, the government has introduced several policy initiatives, which targets an entire value chain at national and state levels. Nonetheless, from a market penetration perspective, India remains in its early phase of adoption, compared to its ambitious target," the management added.

Technical View

Bias: Positive

Target: Rs 545

Support: Rs 470

The stock has been trading on an extremely volatile note in the last seven trading sessions, with sharp intra-day swings of up to 17 per cent.

Having said that, on the positive side, the stock has manged to sustain its 200-DMA (Daily Moving Average) during this period. The crossover happened recently after a gap of nearly five months.

Even as the 200-DMA stands above the other shorter-term moving averages. The near-term bias for the stock seems to be positive, as the stock trades above all the key moving averages.

Further, the stock has also crossed the super trend line, and the Bollinger Bands on the weekly chart for the first time since late February 2022.

The chart indicates that the near term bias is likely to remain favourable as long as the stock sustains above Rs 470 level. On the upside, the stock can rally to Rs 545-odd level.

(With inputs from Rex Cano)