Why did Systematix initiate coverage on JTEKT India? 33% upside seen

Systematix has set a target price of ₹192 for JTEKT India, valuing the stock at EV/Ebitda of 17.5 times on December 2027E, in line with its past five-year average multiple

Systematix Institutional Equities on JTEKT India: Domestic brokerage Systematix has initiated coverage on JTEKT India (JIL), a steering systems manufacturer, with a ‘Buy’ rating, citing its strong leadership position in the domestic steering systems market, planned capacity expansion at CVJ, and emerging structural growth drivers from its expanding driveline business. 

 

The brokerage highlighted the company’s 35 per cent market share in steering systems, a strong share of business across leading passenger vehicle OEMs, and the ramp-up of higher-margin Constant Velocity Joint (CVJ) supplies, which are expected to drive margin expansion. 

 

Systematix also pointed out the company’s growing export opportunity, supported by an order from parent JTEKT Corp in Brazil. It expects Ebitda margins to expand by around 240 basis points over FY25–28E, aided by operating leverage and a favourable product mix.

 

 

While adverse factors which weighed on margins in FY25 are expected to reverse in FY26, analysts project a healthy growth outlook, with Sales, Ebitda, and adjusted PAT CAGRs of 12 per cent, 23 per cent, and 29 per cent, respectively, over FY25–28E. Return on Capital Employed (RoCE) is set to recover to over 14 per cent from the current 11 per cent in FY25. 

 

The brokerage has set a target price at ₹192, valuing the stock at EV/Ebitda of 17.5 times on December 2027E, in line with its past five-year average multiple. The target price implies an upside potential of 33 per cent from the December 23, 2025, closing price of ₹144.11 on the NSE.

 

At 10:50 AM on Wednesday, December 24, the JTEKT India stock was trading at ₹144.5, up around 0.27 per cent from the previous session's close. In comparison, the NSE Nifty50 was up 34 points or 0.13 per cent at 26,212 levels. The company's total market capitalisation stood at ₹4,008 crore.  CATCH STOCK MARKET LIVE UPDATES TODAY

Here's why Systematix Institutional Equities is upbeat on JTEKT India:

Strong presence in steering system: According to Systematix, the steering systems segment contributes 96 per cent of revenues, where the company commands a 35 per cent market share. On the back of a comprehensive product portfolio, this segment remains the primary growth driver, projected to deliver 10 per cent CAGR over FY25–28E. With a strong presence across major OEMs such as TKML (100 per cent), MSIL (+55 per cent), HCIL (+75 per cent), JIL is further augmenting capacity through its upcoming Gujarat facility at a capital expenditure (capex) of ₹6.5bn.

 

Diversifies driveline offerings via CVJ innovation: Analysts said JTEKT India’s driveline segment contributes 5 per cent of revenue, led by CVJs accounting for 4 per cent, and is emerging as a key growth driver, supported by its superior margin profile of around 8–9 per cent and rising customer traction. The company is targeting a sharp increase in CVJ market share to nearly 15 per cent over the medium term, with the segment expected to grow at a robust 45 per cent CAGR over FY25–28E on the back of capacity expansion and entry into new global platforms.

 

Scaling exports boosting margins: The brokerage noted that JTEKT India’s exports are set to scale up, with the company targeting a rise in export contribution from around 3 per cent of sales to about 8 per cent over the next 2.5–3 years. It added that strong support from parent JTEKT Corp, particularly through growing supplies to JTEKT Brazil, positions exports as a key lever for growth and margin expansion.  (Disclaimer: Target price and stock outlook has been suggested by Systematix Institutional Equities. Views expressed are their own.)