JBM Group is in active discussions for bus orders that it expects to come in February. Nishant Arya, executive director, JBM Group says the company is eye Rs 2000 crore as potential revenue from the business.
Arya says the company will be able to produce 2000 buses per year and will not require any capital expansion for the same.
He further adds that the company has invested Rs 500 crore at the group level and is funding the same through internal accruals and debt.
Below is the verbatim transcript of Nishant Arya's interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Reema: Can you tell us what could be the expected quantum of orders that you are hoping to get?
A: We will getting our orders next month so definitely once we have them on board we will be sharing with you but we are seeing that we will be starting to manufacture these buses in the month of March and with the capacity of about 2,000 buses per year we will be catering to our customers in freight transport undertakings, in airlines and schools.
Sumaira: Is this a government order and also can you give us a sense of what kind of margins would you enjoy on this?
A: The orders are a combination of all three different customers I just shared with you. The margins in the bus industry are depending on order to order because it is not like a car that is customised based on every customer's requirement. About 60 percent of the vehicle remains same what 40 percent is customised depending on the kind of requirements the customer have. So, that changes the perspective of the margins and the price.
Reema: Let's assume this capacity of 2,000 buses for which you are equipped for the next two years what could be the potential revenue if you do manage to sell all these 2,000 buses?
A: It should be close to Rs 2,000 crore.
Reema: What is the kind of investment that you have pumped in, to manufacture these buses and how was it funded?
A: We have invested about Rs 500 crore and we are funding through internal accruals and debt.
Sumaira: Can you give a rough sense of what it could be single digits, double digits what would it mean?
A: Definitely it will be double digit EBITDA margin.
Reema: So would that be margin accretive for you all?
A: Yes.
Reema: So eventually we should expect the company's margin to improve?
A: Yes, definitely in the coming year you will see the companies margin should improve.
JBM Group.
Sumaira: Will you need to undertake some more capacity expansion to sort furbish these orders and will you be biding for any more such orders this year or going forward?
A: Biding for orders would be a ongoing exercise.
Sumaira: Would you need to ram up your capacity for that?
A: Not really, we will be able to use this capacity for delivering the orders we have on board.
Reema: You said that this Rs 500 crore of investment was funded by internal accruals and debt. Can you give us the break up? How much was debt?
A: This is not entirely done by JBM Auto as I said it is done at a group level so this includes publicly listed companies and private companies both. So I am only able to share that with you but it is a combination of both.
JBM Auto stock price
On January 23, 2015, JBM Auto closed at Rs 206.80, up Rs 5.00, or 2.48 percent. The 52-week high of the share was Rs 309.90 and the 52-week low was Rs 15.00.
The company's trailing 12-month (TTM) EPS was at Rs 9.65 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 21.43. The latest book value of the company is Rs 39.55 per share. At current value, the price-to-book value of the company is 5.23.
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