Jefferies cuts target price for Jupiter Wagons, maintains Underperform after Q1 earnings. Here’s why

Domestic brokerage firm Jefferies has cut the target price for railways coach manufacturer Jupiter Wagons to Rs 185 from Rs 210, citing the company’s weak Q1 earnings. The brokerage has maintained an Underperform rating on the stock, cutting FY27E-29E EPS by 6%-20% to reflect the Q1 miss.

In a base-case scenario, Jefferies estimates a 23% FY26-30E consolidated EPS CAGR and a 15% standalone EPS CAGR, despite weak wagon sales growth and some uptick in container sales. The brokerage expects Jupiter Wagons’ wheel manufacturing plant to be commissioned by the end of FY28, which should support consolidated revenue growth and margins.

Jupiter Wagons’ quarterly EBITDA was 32% below Jefferies’ estimate, primarily due to weak wagon and wheelset sales and margins. Wagon sales rose 38% YoY on a low base but were 12% below the brokerage’s estimate, partly offset by a 9% YoY rise in realisations.


The company has an order book of Rs 3,000 crore for around 7,000 wagons, with 80% of the orders coming from the private sector. Management has indicated that the order book includes new wagon designs. Jefferies noted that design and prototype approvals for these new wagons led to slower execution.

Gross margins declined 700 bps YoY on a high base that included specialised wagons. Visibility on the new 1 lakh-wagon tender remains low, which is a key concern given that 68% of FY28E EBITDA is expected to come from the wagon business.

Wheel and wheelset sales declined 31% and 73% YoY, respectively. Meanwhile, overheads ahead of the production ramp-up at its electric mobility subsidiary JEM Energy and Stone India resulted in losses at the subsidiaries, according to Jefferies.

Jupiter Wagons remains a key beneficiary of Indian Railways' indigenisation initiatives in wheel manufacturing and components. However, its Odisha wheel manufacturing plant is expected to become operational only by the end of FY28, while component manufacturing JVs remain at a nascent stage.

JEM Energy, a subsidiary of Jupiter Wagons, won a Rs 4,000 crore order for two standalone BESS projects in West Bengal, while Stone India received RDSO approval for its freight brake systems. Commercial production of axles and wheels at the wheel manufacturing facility is expected to commence by Q4 FY27 and FY28-end, respectively, according to Jefferies.

The company has also entered into a strategic partnership with Italy's Lucchini RS. Lucchini, along with SIMEST, an Italian government financial institution, will acquire a 25% stake in the wheel manufacturing subsidiary for Rs 290 crore.

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