Did you notice the huge number of SME IPO’s in September?
You kept on blocking your funds throughout the whole month on multiple companies?
Still didn’t get any allotment and missed out on listing gains? Here’s why!

• If SME’s miss September deadline, they will have to update their half yearly financial numbers and file it with Ministry of Corporate Affairs, Exchange and SEBI

• Before September 30, it only needs to be filed with the Exchange it is listing on. It is quite easy to do an SME IPO.

• Promoters pay a large operator which in turn pay people to go and apply for the IPO to increase the subscription multiple and hence increase the listing gains. They pay fixed costs to these people and ensure at least 50% of the allotment goes to these particular people.

• Promoters get all the profit diff b/w IPO Application price and listing.

• You would also see HNI’s & QIB’s investing in this IPO’s, both pre and post listing. Their job is just to pump the price up. They have realised huge gains in some other deal and hence they are okay with taking a loss here to offset huge tax payments. Anyways they will get the money in black through the promoters.

My Takeaways and Conclusion:

• Wait for at least 6 months and the results post IPO before investing into risky companies. It’s another story if you got IPO allotted and booked profit on listing day/week. It’s totally risky investing after that when share is giving UC’s for a long time and finally you got your order executed.

• Do not buy into listing gains and purchase stocks hitting continuous UC’s. They will also give continuous LC’s later and you won’t be able to exit.

• Subscription multiple from Retail and HNI does not mean anything. Look at QIB’s.

These companies don’t do anything magical. It is extremely unlikely that they will be the next Google. Large and mid cap players can completely destroy these players. Look what Jio did to Telecom providers and now to ISP’s.

“Oh this company is in and on such low P/E as compared to <Large/Mid Cap well Established stock>, let me buy this instead of the company with proven track record.”
Don’t do it.

Hope this helps you in making wiser investment decisions and protecting your capital.

Sources:

Jupiter Wagons Ltd published investor presentation today.
Link: https://www.bseindia.com/xml-data/corpfiling/AttachLive/9714cdf2-d1f1-418f-9bf5-bae96b7e7cb8.pdf
Summary of important points:

Industry Overview:

1. Railway Freight and Passenger Growth: expected increase in railway freight volumes and Indian Railway capital expenditures over the years. Passenger volumes have also been steadily increasing.
2. Metro Rail Projects: The government plans to extend metro railway services to multiple cities, offering a significant financial opportunity. In the Union budget for 2023-24, substantial funds have been allocated to metro projects.
3. Market Growth: The government expects substantial investment in Indian railways from 2018 to 2030, with a significant increase in market share and the demand for goods movement.
4. Logistics Cost: India aims to reduce logistics costs as a share of GDP, bringing it in line with global averages.
5. Freight Corridors: Indian Railways is focusing on building new freight corridors, with increased investments and traffic flows on the Eastern and Western corridors.
6. Government Initiatives: Various government schemes and initiatives are discussed, including liberalized special freight train operations, automobile freight train operator schemes, wagon leasing schemes, and general purpose wagon investment schemes.
7. Latest Government Initiatives: Recent government initiatives include the Gati Shakti Mission, redevelopment of railway stations, and a project to ease operations and reduce congestion.

Company Overview:

Products:

• Jupiter Wagons offers a diverse product range that includes wagons and their accessories, passenger coach accessories, load bodies for commercial and heavy vehicles, containers, CMS crossings, weldable CMS crossings, brake systems, brake discs, and electric light commercial vehicles.

Global Presence:

• Jupiter Wagons serves major players in the railway segment and also exports its products to North America and Europe.

Strong Product Portfolio:

• Jupiter Wagons has a robust product portfolio, including various types of wagons, passenger coach and wagon accessories, brake systems, brake discs, CMS crossings for Indian Railways, draft gear, passenger couplers, alloy steel cast bogies, tippers, heavy fabrications, ISO marine containers, and more.

The company’s diverse product offerings and experienced leadership team make it a key player in India’s railway sector.

*Manufacturing facilities and existing and proposed JVs:
Madhya Pradesh:

• Indore: Plant 1 focuses on manufacturing load bodies for commercial vehicles.

Jharkhand:

• Jabalpur: Jupiter Wagons has a Joint Venture (JV) and three plants in Jabalpur.

  • Plant 1: Specializes in producing load bodies for commercial vehicles.
  • Plant 2: Concentrates on the production of wagons.
  • Plant 3: Manufactures load bodies for commercial vehicles and containers.
    Kovis JV:

• A specialized facility for producing brake discs for high-speed passenger coaches.

West Bengal:

• Kolkata: The company has four plants in Kolkata, each with its unique focus:
  • Plant 1: Manufacturing wagons, couplers, draft gears, CMS crossings, bogies, and CRF sections.
  • Plant 2: A joint venture with Dako for producing brake systems.
  • Plant 3: A joint venture with Talleres Alegria, specifically for CMS crossings.
  • Plant 4: Implementation of an order from Stone India under the NCLT (National Company Law Tribunal) is in progress.

These state-of-the-art manufacturing units demonstrate the company’s significant manufacturing capabilities, covering a wide range of railway and commercial vehicle components.

Existing Joint Ventures:

1. JWL – Kovis (50:50) Joint Venture:

• JWL has a joint venture with Kovis, focused on manufacturing brake discs, axles, gearboxes, castings, and components for railway rolling stock. This venture is operational and has received approvals from the Indian Railways.

2. JWL – Dako-CZ (50:50) Joint Venture:

• Another joint venture with Dako-CZ, this one is aimed at designing, manufacturing, and supplying brake systems for high-speed passenger coaches and freight wagons in India. The venture has received orders and is expected to start supplying products to JWL.

3. JWL – Talleres Alegria (50:50) Joint Venture:

• JWL collaborates with Talleres Alegria to manufacture weldable CMS crossings. They have received significant orders from Indian Railways for this product.

4. JWL – RITES Joint Venture ( Now Navaratna company):

• JWL has signed an MoU with RITES to participate in global rolling stock projects, including the bidding for freight wagons in Zimbabwe and other nations. They aim to secure further tenders for export orders.

Proposed Initiatives:

1. Green Power Electric Commercial Vehicles (MOU 50:50):

• JWL has signed an MOU with GreenPower, a subsidiary of GreenPower Motor Company, to develop electric commercial vehicles. They are currently working on e-LCVs (Light Commercial Vehicles) and expect to achieve certification in Q3FY24.

2. CAF Metro Coaches (MOU 50:50):

• JWL has partnered with CAF, a CIM group company, to collaborate on the development of high-speed passenger train technology in India. They are also working on manufacturing center buffer couplers with balanced draft gears for Linke Hofmann Busch coaches.

3. Partnerships with Global Leaders:

• JWL has established partnerships with various international companies, including Colway Ferroviaria S.L. (Spain) for manufacturing high-speed passenger coach interiors and modern toilet systems, and Tatravagonka (CSG Group, Czech Republic, and Budamar Logistics, Slovakia) for manufacturing wagons.

Right now, I m investing in prevest denpro.

Highlights and Commentary on Q2 FY24

No commentary on Receivables though. Company doesn’t seem to be affected much but receivables now 71 days.

I don’t know whether it is common in IT Industry, but trend shows Receivables increasing way faster than revenues in past 2.5/3 years.

Commentary:
Microsoft Word – Cover Commentary (bseindia.com)

Results + 7 Rs interim dividend:
Microsoft Word – Outcome of Board Meeting 15.10.2023 (bseindia.com).

Disc: Exited earlier. Only tracking now.

Management group does not seem impressive