Over the past year, railway stocks have experienced remarkable growth, with investors enjoying significant gains. However, the broader market, including the railway sector, has faced challenges due to increased regulatory scrutiny and market volatility.
Shares of Jupiter Wagons Ltd (JWL) are up by just about 6% in the last month amid a 331% return in the past year. A notable development for the company was its acquisition of Bonatrans India Pvt Ltd, Europe’s premier wheelset producer. With this acquisition, JWL has become the first rolling stock manufacturer to have its own wheel plant. This move is set to leverage advanced technology for scalable product development.
Vivek Lohia, Managing Director of JWL, highlighted the strategy behind acquiring Bonatrans: to build JWL’s wheelset manufacturing capabilities for both internal use and to reduce import dependencies.
Lohia explained that Tatravagonka A S, a key promoter of the company, faces a significant shortage of wheelsets in Europe due to disrupted supplies from Russia, a situation worsened by the Ukraine conflict. Traditionally, both Ukraine and Russia were key wheelset providers to Europe, but now Tatravagonka needs about 50,000 wheelsets annually and is looking towards India for supply.
With Bonatrans’s capacity to produce nearly 1,000 wheelsets monthly and plans to increase this to 5,000 within two years, JWL aims to eliminate imports and bolster production for local and export demands.
For perspective, JWL currently produces 800 wheelsets and imports 2,000. “So, the idea is that we get rid of the imports completely and scale production to up to 5,000. Of this capacity, 50% will serve Indian demand, while the remaining 50% will be allocated for exports,” he explained.
Moreover, Bonatrans comes with all the required licenses and certifications, already approved for contributing to significant projects like major metro initiatives and the Vande Bharat trains, Lohia said.
Regarding sales prospects, Lohia mentioned that the current market price for a basic wheelset is about ₹3,00,000. For specific uses in metro projects and the Vande Bharat initiatives, the cost per wheelset escalates to between ₹800,000 and ₹10 lakh.
Enhancing production capabilities through recent acquisitions is poised to notably improve EBITDA margins and operational efficiency.
“Currently, a wagon costs approximately ₹40 lakh, with the wheelset alone accounting for around ₹12 lakh. Once we undertake complete wheelset manufacturing in-house, which includes the braking system we already produce, we anticipate achieving nearly 80% cost efficiency,” Lohia pointed out.
He expects braking systems and wheelsets to boost the company’s margins in the next two years.
Lohia also highlighted JWL’s progress in obtaining certification from the Automotive Research Association of India (ARAI), anticipating the final approval for their 1-tonne payload electric vehicle (EV) by mid-April.
The EV will have a Gross Vehicle Weight (GVW) of 2.5 tonnes and a payload capacity ranging from 1 to 1.2 tonnes.
“The plant is scheduled to be commissioned by May, and deliveries are set to commence around May or June,” Lohia said, adding that revenues from the segment are expected by the second quarter of FY25.
In the next two years, JWL plans to develop 3-4 additional vehicles. It also plans to expand into commercial vehicles with a payload of up to 3 tonnes and is also focused on introducing a bus carrier. “The plant capacity we’re setting up will have the capability to produce approximately 5,000 to 8,000 vehicles annually, depending on the mix,” according to Lohia.
Through a partnership with Czech firm Dako-CZ, JWL has also secured contracts from the Indian Railways for brake discs supply, currently holding the largest order book in India for this product. Additionally, the company is tapping into the European market with exports of brake discs and axle boxes, seeing significant growth opportunities.
JWL is also exploring new product lines including automatic doors and vacuum toilets, besides producing coupling systems for Amrit Bharat and Linke Hofmann Busch.
Post-election, Lohia expects an increase in tenders, foreseeing a stable order flow and sustained demand from the private sector.
“Currently, we are in the negotiation phase for approximately 2,000 wagons with the private sector, indicating strong demand,” said Lohia. Keeping this in mind, he said, JWL is focused on augmenting its capacities.
The Kolkata-based company plans to spend around ₹1,000 crore over the next two years, with considerable investments in the wheelset business. Having almost completed its investment phase for wagon production, JWL’s current production rate is nearing 900 wagons per month, with goals to expand this to 1,000 wagons shortly.
By FY25, JWL aims to deliver 10,000 to 12,000 wagons annually, Lohia said.
