01 — At a Glance
The Company That Makes Your Car’s Most Important Body Part (And Refuses to Smile About It)
- 52-Week High / Low₹189 / ₹107
- FY25 Full-Year Revenue₹2,399 Cr
- Q3 FY26 Revenue₹680 Cr
- Q3 FY26 PAT₹20 Cr
- Annualised EPS (Q3×4)₹2.92
- Book Value (Per Share)₹41
- Price to Book3.13x
- Debt / Equity0.23x
- Return over 12 months10.8%
- Return over 3 months-7.65%
The Plot Twist: JTEKT India just raised ₹250 crores via rights issue in August 2025 to fund a greenfield Gujarat factory. The money is out. The land is locked. The GST appeals dropped ₹14.37 crore in penalties (hurray!). But the margins are being filleted quarterly. Stock down 7.65% in 3 months. So basically: good company, expensive stock, interesting times.
02 — Introduction
Steering Systems Are Boring. JTEKT’s Valuation Isn’t. Here’s The Story.
Let’s get the obvious out of the way: JTEKT India manufactures steering systems. Specifically, 96% of their revenue comes from steering—rack and pinion manual gears, column power steering (electric), hydraulic power steering, intermediate shafts, the works. The remaining 4% is driveline (Constant Velocity Joints, case differentials, axle bits).
The parent company is JTEKT Corporation, a Japanese firm. In fact, parent owns 66% of the Indian subsidiary. Maruti Suzuki also sits in the promoter chair with 5.43%. Translation: this company feeds the two largest auto OEMs in India. In FY25, they did ₹2,399 crores in sales. In FY26, they’re tracking for roughly ₹2,500-2,600 crores (modest 4-6% growth). But here’s the joke: margins are collapsing faster than a soufflé in a dishwasher.
In Q3 FY26 (three months ended Dec 2025), revenue was ₹680 crores, up 14.9% YoY. Sounds great. Profit was ₹20 crores, up 41.4% QoQ but the operating profit margin was 7.6%—down from 8.2% last quarter. The message from management’s Nov 2025 concall was brutally honest: they overestimated growth, underestimated cost inflation, and couldn’t absorb fixed costs. So they raised ₹250 crores to build a new factory in Gujarat. Because clearly, the solution to margin compression is to add more fixed costs.
Let’s unpack this beautiful disaster.
Concall Honesty (Nov 2025): “We could not absorb the fixed cost.” Management literally said they got the volume wrong. They planned for higher growth, got lower growth, and watched the leverage work backwards. Refreshingly candid for an Indian auto supplier.
03 — Business Model: They Steer Cars. That’s It.
No Pivots. No Blockchain. No AI. Just Wheels and Gears.
JTEKT India manufactures steering systems at multiple plants: Gurgaon, Dharuhera (3 plants), Chennai, and Bawal. The supply chain is spectacularly simple: get base components, assemble them, bolt them into Maruti, Toyota, Honda, Mahindra, and Tata vehicles. The company supplies ~55% of Maruti’s steering needs. Nearly 100% of Toyota’s (because Toyota group = JTEKT group). They’re also in Honda, Mahindra, and smaller OEMs.
Revenue breakdown: Column Electric Power Steering (48%), Rack and Pinion Manual Gears (23.5%), High Power Steering (8%), Column (8.5%), CVJ Driveline (4%), and others (8%). So essentially, two-thirds of revenue is electric and manual steering, and that’s baked into passenger vehicle production plans.
The competitive moat isn’t spectacular. They have a Japanese parent with technology, access to JTEKT’s global supply chains, and OEM relationships built over decades. But they compete against other steering suppliers: Bosch, Schaeffler, Uno Minda, etc. In the Q3 concall, management acknowledged losing some business to competitors in the past and said they’re focused on new model launches. Translation: win a bit, lose a bit, pray the OEM volume grows.
Customer: Maruti56%Of Sales
Customer: Toyota12%Of Sales
Customer: Mahindra8%Of Sales
Others (Honda, Tata, etc)24%Of Sales
Product Mix Reality: Electric steering (Column EPS) is the future. They do 48% of revenue from it. But manual steering still pays 23.5% of bills, and the industry is slowly shifting to electric. JTEKT’s management knows this. They’re investing in CVJ (Constant Velocity Joints), which they describe as being at ~4% of revenue but “growing in double digits.” The problem: it’s 4% of a shrinking pie.
💬 Here’s a question: If electric vehicles kill manual steering demand in 5 years, what happens to JTEKT’s ₹250-crore Gujarat factory? Drop your thoughts!
04 — Financials Overview
Q3 FY26: The Numbers (And The Heartbreak)
Result type: Quarterly Results | Q3 FY26 EPS: ₹0.73 | Annualised EPS (Q3×4): ₹2.92 | Full-year FY25 EPS: ₹2.71
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 680 | 592 | 639 | +14.9% | +6.4% |
| Operating Profit | 52 | 44 | 46 | +18.2% | +13.0% |
| OPM % | 7.6% | 7.4% | 7.2% | +20 bps | +40 bps |
| PAT | 20 | 16 | 18 | +25.0% | +11.1% |
| EPS (₹) | 0.73 | 0.59 | 0.66 | +23.7% | +10.6% |
The Margin Story They Didn’t Want to Lead With: Full-year FY25 OPM was 8.4%. H1 FY26 OPM was 6.3%. That’s a 210 basis point collapse in half a year. Q3 recovered to 7.6%, but that’s still 80 bps below where they started FY25. Management’s own concall breakdown: +0.8% employee cost (salary inflation + volume shortfall), +0.2% manufacturing overhead (power costs + new line startup inefficiency), +0.2% material cost (product mix), and -0.56% from weak US exports. They’ve listed four different margin drags. In other words, it’s not one problem—it’s everything.
05 — Valuation: The P/E Circus
46.5x P/E: Is This Premium Justified or Premium Overripe?
Method 1: P/E Based
FY25 full-year EPS = ₹2.71. Industry median P/E = 23.98x (per Screener peer median). JTEKT trades at 46.5x. That’s a 94% premium to the sector median. For context: Bosch trades at 38.6x, Schaeffler at 51.89x, Bharat Forge at 70.3x. So within auto components, JTEKT isn’t the highest outlier. But it’s expensive for a company with 11.2% ROCE and declining margins.
Fair P/E Band: 18x–28x
Fair Value Range: ₹49 – ₹76 (at FY25 EPS of ₹2.71)
Method 2: EV/EBITDA Based
FY25 EBITDA ≈ ₹186 Cr (Operating profit ₹185 + D&A ₹83 = ₹268, less tax ≈ ₹186 net). EV = ₹3,627 Cr (market cap ₹3,565 + net debt ₹62). EV/EBITDA ≈ 19.5x. Auto component peers trade at 12x–22x. JTEKT at 19.5x is in the upper band.
Fair EV/EBITDA range: 12x–16x
→ Fair EV: ₹2,232 Cr – ₹2,976 Cr
→ Per share (₹62 Cr net debt to back out):
Fair Value Range: ₹61 – ₹100
Method 3: DCF Based (Simplified)
Base FCF: ~₹172 Cr (FY25 OCF ₹194 − capex ₹75 paid in cash, normalized). Growth: 6% for 5 years (conservative; they’re guiding 4-6% CAGR). Terminal growth: 3%. WACC: 10% (low risk, stable business).
→ PV of 5-year FCFs at 10%: ~₹815 Cr
→ Terminal Value (3% growth / 7% cap rate): ~₹2,457 Cr
→ Total EV: ~₹3,272 Cr (less net debt ₹62):
→ Equity Value: ₹3,210 Cr
Fair Value Range: ₹68 – ₹110
Fair Min: ₹49
CMP: ₹128 | Fair Max: ₹110
3-Yr Avg Return: 9%
CMP ₹128 (Current)
Fair Value Zone ₹49–₹110
⚠️ EduInvesting Fair Value Range: ₹49 – ₹110. CMP ₹128 sits above this range across all three methods. This suggests either: (a) the market is pricing in significant margin recovery post-capex, or (b) the stock is expensive. This fair value range is for educational purposes only and is not investment advice.
06 — What’s Cooking: The Drama & The Bets
Rights Issue. New Factory. Margin Collapse. Management Comedy.
