Jash Engineering Limited (NSEI:JASH), a IN₨2.05B small-cap, operates in the machinery manufacturing industry, which faces increasing demand of capital equipment and machinery from developing economies in Asia, Latin America and the Middle East. Capital goods analysts are forecasting for the entire industry, a strong double-digit growth of 13.41% in the upcoming year . Today, I will analyse the industry outlook, as well as evaluate whether Jash Engineering is lagging or leading in the industry. View our latest analysis for Jash Engineering
What’s the catalyst for Jash Engineering’s sector growth?
Machinery manufacturers face the challenge of managing a plethora of new data so that it becomes useful, adapt technology to run their supply chains and operations more efficiently, and build strategic partnerships that will help grow market share. Over the past year, the industry saw growth in the teens, though still underperforming the wider Indian stock market. Jash Engineering leads the pack with its impressive earnings growth of 41.07% over the past year. This proven growth may make Jash Engineering a more expensive stock relative to its peers.
Is Jash Engineering and the sector relatively cheap?
The machinery industry is trading at a PE ratio of 30.94x, above the broader Indian stock market PE of 24.99x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a similar 10.57% on equities compared to the market’s 9.64%. On the stock-level, Jash Engineering is trading at a lower PE ratio of 16.19x, making it cheaper than the average machinery stock. In terms of returns, Jash Engineering generated 12.26% in the past year, which is 1.69% over the machinery sector.
Next Steps:
Jash Engineering recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. In addition to this, its PE is below its machinery peers, suggesting it is also trading at a relatively cheaper price. If Jash Engineering has been on your watchlist for a while, now may be the best time to enter into the stock. Its industry-beating growth delivered may not have been fully accounted for in its shares given its lower PE ratio relative to its peers. However, before you make a decision on the stock, I suggest you look at Jash Engineering’s fundamentals in order to build a holistic investment thesis.
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1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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2. Historical Track Record: What has JASH’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Jash Engineering? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.