A cash-rich fund is going big on this small cap. Should you?

Summary: This small-cap auto ancillary stock is winning over mutual funds this year and even a fund that’s been sitting on high cash has taken notice. What’s drawing this attention and is the stock truly worth it? We take a look at our analysis below. When cash-rich mutual funds start buying, it’s usually worth paying attention. These are portfolios that prefer to sit on the sidelines when markets look pricey and move only when they spot genuine value. Over the past few months, a small-cap auto stock has found favour from one such fund: Jamna Auto Industries, which makes suspension systems for commercial vehicles. While overall mutual fund ownership in the company has risen from 5.5 per cent in March to 6.3 per cent in the June quarter, ICICI Prudential Smallcap Fund—holding nearly 15 per cent of its corpus in cash—has emerged as the largest public shareholder at 4.6 per cent, up from 2.75 per cent in March. That makes Jamna one of the select few attracting interest from high-cash holding funds in a heated market. Why this attention toward a company long tethered to the truck cycle? Jamna’s ambitious new targets may have something to do with it. But whether those goals are achievable or simply aspirational demands a closer look. Aiming high, grounded in limits Jamna has set a demanding five-year target: double revenue from Rs 2,270 crore in FY25 to Rs 5,000 crore and lift return on capital employed (ROCE) from 27 to 40 per cent, all while maintaining a 50 per cent dividend payout. That implies an annual revenue growth of about 17 per cent in an industry where