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Jyoti Structures – 2QFY2011 Result Update
Angel Broking maintains a Buy on Jyoti Structures with a Target Price of Rs215.
Results in line, order accretion soars: Jyoti Structures (JSL) reported broadly in-line
results for 2QFY2011, with revenue and net profit registering 14.7% and 19.0%
yoy, respectively. The transmission, substation and rural electrification segments
contributed 66%, 8% and 26% to 2QFY2011 revenues, respectively. Order intake
increased 72% yoy to `700cr. We maintain a Buy on the stock.
Steady performance, dilution plans scrapped: Revenues reported steady growth of
14.7% yoy to `542cr, while EBITDA margin rose by 26bp to 11.6%, resulting in
17.3% increase in EBITDA to `63cr. The growth in top-line coupled with stable
EBITDA margins resulted in a 19% increase in PAT to `25cr. The proposal to
raise ~Rs300-400cr through the issue of NCD with detachable warrants to
finance its long-term working capital requirements is likely to be scrapped as the
company now plans to fund the same through internal accruals. The proposal to
issue sweat equity to the promoters has also been shelved.
Outlook and Valuation: Transmission EPC companies are expected to register
increase in order inflow on the back of the ongoing investments in the domestic
power sector. Over the next two years, PGCIL is expected to accelerate its capex
schedule leading to higher order inflows for transmission EPC companies such as
JSL. Apart from the transmission projects, JSL is also expected to garner significant
portion of orders from RAPDRP and RGGVY schemes. At `135, the stock trades at
10x and 8.2x FY2011E and FY2012E earnings, respectively. We maintain a Buy
on the stock, with a Target Price of `215.
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