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Order inflow disappoints; downgrade to HOLD
J Kumar results are inline with our estimates, topline grew
by 24% at Rs2.5bn vs our est. of Rs2.45bn. Ebidta margin
declined by 82bps YoY to 14.2% and was lower than our est.
of 15%, largely due to increase in labour cost and higher
diesel and steel prices. Profit grew by 8% YoY to Rs180mn vs
our est. of Rs186mn.The company disappointed on order inflow
front which during the quarter was at ~Rs1.2bn, which is
below our estimate. The current order book stands at
~Rs13.1bn (1.5x FY11E revenue) and current L1 is about
Rs4.8bn. The stock has been recently de-rated owing to order
inflow concerns, current order book does not comfort us future
visibility.. Hence, we have cut our FY11 estimate by 6.2%,
reduced margin by 50bps to 14.7% to factor in the increased
cost and reduced PAT by 11.8% to Rs693mn. We would relook
at our FY12 nos post conference call. We value the
company at Rs181 which is 6x one year forward earning of
Rs30.2 and we downgrade our rating from ‘BUY’ to ‘HOLD’.
Subdued order inflow
Order inflow during the quarter was subdued at ~Rs1.2bn. Order
book currently stands at Rs13.1bn (1.5x FY11E revenue), of which
skywalk projects consist of ~20%, flyover ~48%, roads ~24% and
remaining ~14% from civil, irrigation and piling works. Currently the
company has L1 status of projects worth Rs4.8bn.
Sales Mix
Sales mix for the quarter was skewed towards skywalk at Rs1.2bn.
Of the total sales, skywalk contributed 49%, followed by roads at
28%, flyover a mere 9% and remaining 14% from piling and others.
VALUATIONS AND RECOMMENDATION
At CMP of Rs145, the stock is trading at PE of 5.8x FY11E earning
of Rs24.9 and 4.6x FY12E earning of Rs31.4 resp. Owing to lower
than expected order inflow and lower future visibility we have cut
our PE to 6x one year forward earning of Rs30.2 and have reduced
our target to Rs181 and downgrade our recommendation from ‘BUY’
to ‘HOLD’.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Order inflow disappoints; downgrade to HOLD
J Kumar results are inline with our estimates, topline grew
by 24% at Rs2.5bn vs our est. of Rs2.45bn. Ebidta margin
declined by 82bps YoY to 14.2% and was lower than our est.
of 15%, largely due to increase in labour cost and higher
diesel and steel prices. Profit grew by 8% YoY to Rs180mn vs
our est. of Rs186mn.The company disappointed on order inflow
front which during the quarter was at ~Rs1.2bn, which is
below our estimate. The current order book stands at
~Rs13.1bn (1.5x FY11E revenue) and current L1 is about
Rs4.8bn. The stock has been recently de-rated owing to order
inflow concerns, current order book does not comfort us future
visibility.. Hence, we have cut our FY11 estimate by 6.2%,
reduced margin by 50bps to 14.7% to factor in the increased
cost and reduced PAT by 11.8% to Rs693mn. We would relook
at our FY12 nos post conference call. We value the
company at Rs181 which is 6x one year forward earning of
Rs30.2 and we downgrade our rating from ‘BUY’ to ‘HOLD’.
Subdued order inflow
Order inflow during the quarter was subdued at ~Rs1.2bn. Order
book currently stands at Rs13.1bn (1.5x FY11E revenue), of which
skywalk projects consist of ~20%, flyover ~48%, roads ~24% and
remaining ~14% from civil, irrigation and piling works. Currently the
company has L1 status of projects worth Rs4.8bn.
Sales Mix
Sales mix for the quarter was skewed towards skywalk at Rs1.2bn.
Of the total sales, skywalk contributed 49%, followed by roads at
28%, flyover a mere 9% and remaining 14% from piling and others.
VALUATIONS AND RECOMMENDATION
At CMP of Rs145, the stock is trading at PE of 5.8x FY11E earning
of Rs24.9 and 4.6x FY12E earning of Rs31.4 resp. Owing to lower
than expected order inflow and lower future visibility we have cut
our PE to 6x one year forward earning of Rs30.2 and have reduced
our target to Rs181 and downgrade our recommendation from ‘BUY’
to ‘HOLD’.
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