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J KUMAR INFRAPROJECTS LTD
PRICE: RS.106 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.135 FY12E P/E: 4.0X
Result highlights: Revenue growth was impacted by lack of order
inflows as well as monsoons. Margins stayed in line with expectations
while net profit growth was boosted by decline in interest
outgo.
q Revenues for Q1FY12 reported a growth of 2% YoY, slightly lower than
our expectations
q Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% while net profit was
better than our expectations and was led by decline in interest outgo
q Based on lower than expected order inflow during entire FY11 as well as
during FY12 till date, we see continued risks to the company's revenue
visibility. Company's order book is not sufficient to sustain revenue
growth beyond Q1FY13 till order inflow ramps up significantly. We thus
reduce our target price for the company. We continue to maintain cautious
stance on the company and recommend ACCUMULATE on the stock
despite decent upside. We expect stock to continue to underperform till
the time order inflow for company ramps up.
Revenue growth impacted by lack of order inflows
n Revenues for Q1FY12 reported a growth of just 2% YoY, marginally lower than
our expectations. Revenues came largely from the transportation segment.
n Transportation segment contributed 78% of the total revenues during Q1FY12
while piling and others contributed 11% and 9% respectively. Irrigation and civil
projects contributed just 1% each to the total revenues during Q1FY12.
n Current order book of company stands at Rs 12.5 bn diversified across transportation
(81%), civil (8%), irrigation (8%) and piling (3%). Company bagged orders
worth nearly Rs 1.4 bn during Q1FY12 and is also likely to get orders worth
Rs 2 bn in coming months. We believe that though company is submitting bids
for various projects but finalization of projects is taking longer than expected
time.
n Company's order book is not sufficient to sustain revenue growth beyond
Q1FY13 till order inflow ramps up significantly. Though current order book provides
visibility for FY12 revenues, we maintain our estimates for FY12 and expect
revenues to grow to Rs 10 bn for FY12.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility in terms of order inflows to introduce FY13 estimates.
Operating margins in line with our estimates
n Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% seen during Q1FY11.
n JKIL would continue to maintain margins at the current levels due to large fleet
of equipment being owned by the company along with no subcontracting.
n We maintain our estimates and expect margins to be 15% for FY12.
Net profit was boosted by decline in interest outgo
n Net profit was better than our expectations, though it witnessed a decline of 5%
YoY due to lower than expected order inflow and revenue growth.
n However it was boosted by lower interest expenses on account of lower bank
guarantee charges.
n We maintain our estimates and we expect net profits to grow marginally to Rs
742 mn for FY12.
Valuation and recommendation
n At current price of Rs 106, stock is trading at 4.0x P/E and 1.8x EV/EBITDA multiples
for FY12.
n Based on lack of order inflow during entire FY11 as well as during FY12 till date,
we see continued risks to the company's revenue visibility.
n There has been de-rating in the multiples for the entire construction sector due to
lower than expected order inflows. We thus reduce our target price for the company
based on 5x FY12 estimated earnings and arrive at a revised price target of
Rs 135 (Rs 180 earlier).
n We continue to maintain cautious stance on the company and recommend ACCUMULATE
on the stock despite decent upside. We recommend investors to use
declines in the stock price to buy the stock. We expect stock to continue to
underperform till the time order inflow for company ramps up.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility to upgrade our estimates as well as recommendation
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
J KUMAR INFRAPROJECTS LTD
PRICE: RS.106 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.135 FY12E P/E: 4.0X
Result highlights: Revenue growth was impacted by lack of order
inflows as well as monsoons. Margins stayed in line with expectations
while net profit growth was boosted by decline in interest
outgo.
q Revenues for Q1FY12 reported a growth of 2% YoY, slightly lower than
our expectations
q Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% while net profit was
better than our expectations and was led by decline in interest outgo
q Based on lower than expected order inflow during entire FY11 as well as
during FY12 till date, we see continued risks to the company's revenue
visibility. Company's order book is not sufficient to sustain revenue
growth beyond Q1FY13 till order inflow ramps up significantly. We thus
reduce our target price for the company. We continue to maintain cautious
stance on the company and recommend ACCUMULATE on the stock
despite decent upside. We expect stock to continue to underperform till
the time order inflow for company ramps up.
Revenue growth impacted by lack of order inflows
n Revenues for Q1FY12 reported a growth of just 2% YoY, marginally lower than
our expectations. Revenues came largely from the transportation segment.
n Transportation segment contributed 78% of the total revenues during Q1FY12
while piling and others contributed 11% and 9% respectively. Irrigation and civil
projects contributed just 1% each to the total revenues during Q1FY12.
n Current order book of company stands at Rs 12.5 bn diversified across transportation
(81%), civil (8%), irrigation (8%) and piling (3%). Company bagged orders
worth nearly Rs 1.4 bn during Q1FY12 and is also likely to get orders worth
Rs 2 bn in coming months. We believe that though company is submitting bids
for various projects but finalization of projects is taking longer than expected
time.
n Company's order book is not sufficient to sustain revenue growth beyond
Q1FY13 till order inflow ramps up significantly. Though current order book provides
visibility for FY12 revenues, we maintain our estimates for FY12 and expect
revenues to grow to Rs 10 bn for FY12.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility in terms of order inflows to introduce FY13 estimates.
Operating margins in line with our estimates
n Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% seen during Q1FY11.
n JKIL would continue to maintain margins at the current levels due to large fleet
of equipment being owned by the company along with no subcontracting.
n We maintain our estimates and expect margins to be 15% for FY12.
Net profit was boosted by decline in interest outgo
n Net profit was better than our expectations, though it witnessed a decline of 5%
YoY due to lower than expected order inflow and revenue growth.
n However it was boosted by lower interest expenses on account of lower bank
guarantee charges.
n We maintain our estimates and we expect net profits to grow marginally to Rs
742 mn for FY12.
Valuation and recommendation
n At current price of Rs 106, stock is trading at 4.0x P/E and 1.8x EV/EBITDA multiples
for FY12.
n Based on lack of order inflow during entire FY11 as well as during FY12 till date,
we see continued risks to the company's revenue visibility.
n There has been de-rating in the multiples for the entire construction sector due to
lower than expected order inflows. We thus reduce our target price for the company
based on 5x FY12 estimated earnings and arrive at a revised price target of
Rs 135 (Rs 180 earlier).
n We continue to maintain cautious stance on the company and recommend ACCUMULATE
on the stock despite decent upside. We recommend investors to use
declines in the stock price to buy the stock. We expect stock to continue to
underperform till the time order inflow for company ramps up.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility to upgrade our estimates as well as recommendation
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