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Jyoti Structures (JSL) reported a subdued performance for 2QFY2012 mainly on
account of higher interest cost. The company’s revenue and EBITDAM were
broadly in-line with our estimates. However, higher-than-anticipated increase in
interest cost led to disappointment on the earnings front. Increased interest costs
have adversely impacted JSL’s profitability since the past few quarters mainly on
account of stretched working capital requirements and increasing interest rates.
However, given the undemanding valuations, a 13% CAGR over FY2011-13E
and healthy return ratios, we maintain our Buy view on the stock.
Revenue and EBITDA growth in-line; interest costs hurt the bottom line: Steady
project execution resulted in revenue growth of 16.5% yoy to `632.1cr (`542.3cr)
for 2QFY2012, which was in-line with our expectation of `618.3cr. EBITDA
margin witnessed a contraction of ~88bp yoy to 10.8%, in-line with our
expectation. Interest costs soared by 49.9%/15.0% yoy/qoq, higher than our
expectation, resulting in the bottom line declining by 10.9% yoy to `22.1cr
(`24.8cr), against our estimate of `25.2cr.
Outlook and valuation: The overall slowdown in the power sector has left
transmission EPC companies to reel under pressure as order inflows have
slackened. In-line with this, the JSL stock has fallen by ~28% and
underperformed the BSE Sensex by ~18% over the last three months. At the CMP
of `60, the undemanding valuations (3.9x and 0.6x on PE and PB basis; well
below its historic PE multiple average of 13.0x), a 13% CAGR earnings story and
reasonable return ratios (~20%) make JSL’s stock attractive at current levels.
Hence, we continue to maintain our Buy rating on the stock, albeit with a
revised target price of `78 by assigning a reasonable multiple of 5.0x to its
FY2013E EPS of `15.5.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jyoti Structures (JSL) reported a subdued performance for 2QFY2012 mainly on
account of higher interest cost. The company’s revenue and EBITDAM were
broadly in-line with our estimates. However, higher-than-anticipated increase in
interest cost led to disappointment on the earnings front. Increased interest costs
have adversely impacted JSL’s profitability since the past few quarters mainly on
account of stretched working capital requirements and increasing interest rates.
However, given the undemanding valuations, a 13% CAGR over FY2011-13E
and healthy return ratios, we maintain our Buy view on the stock.
Revenue and EBITDA growth in-line; interest costs hurt the bottom line: Steady
project execution resulted in revenue growth of 16.5% yoy to `632.1cr (`542.3cr)
for 2QFY2012, which was in-line with our expectation of `618.3cr. EBITDA
margin witnessed a contraction of ~88bp yoy to 10.8%, in-line with our
expectation. Interest costs soared by 49.9%/15.0% yoy/qoq, higher than our
expectation, resulting in the bottom line declining by 10.9% yoy to `22.1cr
(`24.8cr), against our estimate of `25.2cr.
Outlook and valuation: The overall slowdown in the power sector has left
transmission EPC companies to reel under pressure as order inflows have
slackened. In-line with this, the JSL stock has fallen by ~28% and
underperformed the BSE Sensex by ~18% over the last three months. At the CMP
of `60, the undemanding valuations (3.9x and 0.6x on PE and PB basis; well
below its historic PE multiple average of 13.0x), a 13% CAGR earnings story and
reasonable return ratios (~20%) make JSL’s stock attractive at current levels.
Hence, we continue to maintain our Buy rating on the stock, albeit with a
revised target price of `78 by assigning a reasonable multiple of 5.0x to its
FY2013E EPS of `15.5.
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