Key takeaways
Strong operating margins. J. Kumar Infraprojects posted 10% yoy revenue
growth (23% qoq), lower than our estimates since revenue from certain major
projects had not been booked (it had not yet reached the threshold). The
EBITDA margin, however, improved 120bps yoy to 16.5%, taking the FY13
margin to 16.7% (vs 16.1% in FY12). For FY14-15, we have built in a
conservative 16%. Absolute EBITDA was in line with our estimate.
PAT higher than our estimate. PAT came in at `232m (up 2% yoy, 18%
qoq), 4% better than we expected. Higher-than-estimated interest was
nullified by a similar trend in other income. For FY13, PAT grew 11% yoy.
Strong revenue visibility led by robust order book. Supported by strong
order inflows, management is aiming at over 30% top-line growth in FY14.
We expect execution to pick up significantly in the next 2-3 quarters at some
of its major projects (Sion-Panvel, building project in Alwar, DMRC) and hit
the peak revenue-recognition stage. In FY13, orders of `21.3bn were bagged,
taking the order book to `37bn (3.8x TTM revenue). Also, orders of ~`7.5bn
in the Mumbai water transport segment are at the L1 stage. A bid pipeline of
over `60bn and a focus on cash contracts in urban infra are likely to raise
inflows in FY14-15. In FY13, the company has significantly strengthened its
position in Rajasthan, Gujarat and Delhi, besides Maharashtra.
Low gearing. The 0.3x gearing should support strong revenue growth in
FY13-15. Although we expect the leverage in FY14 to rise to 0.6x, following
the `2bn capex, the interest cost will not increase by a similar proportion (as
the company had taken buyers’ credit at significantly lower interest rates).
Our take. J. Kumar’s strong revenue and PAT growth is likely to return in
FY14-15. For FY13, it has declared dividend of `3.5 a share vs `2.3 in FY12,
resulting in a rise in the dividend payout from 9% to 13%. We retain a Buy,
with a target of `295, based on 8x FY14e PE. Risk: Project execution delays.
��
-->
Strong operating margins. J. Kumar Infraprojects posted 10% yoy revenue
growth (23% qoq), lower than our estimates since revenue from certain major
projects had not been booked (it had not yet reached the threshold). The
EBITDA margin, however, improved 120bps yoy to 16.5%, taking the FY13
margin to 16.7% (vs 16.1% in FY12). For FY14-15, we have built in a
conservative 16%. Absolute EBITDA was in line with our estimate.
PAT higher than our estimate. PAT came in at `232m (up 2% yoy, 18%
qoq), 4% better than we expected. Higher-than-estimated interest was
nullified by a similar trend in other income. For FY13, PAT grew 11% yoy.
Strong revenue visibility led by robust order book. Supported by strong
order inflows, management is aiming at over 30% top-line growth in FY14.
We expect execution to pick up significantly in the next 2-3 quarters at some
of its major projects (Sion-Panvel, building project in Alwar, DMRC) and hit
the peak revenue-recognition stage. In FY13, orders of `21.3bn were bagged,
taking the order book to `37bn (3.8x TTM revenue). Also, orders of ~`7.5bn
in the Mumbai water transport segment are at the L1 stage. A bid pipeline of
over `60bn and a focus on cash contracts in urban infra are likely to raise
inflows in FY14-15. In FY13, the company has significantly strengthened its
position in Rajasthan, Gujarat and Delhi, besides Maharashtra.
Low gearing. The 0.3x gearing should support strong revenue growth in
FY13-15. Although we expect the leverage in FY14 to rise to 0.6x, following
the `2bn capex, the interest cost will not increase by a similar proportion (as
the company had taken buyers’ credit at significantly lower interest rates).
Our take. J. Kumar’s strong revenue and PAT growth is likely to return in
FY14-15. For FY13, it has declared dividend of `3.5 a share vs `2.3 in FY12,
resulting in a rise in the dividend payout from 9% to 13%. We retain a Buy,
with a target of `295, based on 8x FY14e PE. Risk: Project execution delays.
Valuations
We retain a Buy, with a revised price target of `295. Our target is based on
a PE of 8x FY14e and an EV/ EBITDA of 5.2x.
Risks
Delay in project execution.
A significant rise in interest rates.
Slowdown in order inflows.
No comments:
Post a Comment