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Showing posts with label Jyoti Structures. Show all posts
Showing posts with label Jyoti Structures. Show all posts
07 June 2013
24 August 2012
BUY Jyoti Structures: Target Price `59 :Angel Broking
Jyoti Structures (Jyoti)’s revenues for 1QFY2013 came in line with our expectations
at `654cr, up 2.5% yoy. However the company disappointed on the margins
front; the EBITDA came in at `64cr, 5.3% lower than our expectation. Jyoti’s
revenue growth continued to be dismal, consistent with its performance over the
past few quarters. The EBITDA margin contracted by 120bps on account of the
tough competition prevalent in the sector and stood at 9.8% for the quarter. We
expect the company to continue to operate at these levels over the coming
quarters. The interest cost was lower than expected and it declined by 16% qoq.
However the company’s interest coverage multiple remained under stress,
declining from 2.6x in 1QFY2012 to 1.9x presently. The other income was also
lower than expected leading to a dismal bottom-line. The PAT came in at `17cr,
declining 33.7% yoy and 18.8% below our expectations. On the back of cheap
valuations we maintain our Buy rating on the stock.
02 June 2012
27 May 2012
13 February 2012
Jyoti Structures Ltd BUY:: KJMC
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Jyoti Structures Ltd (JSL) Q3FY12 results were below our expectation on
execution getting impacted due to delay in clearances and payments by
clients. During the quarter, the company reported 6.5% yoy growth in net
revenue at Rs 6 bn and PAT declined by 44% yoy to Rs 138 mn. The decline in
PAT was on account of 127 bps decline in EBITDA margins and 63.7% yoy
rise in interest expenses. The company added Rs 5.1 bn of new orders
resulting in an order backlog of Rs 42.9 bn at the end of the quarter. The
achievement of 20% revenue growth guidance would depend upon the
clearances and payments made by the clients.
Key Highlights
Q3FY12 revenue grew in single digit at 6.5% yoy: The net revenue of JSL
witnessed single digit growth of 6.5% on yoy in Q3FY12 and was below
our expectations. The delay in clearances from various government
departments and payment related issues from certain clients resulted into
slower execution of orders. Currently 15-20% of the projects are slow
moving and these are from state utilities from UP, Tamil Nadu, DVC, etc.
The achievement of the guidance of 20% revenue growth would depend
upon the clearances and payments made by the clients.
PAT declined on lower margin and higher interest expenses: In the quarter,
the EBITDA margin declined by 127 bps yoy to 10.1% on higher erection
& subcontracting expenses and other expenses which included MTM
forex losses. The EBITDA for the quarter declined by 5.3% yoy to Rs 595.5
mn. The interest cost grew by 63.7% yoy to Rs 310 mn on account of
increase in working capital loan. The delay in payment from some of the
SEBs resulted into this. In addition the average cost of debt also remained
high at 12-12.5%. As a result, the PAT for the quarter declined by 44.2%
yoy to Rs 138 mn.
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Jyoti Structures Ltd (JSL) Q3FY12 results were below our expectation on
execution getting impacted due to delay in clearances and payments by
clients. During the quarter, the company reported 6.5% yoy growth in net
revenue at Rs 6 bn and PAT declined by 44% yoy to Rs 138 mn. The decline in
PAT was on account of 127 bps decline in EBITDA margins and 63.7% yoy
rise in interest expenses. The company added Rs 5.1 bn of new orders
resulting in an order backlog of Rs 42.9 bn at the end of the quarter. The
achievement of 20% revenue growth guidance would depend upon the
clearances and payments made by the clients.
Key Highlights
Q3FY12 revenue grew in single digit at 6.5% yoy: The net revenue of JSL
witnessed single digit growth of 6.5% on yoy in Q3FY12 and was below
our expectations. The delay in clearances from various government
departments and payment related issues from certain clients resulted into
slower execution of orders. Currently 15-20% of the projects are slow
moving and these are from state utilities from UP, Tamil Nadu, DVC, etc.
The achievement of the guidance of 20% revenue growth would depend
upon the clearances and payments made by the clients.
PAT declined on lower margin and higher interest expenses: In the quarter,
the EBITDA margin declined by 127 bps yoy to 10.1% on higher erection
& subcontracting expenses and other expenses which included MTM
forex losses. The EBITDA for the quarter declined by 5.3% yoy to Rs 595.5
mn. The interest cost grew by 63.7% yoy to Rs 310 mn on account of
increase in working capital loan. The delay in payment from some of the
SEBs resulted into this. In addition the average cost of debt also remained
high at 12-12.5%. As a result, the PAT for the quarter declined by 44.2%
yoy to Rs 138 mn.
08 February 2012
Buy Jyoti Structures; Target : Rs 60 ::ICICI Securities
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C h a l l e n g i n g t i m e s …
Jyoti Structures (JSL) reported a disappointing set of Q3FY12 results as
revenues at | 586 crore were below our estimates of | 653 crore. The
revenue miss was mainly on account of right of way issues, delays in
environmental clearances and deferral of execution of projects where
payments were deferred. EBITDA margins were at 10.1% (expected at
11%) owing to a rise in subcontracting expenses and other income
(includes | 8 crore MTM loss). Adding to the woes, an elongated working
capital cycle led to a rise in borrowing. Hence, a 64% YoY jump in interest
cost led to PAT decline of 44% YoY. Order inflows were to the tune of
| 510 crore in Q3FY12.
ƒ Revenue visibility hinges on order wins, going ahead
Revenue visibility now hinges on the orders wins out of the | 10,000 crore
opportunities that the company has bid/will bid for as weak order inflows
in Q3FY12 of | 510 crore and marginal order backlog decline at | 4300
crore has led to a decline in the book to bill ratio. Also, existing orders
from certain SEBs are slow moving in nature (15-20% of the order
backlog), which further makes it important for JSL to secure order wins in
the coming quarters. In the wake of challenging macro issues, we expect
JSL to report revenue CAGR of 10% over FY11-13E.
ƒ Working capital cycle deteriorates further
Delays in execution and weak order inflows (lower advances) have
stretched the working capital cycle. Debtor days have further deteriorated
to 190 days as JSL faces problems relating to receivables from SEBs.
Borrowings have increased to |680 crore from | 580 crore in Q2FY12.
V a l u a t i o n
Due to weak execution, stretched working capital and weakening
visibility, we are revising down our P/E multiples and earnings for JSL.
We value JSL at 5x FY13E EPS to arrive at a target price of | 60/share.
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C h a l l e n g i n g t i m e s …
Jyoti Structures (JSL) reported a disappointing set of Q3FY12 results as
revenues at | 586 crore were below our estimates of | 653 crore. The
revenue miss was mainly on account of right of way issues, delays in
environmental clearances and deferral of execution of projects where
payments were deferred. EBITDA margins were at 10.1% (expected at
11%) owing to a rise in subcontracting expenses and other income
(includes | 8 crore MTM loss). Adding to the woes, an elongated working
capital cycle led to a rise in borrowing. Hence, a 64% YoY jump in interest
cost led to PAT decline of 44% YoY. Order inflows were to the tune of
| 510 crore in Q3FY12.
ƒ Revenue visibility hinges on order wins, going ahead
Revenue visibility now hinges on the orders wins out of the | 10,000 crore
opportunities that the company has bid/will bid for as weak order inflows
in Q3FY12 of | 510 crore and marginal order backlog decline at | 4300
crore has led to a decline in the book to bill ratio. Also, existing orders
from certain SEBs are slow moving in nature (15-20% of the order
backlog), which further makes it important for JSL to secure order wins in
the coming quarters. In the wake of challenging macro issues, we expect
JSL to report revenue CAGR of 10% over FY11-13E.
ƒ Working capital cycle deteriorates further
Delays in execution and weak order inflows (lower advances) have
stretched the working capital cycle. Debtor days have further deteriorated
to 190 days as JSL faces problems relating to receivables from SEBs.
Borrowings have increased to |680 crore from | 580 crore in Q2FY12.
V a l u a t i o n
Due to weak execution, stretched working capital and weakening
visibility, we are revising down our P/E multiples and earnings for JSL.
We value JSL at 5x FY13E EPS to arrive at a target price of | 60/share.
15 January 2012
Query Answered: Dabur, Oil India, Ester Ind, Kilburn, Jyoti Structures, Surya Roshni, Meghmani, GVK, :: Business Line
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I hold Dabur India purchased at Rs 100 and Oil India at Rs 1,150. What is technical view on these stocks?
R.N B Rao
Dabur (Rs 97.5): You seem to have purchased the stock recently since it is still trading close to your cost. The long-term trend in the stock is up since 2003 and it is still going strong. If you are in the stock for the long-haul, the level that you need to watch is at Rs 70. The healthy long-term view will be under threat only if this level is breached.
If the stock manages to hold above Rs 90 in the months ahead, it we can assume that the bulls continue to have the upper hand in this counter.
It can then spend few months moving in a sideways band between Rs 90 and Rs 120 before breaking higher. Break-out targets are Rs 142 and Rs 175. These will, however, be achieved over the long-term, that is in the next two to five years.
Investors who have a shorter perspective can hold with stop-loss at Rs 90. Next supports are at Rs 80 and Rs 70.
Oil India (Rs 1,156.9): Oil India does not have a long trading history, so it is not possible to give a long-term view on this stock. The stock is moving in a wide band between Rs 1,100 and Rs 1,600 over the last two years.
Since it has moved close to the lower end of its long-term trading range, you have bought the stock at the apt juncture. The stock can reverse higher from here to move on to Rs 1,310 or even Rs 1,372 and Rs 1,435.
Long-term trend will turn positive on a rally above Rs 1,435.
Next target is Rs 1,600.
Investors can hold the stock with stop at Rs 1,050. It would be best to divest your holding on a move below this level since it is hard to pin-point where the next halt can be given the stock's short history.
Please let me know the prospects of Ester Industries and Kilburn Engineering.
Amol
02 November 2011
Jyoti Structures :: 2QFY2012 Result Update -Angel Broking,
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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
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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.
25 October 2011
Jyoti Structures :: 2QFY2012 results review: Angel Broking
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Jyoti Structures
Jyoti Structures (JSL) announced its 2QFY2012 results, which were in-line on the
top-line front. However, results were lower than our and street estimates on the
bottom line front. The top line grew by 16.5% yoy to `632.1cr, which was higher
by 2.2% from our estimate of `618.3cr. However, EBITDA margin declined by
~90bp yoy to 10.8%, slightly higher than our estimate of 11.1%, primarily driven
by higher sub-contracting expenses and other expenses rising by ~220bp yoy to
19.5% and 140bp yoy to 9.6%, respectively, as a proportion of sales. Profitability
was further impacted by high interest expenses, which soared by 49.5% yoy
to `31cr. This resulted into PAT declining by 10.9% yoy to `22.1cr, against our
estimate of `25.2cr.
The earnings miss of 2QFY2012 does not warrant for the company’s poor
performance. At the CMP, the stock trades cheaply at 4.5x and 4.0x, FY2012E and
FY2013E, EPS, respectively. The pessimism viz. high interest expenses, low
profitability and elongated working capital cycle has clearly factored in the stock’s
performance. However, we believe the concerns are overly worried, given that JSL
is sailing smooth in terms of growth trajectory (comfortable OB/sales ratio of 1.8x
FY2012E sales). In addition, recent commentary from PGCIL indicated strong
ordering in the near term, which suggests a revival in the T&D space.
India Equity Research Reports, IPO and Stock News
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Jyoti Structures
Jyoti Structures (JSL) announced its 2QFY2012 results, which were in-line on the
top-line front. However, results were lower than our and street estimates on the
bottom line front. The top line grew by 16.5% yoy to `632.1cr, which was higher
by 2.2% from our estimate of `618.3cr. However, EBITDA margin declined by
~90bp yoy to 10.8%, slightly higher than our estimate of 11.1%, primarily driven
by higher sub-contracting expenses and other expenses rising by ~220bp yoy to
19.5% and 140bp yoy to 9.6%, respectively, as a proportion of sales. Profitability
was further impacted by high interest expenses, which soared by 49.5% yoy
to `31cr. This resulted into PAT declining by 10.9% yoy to `22.1cr, against our
estimate of `25.2cr.
The earnings miss of 2QFY2012 does not warrant for the company’s poor
performance. At the CMP, the stock trades cheaply at 4.5x and 4.0x, FY2012E and
FY2013E, EPS, respectively. The pessimism viz. high interest expenses, low
profitability and elongated working capital cycle has clearly factored in the stock’s
performance. However, we believe the concerns are overly worried, given that JSL
is sailing smooth in terms of growth trajectory (comfortable OB/sales ratio of 1.8x
FY2012E sales). In addition, recent commentary from PGCIL indicated strong
ordering in the near term, which suggests a revival in the T&D space.
16 October 2011
Jyoti: Growth muted but valuation compelling HSBC Research,
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Jyoti: Growth muted but
valuation compelling
Muted order inflow is likely to confine sales growth to single-digits,
with EPS expected to grow only 7-13% during FY12-13
With a cautious view on execution and margins, we have lowered
our FY12-13 EPS estimates by 7-10% and cut our TP to INR100
But with limited scope for equity dilution and the stock trading at
4.3x FY13e PE, below the 2008-09 trough, we reiterate OW
Investment thesis
Jyoti witnessed single digit growth in both its
order intake (c6%) and order book (c8%) last
year. Because of this, we believe that its sales
growth this year will likely be in single digits at
c9%. In addition, given the concentration of
Jyoti’s exposure to the Indian T&D market
(c88%), we expect its order inflows to remain
weak this year as well, as we expect domestic
transmission orders to pick up only in the next
calendar year. Hence, we forecast order inflows to
remain broadly flat in FY12 driving sales growth
of only c8% in FY13.
So far margins have shown resilience to pricing
pressures and at this stage we don’t expect
margins to erode significantly as management can
choose to only bid for tenders that offer decent
returns. We believe management are keen to keep
margins at c11-11.5%. Consequently, we forecast
an EBITDA margin of c10.9% for FY12 and
c11.0% for FY13, driving EPS growth of c7% and
c13%, respectively, over the same periods.
We note that even on our cautious estimates, the
stock appears significantly cheap. Based on our
new estimates, the stock is trading at a 4.8x
FY12e PE and 4.3x FY13e PE compared to the
historical average c13.3x 12m forward PE for the
last 5 years. We note that during the crisis of
2008-09, the stock had de-rated to an average 12m
forward PE of c6.3x during the worst 8 months of
the crisis (September 2008 to Apr 2009). It seems
the current multiples are factoring in a crisis much
bigger than in 2008-09 which we believe is not
warranted at this stage.
We have revised down our FY12 and FY13 EPS
estimates by 10% and 7%, respectively, due to our
slightly more cautious view on execution and
margins. Consequently, we reduce our target price
to INR100 from INR115.
We note that over the past 6 months, apart from
external factors, the stock has de-rated somewhat
because of the overhang of potential equity
dilution from warrants issued with the NCDs
(Non-convertible debentures). However, we note
that the exercise price of those warrants is INR120
and at this stage we believe it is unlikely that the
stock will double in the near term to breach that
level. Hence, the risk of equity dilution is minimal
at this stage. All told, we think Jyoti is attractive at
these levels, even with low EPS growth, and
reiterate our OW rating on the stock.
We highlight the key bull and bear factors related
to Jyoti below:
Bull factors
Margins have remained resilient against
pricing pressures
Recent JV with Lauren and the start of its
production facility in the US should
provide some growth momentum for Jyoti
from FY13 onwards
The risk of equity dilution has diminished
considerably
Currently the cheapest stock in the sector,
trading below even the 2008-09 multiples
Bear factors
Weak order growth likely to persist and put
pressure on earnings growth in FY12-13
Working capital requirements remain highest
among peers, thus raising interest burden
Limited diversification makes the company
vulnerable to domestic competition and
pricing pressures
Valuation
Our target price of INR100 is derived from our
preferred EVA valuation methodology, assuming
target sales growth of c7%, through-the-cycle
operating return margin of c10% and WACC of
c16.1%. Our target price implies that 12 months
from now, the stock should be trading at a 12-
month forward PE of c6.0x on 24-month forward
EPS of INR15.6.
Under HSBC’s research model, for stocks without
a volatility indicator, the Neutral rating band is
5ppt above and below the hurdle rate for India
stocks of 11%. This translates into a Neutral
rating band of 6% to 16% around the current share
price. Our 12-month target price of INR100
suggests a potential return of c62% (excluding
dividends), which is above the Neutral rating
band; hence, we reiterate our OW rating.
Risks
Key risks related to our investment case include:
Delay/cancellation of transmission projects
Excessive pricing pressure leading to
significant margin erosion
Continued decline in market share
for industry detail and other company:
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Jyoti: Growth muted but
valuation compelling
Muted order inflow is likely to confine sales growth to single-digits,
with EPS expected to grow only 7-13% during FY12-13
With a cautious view on execution and margins, we have lowered
our FY12-13 EPS estimates by 7-10% and cut our TP to INR100
But with limited scope for equity dilution and the stock trading at
4.3x FY13e PE, below the 2008-09 trough, we reiterate OW
Investment thesis
Jyoti witnessed single digit growth in both its
order intake (c6%) and order book (c8%) last
year. Because of this, we believe that its sales
growth this year will likely be in single digits at
c9%. In addition, given the concentration of
Jyoti’s exposure to the Indian T&D market
(c88%), we expect its order inflows to remain
weak this year as well, as we expect domestic
transmission orders to pick up only in the next
calendar year. Hence, we forecast order inflows to
remain broadly flat in FY12 driving sales growth
of only c8% in FY13.
So far margins have shown resilience to pricing
pressures and at this stage we don’t expect
margins to erode significantly as management can
choose to only bid for tenders that offer decent
returns. We believe management are keen to keep
margins at c11-11.5%. Consequently, we forecast
an EBITDA margin of c10.9% for FY12 and
c11.0% for FY13, driving EPS growth of c7% and
c13%, respectively, over the same periods.
We note that even on our cautious estimates, the
stock appears significantly cheap. Based on our
new estimates, the stock is trading at a 4.8x
FY12e PE and 4.3x FY13e PE compared to the
historical average c13.3x 12m forward PE for the
last 5 years. We note that during the crisis of
2008-09, the stock had de-rated to an average 12m
forward PE of c6.3x during the worst 8 months of
the crisis (September 2008 to Apr 2009). It seems
the current multiples are factoring in a crisis much
bigger than in 2008-09 which we believe is not
warranted at this stage.
We have revised down our FY12 and FY13 EPS
estimates by 10% and 7%, respectively, due to our
slightly more cautious view on execution and
margins. Consequently, we reduce our target price
to INR100 from INR115.
We note that over the past 6 months, apart from
external factors, the stock has de-rated somewhat
because of the overhang of potential equity
dilution from warrants issued with the NCDs
(Non-convertible debentures). However, we note
that the exercise price of those warrants is INR120
and at this stage we believe it is unlikely that the
stock will double in the near term to breach that
level. Hence, the risk of equity dilution is minimal
at this stage. All told, we think Jyoti is attractive at
these levels, even with low EPS growth, and
reiterate our OW rating on the stock.
We highlight the key bull and bear factors related
to Jyoti below:
Bull factors
Margins have remained resilient against
pricing pressures
Recent JV with Lauren and the start of its
production facility in the US should
provide some growth momentum for Jyoti
from FY13 onwards
The risk of equity dilution has diminished
considerably
Currently the cheapest stock in the sector,
trading below even the 2008-09 multiples
Bear factors
Weak order growth likely to persist and put
pressure on earnings growth in FY12-13
Working capital requirements remain highest
among peers, thus raising interest burden
Limited diversification makes the company
vulnerable to domestic competition and
pricing pressures
Valuation
Our target price of INR100 is derived from our
preferred EVA valuation methodology, assuming
target sales growth of c7%, through-the-cycle
operating return margin of c10% and WACC of
c16.1%. Our target price implies that 12 months
from now, the stock should be trading at a 12-
month forward PE of c6.0x on 24-month forward
EPS of INR15.6.
Under HSBC’s research model, for stocks without
a volatility indicator, the Neutral rating band is
5ppt above and below the hurdle rate for India
stocks of 11%. This translates into a Neutral
rating band of 6% to 16% around the current share
price. Our 12-month target price of INR100
suggests a potential return of c62% (excluding
dividends), which is above the Neutral rating
band; hence, we reiterate our OW rating.
Risks
Key risks related to our investment case include:
Delay/cancellation of transmission projects
Excessive pricing pressure leading to
significant margin erosion
Continued decline in market share
for industry detail and other company:
Indian Capital Goods - EPC space offers better value picks ::HSBC Research
20 September 2011
Jyoti Structures bags orders worth `328cr ::Angel Broking,
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Jyoti Structures bags orders worth `328cr
Jyoti Structures has secured orders worth `328cr from PGCIL, which includes 765kV substations
(`254cr) and 400kV transmission lines (`74cr). Despite sluggishness in the power
segment, the company has been able to procure orders and maintain its average quarterly
booking run rate of (`500cr-600cr). Consequently, the long growth visibility remains fairly
transparent (order book/sales of 1.7x). The stock trades at attractive valuations of 5.7x and
4.7x, FY2012E and FY2013E EPS, respectively. The stock has also made an impressive
recovery of 11.3% vs. Sensex gain of 5.6%, since the steep market drift in the previous
month. We continue to maintain our Buy view on the stock with a target price of `100.
India Equity Research Reports, IPO and Stock News
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Jyoti Structures bags orders worth `328cr
Jyoti Structures has secured orders worth `328cr from PGCIL, which includes 765kV substations
(`254cr) and 400kV transmission lines (`74cr). Despite sluggishness in the power
segment, the company has been able to procure orders and maintain its average quarterly
booking run rate of (`500cr-600cr). Consequently, the long growth visibility remains fairly
transparent (order book/sales of 1.7x). The stock trades at attractive valuations of 5.7x and
4.7x, FY2012E and FY2013E EPS, respectively. The stock has also made an impressive
recovery of 11.3% vs. Sensex gain of 5.6%, since the steep market drift in the previous
month. We continue to maintain our Buy view on the stock with a target price of `100.
16 September 2011
Jyoti Structures enter into JV with US-based Lauren Engineers ::Angel Broking,
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Jyoti Structures enter into JV with US-based Lauren Engineers
Jyoti Structures has entered into a JV with US-based Lauren Engineers and Constructors to
garner more EPC business, mainly in the power generation and oil and gas sectors. The JV
company will be named as Lauren Jyoti Private Ltd. Following the deal, Jyoti Structures also
acquired a 50% stake in Lauren Engineers and Constructors India.
The JV company has bagged an order worth `551cr from Godavari Green Energy to set
up a 50MW solar thermal power plant in Rajasthan. However, not much detail has been
disclosed pertaining to the order size for Jyoti Structures. We also await more clarity on the
nature on the JV.
The stock trades at an attractive valuation of 5.7x and 4.8x, FY2012E and FY2013E EPS,
respectively. Since the steep market drift previous month, the stock has made an impressive
recovery of 12% vs. Sensex gain of 6.5%. We continue to maintain our Buy
recommendation on the stock with a target price of `100.
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Jyoti Structures enter into JV with US-based Lauren Engineers
Jyoti Structures has entered into a JV with US-based Lauren Engineers and Constructors to
garner more EPC business, mainly in the power generation and oil and gas sectors. The JV
company will be named as Lauren Jyoti Private Ltd. Following the deal, Jyoti Structures also
acquired a 50% stake in Lauren Engineers and Constructors India.
The JV company has bagged an order worth `551cr from Godavari Green Energy to set
up a 50MW solar thermal power plant in Rajasthan. However, not much detail has been
disclosed pertaining to the order size for Jyoti Structures. We also await more clarity on the
nature on the JV.
The stock trades at an attractive valuation of 5.7x and 4.8x, FY2012E and FY2013E EPS,
respectively. Since the steep market drift previous month, the stock has made an impressive
recovery of 12% vs. Sensex gain of 6.5%. We continue to maintain our Buy
recommendation on the stock with a target price of `100.
03 August 2011
Buy Jyoti Structures; Target : Rs 98::ICICI Securities
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Jyoti Structures
H i g h i n t e r e s t c o s t s t o ma r e x e c u t i o n g r owt h…
Jyoti Structures (JSL) reported in line Q1FY12 results. Revenues grew
13% YoY at | 637 crore (I-direct estimate: | 656 crore). EBITDA grew 10%
to | 70 crore vs. our expectation of | 74 crore. Hence, EBITDA margins at
11% were a tad below our expectation of 11.2%. This was on the back of
high inputs costs. However, higher interest cost during Q1FY12 resulted
in a flattish bottomline of | 26 crore (I-direct estimate: | 25.8 crore). Going
ahead, we believe execution growth will be nullified by higher borrowing
costs and working capital requirement.
ƒ Q1FY12 order inflows reasonable coupled with healthy pipeline
JSL received orders worth | 621 crore in Q1FY12, up 16% YoY. The
backlog for the quarter stood at | 4470 crore, implying a reasonable
revenue visibility with a book to bill ratio of 1.8x. From a client exposure
perspective, PGCIL and utilities comprise 23% and 63% share of the
backlog. There was a significant shift in the geographical composition as
the international backlog comprises 30% of the backlog as of Q1FY12.
JSL foresees a robust pipeline for transmission and substation order (~ |
14000 crore). As of Q1FY12, transmission, substation and rural
electrification comprise 62%, 19% and 19%, respectively. The company
also expects to bid for BOT transmission projects in FY12.
ƒ EBITDA margins to remain stable but high interest costs a headwind
EBITDA margins were in line with our estimates for Q1FY12. For FY12-
FY13E, we estimate margins will be at 11.4% as 90% of the backlog is
based on PVC contracts. However, rising interest rates will not go down
well for JSL as rising interest rates will weaken PAT growth and high
execution will call for higher working capital requirement. In lieu of the
same, we have increased our interest expenses and reduced our PAT
estimates for FY12E and FY13E by 13% and 4%, respectively.
V a l u a t i o n
We expect JSL to report better execution of backlog on reasonable order
flows in the last couple of quarters. However, at the same time, high
interest costs will dent the profitability of JSL to the tune of 13% and 4%
in FY12E and FY13E, respectively. We expect the stock to languish owing
to macro headwinds and maintain our earlier rating and target price
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Jyoti Structures
H i g h i n t e r e s t c o s t s t o ma r e x e c u t i o n g r owt h…
Jyoti Structures (JSL) reported in line Q1FY12 results. Revenues grew
13% YoY at | 637 crore (I-direct estimate: | 656 crore). EBITDA grew 10%
to | 70 crore vs. our expectation of | 74 crore. Hence, EBITDA margins at
11% were a tad below our expectation of 11.2%. This was on the back of
high inputs costs. However, higher interest cost during Q1FY12 resulted
in a flattish bottomline of | 26 crore (I-direct estimate: | 25.8 crore). Going
ahead, we believe execution growth will be nullified by higher borrowing
costs and working capital requirement.
ƒ Q1FY12 order inflows reasonable coupled with healthy pipeline
JSL received orders worth | 621 crore in Q1FY12, up 16% YoY. The
backlog for the quarter stood at | 4470 crore, implying a reasonable
revenue visibility with a book to bill ratio of 1.8x. From a client exposure
perspective, PGCIL and utilities comprise 23% and 63% share of the
backlog. There was a significant shift in the geographical composition as
the international backlog comprises 30% of the backlog as of Q1FY12.
JSL foresees a robust pipeline for transmission and substation order (~ |
14000 crore). As of Q1FY12, transmission, substation and rural
electrification comprise 62%, 19% and 19%, respectively. The company
also expects to bid for BOT transmission projects in FY12.
ƒ EBITDA margins to remain stable but high interest costs a headwind
EBITDA margins were in line with our estimates for Q1FY12. For FY12-
FY13E, we estimate margins will be at 11.4% as 90% of the backlog is
based on PVC contracts. However, rising interest rates will not go down
well for JSL as rising interest rates will weaken PAT growth and high
execution will call for higher working capital requirement. In lieu of the
same, we have increased our interest expenses and reduced our PAT
estimates for FY12E and FY13E by 13% and 4%, respectively.
V a l u a t i o n
We expect JSL to report better execution of backlog on reasonable order
flows in the last couple of quarters. However, at the same time, high
interest costs will dent the profitability of JSL to the tune of 13% and 4%
in FY12E and FY13E, respectively. We expect the stock to languish owing
to macro headwinds and maintain our earlier rating and target price
26 July 2011
Jyoti Structures --- 1QFY2012 Result Review ----Angel Broking,
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Jyoti Structures
For 1QFY2012, Jyoti Structures reported 13% yoy growth in its top line to `638cr, which
was lower by 8.9% from our expectation of `700cr. EBITDA margin reported a contraction
of 30bp yoy to 11%, (est. 11.2%). In tandem with modest revenue growth and margin
contraction, EBITDA posted sedate growth of 9.7%. Higher interest and depreciation
expense, partly offset by higher other income and lower tax incidence, resulted in flat yoy
PAT figure of `26cr. Overall, results were below our estimates. We will revisit our estimates
post the conference call. Currently, we maintain our Buy recommendation on the stock
with a target price of `104.
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Jyoti Structures
For 1QFY2012, Jyoti Structures reported 13% yoy growth in its top line to `638cr, which
was lower by 8.9% from our expectation of `700cr. EBITDA margin reported a contraction
of 30bp yoy to 11%, (est. 11.2%). In tandem with modest revenue growth and margin
contraction, EBITDA posted sedate growth of 9.7%. Higher interest and depreciation
expense, partly offset by higher other income and lower tax incidence, resulted in flat yoy
PAT figure of `26cr. Overall, results were below our estimates. We will revisit our estimates
post the conference call. Currently, we maintain our Buy recommendation on the stock
with a target price of `104.
25 July 2011
BUY Jyoti Structures: Bright prospects:: Business Line,
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The stock of power transmission player, Jyoti Structures, has fallen 33 per cent year-to-date in 2011, after several quarters of slowdown in order flows did not go too well with the market. Limited overseas exposure did not help the company combat the domestic slowdown, unlike peers such as KEC International, which have a more significant presence in the overseas market.
These issues are set to change for Jyoti Structures. Its efforts to ramp up overseas presence are yielding results. Higher order flows seen by the company in the March quarter, coupled with increased tenders from Power Grid Corporation (PGCIL), mean that the domestic scenario too is set to turn around. Investors with a two-year perspective can consider taking limited exposure to the stock (Rs 89), which trades at 5.8 times its expected per share earnings for FY-12, at a good discount to bigger peer KEC international (10 to 11 times).
IMPROVEMENT VISIBLE
Jyoti Structures ended FY-11 with a 19 per cent growth in sales to Rs 2,380 crore and 21 per cent expansion in net profits to Rs 111 crore, thanks to significant traction in performance in the fourth quarter. It was not only execution but also order inflows that witnessed marked improvement in the March quarter. Jyoti Structures bagged orders worth Rs 1,100 crore in the above quarter alone; accounting for 40 per cent of total inflows for the full fiscal. This performance is also the best, post-2008. The current pace of bidding and order activity from PGCIL also appears to suggest that revival is on the cards.
Jyoti Structures has, in fact, currently bid for PGCIL projects valued at Rs 2400 crore. This together with the company's bid for private and State electricity board orders added to Rs 4,900 crore. Even if a part of this gets converted into projects, it will add sufficiently to the current order book of Rs 4500 crore (1.8 times FY-11 sales) which itself is expected to keep the company busy for the next 18-24 months.
Jyoti Structures also ended FY-11 without much pressure from input costs. Barring 10-15 per cent of the contracts being fixed price in nature, a majority of orders were built on variable pricing model, with leeway to pass on input cost hikes. However, as the proportion of fixed-to-variable contracts may be subject to change, the June quarter results have to be watched for consistency on this front. An average borrowing cost of 11 per cent, though not high, has kept interest coverage at at a not-so-comfortable level of three times.
The company has made efforts to keep interest costs under check by raising 7 per cent non-convertible debentures (issued to shareholders) of Rs 120 crore that would substitute a part of the working-capital loans. This can be expected to reduce interest burden as debentures now account for a fourth of total borrowings. Detachable warrants that would come for conversion in FY-13 would expand capital by 25 per cent. We however, expect earnings growth to compensate for the equity expansion.
OVERSEAS EXPANSION
While Jyoti Structures witnessed only 14 per cent of its sales coming from overseas in FY-11, it has made some efforts to improve this proportion to provide some hedge against domestic slowdown. For one, its joint venture in West Asia, Gulf Jyoti, turned profitable in the calendar year ending 2010 and had orders worth Rs 1,100 crore (Jyoti's share being 30 per cent) in hand. Two, the company's African subsidiary has cautiously focussed on less-turbulent markets such as South Africa, where it has secured orders from the local electricity boards.
Three, the company is setting up a steel lattice tower manufacturing unit in the US, which has been a good market for power transmission equipment companies with players such as KEC International taking the inorganic route to tap the US market.
While this 30,000 tonnes per annum facility (with capex of $30 million) in Texas is expected to go on-stream by end-2011, we have not accounted for the contribution from this unit, until it establishes itself. However, the region offers potential, as besides replacement demand, a number of renewable energy projects are set to be connected to the grid.
20 June 2011
Jyoti Structures bags orders worth `524cr - Angel Broking,
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Jyoti Structures bags orders worth `524cr
Jyoti Structures Ltd (JSL) has secured contracts totaling `524cr from different companies.
The company received orders worth `317cr for substation and distribution works from
Maharashtra State Electricity Distribution and Transmission companies. Other orders
included contract from JaiPrakash Power Ventures for 400kv transmission line associated
with its super thermal power project in MP (`169cr), and contract for 220kv transmission
line from Bhutan Power Corporation (`38cr). We maintain our Buy recommendation on
the stock with target price of `104.
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Jyoti Structures bags orders worth `524cr
Jyoti Structures Ltd (JSL) has secured contracts totaling `524cr from different companies.
The company received orders worth `317cr for substation and distribution works from
Maharashtra State Electricity Distribution and Transmission companies. Other orders
included contract from JaiPrakash Power Ventures for 400kv transmission line associated
with its super thermal power project in MP (`169cr), and contract for 220kv transmission
line from Bhutan Power Corporation (`38cr). We maintain our Buy recommendation on
the stock with target price of `104.
05 April 2011
Buy Jyoti Structures; Target : Rs 89 :Show me the orders…: ICICI Securities
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Diverse EPC capabilities, a strong domestic focus and wide client base
make Jyoti Structures Ltd (JSL) a key beneficiary of the massive power
sector investment planned in the XI-XII Plans. The company’s revenues
and earnings are projected to grow at 12% and 15% CAGR,
respectively, over FY10-13E, fuelled by its reasonable sales visibility
(TTM book-to-bill ratio of 2x in Q3FY11). However, a pick-up in order
inflows will be highly crucial for re-rating. Stronger-than-expected
performance of subsidiaries and success in the domestic BOOT segment
provide attractive value creation opportunities. We are initiating
coverage on the stock with ADD rating given that the recent correction
in the stock price has priced in the negatives, but at the same time new
orders will be eagerly awaited.
Well-placed to grow order book but needs to get orders at the earliest
With an order book of | 4,100 crore (Q3FY11), the company enjoys
reasonable sales visibility (TTM book-to-bill ratio of 2x). The order intake
is expected to be robust in FY11E-13E fuelled by the large order pipeline
and positive macroeconomic environment. Though the company’s wide
client base and status as a turnkey provider of transmission lines and
substations make it especially well-placed to enjoy significant traction in
order book expansion, the current market share loss in PGCIL tendering
will be a key overhang until its starts winning the orders. Consequently,
we project strong growth of the company’s order book (7.7% CAGR in
FY10-13E to | 5,186 crore) and revenues (12.3% CAGR to | 2,824 crore).
Value creation opportunities for subsidiaries
The performance of international operations, especially the Gulf JV, is
expected to improve sharply in CY11E (though the current ongoing crisis
in the MENA region may lead to slippages in execution). This, coupled
with the company’s plans to bid for domestic power transmission BOOT
projects and US expansion (inorganic route), could lead to value creation
opportunities for subsidiaries. This provides a further upside to our
valuation case.
Valuations
At the CMP of | 82, the stock is trading at P/E of 6.4x and 6.6x on FY11E
and FY12E earnings, respectively. We believe low discounting and a
steep correction in the stock price is for the want of order inflows and
dilutive concerns owing to the issue of warrants attached with NCDs.
Though the company has reasonable revenue visibility, a pick-up in
order wins is highly crucial for a re-rating of the stock. We are initiating
coverage on the stock with a Add rating and target price of | 89.
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Diverse EPC capabilities, a strong domestic focus and wide client base
make Jyoti Structures Ltd (JSL) a key beneficiary of the massive power
sector investment planned in the XI-XII Plans. The company’s revenues
and earnings are projected to grow at 12% and 15% CAGR,
respectively, over FY10-13E, fuelled by its reasonable sales visibility
(TTM book-to-bill ratio of 2x in Q3FY11). However, a pick-up in order
inflows will be highly crucial for re-rating. Stronger-than-expected
performance of subsidiaries and success in the domestic BOOT segment
provide attractive value creation opportunities. We are initiating
coverage on the stock with ADD rating given that the recent correction
in the stock price has priced in the negatives, but at the same time new
orders will be eagerly awaited.
Well-placed to grow order book but needs to get orders at the earliest
With an order book of | 4,100 crore (Q3FY11), the company enjoys
reasonable sales visibility (TTM book-to-bill ratio of 2x). The order intake
is expected to be robust in FY11E-13E fuelled by the large order pipeline
and positive macroeconomic environment. Though the company’s wide
client base and status as a turnkey provider of transmission lines and
substations make it especially well-placed to enjoy significant traction in
order book expansion, the current market share loss in PGCIL tendering
will be a key overhang until its starts winning the orders. Consequently,
we project strong growth of the company’s order book (7.7% CAGR in
FY10-13E to | 5,186 crore) and revenues (12.3% CAGR to | 2,824 crore).
Value creation opportunities for subsidiaries
The performance of international operations, especially the Gulf JV, is
expected to improve sharply in CY11E (though the current ongoing crisis
in the MENA region may lead to slippages in execution). This, coupled
with the company’s plans to bid for domestic power transmission BOOT
projects and US expansion (inorganic route), could lead to value creation
opportunities for subsidiaries. This provides a further upside to our
valuation case.
Valuations
At the CMP of | 82, the stock is trading at P/E of 6.4x and 6.6x on FY11E
and FY12E earnings, respectively. We believe low discounting and a
steep correction in the stock price is for the want of order inflows and
dilutive concerns owing to the issue of warrants attached with NCDs.
Though the company has reasonable revenue visibility, a pick-up in
order wins is highly crucial for a re-rating of the stock. We are initiating
coverage on the stock with a Add rating and target price of | 89.
13 February 2011
Buy Jyoti Structures: Price - `99 Target Price - `150: Angel Broking
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Huge opportunity for transmission EPC players: The
government has envisaged an investment of `240,000cr in the
transmission segment under the Twelfth Five-Year Plan, an
increase of over 70% from the investments planned during the
Eleventh Plan. As per our estimates, this has opened substantial
potential opportunity for the transmission EPC players such as
Jyoti Structure (JSL).
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Huge opportunity for transmission EPC players: The
government has envisaged an investment of `240,000cr in the
transmission segment under the Twelfth Five-Year Plan, an
increase of over 70% from the investments planned during the
Eleventh Plan. As per our estimates, this has opened substantial
potential opportunity for the transmission EPC players such as
Jyoti Structure (JSL).
05 February 2011
Anand Rathi:; Buy Jyoti Structures 3Q lower than estimated, execution to pick up in 4Q
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Jyoti Structures
3Q lower than estimated, execution to pick up in 4Q; Buy
We maintain our positive stance on Jyoti Structures following an
expected pick-up in orders and execution, steady operating
margins, a 13% earnings CAGR over FY10-13 and attractive
valuations. We retain our Buy, with a revised target of `143 (from
`157 earlier) based on 12x FY12e earnings.
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Jyoti Structures
3Q lower than estimated, execution to pick up in 4Q; Buy
We maintain our positive stance on Jyoti Structures following an
expected pick-up in orders and execution, steady operating
margins, a 13% earnings CAGR over FY10-13 and attractive
valuations. We retain our Buy, with a revised target of `143 (from
`157 earlier) based on 12x FY12e earnings.
02 February 2011
Buy Jyoti Structures -Lacklustre quarter: Prabhudas Lilladher
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Results below estimate: Jyoti Structures (JSL) reported a top‐line of Rs5.5bn, up
8% YoY. This was lower than our estimate of Rs5.8bn, mainly on account of
lower‐than‐expected execution in the quarter. However, slippages in revenue
was just a timing issue and the company expects to make up for the same in
Q4FY11 to achieve a full guidance of top‐line of Rs24bn. EBITDA was up 12% YoY
to Rs629m and margins improved 40bps YoY to 11.4%. Interest cost increased
18% YoY to Rs212m, Adj. PAT increased by 5.8% YoY to Rs247m.
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Results below estimate: Jyoti Structures (JSL) reported a top‐line of Rs5.5bn, up
8% YoY. This was lower than our estimate of Rs5.8bn, mainly on account of
lower‐than‐expected execution in the quarter. However, slippages in revenue
was just a timing issue and the company expects to make up for the same in
Q4FY11 to achieve a full guidance of top‐line of Rs24bn. EBITDA was up 12% YoY
to Rs629m and margins improved 40bps YoY to 11.4%. Interest cost increased
18% YoY to Rs212m, Adj. PAT increased by 5.8% YoY to Rs247m.
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