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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.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
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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