J. Kumar Infraprojects - Emerging Corporates : INVESTOR FORUM Key takeaways :: HDFC Securities

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J. Kumar Infraprojects is a civil engineering and
infrastructure development company with
primary focus on development of roads,
flyovers, bridges, metro projects, irrigation
projects and buildings. With the formation of
the new Government at the Centre, JKIL
management believes that urban infrastructure
will be a key focus area and expects to win
fresh orders to be given for boosting urban
infrastructure. With the capex build up for JKIL
being over in FY14, the company is aiming for
higher revenues without any significant
increase in debt over FY16-17E, thus aiding
profitability going ahead.
 Play on transportation : JKIL has been on a
stable growth trajectory, posting a revenue and
PAT CAGR of 12% and 5% respectively over FY10-
14. The company’s operating margins, leverage
and working capital are amongst the best in the
industry, so are its return ratios (RoE upwards of
16%). The reason behind the company’s high
margins is its strategy of not sub-contracting
work to smaller contractors. Also, JKIL is steering
clear of BOT projects as it aims to keep its
balance sheet light.
 Robust order book : JKIL currently has an order
book of Rs 31bn (Rs 3bn of new order wins in
2QFY15) and L1 orders of Rs 11bn. Management
expects the L1 pipeline to be converted into
confirmed orders in a few months and maintains
its guidance for ~Rs 14-15bn of order wins in
FY15E and has also bid for another Rs 20bn of
fresh projects.
 Set to benefit from thrust on Mumbai
infrastructure : With the formation of a new
State Government in Maharashtra, JKIL expects
incremental orders wins from the renewed focus
on Mumbai infrastructure. These opportunities
will come from new flyovers at BKC and Navi
Mumbai by MMRDA and JKIL being pre-qualified
for the Mumbai Metro Phase III project.

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