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

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

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J Kumar Infraprojects - Strong Performance; Result Update Q2FY15 :: Edelweiss, PDF link

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J. Kumar Infraprojects Execution pace to pick up; Buy :: Anand Rathi

J. Kumar Infraprojects
Execution pace to pick up; Buy
Key takeaways
Clear revenue visibility. Consequent on the strong order inflows in FY13,
we expect execution to pick up in the following 2-3 quarters in some of J.
Kumar Infraprojects’ major projects (Sion-Panvel and DMRC). Moreover, the
Delhi Metro Rail Corp. (DMRC) project picked up speed during the quarter.
For 3QFY14, we expect the company to post 19% yoy revenue growth
(29.3% qoq).
Strong operating margins. Its present order book factors in healthy margins
of over 16% in all projects. For the quarter, we expect a 17.5% EBITDA
margin, vs 16.9% in the Dec’12 quarter and 18.2% in Sep’13 quarter. In the
next 3-4 quarters, the margin is likely to be healthy because of the larger
contribution from the DMRC project. As debt on the company’s books is
low (net-debt-to-equity: 0.2x), we expect a 7.3% net profit margin.
Smart pickup in order book. In 1HFY14, the company bagged orders of
`1.7bn, taking its order book to `34bn (3.3x TTM revenue). Further, at the
L1 stage, it has orders of ~`9bn in the Mumbai Water Transport project. A
bid pipeline of over `60bn and the company’s focus on cash contracts in
urban infra are likely to increase inflows in FY14-15.
Our take. We expect J. Kumar’s 3QFY14 revenue to grow 19% yoy (29%
qoq), following strong execution in its Sion-Panvel and DMRC projects. We
expect a 17.5% EBITDA margin and a 7.3% net profit margin. Key
monitorables are the company’s orderbook and the status of its L1 projects.
Our price target of `295 is based on a PE of 8x FY15e and an EV/ EBITDA
of 4.5x. Risk. Delay in project execution.

J. Kumar Infraprojects Strong operational performance; sturdy order book; Buy :: Anand Rathi

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.

J. Kumar Infraprojects -Urban infra play, lean balance sheet to support growth; Buy:: Anand Rathi

J. Kumar Infraprojects
Urban infra play, lean balance sheet to support growth; Buy
A management meet with J. Kumar indicates a positive outlook on its
growth strategy. Its planned focus on urban infra, on geographical
diversification and a lean balance sheet are key positives. Of its bid
pipeline of over `60bn, most have been placed outside its core area of
Maharashtra. It has recently bid for metro works in Delhi and Gujarat
and the Mumbai water transport project. Of these, it hopes to bag some
orders. Its current orderbook stands at `25bn. We maintain a Buy with
a target of `239.

Kotak Sec:: PDF link:Cummins, Sun TV, TV18, J Kumar Infraprojects,

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http://www.kotaksecurities.com/pdf/dmb/MorningInsight13022012.pdf


DECEMBER IIP
Industrial production came in at 1.8% slower than the expected
in December


CUMMINS  INDIA LIMITED (CIL)
 RECOMMENDATION: BUY
TARGET  PRICE:  RS.520


SUN TV NEWORK
RECOMMENDATION: REDUCE
TARGET  PRICE:  RS.329


TV18 BROADCAST
RECOMMENDATION: ACCUMULATE
TARGET  PRICE:  RS.32



J KUMAR  INFRAPROJECTS LTD
RECOMMENDATION: ACCUMULATE
TARGET  PRICE:  RS.19

Accumulate J KUMAR INFRAPROJECTS ; TARGET PRICE: RS.156:: Kotak Sec,

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J KUMAR INFRAPROJECTS LTD
PRICE: RS.148 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.156 FY13E P/E: 4.7X
Result highlights: Revenue growth was in line with our estimates and is
expected to improve going forward. Order inflow has jumped up from
October onwards. Margins stood better than expectations and boosted net
profit growth during Q2FY12. We maintain ACCUMULATE on the stock.
q Revenues for Q2FY12 reported a growth of 9% YoY, in line with our expectations.
Sequentially, the performance of the company was impacted
by monsoons.
q Margins stood at 17.1% for Q2FY12 vis-à-vis 15.9% for Q2FY11 which resulted
in boosting net profit growth.
q At current price of Rs 148, stock is trading at 5.5x and 4.7x P/E and 2.5x
and 2.2x EV/EBITDA multiples for FY12 and FY13 respectively. Order inflow
for the company has started witnessing improvement enhancing
the revenue visibility for the company. We thus introduce FY13 estimates
and roll forward our price target on FY13 estimates. We arrive at a revised
price target of Rs 156 (Rs 135 earlier) and continue to maintain ACCUMULATE
on the stock.

ACCUMULATE J Kumar Infraprojects::: ::: TARGET PRICE: RS.135 :: Kotak Sec,

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J KUMAR INFRAPROJECTS LTD
PRICE: RS.106 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.135 FY12E P/E: 4.0X
Result highlights: Revenue growth was impacted by lack of order
inflows as well as monsoons. Margins stayed in line with expectations
while net profit growth was boosted by decline in interest
outgo.
q Revenues for Q1FY12 reported a growth of 2% YoY, slightly lower than
our expectations
q Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% while net profit was
better than our expectations and was led by decline in interest outgo
q Based on lower than expected order inflow during entire FY11 as well as
during FY12 till date, we see continued risks to the company's revenue
visibility. Company's order book is not sufficient to sustain revenue
growth beyond Q1FY13 till order inflow ramps up significantly. We thus
reduce our target price for the company. We continue to maintain cautious
stance on the company and recommend ACCUMULATE on the stock
despite decent upside. We expect stock to continue to underperform till
the time order inflow for company ramps up.


Revenue growth impacted by lack of order inflows
n Revenues for Q1FY12 reported a growth of just 2% YoY, marginally lower than
our expectations. Revenues came largely from the transportation segment.
n Transportation segment contributed 78% of the total revenues during Q1FY12
while piling and others contributed 11% and 9% respectively. Irrigation and civil
projects contributed just 1% each to the total revenues during Q1FY12.
n Current order book of company stands at Rs 12.5 bn diversified across transportation
(81%), civil (8%), irrigation (8%) and piling (3%). Company bagged orders
worth nearly Rs 1.4 bn during Q1FY12 and is also likely to get orders worth
Rs 2 bn in coming months. We believe that though company is submitting bids
for various projects but finalization of projects is taking longer than expected
time.


n Company's order book is not sufficient to sustain revenue growth beyond
Q1FY13 till order inflow ramps up significantly. Though current order book provides
visibility for FY12 revenues, we maintain our estimates for FY12 and expect
revenues to grow to Rs 10 bn for FY12.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility in terms of order inflows to introduce FY13 estimates.
Operating margins in line with our estimates
n Margins stood at 14.8% for Q1FY12 vis-à-vis 15.4% seen during Q1FY11.
n JKIL would continue to maintain margins at the current levels due to large fleet
of equipment being owned by the company along with no subcontracting.
n We maintain our estimates and expect margins to be 15% for FY12.
Net profit was boosted by decline in interest outgo
n Net profit was better than our expectations, though it witnessed a decline of 5%
YoY due to lower than expected order inflow and revenue growth.
n However it was boosted by lower interest expenses on account of lower bank
guarantee charges.
n We maintain our estimates and we expect net profits to grow marginally to Rs
742 mn for FY12.
Valuation and recommendation
n At current price of Rs 106, stock is trading at 4.0x P/E and 1.8x EV/EBITDA multiples
for FY12.
n Based on lack of order inflow during entire FY11 as well as during FY12 till date,
we see continued risks to the company's revenue visibility.
n There has been de-rating in the multiples for the entire construction sector due to
lower than expected order inflows. We thus reduce our target price for the company
based on 5x FY12 estimated earnings and arrive at a revised price target of
Rs 135 (Rs 180 earlier).
n We continue to maintain cautious stance on the company and recommend ACCUMULATE
on the stock despite decent upside. We recommend investors to use
declines in the stock price to buy the stock. We expect stock to continue to
underperform till the time order inflow for company ramps up.
n Though order inflow is expected to grow going ahead but we would wait for
more visibility to upgrade our estimates as well as recommendation

Buy J Kumar Infraprojects: Target Price: Rs.210 : Kotak Securities

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J KUMAR INFRAPROJECTS LTD
RECOMMENDATION: BUY
TARGET PRICE: RS.210
FY12E P/E: 4.5X

q J Kumar Infraprojects revenues reported 24% growth for Q3FY11 vis-à-vis
same period last year. This was lower than our expectations and was
impacted by lower than expected order inflow in 9MFY11.
q Operating margin performance was marginally lower than our estimates
and margins stood at 14.2% for Q3FY11. This was due to commencement
of work on recently won projects in Ahmedabad where work has not
reached revenue recognition stage while costs have been incurred.
q Net profits reported a growth of 8% for Q3FY11 as against same period
last year. This was impacted by higher interest expenses.

J Kumar Infraprojects- OPM pressure leads to lower growth; 4Q to pick up: Anand Rathi

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J Kumar Infraprojects
OPM pressure leads to lower growth; 4Q to pick up
J Kumar’s 3QFY11 revenue rose 24% yoy. Compression in OPM
and increase in finance costs led to net profit growth of only 8%
yoy. We estimate a better 4QFY11, led by more revenue booking.
We maintain our Buy rating and target price of ` 218.

J. KUMAR INFRAPROJECTS : Order inflow disappoints; downgrade to HOLD: PINC

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Order inflow disappoints; downgrade to HOLD
J Kumar results are inline with our estimates, topline grew
by 24% at Rs2.5bn vs our est. of Rs2.45bn. Ebidta margin
declined by 82bps YoY to 14.2% and was lower than our est.
of 15%, largely due to increase in labour cost and higher
diesel and steel prices. Profit grew by 8% YoY to Rs180mn vs
our est. of Rs186mn.The company disappointed on order inflow
front which during the quarter was at ~Rs1.2bn, which is
below our estimate. The current order book stands at
~Rs13.1bn (1.5x FY11E revenue) and current L1 is about
Rs4.8bn. The stock has been recently de-rated owing to order
inflow concerns, current order book does not comfort us future
visibility.. Hence, we have cut our FY11 estimate by 6.2%,
reduced margin by 50bps to 14.7% to factor in the increased
cost and reduced PAT by 11.8% to Rs693mn. We would relook
at our FY12 nos post conference call. We value the
company at Rs181 which is 6x one year forward earning of
Rs30.2 and we downgrade our rating from ‘BUY’ to ‘HOLD’.

Report on J Kumar Infraprojects by Anand Rathi on 22.12.10

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J Kumar Infraprojects

Order inflow traction to improve; maintain Buy
We revisit our growth projections based on our analysis of the
current fundamental situation. We lower our FY11e/FY12e
earnings by 16% each to factor in slow order inflow during FY11.
J Kumar’s scrip has dipped ~27% in the past month due to
correction across mid-caps, negative newsflow and slowdown in
order inflows. We maintain Buy, given steep stock correction
and the imminent triggers of receipt of orders and strong
revenue booking during 2HFY11.

 Order book. J Kumar's order backlog stands at `14.3bn (2x FY10
sales). Order inflow has been slow in the past two quarters due to
drying up of road cash contracts, political turbulence in
Maharashtra (historical dependence) and intense competition in
other states. The situation is likely to improve given the status of
`3.7bn orders at the L1 stage, bids in place for orders of `30bn
and pre-qualification for BOT road projects worth `15bn.

 Working capital to reduce. Working capital, which increased
during 1HFY11 due to advances for buying a corporate office, will
reduce in FY13 once the company gets possession of the premises
that will then reflect in ‘fixed assets’. With net leverage of 0.2x, the
balance sheet offers ample room for business growth.

 Valuation and risks. We lower our target price to `218 based on
PE of 6.5x FY12e (from `300 based on 7.5x FY12e), implying
~45% discount to our target PE of mid-cap construction
companies. At our target price, the stock trades at FY12e
EV/EBITDA of 3.5x. Risks: Delay in project execution, lower
order-flows and geographical concentration.