Accumulate J Kumar Infra; target of Rs 197: PINC Research

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Accumulate J Kumar Infra; target of Rs 197: PINC Research

PINC Research is bullish on J Kumar Infraprojects and has recommended accumulate rating on the stock with a target of Rs 197 in its February 10, 2012 research report.

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PINC Research is bullish on J Kumar Infraprojects and has recommended accumulate rating on the stock with a target of Rs 197 in its February 10, 2012 research report.

"J Kumar Infraprojects (JKIL) reported inline results, sales were flat YoY at Rs2.5bn (PINCe Rs2.7bn) while operationally margins surprised positively at 16%, an improvement of 171bps YoY (PINCe 14.5%), due to execution of high margin flyover work. PAT is marginally better than our estimates at Rs196mn a YoY growth of 9% (PINCe Rs185mn). There is strong boost to visibility as OB inflow & outlook has improved and operating margin is likely to be maintained. We have upgraded our earning estimates for FY12E and FY13E by 14.2% and 7% resp. We have upgraded our recommendation on the stock from 'REDUCE' to 'ACCUMULATE' with target price of Rs197."

"Order inflow was tremendous during last two quarters at Rs16.2bn taking the order book position to Rs25.3bn, 2.6x FY12E sales. Order inflow has been a concern for the company few quarter back, post this new order flows, visibility for FY13 has improved. Order book continues to be dominated by transportation segment at 71%, followed by civil at 25%, irrigation at 4% and piling at 1%. Operating margin has improved by 171bps this quarter due to higher contribution from flyover at 69%, which are 27% of current order book. Margins are up by 80bps at 15.9% for the 9mFY12. We have increased our operating margin by 120bps and 50bps for FY12E and FY13E at 15.4% and 14.5% respectively. Management has guided for Rs13bn and Rs15bn of sales for FY13E and FY14E. Considering margin and order inflow improvement, we have increased our topline for FY13E by 4.1% and earning by 14.2% and 7% for FY12E and FY13E respectively."

"Concern of low order inflow has waned and the outlook has improved as per the bidding pipeline, JKIL is likely to bid for Rs20bn worth of order in the next two months. The management indicated signs of robust order pipeline from government bodies especially post the state elections, large opportunities in metro & mono rail, tunnels and building segment. JKIL is now in the leagues of +Rs20bn order book companies and it is very much likely to maintain and improve upon it. Given the earnings upgrade and OB outlook, we increase our target multiple to 7x from earlier 5.5x, we upgrade our rating to ACCUMULATE with a target of Rs197," says PINC Research report.   

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To read the full report click on the attachment