JMC Projects has target of Rs 176: Choksey

Choksey told CNBC-TV18, "JMC Projects is a pure play on Indian infrastructure story. This company, which is coming from the house of Kalpataru, is having a strong order book in the areas of industrial and building projects, also the infrastructure projects and the power projects. The order book currently is around 2,200 crore and probably the expectation for it to go up is around 3,000 crore in this particular year, which gives the visibility of atleast next two years from the business perspective if one wants to look at it.”

He further added, “The important part in this company is that they have been substantially improving their margins. If you look at last financial year, the margins have doubled and they are likely to be better because of the build-operate-transfer (BOT) projects that they are going to sign at some point of time. So from that perspective, this company looks extremely interesting.”

“The company compared to all other construction players in the industry is trading atleast 50% discount. I think its forward earnings estimate is around Rs 20 for FY10 i.e. nine months forward and on that if you look at this company, it is trading at around 8 times today. From that perspective, this is looking interesting.”

“Return on capital (RoC) ratios are also quite encouraging, upwards of 20-25%. So from that ratio also I think the valuations are quite compelling. I find this company as a good long-term story. For the short-term the target kept is Rs 176. In a year, I think this company could be an Rs 400 candidate."

Disclosure: We have been holding this company in our portfolios, clients have been holding investments in this company and we are continuing to serve research on this company as well.