Buy Jyoti Structures; target Rs 50: KRChoksey

KRChoksey is bullish on Jyoti Structures and has recommended buy rating on the stock with a target of Rs 50 in its August 3, 2012 research report.

"Jyoti Structures Ltd (JSL) sales increased by 2.7% to Rs. 654.8 cr, below expectations. Operating margins declined by 122 bps to 9.8% on account of higher raw material cost. Interest cost increased by 25.7% to Rs. 33.9 cr on account of stretch working capital. Consequently PAT declined by 33.7% to Rs. 17.3 cr. Company registered strong order inflow worth Rs 930 cr. Consequently Order backlog increased to Rs 4,600 cr as of Q1FY13."

"JSL registered subdued growth in sales of 2.7%. Transmission constituted 60% of the revenues booked followed by Rural electrification 21% and substations 19%. Issues related to ROW, other clearances and delay in payments from customers have been impacting sales growth. However, based on current order backlog JSL maintained sales guidance of Rs 3,000 cr for FY13."

"JSL registered healthy order flows worth Rs. 930 cr vs Rs 621 cr in Q1FY12. Big ticket order in Rural Electrification from West Bengal helped JSL achieve growth in order inflows. Consequently order backlog increased to Rs 4,600 cr vs Rs. 4,470 cr in Q1FY12 and Rs. 4,300 cr in Q4FY12. Current order is ~ 1.8x TTM sales, giving visibility for next 18 months."

"At CMP of Rs. 37, JSL is trading at a P/E of 3.7x its FY13E earnings and 3.4 x its FY14E. Considering attractive valuation the company is trading at, coupled with initiatives taken by the management to recover dues which is currently impacting earnings and strong order backlog (1.8x TTM sales), we recommend a “BUY” on the stock with a price target of Rs. 50 (assigning 5x to FY13 EPS)," says KRChoksey research report.

Shares held by Mutual Funds/UTI

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment

Read More