Accumulate Jyoti Structures; target Rs 50: P Lilladher

Prabhudas Lilladher is bullish on Jyoti Structures and has recommended accumulate rating on the stock with a target price of Rs 50 in its February 01, 2013 research report.

"Jyoti Structures (Jyoti) reported sales growth of 5.6% YoY at Rs6.20bn for Q3FY12, in line with our expectation. EBITDA margins YoY were flat at 10.1%. However, sequentially it has improved by 60bps QoQ. Interest cost increased by 10% YoY at Rs405m (due to increase in debt on account of stressed working capital). Reduction in other income and rise in interest expenses restricted PAT to Rs134m for Q3FY13, de-growth of 3% YoY. Current order book stood at Rs46.05bn, up 7% YoY. The break-up of order book in terms of segment is - 57% Transmission line (~Rs26.25bn), 14% Substation (~Rs6.45bn) and 29% Rural electrification (~Rs13.35bn) orders. 70% of the total order book is from domestic clients and the remaining from exports. In terms of client, Power Grid contributed ~28% (~Rs12.89bn) of the order book, Maharashtra Housing and State Electricity Board~12% (Rs5.53bn), Madhya Pradesh Rural Electrification projects 4% (~Rs1.84 bn), West Bengal SEB 14% (Rs6.45bn) and rest 42% (~Rs19.34bn) from other SEBs and overseas orders. Pipeline of new tenders coming up for bidding were ~Rs85bn (PGCIL ~Rs20bn, other domestic orders ~Rs45bn and International markets ~Rs20bn). The company continues to see stress on working capital due to increased debtor days (Debtor days in Q3FY13 were up from 224 days to 228 days in H1FY13). Outstanding of ~Rs4.5bn from three SEBs (Maharashtra, TN and Rajasthan) has not seen a significant movement and continues to put stress on the overall working capital. Debt in balance sheet increased to Rs8.7bn in Q3FY13 from Rs7.5bn in H1FY13. Gulf Jyoti has reported sales of 246m AED, PAT at 10m AED and its order book stood at 330m AED for CY12. Jyoti Structures Africa has achieved sales at 130m ZAR, it has made marginal profit and has OB of 80m ZAR. Jyoti USA sales were at US$14M, no profit made (will only make profit next year) and has OB of US$4-5m. Outlook and Valuation: The stock is trading at 4.2X FY14E earnings. We believe the stock will continue to underperform till the working capital issues are sorted out. We maintain 'Accumulate' on the stock with a target price of Rs 50," says Prabhudas Lilladher research report. Bodies Corporate holding more than 50% in Indian cos 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

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