Accumulate J Kumar Infraprojects; target of Rs 110: Dolat Capital

Dolat Capital's research report on J Kumar Infraprojects

JKIL reported revenue above estimates, EBITDA margin below estimates and PAT in line with estimates. JKIL posted 9.3%/ 31.4%/ 45.8% YoY de-growth in revenue/ EBITDA/ PAT to Rs8.8 bn/ Rs919 mn/ Rs311 mn in Q4FY20. We reduce our revenue estimates by 15.2%/ 7.6% for FY21E/ FY22E on account of lockdown due to covid-19. We factor EBITDA loss/ EBITDA breakeven levels in Q1FY21E/ Q2FY21E leading to reduction in EBITDA margin estimates by 591/ 145 bps for FY21E/ FY22E. Accordingly, we drastically reduce our PAT estimates by 89.9%/ 32.3% for FY21E/ FY22E. JKIL's muted revenue growth (5.0% CAGR over FY20-22E) and EBITDA margin of 9.3%/ 14.0% in FY21E/ FY22E will lead to muted CAGR of -2.0% in its bottom line over FY20-22E. We, therefore, expect the RoCE and RoE to dip to 9.9%/ 8.7% in FY22E from 11.4%/ 10.5% in FY20.

Outlook

Though the stock has increased ~33% since our covid report on 24th Mar'20, we believe confidence on management still remains an overhang on the stock. Thus, we downgrade to Accumulate with a downward revised TP of Rs110 (5x FY22E EPS).