While the Covid-19 impact is amply visible in J Kumar’s Q4, it is only expected to be more pronounced in FY21. With an urban-focused OB lowering any hopes of a quick revival in operations (labour still wary of urban areas), H1 is likely to be a washout and H2 becomes critical for any respectable performance in FY21. The OB provides ample assurance (insulating it from any immediate awarding lull), and the balance sheet too is in shape. The return of migrant labour holds the key. The issue seems more than priced in; hence, we retain our Buy rating.
OutlookAdjusting for the Covid’19-led disruption, FY21e earnings are ~95% lower (~42% for FY22). Our PER methodology-based TP is revised from `289 to `144, derived using 6x FY22e construction EPS. At the CMP, the stock trades at 3.9x FY22e EPS.
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