Buy J.Kumar Infraprojects; target of Rs 176: Prabhudas Lilladher

Prabhudas Lilladher's research report on J.Kumar Infraprojects

JKIL reported decent set of numbers with revenues coming above our & street estimates despite Covid-19 pandemic and low labour availability. The company already commenced operations in over 90% of the order book with projects operating at ~40% efficiency levels. Labour availability have improved to over 60% pre-covid levels (from 25% in May’20). With full labour force expected to be back in Oct'20 and pick up in construction activity across projects, company has guided for topline of ~Rs20bn & ~Rs35bn for FY22 & FY23 respectively. Further collections remain strong with receivables reducing by ~Rs1bn to Rs5.2bn. The company has a strong track record of executing roads and bridges, structural buildings, urban infrastructure such as metro, railway, subways and skywalks. JKIL stands strong on the back of a) healthy order book (Rs109.7bn as at 1QFY21) with steadily increasing order ticket size, b) strong execution capabilities, c) controlled financial leverage (D:E of ~0.3), d) strong EBITDA margins (~15-16% over FY16-20).

Outlook

At CMP, the stock trades at a P/E of 23.9x/3.8x on FY21E/FY22E EPS and at an EV of 3.2x/2.2x of FY21E/ FY22E EBITDA. We maintain BUY rating on the stock with a TP of Rs176.