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

Prabhudas Lilladher's research report on J.Kumar Infraprojects

JKIL reported a healthy operational performance with revenues coming in above our and street estimates and margins showing resilience through several cost control measures adopted by the company. Further, execution picked up sharply as labour force are back to pre-covid levels and the projects are operating at 80-90% efficiency levels. With strong order book, healthy bid pipeline and labour force at pre-covid levels, management raised its guidance for FY21 revenues to ~Rs22bn (earlier Rs20bn) and maintained its FY22 guidance of ~Rs35bn topline. 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 (Rs106.4bn as at 2QFY21) with steadily increasing order ticket size, b) strong execution capabilities, c) controlled financial leverage (D:E of ~0.3), and d) strong EBITDA margins (~15-16% over FY16-20). We have upgraded our FY21E PAT estimates from Rs355mn to Rs684mn on the back of healthy 1H performance and revised management guidance.

Outlook

At CMP, the stock trades at a P/E of 11.6x/3.6x on FY21E/FY22E EPS and at an EV of 3.5x/2.1x of FY21E/ FY22E EBITDA. We maintain BUY rating on the stock with a TP of Rs176 (same as earlier).

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