Prabhudas Lilladher's research report on J.Kumar Infraprojects
JKIL’s 4Q results were a mixed bag with healthy revenues (above our and street estimates), but disappointed on margins front. Amidst the second wave of Covid, it lost Rs1bn revenues in 4QFY21 and is currently facing a drop in labour availability by 30-35% compared to Feb-Mar’21. Despite these headwinds, the company maintains a strong liquidity position by turning Net Cash as at 4Q. On the back of strong order book, healthy bid pipeline and execution expected to reach normalcy by Jun’21 end, management guided for robust revenues of Rs30-35bn in FY22 (earlier guidance ~Rs35bn) with EBITDAM to normalize in the range of ~14-16%. With a strong track record of executing roads, bridges, structural buildings, urban infrastructure such as metro, railways, subways and skywalks, JKIL stands strong on the back of a) healthy order book (~Rs109bn as at 4QFY21) with increasing ticket size, b) strong execution capabilities, c) controlled debt (Net cash as at Mar’21), and d) strong EBITDA margins (~15-16% over FY16-20). With lower debt levels, we have tweaked our finance cost estimates and consequently raised our earnings estimates by 4.4%/4.5% for FY22E/ FY23E.
At CMP, the stock trades at a P/E of 5.7x/4.6x on FY22E/ FY23E EPS and an EV of 3.7x/3x of FY22E/ FY23E EBITDA. We maintain BUY rating with a revised TP of Rs272 (earlier TP Rs260).
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