Buy J. Kumar Infraprojects; target of Rs 284: HDFC Securities

HDFC Securities' research report on J. Kumar Infraprojects

JKIL delivered robust Revenue/PAT beat of 27/32% led by strong execution in Mumbai Metro and JNPT road project. It reported strong EBITDA margins at 17.7% (-172bps YoY, +149bps QoQ, 110bps beat). Metro Lines 2, 3 and 7 and the JNPT projects are particularly driving the revenues with 2QFY19 contribution of Rs 2.9bn and Rs 0.8bn respectively. 2QFY19 order book stands at Rs 92.8bn (69% in Metro, 11% Civil, 11% Flyover, 7% Roads). It has already added orders worth ~29-30bn in YTDFY19 (including Rs 2.8bn post 1HFY19). NHAI Dwarka EPC project of Rs 13.5bn is L1 with likely LOI in Dec-18.

Outlook

JKIL believes that this will be an optimum size which can be managed without stressing the balance sheet and execution bandwidth. We maintain BUY with reduced TP of Rs 284/sh (12x Mar-20E EPS).