Buy J Kumar Infraprojects; target of Rs 294: Edelweiss

Edelweiss' research report on J Kumar Infraprojects

J Kumar Infraprojects’ (JKIL) Q1FY18 revenue, at INR3.7bn, dipped ~7% YoY and PAT declined 12.6% YoY to INR258mn due to shortage of aggregates post closure of quarries in the Thane-Turbhe area. This, along with delay in utility shifting for JNPT projects, compels us to cut FY18/19E earnings 6%/9%. However, we remain sanguine on the company’s longterm prospects owing to healthy order book (6.3x TTM revenue), lean balance sheet and expect execution to improve in H2FY18.

Outlook

Hence, we revise our FY19E P/E multiple down to 14x (lower end of our construction universe). We maintain ‘BUY’ with revised target price of INR294.