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Add J Kumar Infraprojects Ltd For Target Rs.388 - Yes Securities
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Strong execution with stellar margins
Our view
J. Kumar Infraprojects Ltd (JKIL) reported strong revenue growth of 47.2% YoY in 1QFY23 led by healthy execution in its key metro and non-metro projects. Adj. PAT came in at Rs619mn (YSec Rs442mn), up 40% YoY, led by strong execution and better operational margins. JKIL has already submitted RFQs for the Goregoan-Mulund link road (GMLR) and plans to bid for projects worth Rs300bn in FY23E. Consequently, it expects order inflow of Rs50bn in FY23E of which 27% worth orders achieved in1QFY23. Order book stands robust at Rs121bn (3.1x its trailing revenues) providing strong revenue visibility of next 2-3 years. Given the robust ordering pipeline management continues to maintain its revenue guidance of Rs40bn with EBITDA margin of 14-15% range for FY23E.
A strong track record of executing roads, bridges, structural buildings, urban infrastructure such as metro, railways, subways and skywalks, JKIL stands strong led by a) healthy order book with increasing ticket size, b) strong execution capabilities, c) controlled debt levels and d) robust EBITDA margins. We expect JKIL to post a revenue/PAT CAGR of 14%/26% over FY22-24E. However due to the recent run-up in the stock price we have revised our rating to ‘ADD’ with revised TP of Rs388 (Earlier TP Rs305) valuing the company at 9x its FY24E.
Result Highlights
* For Q1FY23, JKIL’s revenues grew 47.2% YoY to Rs9.9bn (above our/street estimates of Rs8.4bn/Rs8.1bn), on the back of strong execution across project sites
* EBITDA grew 45.1% YoY to Rs1.4bn (above YSec estimate of Rs1.2bn) while EBITDAM came at 14.1% (above our estimates of 13.8%) due to stellar execution.
* On bottom-line front, adj. PAT was up 92.9% YoY and came in at Rs619mn (above our/ street estimates: Rs442mn/Rs300mn) largely owing to better operating margins
* In 1Q, JKIL bagged orders worth Rs13.7bn consisting of 8 lane expressway project from IRCON international of Rs10.7bn and Mumbai sewage disposal project from BMC of Rs3.1bn.
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