Add J Kumar Infraprojects Ltd For Target Rs.475 - Yes Securities
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Strong execution with stellar margins
Our view
J. Kumar Infraprojects Ltd (JKIL) 1QFY24 results were in line with estimates with revenue growth of 13.8% YoY to Rs11.3bn and EBITDAM at 14.3%. The company bagged orders worth Rs36bn in YTDFY24 and has been L1 for projects worth Rs40bn. Order book stands robust at Rs143.5bn (3.3x its trailing revenues) providing strong visibility of next 2?3 years. Given the robust ordering pipeline management expects order inflows of Rs80bn+ in FY24E. For the newly awarded Chennai metro projects, majority of the capex will be done in the next 2 years. For FY24E, management has retained its revenue guidance of 15% growth with EBITDAM of 14?15% range and for FY25E has given revenue guidance of 18?20% growth.
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. With substantial order inflow and robust bid pipeline we raise FY24E/ 25E revenue estimates by 4%/11% largely to factor in uptick in execution on account of strong order book. We expect JKIL to post a revenue/PAT CAGR of 16%/19% over FY23?25E. However due to the recent run? up in the stock price we have revised our rating to ‘ADD’ with revised TP of Rs475 valuing the company at 9x its FY25E.
Result Highlights
* For Q1FY24, JKIL’s revenues grew 13.8% YoY to Rs11.3bn (in line with our estimates of Rs11.4bn), on the back of strong execution across project sites.
* EBITDA grew 15.3% YoY to Rs1.6bn (in line with our estimate of Rs1.6bn) with EBITDAM came at 14.3% (our estimates of 14.1%) due to stellar execution.
* On bottom-line front, adj. PAT was up 17.6% YoY and came in at Rs728mn (our estimates Rs724mn) largely owing to better operating margins
* In 1Q, JKIL bagged highest ever order inflow worth Rs35.7bn
* At the CMP, the stock trades at a P/E of 9.7x and 7.9x its FY24E & FY25E earnings.
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