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Strong execution with stellar margins

Our view

J. Kumar Infraprojects Ltd (JKIL) posted strong set of numbers beating our estimates led by stellar execution in its under‐construction projects along with EBITDAM of 14.3%. The company bagged two EPC projects worth Rs20.3bn taking its order inflows to Rs36.8bn for FY22. Order book stands robust at Rs119.4bn (3.4x its trailing revenues) providing strong visibility of next 2‐3 years. Given the robust ordering pipeline management expects order inflows of Rs50bn (already bagged Rs11bn) in FY23E. On the back of recovery in economic activity, pick up in execution and massive bid pipeline, management guided for revenue growth of 12‐15% growth in FY23E with EBITDA margin of 14‐15% range.

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%/27% over FY22‐24E. Given strong FY22 performance and healthy order book, we have revised our Revenue/PAT estimate for FY24E by 3%/7%. We maintain ‘BUY’ rating on the stock with revised TP of Rs305 (Earlier TP Rs284) valuing the company at 7x its FY24E.

Result Highlights

* For Q4FY22, JKIL’s revenues grew 12.3% YoY to Rs11.1bn (above our/street estimates of Rs10.1bn/Rs10.6bn), on the back of strong execution across project sites.

* EBITDA grew 52.5% YoY to Rs1.6bn (YSec Rs1.5bn) with EBITDAM expanding YoY by 376bps to 14.3% (in line our/street estimates of 14.6%/14.2%) due to stellar execution.

* PBT grew by 132.7% YoY at Rs1,034mn led by lower finance cost at Rs294mn (down 9.5% YoY).

* On bottom‐line front, adj. PAT was up 126.3% YoY and came in at Rs740mn (above our/ street estimates: Rs680mn/Rs700mn) largely owing to better operating margins

* In 4Q, JKIL bagged 2 EPC orders worth Rs20.3bn  

* At the CMP, the stock trades at a P/E of 7.1x and 5.6x its FY23E & FY24E earnings.

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