Buy J Kumar Infraprojects Ltd For Target Rs.362 - Yes Securities
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Need for healthy order inflow to fuel the growth
J. Kumar Infraprojects Ltd (JKIL) execution continued to remain strong with healthy margins. In FY23, order addition has been modest with orders of Rs26.5bn (vs guidance of Rs50bn) bagged and now order inflow is a key monitorable. For FY24E, management is confident of bagging orders worth Rs50bn. The company has already bided for projects worth Rs120bn and plans to further bid for projects worth Rs400bn. The order book as on FY23 stands at Rs118.5bn translating into an order book-to-sales ratio of 2.8x TTM revenues. On the back of healthy bid pipeline and robust execution, management has guided for revenue growth of 15% in FY24E and FY25E with strong operating performance (EBITAM of 14?15%) to continue going forward. Balance sheet continues to be robust with D/E at 0.2x. Further management has guided for capex of Rs1.5bn in FY24E
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. However, with moderate order inflow we expect execution to be impacted in FY25E and hence we have trimmed our revenue estimates by 4%. We expect JKIL to post a revenue/PAT CAGR of 10%/12% over FY23?25E. We continue to maintain BUY rating on the stock with a revised TP of Rs362 valuing the company at 8x its FY25E thereby implying an upside potential of ~38% from the current levels.
Result Highlights
* For Q4FY23, JKIL’s revenues grew 1.8% YoY to Rs11.3bn (in line with our estimates of Rs10.9bn), on the back of better execution.
* EBITDA grew 0.1% YoY to Rs1.6bn (in line with our estimate of Rs1.6bn) with EBITDAM came at 14.1% (below our estimates of 14.7%) due to higher employee cost.
* On bottom-line front, adj. PAT came in at Rs739mn (our estimates Rs721mn) largely owing higher other income.
* At the CMP, the stock trades at a P/E of 6.5x and 5.8x its FY24E & FY25E earnings
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