Buy J.Kumar Infraprojects Ltd For Target Rs. 388 - Yes Securities
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Robust performance continues
Our view
J. Kumar Infraprojects Ltd (JKIL) reported yet another strong quarter with revenue / EBITDA / PAT at Rs10.6bn/Rs1.5bn/Rs0.7bn beating our estimates at all fronts by 6%/21.4%/39%. The order inflow of Rs16.7bn in 9MFY23 took the orderbook to Rs112.1bn (2.7x TTM revenue) with 52% of the orders from metro segment. JKIL reiterated its order inflow guidance for FY23E of Rs50bn, of which 33.8% orders were achieved in 9MFY23. On the back of strong order book, healthy bid pipeline and robust execution, management has given revenue guidance of 15% growth in FY24E with strong operating performance (EBITAM of 14?15%) to continue going forward. The balance sheet continues to be robust with gross debt at Rs4.5bn (D/E at 0.2x). On the working capital front, debtors have been stretched by Rs1.7bn to Rs11.9bn (vs Rs10.2bn in 1HFY23) of which ~Rs4.5bn have been collected in Jan`23.
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 15%/26% over FY22?25E. We maintain our BUY rating on the stock with a TP of Rs388 valuing the company at 9x its FY24E thereby implying an upside potential of ~42% from the current levels.
Result Highlights
* For Q3FY23, JKIL’s revenues grew 10% YoY to Rs10.6bn (our estimates of Rs10bn), on the back of strong execution across project sites
* EBITDA grew 9.4% YoY to Rs1.5bn (above our estimate of Rs1.2bn) with EBITDAM came at 14.3% (above our estimates of 12.5%) due to stellar execution.
* On bottom?line front, adj. PAT was up by 39bps and came in at Rs711mn (above our estimates Rs511mn) largely owing to better operating margins
* At the CMP, the stock trades at a P/E of 8.3x and 6.2x its FY23E & FY24E earnings.
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