J.Kumar Infraprojects Analysis , healthy prospect pipeline
Call & Research Report by Anand Rathi Research
Sector : Infrastructure
CMP Rs. 291, Target Rs. 311
Target Period : 12 Months
With sales at a new high and no further leverage, J Kumar’s performance
in FY22 was inspiring. It’s even more appealing because of its consistent
operating profitability in an inflationary environment. The near future is
bright, with ample assurance and execution expected to trend higher. A
healthy prospect pipeline with ample opportunities in its stronghold and
otherwise mean the OB is likely to be bolstered to keep growth going.
On proven execution abilities, sturdy balance sheet and good prospects,
we retain our Buy rating with a higher TP of Rs311 (on raised estimates).
Healthy Q4 additions, comforting FY22. At ~Rs20.4bn, the Q4 orders
added were robust and made full-year additions (at ~Rs36.9bn) slightly exceed
FY22 revenue. Consequently, the assurance, at ~3.4x FY22 revenue, is still
healthy. Incl. a post-Q4 order of ~Rs10.7bn, the OB is ~Rs130bn, and the
assurance turns sturdier (to ~3.7x). Management looks to add ~Rs40bn more
in the year, and has its eyes set on ~Rs60bn of two RFPs already submitted and
~Rs200bn of an immediate prospect pipeline.
Attains net cash status. Q4 cash PAT of ~Rs1.1bn holds the key to ~Rs0.8bn
net cash balance on 31st Mar’22 (against net debt of ~Rs0.4bn at end-Q3).
Favourable q/q movement in some of the key constituents of working capital
(trade payables, and trade receivables especially) not only covered ~Rs0.5bn of
capex, but also capital needs for greater operations scale.
Revenue guidance held. On the continuing healthy pace of execution and
ample assurance, FY23 revenue guidance was held at 12-15%. Management
does not rule out potential to this, but challenges involved with the urban
infrastructure projects (land-acquisition/utility-shifting issues) make it guide
cautiously. It also held to its mid-term ~Rs50bn revenue guidance by FY25.
J.Kumar Infraprojects Analysis Valuation. On the stronger-than-expected Q4 additions, continuing swifter-
than-expected pace of execution, and better managed working-capital cycle,
FY24e earnings are ~3% better and FY24e, ~7%. At the ruling price, the stock
trades at a PER of 6.6x FY24e. Risk: Any significant delay in orders.
To subscribe our Paid Calls, click : analysislibrary.com/shop
For IPO analysis , Click chanakyanipothi.com