Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Maintain BUY on J. Kumar Infraprojects - Migration headwinds - HDFC Securities

Posted On: 2020-07-02 04:41:02

Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities.

J. Kumar Infraprojects (Q4FY20 Results Review): Migration headwinds. Maintain BUY
(TP Rs 138, CMP Rs 94, MCap Rs 7bn)

JKIL delivered 22/(6)/(24)% 4QFY20 Rev/EBIDTA/APAT beat/(miss) as margins collapsed owing to lockdown impact, esp. in urban centers like NCR/MMR (~90% of order book). Labor availability is ~20% and is gradually ramping up, expected to normalize by 3QFY21E. We expect about 35-40% execution for 1QFY21 and 45-50% during 2QFY21 (YoY). Whilst order backlog is robust at 4x FY20 book/bill, near term execution challenges have sprung up as Metro/Tier-1 cities are the worst impacted due to COVID-19 in terms of labor migration. We have revised our FY21/22E Rev estimates by (23)/(0.5)% and APAT by (85)/(3.8)%. At 4.1x FY22E EPS, 1HFY21 losses/execution disappointment is already priced in. We expect re-rating to happen in near term as 3QFY21 will see major turnaround on profitability. We maintain BUY. Key risks (1) Geographic concentration (2) Order conversion within estimated timelines (3) Extended lockdown (4) Prolonged monsoon.

Execution severely impacted, margins under pressure: JKIL 4QFY20 revenue at Rs 8.8bn was ahead of our estimates with EBIDTA at Rs 0.92bn (6% miss). EBITDA margins contracted 338/440 bps YoY/QoO to 10.5% (313bps miss) due to negative oplev with both fixed/variable expenses rising as % sales. 1HFY21 is expected to be significantly worse. However, EBIDTA margins are expected to normalize at 15-16% range for FY22E as execution ramps up 3QFY21 onwards. APAT for the quarter came in at Rs 310mn (24% miss) due to higher int & dep expense. Execution efficiency/Labor availability is still at 15-20%. Skilled labor migration bigger challenge.

Healthy order book; order inflows in-line with FY20 guidance: Inflows for FY20 stood at Rs 43bn. The order backlog is robust at Rs 116bn (ex-L1 Rs 10bn, 4x FY20). Order inflow guidance for FY21 is Rs ~40-45bn, same as FY20. Dwarka Expressway Pkg-2 work started, AD for Pkg-1 awaited. Metros/Bridges & Flyovers contribute 54%/33% to the order book. Same is expected to continue going forward.

Improvement in leverage: The D/E as of 4QFY20 stands at 0.37x vs 0.39x as of 3QFY20. The gross debt for the company is Rs 6.7bn, marginally down from Rs 7/7.2bn at the end of 3Q/2QFY20. With no significant capex planned during the FY21E/FY22E (Rs 0.5bn in FY21), partial release of BGs by govt agencies, & utilization of mobilization advances, we expect D/E ratio to be maintained in 0.37-0.40x range.

Order book exposed to geographic concentration risk: Maharashtra accounts for over 70% of JKIL's order book which exposes it to local risks. However, we derive comfort from continuing payments from the new government in charge, diversification efforts and ongoing progress on all projects with no impending cancellations. ~91% book is exposed to urban centers, hence, most vulnerable to labor shortage.

Shares of J.KUMAR INFRAPROJECTS LTD. was last trading in BSE at Rs.96.25 as compared to the previous close of Rs. 95.75. The total number of shares traded during the day was 7303 in over 343 trades.

The stock hit an intraday high of Rs. 97.4 and intraday low of 93.95. The net turnover during the day was Rs. 698308.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Cadila Healthcare - Q1FY21 First Cut - ICICI Securities

Dwarikesh Sugar - Q1FY21 First Cut - ICICI Securities

Jyothy Lab - Q1FY21 First Cut - ICICI Securities

Avenue Supermarts - Company Update - August 2020 - ICICI Securities

Hawkins Cookers - 1QFY21 Results - Angel Broking

Maintain REDUCE on Godrej Consumers - Strong comeback in H1 - HDFC Securities

ADD on Gujarat Gas - A complete washout quarter - HDFC Securities

SELL on Vinati Organics - At an inflexion point - HDFC Securities

Expectations from the upcoming RBI Policy - HDFC Securities

AXIS Bank - 10,000 Cr QIP - Angel Broking

PI Industries - Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd.

Maintain BUY on Teamlease Services - Recovery on the cards ICICI Securities

Reiterate ADD on Tata Motors - Volatile environment - ICICI Securities

Tata Consumer Products Ltd - 1QFY21 results - Rajit Rajoriya, Equity Research Associate, Angel Broking Ltd

Maintain REDUCE On Karur Vysya Bank - Pain inevitable - HDFC Securities

Sovereign Gold Bonds - Thematic Report - ICICI Securities

Varun Beverages - Q2CY20 Result Update - ICICI Securities

Saregama India - Company Update - August 2020 - ICICI Securities

Exide Industries - Q1FY21 Result Update - ICICI Securities

Indian Oil Corporation - Q1FY21 Result Update - ICICI Securities

Maintain ADD on Indian Oil Corporation - High inventory losses drag earnings - HDFC Securities

Maintain BUY on Cholamandalam Investment & Finance - A mostly good show - HDFC Securities

Maintain ADD on BSE - Fighting its way back - HDFC Securities

Maintain ADD on Motilal Oswal Financial Services - In-line performance - HDFC Securities

Maintain BUY on Sobha - A smooth ride with few bumps - HDFC Securities

Banking Sector Credit Trends Report - Growth slows, as expected - HDFC Securities

Maintain ADD on Sun Pharma - Cost savings drive the quarterly beat - HDFC Securities

Auto Sector Performance - July'20 - Angel Broking

Sector Thematic on Indian Gas Sector - Looking beyond the pandemic - HDFC Securities

ADD on Max Financial - Lower margins despite higher protection - HDFC Securities

Maintain BUY on Mastek - Changing orbit - HDFC Securities

Mantain REDUCE On Dabur - In-line 2Q, slight beat in domestic volume - HDFC Securities

CreditAccess Grameen - Q1FY21 - YES Securities

ADD on Torrent Pharma - Resilient performance - HDFC Securities

BSE Limited - Pricing pressure remains a challenge - ICICI Securities

Kansai Nerolac Paints - Better-than-expected trajectory in decorative paints -

VA Tech Wabag - High receivables, low margins to impact earnings - ICICI Securities

CreditAccess Grameen - Customer activation trend shows resilience - ICICI Securities

Tata Chemicals - Q1FY21 Result Update - ICICI Securities

VST Industries - Q1FY21 Result Update - ICICI Securities

ADD on Navin Fluorine International - Commendable performance - HDFC Securities

Whirlpool of India - Valuations belie outlook; risk-reward unfavourable - ICICI Securities

Kansai Nerolac - Q1FY21 First Cut - ICICI Securities

Exide Industries - Q1FY21 First Cut - ICICI Securities

Monthly Auto Volumes - July, 2020 - ICICI Securities

Cholamandalam Investments and Finance Company Ltd - Q1FY21 Result Update - YES Securities

Mahindra logistics - Q1FY21 Result Update - YES Securities

Bluedart Express - Q1FY21 Result Update - YES Securities

Tata Motors - Cost improvements reassuring - ICICI Securities

Godrej Agrovet - Deflation in input prices leads to higher margin - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019