J. KUMAR INFRAPROJECTS LTD. - PINC Result Review

J.Kumar results are inline with our estimates with reported PAT of Rs 158.6mn against our estimate of Rs 159.7mn. The positive factor being margins have been maintained at 15.4% but interest cost is higher at Rs55.5mn against Rs31mn expected, which is 117% higher than last year. We maintain our FY11Eand FY12E numbers with a BUY rating.

L1 position improves during the quarter…

JKIL L1 position has improved to Rs4.1bn during the quarter against Nil in Q4FY11.

Order Book lower than Q4FY10

JKIL's current order book stands at Rs13.5bn lower than reported at the end of FY10 at Rs14.5bn, which we believe is not a matter of concern as better L1 position offset the impact.

Higher interest cost a surprise

JKIL reported interest cost of Rs55.5mn higher than our estimate of Rs31mn, due to higher utilization of WC limit. Though secured and unsecured debt has been maintained steady at ~Rs50mn. Bank OD has increased by ~Rs500mn.

Sales mix…

96% of the revenue was from the transportation segment of which skywalk comprised of 26% against 40% in FY10.

VALUATIONS AND RECOMMENDATION

At CMP of 201, the stock is trading at a PE of 6.9x FY11E EPS of Rs29 and 6.2x FY12E EPS of Rs32.5. We maintain a PE of 8.5x on FY11E EPS of Rs29, thus arrive at price target of Rs246. We re-iterate our 'BUY' recommendation on the stock.

Source : Equity Bulls

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