Edelweiss maintains ‘Buy’ on J Kumar Infraprojects

By: | Published: February 22, 2017 3:45 AM

J Kumar Infraprojects’ (JKIL) Q3FY17 revenue, at R3.7 billion, rose 19% y-o-y following a pick-up in execution in Mumbai Metro projects.

Top-line growth was strong on account of pick-up in work in Mumbai Metro Line 2A, Line 3 and Line 7 projects, which contributed R1.5 billion to revenues during the quarter. (Reuters)

J Kumar Infraprojects’ (JKIL) Q3FY17 revenue, at R3.7 billion, rose 19% y-o-y following a pick-up in execution in Mumbai Metro projects. EBITDA margin declined 100 bps y-o-y to 17.1%. While interest costs jumped 20% y-o-y, higher other income led to PAT growing 10% y-o-y to R265 million. The company’s order book stands at ~R97 billion (book-to-bill at 6.7x), which provides robust revenue visibility. We expect revenues to further gain momentum driven by execution of Mumbai Metro and JNPT projects. JKIL remains the best bet in the EPC space due to its healthy balance sheet (0.1x net debt:equity), niche presence in the fast-growing metro rail space and attractive valuations (trades at 9.7x FY19E P/E). Maintain ‘buy’ with a target price of R343 as we roll over to FY19E.

Top-line growth was strong on account of pick-up in work in Mumbai Metro Line 2A, Line 3 and Line 7 projects, which contributed R1.5 billion to revenues during the quarter.

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While utility shifting issues impacted work in the JNPT projects during the quarter, management expects work to gather pace going ahead. Debt levels declined sequentially to R4.6 billion (R5.1 billion at Q2FY17 end) due to reduction in inventory levels.

Management has guided for capex of R750mn in FY17, R2.5-3 billion in FY18 and R400-500 million in FY19. JKIL is currently executing metro rail projects in Delhi, Mumbai, Ahmedabad and Navi Mumbai.

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