JKUMAR INFRAPROJECTS -- JKIL

JKUMAR INFRAPROJECTS (JKIL)

AS THE NAME SUGGESTS IT IS AN INFRA PLAY AND ITS EXPERTISE IS IN TRANSPORTATION AND PILING RELATED PROJECTS.

COMPANY HAS A DOMINANT POSITION IN  MAHARASHTRA AND WITH UPCOMING PROJECTS LIKE SKYWALKS, FLYOVERS, BRIDGES AS WELL AS IRRIGATION PROJECTS,  THE COMPANY HAS GOOD POTENTIAL TO GROW.

JKIL has bid for projects outside Maharashtra in various states like Gujarat, Delhi, Uttar Pradesh, Punjab, Haryana, Rajasthan and has bid for BOT projects via the JV route.

FINANCIALS:

MARKET CAP AT CMP OF AROUND 195 IS AROUND 550 CRORES.

EQUITY IS 2.78 CRORE SHARES OF RS 10 EACH.

PROMOTERS HOLDING IS AROUND 54% AND PROMOTERS HAVE PLEDGED 14%(OF TOTAL EQUITY)

COMPANY RECENTLY RAISED AROUND 90 CRORES THROUGH QIP AND PREF ALLOTMENT AT A PRICE OF 180 PER SHARE IN FY 10.

In the annual report, the management indicates at a  capex of around 80 crores in next three years which will be met through fund raised through recent QIP and internal accruals.

Year	06	07	08	09	10	Q1FY11	FY 11e	FY12e
Sales	23	113	214	406	770	200	1152	1463
NP	0.7	8	20	33	70	15.9	94.5	121
ROCE	6	30	22	29	41		38	38
DEBT	11	26	38	48	56
EPS	0.6	6.41	9.41	15.9	25	5.72	34	43
EQUITY	12.5	12.5	20.72	20.72	27.8
BV	11	17	56	70	110
OPM	10	15	19	17	18
NPM	3	7	9	8	9	8

Projections for FY 11 and 12 are based on Kotak report. I have conservative estimates of EPS of 30 for FY 11 and 36 for FY 12.

POSITIVES:

EXPERIENCED (THREE DECADES OF EXPERIENCE) URBAN INFRA PLAYER

LOW DEBT AS COMPARED TO OTHER INFRA PLAYERS

HIGH RETURN RATIOS, AS COMPARED TO OTHER INFRA PLAYERS AND HIGH OPERATING MARGINS OF ABOVE 15%

GOOD ORDER BOOK GIVING VISIBILITY TO 1.5 YEARS REVENUES, ORDER BOOK OF AROUND 1500 CRORES AS END OF FY 10

KEY STRENGTHS:  Large fleet of owned machinery and equipment which provides flexibility and efficiency to execute projects with ease.  Local expertise and reduced lead time for mobilization of manpower and equipment, Use of innovative technology to complete complex structures, Covering the length and breadth of Mumbai.

ATTRACTIVE VALUATIONS ( AT 7.7XFY10 AND 6.5X FY11E EPS OF 25 AND 30)

REPUTED CLIENT BASE, ALMOST 80-90% ORDERS ARE FROM GOVT AND SEMI GOVT AGENCIES LIKE MMRDA, MUMBAI RAIL VIKAS CORP, MSRDC ETC WHICH ENSURE TIMELY PAYMENT, AND EFFICIENT WORKING CAPITAL CYCLE

NEGATIVES:

ANY SLOWDOWN IN ORDER INFLOW COULD IMPACT GROWTH

EXECUTION DELAYS MIGHT IMPACT REVENUE RECOGNITION

CLIENT CONCENTRATION—SINCE MAJORITY OF ORDERS ARE FROM GOVT AGENCIES 

ANY CUT IN GOVT ALLOCATION FOR INFRA SPENDING COULD POSE PROBLEMS FOR COMPANY.

TECHNICAL ANALYSIS:

THE STOCK IS CURRENTLY IN A CONSOLIDATION PHASE BETWEEN AROUND 180 TO 210.