Comments
CD Equisearch
J Kumar Infra (Buy)
CMP: ₹210.90
Target: ₹306
After a gap of over three years, the order book of J Kumar Infraprojects Ltd (JKIL) seems to be revitalised for the order inflows in the last few months (₹7,528 crore) has vastly trumped the cumulative inflows in the last three years by a factor of over 2. Lumpy nature of metro rail orders explains the precipitous order book swell. For instance, JKIL bagged four separate packages of Delhi Metro Rail Project (DMRC) worth ₹1,586 crore in two years ending FY13, perilously skewing the order book — DMRC projects accounted for 42 per cent of total order book in FY13. Similar risks loom large for newly cornered Mumbai metro orders form nearly two-thirds of current outstanding orders, exposing it to dreadful and inescapable effects of geopolitical unrest and regional adversities. Yet execution of large and complex orders helps it pre-qualify for biggish projects.
The stock currently trades at 12x FY17e EPS of ₹16.06 and 9.4x FY18e EPS of ₹20.41. Susceptibility of earnings to external vulnerabilities - regulatory bottlenecks; political disorder; project award delays — cannot be gainsaid. Fragility of metro orders with respect to cost overruns and unwanted delays should make investors no less paranoid. Yet ability to execute complex projects and prevent debt accumulation (FY18debt equity: 0.4) are also worthy of scrutiny — and so is the current P/BV ratio of 1.1.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.