J Kumar Infraprojects Ltd. share price target

J Kumar Infraprojects (JKIL) delivered 1QFY17 RPAT beat, 7.6% above our estimates (incl. Rs25mn dividend from mutual funds). Net revenue growth of 10% YoY (6.2% below estimates) was on account of subpar execution at the JNPT road project (Rs 300mn), expect strong pickup from 3QFY17E. The Balance sheet remains healthy with net debt at Rs 1.8bn & net D/E stood at 0.13x. QIP proceeds have aided deleveraging.

JKIL has finally received the LOA for the Mumbai Metro line 3 project with bid value of Rs 52bn. The dark clouds on fate of Metro project has cleared now and worst of BMC headwinds may be receding. Whilst litigation on BMC road projects continues, JKIL has been de-registered from further bidding in BMC road segment. Other State Government department, JKIL continues to eligible for bidding. Maintain BUY with TP to Rs 321/sh (15x Mar-18E EPS).

On 26th April, 2016, media sources reported that an investigating committee formed by Bombay Municipal Commission (BMC) had recommended black-listing six companies for executing ‘shoddy work’ on the 35 road projects that they had inspected. The list included five private players (Mahavir Road Infra, Relcon Infra Projects, KR Infra Projects, RPS Infra Projects and RK Madani) – JKIL was the only listed player.

Outlook and Valuation: Over the last six months, JKumar’s stock has corrected by over 50%, bearing the brunt of the BMC black-listing and its potential impact on current and future orderbook. While on one hand, the current orderbook (at 6.3x book-to-sales) provides high revenue visibility, we see no clarity emerging in the next six months (till BMC elections in February 2017), on the “executable orderbook”. Chances of the imprisonment of the promoter/management of the company can also not be ruled out, at the current juncture. In view of the lack of clarity on order cancellations and its potential impact on the orderbook and earnings, we suspend our rating on the stock and put the stock “Under Review”. We will maintain passive coverage, keeping a keen eye on the developments and resume our coverage as soon as clarity emerges on the aforementioned issues.

Topline was marginally below our expectations (inline with consensus), on lower execution due to delay in commencement of execution at JNPT orders. EBITDA margins at 15.7% - declined 120bps yoy below our and street estimates....

(having worked on Delhi Metro and Ahmedabad Metro projects) and huge pipeline in the MRTS segment is likely to lead to a strong topline growth over the next three years. Its strongbalancesheetandsuperiormarginprofileshouldleadtorobustearningsgrowth....

J Kumar Infraprojects (JKIL) delivered disappointing 3QFY16 revenue/EBITDA, which were 16.2/19.9% below our estimates. EBIDTA margins contracted 131bps on YoY basis, driven by higher employee costs (81bps expansion YoY) and other expenses (168bps expansion YoY), which offset the 119bps expansion in gross margins.

J Kumar Infraprojects (JKIL) delivered a muted 2QFY16, with revenue/EBITDA 1.6/5.2% below our estimates. EBIDTA margins contracted 246bps on YoY basis mostly because of increase in raw material costs (514bps expansion YoY).

The order book was Rs 40.3bn (including L1 of Rs 3.5bn), a handsome 2.9x bookto sales. However, if we include the two MumbaiMetroPhase3 (MM3) packages (Rs 52.3bn)theorderbookstandsatRs92.6bn(whopping6.6xbooktosales)...

J Kumar Q2FY16 performance was in-line with our estimates. Standalone net sales grew by 10.2% YoY to Rs3.3 bn (vs. our estimate of Rs 3.4 bn). EBITDA margin declined 246bps to 18.3% (largely in-line with our expectation of 18.4%).

company accrued orders worth Rs 3.75bn in this quarter. It has outstanding bids for Rs 150bn worth of projects (Rs 120bn Mumbai Metro, Rs 20bn JNPT NHAI orders). L1 orders includedRs6.5bnMumbaiwatertransportproject,whichisdelayedbyoveroneyearnow....

Whilst J Kumar Infraprojects (JKIL) 1QFY16 revenue was subpar (4.7% below estimates), EBITDA & Net profit were 1.8% & 10.7% ahead of expectations. EBIDTA margins expanded 50bps/166bps on YoY/QoQ basis, largely driven by lower employee costs (29bps contraction YoY) and lower other expenses (172bps contraction YoY), which compensated for increase in material costs (151bps expansion YoY).