As the first half is likely to be a washout, the second half has become critical for any respectable performance in FY21.
Anand Rathi has given buy rating to J Kumar Infraprojects with a target price of Rs 144. The share price moved up by 1.35 per cent from its previous close of Rs 96.15. The stock’s last traded price is Rs 97.45
While the Covid-19 impact is amply visible in J Kumar’s Q4, it is only expected to be more pronounced in FY21, says the brokerage. With an urban-focused order book lowering any hopes of a quick revival in operations (labour still wary of urban areas), the first half is likely to be a washout and the second half has become critical for any respectable performance in FY21, according to the brokerage.
Investment Rationale
The order book provides ample assurance (insulating it from any immediate awarding lull), and the balance sheet too is in shape. The return of migrant labour holds the key. The issue seems more than priced in Hence, the brokerage has retained its buy rating.
Adjusting for the Covid’19-led disruption, FY21e earnings are 95 per cent lower (42 per cent for FY22). The brokerage’s PER methodology-based target price is revised from Rs 289 to Rs 144, derived using 6 times FY22e construction EPS. At the CMP, the stock trades at 3.9 times FY22e EPS.
Risk: Prolonged Covid-19 impact.
Financials
For the quarter ended March 31, 2020, the company reported standalone sales of Rs 877.78 crore, up 10.69 per cent from last quarter sales of Rs 793.03 crore and down -9.32 per cent from last year's same quarter sales of Rs 967.99 crore. The company reported net profit after tax of Rs 31.06 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 45.32 per cent stake in the company as of March 31, 2020, while FIIs held 9.64 per cent, DIIs 11.7 per cent and public and others 33.34 per cent.
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