JKumar Infraprojects Ltd Research Report By IIFL

JKumar Infraprojects Ltd: Riding the Infra boom – BUY
CMP Rs345, Target Rs452, Upside 31%

JKumar Infraprojects Ltd (JKIL) will benefit from the huge opportunity about to unfold in the infrastructure sector, especially the transportation segment. Recently, company was declared L1 for the prestigious Mumbai Metro 3 (MM3) project worth Rs.5,200cr, which is ~4x its FY15 turnover. Additionally, JKIL already has an order book of Rs.3,600cr providing high revenue visibility for many years. The company’s continued focus on an asset light EPC model has led to consistently higher margins as compared to peers. Margin boost also due to backward integration with major equipments owned (tunnel boring machines, RMC plants, transit mixers etc), allowing it to limit sub-contracting of jobs. JKIL has recently raised funds via QIP, which has improved its leverage position and would allow it to take on more projects without taking on significant leverage. Stock is trading at valuations of 13x its FY18E EPS. It is one of the few companies that did well during challenging peri! od of last few years and stayed away from BOT model. JKIL therefore deserves premium multiple as compared to some of its peers. We initiate coverage on JKIL with BUY rating for target price of Rs.452 implying target P/E of 17x.

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