J Kumar Infra hits four-year high; surges 38% in twelve days on strong Q4

Strong cash position and unutilised working capital limits facilitate headroom for undertaking large projects and executing existing projects, analysts said.

Shares of J Kumar Infraprojects (JKIL) hit a four-year high of Rs 299.50, on rallying 7 per cent on the BSE in Friday’s weak market on the back of a strong business outlook. The stock was trading at its highest level since April 2018. In comparison, at 11:31 am, the Sensex was down 1.5 per cent at 54,500 points.

In the past 12 trading days, the stock of the civil construction company has zoomed 38 per cent after its profit after tax (PAT) more than doubled to Rs 74 crore in March quarter (Q4FY22), on the back of healthy operational performance. The company had posted net profit of Rs 33 crore in the year ago quarter.

The company’s revenue from operations grew 12 per cent year on year (YoY) to Rs 1,114 crore from Rs 992 crore. Earnings before interest, taxes, depreciation, and amortization (EBIDTA) increased 52 per cent YoY to Rs 159 crore, whereas, margins improved to 14.3 per cent from 10.5 per cent in Q4FY21.

On May 30, JKIL said the company received a letter of acceptance (LOA) from Ircon International for a total lumpsum contract price of Rs 1,068 crore, exclusive of Goods and Service Tax.

LOA received for construction of eight lane access-controlled Expressway from Km 69.800 Km 79.783 (Bhoj to Morbe Section- SPUR of Vadodara Mumbai Expressway including 4.160 km long twin tube eight-lane tunnel in Matheran Eco-sensitive Zone in the state of Maharashtra on engineering, procurement, and construction (EPC) mode under Bharatmala Pariyojna (Phase 11-Package XVII).

Meanwhile, JKIL has bid for metro projects in Surat, Chennai, Mumbai, Agra, Kanpur, and Delhi. It has also submitted request for qualifications (RFQs) for the Goregoan-Mulund link road (GMLR) and has a bid pipeline of over Rs 20,000 crore.

Consequently, it expects orders inflow of Rs 5,000 crore in FY23, of which 20 per cent orders have been achieved so far. JKIL expects to handover Mumbai metro line 3A and 7 and Pune elevated corridor by H1FY23.

As all contracts are protected by price escalation clauses, commodity price volatility has no major impact on margins. Consequently, EBITDA margin is expected to be in the range of 14-15 per cent. JKIL has reiterated its target of achieving revenue of Rs 50 bn by FY25 and growing FY23 revenue by 12-15 per cent, said HDFC Securities in a result update.

Strong cash position and unutilised working capital limits facilitate headroom for undertaking large projects and executing existing projects, it said. The stock is trading above the brokerage's target price of Rs 283 per share.