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Jkil -- jkumar infraprojects

JKUMAR INFRAPROJECTS (JKIL)


AS THE NAME SUGGESTS IT IS AN INFRA PLAY AND ITS EXPERTISE IS IN TRANSPORTATION AND PILING RELATED PROJECTS.

COMPANY HAS A DOMINANT POSITION IN MAHARASHTRA AND WITH UPCOMING PROJECTS LIKE SKYWALKS, FLYOVERS, BRIDGES AS WELL AS IRRIGATION PROJECTS, THE COMPANY HAS GOOD POTENTIAL TO GROW.

JKIL has bid for projects outside Maharashtra in various states like Gujarat, Delhi, Uttar Pradesh, Punjab, Haryana, Rajasthan and has bid for BOT projects via the JV route.

FINANCIALS:

MARKET CAP AT CMP OF AROUND 195 IS AROUND 550 CRORES.

EQUITY IS 2.78 CRORE SHARES OF RS 10 EACH.

PROMOTERS HOLDING IS AROUND 54% AND PROMOTERS HAVE PLEDGED 14%(OF TOTAL EQUITY)

COMPANY RECENTLY RAISED AROUND 90 CRORES THROUGH QIP AND PREF ALLOTMENT AT A PRICE OF 180 PER SHARE IN FY 10.

In the annual report, the management indicates at a capex of around 80 crores in next three years which will be met through fund raised through recent QIP and internal accruals.

Year

06

07

08

09

10

Q1FY11

FY 11e

FY12e

Sales

23

113

214

406

770

200

1152

1463

NP

0.7

8

20

33

70

15.9

94.5

121

ROCE

6

30

22

29

41

38

38

DEBT

11

26

38

48

56

EPS

0.6

6.41

9.41

15.9

25

5.72

34

43

EQUITY

12.5

12.5

20.72

20.72

27.8

BV

11

17

56

70

110

OPM

10

15

19

17

18

NPM

3

7

9

8

9

8

Projections for FY 11 and 12 are based on Kotak report. I have conservative estimates of EPS of 30 for FY 11 and 36 for FY 12.

POSITIVES:

EXPERIENCED (THREE DECADES OF EXPERIENCE) URBAN INFRA PLAYER

LOW DEBT AS COMPARED TO OTHER INFRA PLAYERS

HIGH RETURN RATIOS, AS COMPARED TO OTHER INFRA PLAYERS AND HIGH OPERATING MARGINS OF ABOVE 15%

GOOD ORDER BOOK GIVING VISIBILITY TO 1.5 YEARS REVENUES, ORDER BOOK OF AROUND 1500 CRORES AS END OF FY 10

KEY STRENGTHS: Large fleet of owned machinery and equipment which provides flexibility and efficiency to execute projects with ease. Local expertise and reduced lead time for mobilization of manpower and equipment, Use of innovative technology to complete complex structures, Covering the length and breadth of Mumbai.

ATTRACTIVE VALUATIONS ( AT 7.7XFY10 AND 6.5X FY11E EPS OF 25 AND 30)

REPUTED CLIENT BASE, ALMOST 80-90% ORDERS ARE FROM GOVT AND SEMI GOVT AGENCIES LIKE MMRDA, MUMBAI RAIL VIKAS CORP, MSRDC ETC WHICH ENSURE TIMELY PAYMENT, AND EFFICIENT WORKING CAPITAL CYCLE

NEGATIVES:

ANY SLOWDOWN IN ORDER INFLOW COULD IMPACT GROWTH

EXECUTION DELAYS MIGHT IMPACT REVENUE RECOGNITION

CLIENT CONCENTRATIONâSINCE MAJORITY OF ORDERS ARE FROM GOVT AGENCIES ANY CUT IN GOVT ALLOCATION FOR INFRA SPENDING COULD POSE PROBLEMS FOR COMPANY.

1 Like

The stock has been on a wonderful run and currently around 260 levels. Re rating seems to be happening here. The undervaluation which was prevalent earlier now seems to be getting corrected.

Is something fishy about the promoters of this company?
Not invested but recent fall has made it attractive.

The stock went down again 15%. They don’t appear to have much debt like other construction companies. Is someone tracking this company who can share what is going on ?

Found a news article:

I thinks they hv got some orders cancelld…so d stock is down…some intelligent investers r in d stock…
Discl:i hold d stock…so i may hv vested interest…

Here is background -

The company is facing potential blacklisting by BMC (Brihanmumbai Municipal Corporation) for the shortfall in the quality of work executed on a roadproject in Mumbai( this work was sub contracted to another vendor). Even though management maintained that the blacklisting (if at all) will not impact its ability to bid for future projects, with any other government body. Company did receive further order from BMC which was later cancelled by court last month.

Company received huge order from mumbai metro worth 5200+Cr couple of weeks back;however, there is quite a lot of protest against this from opposition parties and activists.

Even excluding mumbai metro order, company has huge order backlog of ~3X fy16 rev. including mumbai metro it will be whooping 7.5X fy16 rev!

Sold when court cancelled BMC order. no investments.

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Today after free fall of 20 % and next day 15 % , now J Kumar seems to be stable. please advice on the stock on the basis of recent correction in price but conidering the risk of pledging of shares to the extent of 33 % out of 44 %

Mutual funds own 9.87% or 81 lakh shares of JKIL. This is the second infra company after MBL Infra where they are stuck holding something which they are now unable to liquidate.
http://www.moneycontrol.com/mf/user_scheme/mfholddetail_sec.php?sc_did=KI01#KI01

There will be an attempt by AMFI to put pressure on SEBI to resume trading.
Some HNI’s might even put in a redemption request to those couple of mutual funds which have 1.5-2.5% weightage to JKIL.

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@hitesh2710 I think, it would be good time to buy as it has order book of 6x current revenues and the price also has corrected a lot. Is most of the correction done or we should expect more ? Please advice.

@sahil, I dont track jkil since a long time.

HI topic seems to be closed for some but wanted to add my views on this.

JKIL closed 2018 with turnover of 2050 cr up 28%, EBITDA at 321 cr & PAT at 137 cr were also up by same percentage. As of now they have an order book of some 8500 cr which is 4 times current revenue. Further a lot of the order book is in stuff like Metro rail construction where it is among the very few people with experience so presumably this should help margins. in FY19 they are bidding for 4500 cr of tenders so there should be some uptick in order book. Also many cities are still looking to add metros so there should be further uptick over the years.

On the flip side stock has not been for the faint hearted, with 2 40-50% down swings (and subsequent recoveries) in the last 2 years. There have been 2 incidents, first some road they constructed for the BMC (which they had in turn subcontracted) was found to be substandard in quality and they were blacklisted by the BMC for 6 years or something in 2016. While the company has appealed, lets assume they wont get any leniency on this.

Other issue was SEBi somehow using some “big data” analysis found this as a shell company. This is clearly a blooper on SEBI’s side, they are a functional, operating, profit making dividend paying company. While the BMC issue is a concern, one needs to note that they have a 4x order book without any BMC revenues. Further they have completed a large number of projects without any issue and the problem is presumably one off. They have won many orders post the BMC blacklisting also.

So essentially we are getting a company with excellent revenue visibility, more or less debt free (0.2x net debt , around 0.3 gross debt), at like 15 times trailing earnings. Assuming 15% profit growth (which should be quite cool given revenue scaleup - Mumbaiites will note Metro work is progressing extremely well), stock is available at approx 10 times FY20 earnings which is very cheap in todays market.

Once we have a couple more quarters of strong revenue growth (Q4 revenue & PAT were up 73% and 95% YOY), IMO greed should take over fear…

Any views on this? Anything I’m missing out.

Disc: Holding

1 Like

Yesterday the company held a conference call with analysts to clarify on the recent developments.In case any one has attended it,please share the details.

Why JKumar again!!! Locked in 20% lower circuit yesterday!

  1. BMC issue in 2016!
  2. Shell company in 2017!
  3. And now SEBI doubting authenticity of documents submitted by JKumar pertaining to an order 10 years back!

What happened: SEBI has passed an interim order asking exchanges to appoint an independent auditor to conduct a forensic audit on J Kumar Infraprojects.

Attended the concall, key takeaways: See comments section

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If you see moneycontrol research reports section on JKIL, there is no dearth of reports projecting price from 300+to 450. This company is a confounding mess, on one side you have very clear visible earnings growth and a very reasonable valuation. On the other these seemingly arbitrary regulatory issues keep coming up from time to time, I mean how many times does SEBI open a 10 year old issue? One is left thinking how many skeletons are there in the cupboard !! Very tough one to play!!

Disc: Invested

2 Likes

Can’t agree more.
Yes many brokerages cover this company and had targets close to Rs 400. Now many have put it Under Review due to that SEBI issue.
Yes exactly, order book gone up from 3000 cr to 10000 cr in last 3 years, metro construction on the rise, company bagging orders, clear earnings visibility, company delivering very well in last 2 quarters, and when everything started looking good, this SEBI issue cropped up.
I guess owning mid cap companies comes up with these risks of corporate governance and thus being diversified is one of the solutions to it.
I am sure this stock would have been at high levels considering its reasonable valuation, but above such events shake investor’s faith. Hoping the company comes out of it again.

Disc: Invested

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JKIL on a 20% upper circuit !!
It has received an order of Rs 1349 Cr. Takes total order book close to 11000 Cr
Check full coverage here

2 Likes

Excellent Results, Dont understand why this stock is falling. The SEBI inquiry is a overhang but as explained by management maximum impact is Rs. 4.5 Cr.

Results For The Quarter And Year To Date Ended 31St December 2018 http://www.bseindia.com/xml-data/corpfiling/AttachHis/c34d706c-0065-4f8f-baa2-929d63db7788.pdf

Results for the quarter and year to date ended 31st December 2018

Stock available at PE of 5.

Regards,

Disc.: I am invested

From an old 2010 news on J Kumar Infra
Mr Dangi, at the behest of the promoter, attempted to pick up all floating stock from the market in respect of J Kumar Infraprojects (JKIL) and then placed the scrip with institutions. About 75,000 shares were also transferred from the promoters’ account to Mr Dangi’s account, with the further prospect of three lakh shares being exchanged on 23 and 24 September 2010. Mr Dangi was also in contact with Anand Rathi in this context. Bulk deals in JKIL on 22 September featured Pacific Corporate Services and Cello Finance Corporation, linked to Pradeep Rathod.

Source: https://www.moneylife.in/article/sanjay-dangi-another-barred-market-manipulator-still-pulling-strings/12075.html

Where Promoters integrity is in Question , stocks used to trade at cheap valuations except when it is a Bull Market.

Disc: No investments

https://lnkd.in/f62HbJq

my company analysis on j kumar infra

Disc- Invested


Excellent Results … Net Profit grew 30% YoY and revenues up 35%

Order book almost 11k Cr. Should get more orders before Maharashtra elections.

Disclosure: Invested

1 Like