Friday, January 2, 2009

Stock Idea: J. Kumar Infraprojects

J. Kumar Infraprojects went public with an issue of 65 lakh equity shares of Rs.10 each, at Rs.110 per share, on 18-01-08. Share got listed on 12-02-08 and closed at Rs.103 on that day. Its all time high was Rs.131 touched on 22-05-08 and low at Rs.56 made on 29-12-08. Now it is ruling at Rs.61.
The company is a civil engineering contractor and infrastructure development company with strong presence in Mumbai, constructing various flyovers and skywalks in the city. Majority of these works have been given to the company, due to better track record. As of date, its order book is of Rs.1,284 crores, which are likely to get executed in the next 30 – 36 months.
The company has been able to maintain its growth momentum, due to better order book. FY 08, total income of the company was at Rs.217 crores with PAT of Rs.19.50 crores, which has resulted into an EPS of Rs.9.42 on equity of Rs.20.72 crores. For first six months of FY 09, its total income is placed at Rs.170 crores with PAT of Rs.13.79 crores yielding an EPS of Rs.6.66. Second half of these companies are always better so one can expect a topline of Rs.400 crores and bottomline of Rs.31 crores, which should result in an EPS of Rs.15. This results into a PE multiple of about 4 times
In the recent times, all the contracting companies are ruling at a PE of 4 to 6 times, due to fear of slowdown which may impact bottomlines and topline of such companies. Also, due to presence of the company in Mumbai City, it goes to its disadvantage.
The company had mobilized Rs.70 crores from IPO, of which, Rs.60 crores has already been utilized. The good part about the issue was, that Rs.51 crores were earmarked for purchase of capital equipments, which is key for any contracting company. This reduces the lease and hire charges, substantially for them, as life of such equipments are quite long.
One more best thing for the company is its low gearing with debt equity ratio of just 0.25 : 1. Of its net worth of Rs.125 crores over Rs.100 crores has been used for purchasing capital equipments. Even debtor cycle of the company is quite under control, as compared to other similar companies. Overall, financial control and management of the company is quite good.
Those who have acquired the stock in IPO, are advised to remain invested with 12 months view. Those who wants to make fresh entry, can buy at 60 levels with a view to exit at 72 to 75 levels which is likely in the next 30 – 40 days. Downside from hereon is minimal.


No comments:


The information in this publication is provided by is intended for use for Readers & Traders . Every effort is made to provide accurate information, but cannot guarantee the accuracy of the information or of the market analysis. This is a newsletter and is for informational purposes only. It is not a solicitation or offer to buy or sell futures. There is a high risk of loss in trading futures. You should not trade with money that you cannot afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this newsletter. The past performance of any trading system or methodology is not necessarily indicative of future results.

free counter