J Kumar Infraprojects Ltd - Rs 60.00

Established in 1980, J Kumar Infraprojects Ltd (JKIL) is a civil engineering and infrastructure development company whose primary focus is on development of roads, flyovers, bridges, railway over bridges, irrigation projects, commercial and residential buildings, railway buildings, sports complexes and airport contracts. For smooth functioning, it has broadly divided its project work into four segments namely transport engineering, civil construction, irrigation projects & pilling work. Among these segments JKIL has developed strong expertise in transport engineering space like undertaking design & construction of roads & flyovers on a turnkey basis, widening of highways etc. It is also among the few construction companies implementing innovative construction techniques such as RCC box jacking, volumetric & panelized construction, insulating concrete framework (ICF), flexible concrete pavement technology etc. However JKIL’s operations are largely confined in the state of Maharashtra and that too especially Mumbai. Notably, it is a class IA contractor with PWD, Government of Maharashtra and has been a preferred government contractor over the past years.

Over the years, the company has earned many accolades for timely & quality execution of its projects. Few of its well known projects include Konkan Bhavan Flyover at Navi Mumbai, Ghatkopar Cheddanagar flyover, Aurangabad flyover, Goregaon sports complex, Residential quarters of AAI staff, Bandra Terminus Bldg etc apart from various projects for road widening, irrigation and pilling. Interestingly, JKIL prefers to execute the whole project independently and also ensures to bag the contract directly from the govt agencies and developers. With substantial order coming from govt dept its main and renowned clientele includes MSRDC, MMRDA, PWD, MCGM, Mumbai Rail Vikas Corporation, Indiabulls Real Estate, SMC Infrastructures & Sarthak Developers. Nevertheless, JKIL has also formed strategic alliances with other private contractors like Era Construction, Indiabulls, Nagarjuna etc. with whom it has entered into project specific JVs & subcontracting relationships for specific purposes. Importantly, to complete the project effectively and on time, company owns a large fleet of modern construction equipments like hydraulic piling rigs, putmiester, mobile boom placer concrete pump and stationery concrete pumps, transit mixers, various capacity cranes, poclains, front end loaders, JCBs and tippers. It also has a ready mix concrete plant for captive use as well as to supply to third parties. Of late company has been putting more thrust to expand the lucrative business of pilling and RMC.

As of now, JKIL boasts of having a huge order in hand position of more than Rs 1200 cr to be executed in coming 24 months or so. This is 3x times its FY09 turnover, thereby ensuring strong revenue visibility for coming years. Last fiscal company bagged huge order from MMRDA & MSRDC to the tune of Rs 560 cr for construction of 16 skywalks in Mumbai. Recently, in last couple of months it won another Rs 130 cr order for construction of nallah & Railway Bridge(Jogeshwari) in Mumbai. Importantly, execution across multiple segments has not only enabled JKIL in de-risking its business model, but has also provided a platform to leverage on opportunities emerging from these segments. With massive investment expected to happen in infrastructure segment and govt making higher budgetary allocation, the future of JKIL looks quite promising.

Fundamentally, JKIL has grown at a scorching pace in the last few years. A company which barely did a business of Rs 5 cr in FY05 is today almost Rs 400 cr company. In the last three years it has recorded an impressive CAGR of 150% for sales and 250% for net profit. JKIL was fortunate enough to raise round about Rs 70 cr during Jan 2008 post which the stock market went for a tail spin. Led under the dynamic leadership of Mr Jagdish Kumar Gupta, JKIL has already become a leading infrastructure company of Mumbai and is now aiming for pan India presence. Meanwhile, last week company declared satisfactory result for the March quarter. Its revenue increased by 55% to Rs 148 cr but PAT grew by only 15% to Rs 12 cr due to fall in operating margin. Despite this, for the entire FY09 JKIL recorded 85% growth in topline to Rs 389 cr and 70% jump in bottomline to Rs 33 cr. This translates into EPS of Rs 16 on equity base of Rs 20.70 cr. In order to funds its working capital requirement, JKIL is contemplating to make preferential allotment of 40 lakh share warrants to promoters and other investors. To finalize this company is having a general meeting on 20th May 2009. Based on the current scenario, JKIL is expected to clock a turnover of Rs 525 cr and PAT of Rs 38~40 cr leading to an EPS of Rs 18 on current equity and EPS of Rs 15 on diluted equity of Rs 24.70 cr. Even at a fair discounting by 7x times against FY10E earnings scrip can easily shoot up to Rs 105~110 Rs within a year. Investors are advised to keep accumulating this scrip at sharp declines.

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