JKumar Infra-Urban Play BUY JKIL is likely to report a 49% earnings CAGR over FY09-12. Given steady order inflows and a proven execution record, we raise FY10 and FY11 earnings estimates by 25% and 21%, respectively. We estimate a 49% CAGR in J Kumar's earnings over FY09-12. Healthy order book. J Kumar's Rs14.5bn order book (3.7x FY09 and 3.1x TTM revenues) is a healthy mix of varied projects –transport engineering, skywalks, irrigation, civil construction and piling. It has an average execution period of two years. Superior operating margins. J Kumar's operating margin (15%) is better than the sector average (10%) given its strengths: geographical concentration, owned machinery and manpower and a strategy of not bidding for sub-contract work. For FY10-12, we estimate it would maintain margins at current levels. Macro growth opportunities… scale up in execution is key. Increase in outlay on infrastructure development would increase order flows to construction companies. J Kumar, with a threedecade long track record in Maharashtra, is in a good position to capitalise on the potential for infrastructure investment. Valuation. We value J Kumar at 10x FY11e earnings, a 50% discount to the average of large cap construction companies and a 25% discount to mid cap companies. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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http://in.groups.yahoo.com/group/investwise/
INVESTMENTS IN INDIA
We are low-risk, long-term investors.
Stocks, mutual funds and the entire investment gamut. Only financing/investment avenues in India will be discussed.
For any assistance, questions or improvement ideas, contact investwise-owner@yahoogroups.co.in
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NEW! ==== Check our LINKS and FILES sections for a world of information. REGULARLY UPDATED.
NEW! ==== Check "Tracklist" in Links and Files sections for Investment Ideas.
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