J Kumar Infraprojects Ltd Stock Research Report

ROBUST ORDER BOOK & EFFICIENT EXECUTION TO DRIVE GROWTH……

J. Kumar Infraprojects Limited (JKIL) is an EPC player with more than 24 years of experience in the construction of Urban Infra Projects including Metros, Flyovers, Bridges, Tunnels, and STPs to name a few. It is renowned for undertaking design and construction projects on a turnkey basis, meeting clients’ requirements with precision and efficiency. JKIL is focused on EPC projects, with a specific focus on Urban Infrastructure, Transportation, Infrastructure and Civil Construction. The company has a diverse portfolio of projects across different sectors, including roads, highways, bridges, metro railways, urban infrastructure, and tunnelling water supply, among others.

Key Rationale

◼ Robust order book to drive revenue growth:

As of 30th Sep 2024, the company’s order book stood at Rs 18,721 Cr. The company is L1 in projects worth Rs 4,500 cr and including order received in October’24 worth over Rs 2,000 cr, the total order book stands over Rs. 25,000 cr (5x FY24 revenue). A healthy and robust order book provides revenue visibility for the next 3-4 years. We expect the company to report a revenue CAGR of 17% over FY24-FY26E

◼ Established track record of timely project execution:

JKIL has a proven track record of successfully undertaking and timely executing large and complex projects, including notable projects such as the Mumbai Metro, Delhi Metro, JNPT, and Dwarka Expressway. The company is recognised for its scale, technical intricacies, and expertise in managing such projects. This combined with its meticulous planning and execution capabilities has allowed it to deliver outstanding results. The company owns and operates a remarkable fleet of eight Tunnel Boring Machines (TBMs), one of the highest in India, enabling it to undertake and execute underground projects more efficiently and with exceptional precision.

J Kumar Infraprojects Ltd Stock Research Report

◼ Improvement in EBITDA margin:

The company expects EBITDA margins to trend higher in FY26 from current 14%-15% range to 15%-16% range backed by efficient project execution and accretion of more orders.

◼ Outlook:

The government has made a commitment to allocate Rs 11.1 Lc Cr in the Interim union budget 2024-25 for the infrastructure sector, taking into consideration its vital contribution to economic growth. The allocation for Roads & Railways has been raised to Rs 2.78 Lc Cr and 2.55 Lc Cr in the budget 2024-25. To increase the ambit of the metro rail system across the country, the government had also earmarked Rs 19,518 Cr for Metro Projects in last year’s budget.

This higher allocation demonstrates the government’s commitment to achieving inclusive and sustainable urban development as well as to modernising and improving the efficiency of Indian Railways, which stands as one of the most extensive railway networks in the world.. The company reported good operating performance in Q2FY25 with Revenue/EBITDA/PAT growth of 17%/18%/23% which were above estimates. Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, we expect JKIL to report Revenue/EBITDA/APAT CAGR of 17%/19%/23% respectively over FY24-FY26E.

◼ Valuation: Stock is currently trading at 14x and 12x FY25E/FY26E EPS..

◼ Key risks: a) Delay in project execution; b) Lower Order inflow than expected c) Increase in input cost.

Key Financials