JMC Projects (India) Ltd - Q2FY21 Result Update - YES Securities

Execution improving - Conference call takeaways

- JMC's performance during Q2 FY21 improved sharply on qoq basis with better labor availability and easing of lockdown. It de-grew around 15% on yoy basis. With monsoon behind, the execution momentum is expected to further pickup during 2H FY21 and the Company now expects to close the year with marginal growth over FY20.

- While Operating margins have come off to ~9% during the quarter with low execution yoy, the Company expects margins to move back to 10-11% levels going forward.

- JMC has received massive order inflows of Rs.60 bn during YTD FY21 and order book now stands at all time high levels of ~Rs.142 bn (excluding L1 orders of Rs.4 bn) which provides very strong revenue visibility. The order book is well diversified with nearly half of the orders from Infra segment and balance majorly from Buildings and Factories (B&F) segment.

- The Company's toll road assets saw decent pickup in toll collections. Average per day toll collection in its BOT assets stood at Rs.5.2 mn during Q2 FY21 (up from Rs.4.5 mn during Q2 FY20 and 3.6 mn in Q1 FY21). With lifting of lockdown and improved economic activity, the toll collections are almost back to normalized levels.

- The Company made no further Equity investment in the toll road assets during 1H FY21. The management expects lower equity investment during 2H FY21 (as against 2H FY20). Investment by JMC in Road BOT Assets at the end of Sep-20 stood at Rs 8.2 bn.

- Restructuring of debt in Kurukshetra Expressway and Wainganga Express toll projects is progressing well. The management expects process to get complete by end of FY21. The asset sale of other two BOT assets is also currently under evaluation and some development can be expected in the next 2-3 quarters.

- During Q2 FY21, 60% of revenues were from B&F segment and balance from Infrastructure. The Company expects the mix to be 55:45 for B&F:Infra by end of FY21.

- The Net Debt at the standalone level for JMC stood at Rs.8.1 bn. The Company expects to close the year with Net debt of Rs.8 bn.

Our view

We expect execution to pick up during H2 FY21 with monsoon behind and better labor availability. We expect operating margin to improve gradually to 10-11% levels as execution ramps up in subsequent quarters. The new orders would also contribute to revenues in H2 FY21 and FY22. Refinancing of certain BOT assets would aid in reducing debt. We maintain our revenue and earnings estimates for FY21E/FY22E. We maintain our BUY rating on the stock for target of Rs.65 (based on SOTP valuation).

Q2 FY21 Standalone results summary

- JMC Projects reported topline de-growth of 15% yoy (to Rs.8 bn) on standalone basis which was in-line with our estimates. The execution saw sharp improvement of 71% over Q1 with better labor availability and easing of lockdown situation.

- Operating margin stood at 9.1% during Q2 FY21 (10.8% in Q2 FY20).

- Higher depreciation and tax outgo saw PAT decline 82% yoy to Rs.72 mn during the quarter.

- Order book at the end of Q2 FY21 stood at ~Rs.142 bn and YTD Order inflows stands at Rs.60 bn.

https://ysil.in/docs/default-source/research/instieq/jmc-projects-q2fy21.pdf

Shares of JMC PROJECTS (INDIA) LTD. was last trading in BSE at Rs.46.6 as compared to the previous close of Rs. 46.5. The total number of shares traded during the day was 2509 in over 91 trades.

The stock hit an intraday high of Rs. 47 and intraday low of 46.45. The net turnover during the day was Rs. 117036.

Source : Equity Bulls

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