JMC Projects Results Report - Poised for growth - HDFC Securities

Mr. Parikshit D Kandpal, CFA, HDFC Securities and Mr. Chintan Parikh, Institutional Research Analyst, HDFC Securities

JMC Projects (JMC) reported revenue of INR 13.5bn (+44%/+26% YoY/QoQ), 6% ahead of our estimate. However, EBITDA/APAT missed our estimate by ~7% on higher commodity prices and COVID-related expenses. JMC registered an exceptional year with order wins of INR 84.4bn, taking the order book (OB) to INR 140bn. The momentum has continued in 1QFY22 with intake of INR 30bn until now. Despite the lockdown, labour availability is at 90% of Mar-21. Provided COVID situation does not deteriorate further, management expects 15-20% revenue growth. We reiterate BUY with an increased target price of INR 126, given (1) a healthy order book (~4x FY21 revenue) and (2) comfortable balance sheet. We have tweaked our FY21 estimate to incorporate continued momentum in the order intake and higher commodity prices. Key risks: (1) delay in restructuring/monetisation of BOT assets and (2) increase in leverage.

Growth levers in place; higher commodity prices could put a spanner: JMC reported revenue of INR 13.5bn (+44%/+26% YoY/QoQ). EBITDA at INR 1.3bn was impacted by higher commodity prices. APAT at Rs 601mn (+33% YoY) was 7% below our estimate. Management has guided for 15-20% topline growth in FY22, which we believe is achievable, given the robust OB. Despite 90% of the OB being variable pass-through contract, higher commodity prices could jeopardise JMC's double-digit margin guidance. We remain cautious and build in 9.5% EBITDA margin for FY22.

Exceptional year in terms of order wins: JMC received orders of INR 84.4bn in FY21, more than its guidance of INR 60bn to 80bn for the year. Including the order wins of INR 30bn in 1QFY22, the order book stands at INR 170bn (~4.6x FY21 revenue). Although management did not give any formal guidance, it expects to match FY21 in terms of order intake, driven by B&F and water segments.

Debt to be at the same level; resolution of BOT assets inching closer: Standalone net debt reduced to INR 5.1bn (net D/E 0.47x) from INR 6.6bn at the end of Dec-20. Debt is likely to remain at similar level in the near term, given the growth prospects. Basis management commentary, the restructuring process of two of the BOT road assets (Wainganga and Kurukshetra Expressway) could be completed by Jun-21. For Vindhyachal asset, a binding offer is expected in 60-90 days from a prospective buyer. The restructuring process would potentially reduce (near NIL) the support required from JMC.

Shares of JMC PROJECTS (INDIA) LTD. was last trading in BSE at Rs.98 as compared to the previous close of Rs. 100.85. The total number of shares traded during the day was 43464 in over 946 trades.

The stock hit an intraday high of Rs. 105 and intraday low of 95.7. The net turnover during the day was Rs. 4248067.

Source : Equity Bulls

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