Recommendation From Construction & Contracting - Civil Sector
This section gives a recommendation of a stock having stock price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon.
JMC PROJECTS (INDIA) LTD. : BUILDING A STRONG FOUNDATION
HERE IS WHY
✓Good financial improvement
✓Good growth prospects
✓Focus on cost reduction
JMC Projects (India) Limited (JMC), a subsidiary of Kalpataru Power Transmission Limited, is one of the leading civil construction and infrastructure EPC companies in India with over three decades of experience. With its strong focus on quality backed with proficient project management and execution capabilities, JMC has emerged a market leader in the verticals of buildings and factories, and water and urban infrastructure. JMC has been involved in the construction of landmark edifices and has developed expertise in areas like highways, expressways, bridges, flyovers, townships, high-rise buildings, commercial buildings, IT-ITES parks, hospitals, educational complexes, industrial units, metro rail, and water supply and power plants.
It has expanded its operations in the international EPC market with presence in Sri Lanka, Ethiopia, Mongolia and Maldives. The company reported net sales of Rs 3,844.46 crore in FY21. It had reported net sales of Rs 3,866.31 crore in FY20, posting a decrease of 0.57 per cent. The company reported PBIDT of Rs 439.99 crore in FY21, a decrease of 0.95 per cent. It had reported PBIDT of Rs 444.20 crore in FY20. The company reported PAT of Rs 6.01 crore in FY21, a decrease of 75.55 per cent. It had reported PAT of Rs 24.58 crore in FY20. The company has reported cash from operating activities of Rs 478 crore in FY21 as against Rs 335 crore it reported in FY20.
The company recorded its highest ever quarterly revenue of Rs 1,392.22 crore in March 2021, up by 42.6 per cent from Rs 976.28 crore in March 2020. This revenue growth was driven by robust execution in buildings and factories, and water and urban infrastructure business. Its PBIDT was at Rs 170.52 crore in March 2021, up 217.25 per cent from Rs 53.75 crore in March 2020. The quarterly net profit was Rs 51.44 crore in March 2021 as against net loss of Rs 49.66 crore in March 2020, an increase of 203.58 per cent. JMC registered an exceptional year with order wins of Rs 7,916 crore, taking the order book (OB) to Rs 14,009 crore.
The momentum has continued in Q1FY22 with intake of Rs 30 billion until now. Although the management did not give any formal guidance, it expects to match FY21 in terms of order intake, driven by building and factories and water segments. The management has guided for 15-20 per cent top-line growth in FY22. It has expanded its presence in five new countries. Now its global footprint stands at 62 countries. The company has reduced debt in FY21 with net debt at one of the lowest levels in the recent past of Rs 512 crore as on March 21, 2021. Debt is likely to remain at a similar level in the near term given the growth prospects.
On the basis of the management commentary, the restructuring process of two of the BOT road assets of Wainganga and Kurukshetra expressways could be completed by June 2021. For its Vindhyachal asset, a binding offer is expected in 60-90 days from a prospective buyer. The restructuring process would potentially reduce the support required from JMC. These factors will drive growth through a healthy order book and comfortable balance sheet. The key risks are delay in restructuring or monetisation of BOT assets and increase in leverage. By virtue of these factors, we recommend our reader-investors to BUY this stock.
