This Infrastructure Stock Can Give Over 90% Gains, Requisites In Place For Better Scale Ahead

The brokerage firm Anand Rathi has given a buy call on the JMC projects (India) with a target price of Rs 148 per share. Currently, the shares of the company are trading at Rs 77.70. With the given target price and the CMP, the stocks have the potential to gain over 90% returns. JMC Projects (India) Ltd.'s price can reach the set objective in one year, according to the brokerage.

Sturdy Orderbook, ample assurance

The brokerage has said, "Though order additions eased in Q4 FY22, good additions earlier in the year, led to its single year best FY22 additions of ~Rs101bn, and far exceeded works executed in the year. Hence, the end-FY22 ~Rs171bn Orderbook is sturdy (~3.2x FY22 revenue), and turns sturdier on including ~Rs22bn added in Q1 FY23 and ~Rs27bn of L1 orders. Management sees the OB as good to deliver at least 15-20% y/y higher FY23 revenues, and spoke of potential if the generally disrupted supply-chain normalises at the earliest."

Commenting on the KPP-JMC merged entity, the brokerage has said, "With the merger process going well, management expects it to be completed by Mar'23. The proposed merger is likely to bring complementary capabilities into play to win business in high- growth segments and emerging markets, heighten capabilities to bid for large/ complex projects and bring efficiencies (procurement synergies and cost optimisation - finance and otherwise) to augment shareholder wealth."

 

Investment Rationale

Strong order addition, an inspiring pace of execution and efforts to contain BOT-toll bleed are some of the key positives from FY22. The future looks bright: the strong order backlog seems set to pave the way for healthy growth in core operations and operating profitability (a miss in FY22, largely on the BOT-toll ECL provisioning) is already on an uptrend. Success with restructuring/refinancing efforts (underway) combined with the gradually rising average daily collection at the road BOT portfolio would mean funding needs trend down. "On the strong assurance, bright outlook and benign valuation, we retain our Buy rating," Anand Rathi Has said.

Buy for a target price of Rs 148

Anand Rathi Securities recommends buy for a target price of Rs 148. The brokerage firm has said, "On the stronger-than-expected pace of execution but pruned margins (reflecting inflationary pressures), we raise our FY23e earnings ~6%, and ~7% for FY24. On our revised estimates, the stock (excl. Investments) trades at PEs of 5.1x FY24e." According to the brokerage, the risk would be a Sharp surge in key inputs.

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi Securities. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.