Jyoti Structure's (JYS) Q1FY13 numbers were below Edelweiss' estimates as JYS posted a subdued revenue growth due to sustained issues with clients and ROW. PAT declined by 33% YoY due to higher interest cost. Order intake improved 18% YoY to Rs9.3bn even as the order backlog was flattish at Rs46bn. JYS indicated bids worth Rs115bn, including bids to be opened and those on the anvil. It maintains a revenue growth guidance of 10%-15% with a margin range of 10%-11% for FY13E. Edelweiss maintain HOLD with a target price of Rs41.
Mute execution, higher interest costs dent earnings
JYS reported a passive revenue growth of 3% YoY to Rs6.5bn, primarily due to ROW and client centric issues. Margins came off by 120bps YoY to 9.8% on account of higher sub-contracting charges. JYS continues to face higher interest costs (up 26% YoY), hurting earnings which dipped 33% YoY to Rs174mn. JYS also grapples with high working capital with the debtor at 215days (same as FY12 level).
Order inflow improves, pipeline remains strong
JYS reported a stable order book of Rs46bn, up 3% YoY. It reported a big ticket size order from the West Bengal SEB worth Rs7bn which helped JYS report an order inflow growth of 18% YoY to Rs 9bn.While PGCIL currently accounts for 33% of JYS’ order book, SEBs make up 37% and private sector and others account for the balance 30%. Specifically, transmission line towers account for 55%, sub-station 18% and rural electrification for the rest of the order book. It focuses on select SEBs and PGCIL besides the private sector for incremental order intake. The current order pipeline is ~Rs110bn of which, it has submitted bids worth Rs65bn to PGCIL.
Outlook and valuations: Stable; maintain ‘HOLD’
JYS continues to battle with deteriorating working capital and high interest costs. It mentioned that though the competitive intensity has declined, the pricing remains a problem. Edelweiss trim our earnings estimates by 8% & 6% respectively for FY13E & FY14E respectively building in lower margins. The stock trades at 3.4x and 2.9x FY13E and FY14E earnings, respectively. Edelweiss maintains their ‘HOLD/ Sector Performer’ reco/rating on the stock with a target price of Rs41.
Click here to read the full report
Edelweiss is one of the leading financial services company based in Mumbai, India. Its current businesses include investment banking, securities broking and investment management. They provide a wide range of services to corporations, institutional investors and high net-worth individuals.
For more information please write in to firstname.lastname@example.org
Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.
- Jyoti Structures: Focusing on getting execution back on track
- Buy Jyoti Structures Ltd For Target Rs.75 - Sharekhan
- Stocks on radar: City Union Bank, Jyoti Structures, Manali Petro and Rico Auto
- Jyoti Structures: Muted performance in Q1FY13
- Jyoti Structures: Interest cost continues to drag earnings
Have a question?
Also On IndiaNotes.Com
- Technical Call: Buy GRUH Finance for a target of Rs278
- Buy NTPC above 157 with a stop loss below 130