YES Securities is bullish on JMC Projects (India) has recommended buy rating on the stock with a target price of Rs 65 in its research report dated August 13, 2020.
YES Securities' research report on JMC Projects (India)
JMC Projects delivered subdued performance during Q1 FY21 with standalone revenues declining 48% yoy (to Rs.4.7bn). The execution was impacted due to COVID-19 related shutdown with disruptions in labor/raw material availability. At the operating level, margin declined to 5.9% primarily due to lower execution and continued fixed costs. However, with several costs cutting initiatives and improved business mix, the management expects normalized level of margins going forward. JMC has received Rs.20.1 bn worth of orders during Q1 FY21, which leads to a robust order book position of Rs.114.2bn. Toll collective average per day in its BOT assets declined to Rs.3.7mn during Q1 FY21 (down from Rs.5.9mn registered during Q1 FY20) largely impacted due to lockdown and restrictions on vehicle movements. With execution expected to pick up in coming months, we expect company to make up for significant part of revenue that would be lost due to COVID related shutdown. Overall, we expect a revenue de-growth of 11% during FY21 followed by a 18% growth in FY22. The company has taken various cost cutting measures during Q1 FY21.
Outlook
We expect operating margin to improve gradually as execution ramps up in subsequent quarters. Refinancing of certain BOT assets would also aid in reducing debt. We maintain our BUY rating on the stock for revised target of Rs.65 (based on SOTP valuation).
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