Buy This Small-Cap Infra Stock For 75% Gains, Share Price Surged 13.48% In A Month: Anand Rathi

Anand Rathi is bullish on JMC Projects Limited, a small cap infra company, and suggest buying for a target price of Rs 150 apiece. The brokerage sees potential gains of 75% if the stocks of the company are bought at the current market price.

Stock outlook & Returns

The JMC Projects stock's current market price is Rs 85.85 apiece, closed after a gain of 1.54%. Currently, the is trading Rs 17.75 above the 52-week low and Rs 37.3 below the 52-week high, respectively. The 52 week low of the stock was recorded in May 2022 at Rs 68.10 apiece and the 52 week high was in January 2021 at Rs 123.15 apiece.

The share in the past 1 week gained around 4.19% and in the past1 month gained nearly 13.48%, respectively. Whereas in the past 1 year the share price has fallen almost 29.34% and 26.28% in the past 3 years, respectively. However, in the past 5 years, the stocks delivered positive returns of 21.7%.

The PE ratio is 24.18 and the P/B ratio is 2.74, respectively. TTM EPS is Rs 3.55. The ROE is 3.45%. Its dividend yield is 1.16% and the face value is Rs 2. It has a market cap of Rs 1441 crore.

Additions continue, Order Book sturdy

With orders of ~Rs37bn already in FY23, the additions are brisk. The L1 status for orders of ~Rs28bn and a healthy prospects pipeline suggests the momentum is set to continue, and FY23 inflow guidance of Rs100-110bn is possible. With strong additions, the end-Q1 Order Book was sturdy at ~Rs194bn, and the assurance turns sturdier on post-Q1 and L1 orders included.

Leverage down, on sturdy core operations

Notwithstanding a better scale of operations (consequently working capital needs), the Rs0.2bn-0.25bn capex and the ~Rs0.2bn support to the BOT-toll SPVs, standalone net debt contracted ~Rs0.65bn q/q (to ~Rs5.74bn). This is a sign of core operations generating well enough not only to meet core needs, but non-core as well (read BOT-toll). With restructuring/refinancing of BOT-toll SPVs nearing fruition and traffic rising constantly, free cash-flow generation appears to hold potential.

KPP-JMC merger, progressing

No observation letters from SEBI and the stock exchanges have been received, and NoCs from lenders, too, are in place. The merger petition was filed with the NCLT in May'22, and would be followed up with shareholder and other stakeholder meetings. Management expects the entire process to be complete by Q4 FY23.

Inspiring start to the year; Buy for 150

JMC made an encouraging start to the year, with strong order additions, and pruned leverage even with a greater scale of operations and support to BOT-toll SPVs. Refinancing and restructuring are nearing fruition, and constantly rising traffic at its BOT-toll portfolio would lessen the support required. With this and operations moving in right direction, the future looks bright. The strong order backlog, and already returning operating profitability seems set to pave the way to healthy growth in core operations. On the strong assurance, bright outlook and benign valuation, we retain our Buy rating, with a slightly raised Target Price of Rs150 (from Rs148).

Brokerage suggests, "We retain our inflow and revenue estimates, but operating profitability and earnings we alter a bit on FY22 actuals from the annual report. At the Current Market Price, the stock (excl. investments) trades at a PER of 5.5x FY24e. Risks: Slower-than-expected pace of execution, surge in key inputs."

About - JMC Projects Limited

Incorporated in 1986 as a construction company under the name of Civen Construction Pvt Ltd now the JMC Projects (India) Limited has to its credit many prestigious projects in Industrial Power Institutional & Infrastructure sectors and is always acknowledged as a reliable & professional construction company by discerning & quality conscious market. JMC is engaged in civil and structural construction work of Industrial Power projects pharmaceutical projects Corporate houses Institutional and Residential projects Infrastructure projects etc. working across India. The Company's status was converted from private limited to a public limited company on 4th February of the year 1994 and consequently obtained its present name as JMC Projects (India) Limited. In the year 1997, the company bagged an Award for 'Perfection in Time & Quality' presented by Ahmedabad Management Association for the Construction of World Class Management Institution Building at Ahmedabad.

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. Greynium Information Technologies, the Author, and the respective 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 decision.