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Jyoti Structures, 6th February, 2013

Jyoti Structures, 6th February, 2013

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Published by Angel Broking
6th February, 2013
6th February, 2013

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Categories:Types, Business/Law
Published by: Angel Broking on Feb 06, 2013
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Please refer to important disclosures at the end of this report
 1 
Quarterly Highlights (Standalone)
 
(
`
cr) 3QFY13 3QFY12
% chg (yoy)
2QFY13
% chg (qoq)
Revenue 620 587
5.5
593
4.5
EBITDA 63 59
5.2
57
9.3
EBITDA margin (%) 10.1 10.1
(3)bp
9.7
 44bp
Reported PAT 13 14
(3.0)
12
12.3
 Source: Company, Angel Research
For 3QFY2013, Jyoti Structures (Jyoti)’s top-line performance was in-line with ourexpectations, posting a subdued 5.5% yoy growth to
 ` 
620cr due to slow executionand revenue deferrals. However, the Management is confident of strong executionin 4QFY2013 as the company has received clearances for its upcoming projects.The EBITDA margin came in flat yoy at 10.1%. Jyoti’s interest coverage multipleremains under stress, declining from 2.0x in 4QFY2012 to 1.6x presently. Theincrease in receivables has led to higher working capital borrowing, elevating theinterest cost. Consequently, the PAT declined by 3.0% yoy to
 ` 
13cr.
Weak order inflow:
The company reported weak order inflow of
 ` 
433cr in3QFY2013. However, the Management believes order inflow will improve goingforward as the company expects few orders from PGCIL and overseas markets tobe finalized soon. Jyoti’s order backlog stood at
 ` 
4,605cr, up 7.1% yoy implyingan order coverage of 1.8x trailing four quarter revenues. The order backlog wasspread across transmission (57%), substation (14%) and rural electrification (29%)segments. Client-wise, the backlog mainly comprised of orders by PGCIL (26%), West Bengal (14%), Maharashtra (27%), Madhya Pradesh (4%), overseas (20%) andthe private sector (3%). The company received major orders from Nigeria andKenya, which boosted its overseas segment’s contribution to the top-line.
Outlook and valuation:
Jyoti’s robust order book and recent focus to scale up itsoverseas operation to insulate itself from domestic headwinds will benefit thecompany in the medium to long term. The stock is currently trading at 3.7xour FY2014E EPS. Given the attractive valuation,
we maintain our Buy ratingon the stock, assigning a multiple of 4.5x FY2014E EPS, to arrive at a targetprice of
`
49.
 
Key financials (Consolidated)
Y/E March (
`
cr) FY2011 FY2012 FY2013E FY2014ENet sales 2,400 2,678 2,802 3,074
% chg 12.7 11.6 4.6 9.7
Net profit 100 92 63 89
% chg 18.4 (8.0) (31.5) 42.1
EBITDA (%) 11.2 11.0 9.5 9.8
EPS (
`
) 12.1 11.2 7.7 10.9
P/E (x) 3.3 3.6 5.3 3.7P/BV (x) 0.6 0.5 0.5 0.4RoE (%) 19.5 16.2 10.0 12.8RoCE (%) 26.3 24.8 19.2 20.3EV/Sales (x) 0.3 0.3 0.3 0.3EV/EBITDA (x) 2.7 2.9 3.5 3.0
 Source: Company, Angel Research
 
BUY
CMP
 ` 
41
 Target Price
 ` 
49
 
Investment Period 12 Months
Stock InfoSectorNet Debt (
 ` 
cr)506Bloomberg CodeJYS@INShareholding Pattern (%)Promoters27.8MF / Banks / Indian Fls18.7FII / NRIs / OCBs13.8Indian Public / Others39.7 Abs. (%)3m1yr3yrSensex4.811.724.5JYS(6.5)(16.6)(74.6)Capital GoodsMarket Cap (
 ` 
cr)333Beta1.452 Week High / Low59/36 Avg. Daily Volume118,020Face Value (
 ` 
)2BSE Sensex19,660Nifty5,957Reuters CodeJYTS.BO
 
Amit Patil
022-39357800 Ext: 6839amit.patil@angelbroking.com
Jyoti Structures
Performance Highlights
3QFY2013 Result Update | Capital Goods
February 5, 2013
 
 
Jyoti Structures
 
| 3QFY2013 Result Update
February 5, 2013
 2
Exhibit 1:
 
Quarterly performance (Standalone)
(
`
cr) 3QFY13 3QFY12
% chg (yoy)
2QFY13
% chg (qoq)
9MFY13 9MFY12
% chg (yoy)
Net Sales
619 587
5.3
592
4.5
1,864 1,857
0.4
Other operating income
1 0 1
-
3 -
-
Total income
620 587
5.5
593
4.5
1,867 1,857
0.6
Stock adjustments
4 (7) 4 19 (20)
Raw Material
371 276
34.6
320
16.2
1,041 1,017
 2.3
(% of total income)
60.6 45.8
1482.1
54.6
56.7 53.7
Erection and sub contracting exp.
109 166
(34.2)
125
(12.2)
381 411
(7.2)
(% of total income)
17.7 28.3
(1067.2)
21.0
 20.4 22.1
Employee Cost
20 19
 4.0
23
(12.0)
66 59
10.6
(% of total income)
3.2 3.3 3.8
3.5 3.2
Other Expenses
52 73
(28.9)
64
(19.1)
177 192
(7.7)
(% of total income)
8.4 12.5
(406.7)
10.8
9.5 10.3
Total Expenditure
557 527
5.6
535
4.0
1,684 1,659
1.5
EBITDA
63 59
5.2
57
9.3
184 198
(7.0)
(EBITDA %)
10.1 10.1 9.7 9.8 10.6
Interest
38 35
10.4
35
8.6
107 93
15.9
Depreciation
6 6
5.6
6
(1.9)
19 17
10.0
Other Income
1 3
(76.2)
2
(72.1)
3 6
-
PBT
19 22
(13.1)
18
4.4
61 94
(34.9)
(% of total income)
3.3 3.7 3.0
3.3 5.1
Total Tax
7 8
(13.3)
6.0
12
21 32
(32.7)
(% of PBT)
33.5 36.1 33.6
35.1 33.9
Reported PAT
13 14
(3.0)
12
12.3
40 62
(36.1)
(PAT %)
2.2 2.4 2.0
3.8 6.1
EPS (
`
)
1.6 1.7 1.5
12.3
5.2 7.6
(31.3)
 Source: Company, Angel Research
Exhibit 2:
 
 Actual vs Estimates
(
`
cr) Actual Estimates
Var (%)
Revenue 620 617
0.5
EBITDA 63 65
(3.4)
PAT 13 18
(25.1)
 Source: Company, Angel Research
 
 
Jyoti Structures
 
| 3QFY2013 Result Update
February 5, 2013
 3
Exhibit 3:
 
Trend in revenues
 Source: Company, Angel Research
Exhibit 4:
 
Trend in EBITDA 
 Source: Company, Angel Research
Subdued revenue growth
Jyoti’s revenues were in-line with our expectations, posting a subdued 5.5% yoy growth to
 ` 
620cr. The EBITDA margin came in flat at 10.1%. Jyoti’s interestcoverage multiple remains under stress, declining from 2.0x in 4QFY2012 to 1.6xpresently. The increase in receivables has led to higher working capital borrowing,elevating the interest cost. Consequently, the PAT declined by 3.0% yoy to
 ` 
13cr.The debtor days continue to be as high as 228 days, mainly due to pendingreceivables from Maharashtra (
 ` 
250cr), Tamil Nadu (
 ` 
68cr) and Rajasthan (
 ` 
58cr)discoms. In light of the deteriorating working capital cycle (higher levels of workingcapital borrowing), we expect interest costs to remain elevated going forward.
Exhibit 5:
 
Interest coverage ratio
 Source: Company, Angel Research
Exhibit 6:
 
Trend in PAT
 Source: Company, Angel Research
   5   5   1   7   2   2   6   3   8   6   3   2   5   8   7   7   3   5   6   5   5   5   9   3   6   2   0
7.931.813.016.56.51.92.7(6.2)5.5(10)(5)051015202530350100200300400500600700800
   3   Q   F   Y   1   1   4   Q   F   Y   1   1   1   Q   F   Y   1   2   2   Q   F   Y   1   2   3   Q   F   Y   1   2   4   Q   F   Y   1   2   1   Q   F   Y   1   3   2   Q   F   Y   1   3   3   Q   F   Y   1   3
Sales (` cr, LHS)
Growth (yoy %, RHS)
   6   3   8   4   7   0   6   8   5   9   8   2   6   4   5   7   6   3
11.411.611.010.810.111.29.89.710.1024681012140102030405060708090
   3   Q   F   Y   1   1   4   Q   F   Y   1   1   1   Q   F   Y   1   2   2   Q   F   Y   1   2   3   Q   F   Y   1   2   4   Q   F   Y   1   2   1   Q   F   Y   1   3   2   Q   F   Y   1   3   3   Q   F   Y   1   3
EBITDA (` cr, LHS)
EBITDAM (%, RHS)3.23.13.02.52.62.21.72.01.91.61.51.71.92.12.32.52.72.93.13.3
   1   Q   F   Y   1   1   2   Q   F   Y   1   1   3   Q   F   Y   1   1   4   Q   F   Y   1   1   1   Q   F   Y   1   2   2   Q   F   Y   1   2   3   Q   F   Y   1   2   4   Q   F   Y   1   2   1   Q   F   Y   1   3   2   Q   F   Y   1   3   2   5   3   5   2   6   2   2   1   4   3   1   1   7   1   2   1   3
4.54.84.13.52.44.32.62.02.20123456-510152025303540
   3   Q   F   Y   1   1   4   Q   F   Y   1   1   1   Q   F   Y   1   2   2   Q   F   Y   1   2   3   Q   F   Y   1   2   4   Q   F   Y   1   2   1   Q   F   Y   1   3   2   Q   F   Y   1   3   3   Q   F   Y   1   3
Adj. PAT (` cr, LHS)
PATM (%, RHS)

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