CLSA reiterates 'buy' rating on J Kumar Infra

Mumbai: CLSA has retained a 'buy' rating on J Kumar Infraprojects despite weak second quarter earnings, stating that the company offers a play into the urbanisation capex, given its successful entry into the metro rail segment.

"Its order book at Sep-end is strong at Rs83bn (Rs 8,300 crore), covering 5x FY17CL revenue. We like JKI’s regional focus, control over machinery and aggregates, aversion to debt, hands-on promoters and a shift to complex projects, which have given it industry-leading margins," said CLSA analyst Bharat Parekh in a report dated December 10.

Strong earnings per share growth is also a factor in maintaining a 'buy', said CLSA.

The brokerage cut EPS estimate for FY17-19 by 2-9% to account for slower execution and delay in metro orders, but maintained its target price of Rs 330 as it rolled forward valuation to September 2018