Along with piling machines, the company also owns a large fleet of other construction equipment and machinery, which are leveraged to a relatively higher level. Most of its operations are centred in Maharashtra, especially in Mumbai, which allows feasible movement of the equipment within various construction sites.
This not only helps in optimal usage of equipments, but it also reduces dependence on leased equipment.
The company has made efforts to move up the ladder and now intends to invest more for purchasing equipment and enhance its working capital. To fund these, it is raising Rs 78 crore from its initial public offer. It also hopes to procure larger and complex projects besides, enabling it to execute projects faster.
Valuations
At the offer price of Rs 110-120, the stock is priced at 28-31 times its FY07 earnings and 14-15 times its annualised earnings for FY08. Considering the current order book of Rs 461 crore, which is about 4 times its FY07 revenue, and an average execution time of 18-24 months, the company is expected to maintain an annual growth of about 50 per cent in revenues, over the next two years.
Also, with net margins of about 9-9.5 per cent, profit is expected to grow about 80-90 per cent in FY08 and by over 50 per cent in FY09. To sum up, J Kumar has the potential to deliver decent returns.
Issue opens: January 24, 2008 Issue closes: January 29, 2008
