jyoti structures 2qfy2013

7/30/2019 Jyoti Structures 2QFY2013

http://slidepdf.com/reader/full/jyoti-structures-2qfy2013 1/11

Please refer to important disclosures at the end of this report 1

EBITDA 57 68 (15.8) 64 (10.6)

EBITDA margin (%) 9.7 10.8 (111)bp 9.8 (13)bp

Source: Company, Angel Research

Jyoti Structures (Jyoti)’s 2QFY2013 performance was below our expectations, with

the top-line declining by 6.2% yoy to ` 593cr. The company’s EBITDA came in at

` 57cr, 15.8% lower yoy. The EBITDA margin contracted 111bps following tough

competition in the sector and is presently at 9.7%. Jyoti’s interest coverage

multiple remains under stress, declining from 2.6x in 1QFY2012 to 1.6x

presently. The increase in receivables has led to higher working capital

borrowing, elevating the interest cost. Consequently, the PAT declined by 46.0%

yoy to ` 12cr.

The company reported a strong order inflow of ` 801cr in

2QFY2013. The order flow from Power Grid Corporation of India (PGCIL) is

expected to retain traction; we therefore see order inflows for Jyoti to remain

stable. Jyoti’s order backlog stood at ` 4,800cr up 9.7% yoy. However the

company’s order coverage has been lower at 1.7x over the past few quarters. The

order backlog was spread across transmission (60%), substation (25%) and

distribution (15%) segments. Client-wise, the backlog mainly constituted of orders

by PGCIL (29%), West Bengal (15%), Maharashtra (12%), MP (6%), overseas (15%)

and the private sector (5%). The company received major orders from Kenya and

Uganda which boosted its overseas segment’s contribution to the top-line.

Jyoti’s robust order book and recent focus to scale up its

overseas operation to insulate itself from domestic headwinds will benefit the

company in the medium to long term. The stock is currently trading at 3.7x

our FY2014E EPS. Given the attractive valuations,

% chg 12.7 11.6 4.3 9.1

% chg 18.4 (8.0) (17.6) 27.1

EBITDA (%) 11.2 11.0 10.6 10.6

P/E (x) 3.6 3.9 4.7 3.7

P/BV (x) 0.6 0.5 0.5 0.4

RoE (%) 18.7 14.9 10.9 12.5

RoCE (%) 25.4 19.6 16.0 17.2

EV/Sales (x) 0.3 0.5 0.4 0.4

EV/EBITDA (x) 2.9 4.1 3.7 3.4


CMP ` 44

Target Price ` 53

Investment Period 12 Months

Stock Info

Sector

Net Debt ( ` cr) 841

Bloomberg Code JYS@IN

Shareholding Pattern (%)

Promoters 27.8

MF / Banks / Indian Fls 17.8

FII / NRIs / OCBs 14.3

Indian Public / Others 40.2

Abs. (%) 3m 1yr 3yr

Sensex 6.4 7.6 13.2

JYS 13.8 (28.1) (69.7)

Reuters Code JYTS.BO

BSE Sensex 18,684

Nifty 5,686

Avg. Daily Volume 110,340

Face Value ( ` ) 2

Beta 1.4

52 Week High / Low 60/35

Capital Goods

Market Cap ( ` cr) 359

022-39357800 Ext: 6839

[email protected]

Performance Highlights

2QFY2013 Result Update | Capital Goods

November 9, 2012



Jyoti Structures | 2QFY2013 Result Update

November 9, 2012 2

Exhibit 1: Quarterly performance (Standalone)

Other operating income 1 0 1 - 2 - -

Stock adjustments 4 5 10 15 (13)

Raw Material 320 353 (9.4) 350 (8.6) 669 741 (9.7)

(% of total income) 54.6 56.6 55.0 54.8 57.4

Erection and sub contracting exp. 125 125 (0.1) 147 (15.3) 272 244 11.1

(% of total income) 21.0 19.7 22.5 21.8 19.3

Employee Cost 23 20 11.4 23 (0.4) 46 40 13.7

(% of total income) 3.8 3.2 3.5 3.7 3.2

Other Expenses 64 61 5.6 61 6.0 125 119 5.5

(% of total income) 10.8 9.6 9.3 10.0 9.3

(EBITDA %) 9.7 10.8 9.8 9.7 10.9

Interest 35 31 13.6 34 3.9 69 58 19.2

Depreciation 6 6 12.4 6 1.4 12 11 12.3

Other Income 1 2 (68.0) 2 (69.5) 3 3 -

(% of total income) 3.0 5.3 4.0 3.4 5.7

Total Tax 6 11 (46.3) 8.7 (30) 15 24 (38.9)

(% of PBT) 33.6 33.7 33.4 34.7 33.3

(PAT %) 2.0 3.5 2.6 4.1 6.5


Exhibit 2: Actual vs Estimates

EBITDA 57 65 (12.1)

12 18 (33.5)





November 9, 2012 3

Revenue declines by 6.2% yoy

Jyoti’s revenues were below our expectations, declining by 6.2% yoy to ` 592cr

on account of slower execution. The company’s EBITDA came in at ` 57cr, 15.8%

lower yoy. The EBITDA margin contracted 111bps following tough competition in

the sector and is presently at 9.7%. We expect the company to continue to operate

at these levels over the coming quarters. Consequently, the PAT declined by 46.0%

yoy to ` 12cr

Exhibit 3: Trend in revenues


Exhibit 4: Trend in EBITDA


Interest cost pressure remains…

Jyoti’s interest coverage multiple remains under stress, declining from 2.6x in

1QFY2012 to 1.6x presently. The increase in receivables has led to higherborrowing, thus elevating the interest cost. In light of the deteriorating working

capital cycle (higher levels of working capital borrowing), we expect interest costs

to remain elevated going forward.

Exhibit 5: Interest coverage ratio


Exhibit 6: Trend in PAT


5 4 2

5 5 1

7 2 2

6 3 8

6 3 2

5 8 7

7 3 5

6 5 5

5 9 3

14.7 7.9

31.8

13.0 16.5 6.5

1.92.7

(6.2)

-10

-5

05

10

15

20

25

30

35

0

100

200300

400

500

600

700

800

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

Sales (` cr, LHS) Growth (yoy %, RHS)

6 3

6 3

8 4

7 0

6 8

5 9

8 2

6 4

5 7

11.6 11.4 11.611.0 10.8

10.111.2

9.8 9.7

0

2

4

6

8

10

12

14

0

10

2030

40

50

60

70

80

90

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

EBITDA (` cr, LHS) EBITDAM (%, RHS)

3.23.1

3.0

2.5 2.6

2.2

1.7

2.0 1.9

1.6

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

3.3

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

2 5

3 5

2 6

2 2

1 4

3 1

1 7

1 2

4.6 4.54.8

4.1

3.5

2.4

4.3

2.6

2.0

0

1

2

3

4

5

6

-

5

10

15

20

25

30

35

40

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

Adj. PAT (` cr, LHS) PATM (%, RHS)




November 9, 2012 4

Order flows remain stable

The company reported a strong order inflow of ` 801cr in 2QFY2013. The order

flow from PGCIL is expected to retain traction; we therefore see order inflows for

Jyoti to remain stable. Jyoti’s order backlog stood at ` 4,800cr up 9.7% yoy.

However the companies order coverage has been lower at 1.7x over the past few

quarters. The order backlog was spread across transmission (60%), substation

(25%) and distribution (15%) segments. Client wise, the backlog mainly constituted

of orders by PGCIL (29%), West Bengal (15%), Maharashtra (12%), Madhya

Pradesh (6%), overseas (15%) and private sector (5%). The company received

major orders from Kenya and Uganda which boosted its overseas segment’s

contribution to the top-line.

Exhibit 7: Order Book coverage ratio


Exhibit 8: Order backlog growth


2.0

1.91.9

1.8

1.7

1.7 1.7

1.81.7

1.5

1.6

1.6

1.7

1.7

1.8

1.8

1.9

1.9

2.02.0

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

4 , 2

5 0

4 , 1

0 0

4 , 5

0 0

4 , 4

7 0

4 , 3

7 5

4 , 3

0 0

4 , 3

4 0

4 6 0 0

4 8 0 0

9.8

1.7

8.4 8.9

2.94.9

(3.6)

2.9

9.7

-8

-3

2

7

12

17

3,600

3,800

4,000

4,200

4,400

4,600

4,8005,000

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

Order backlog Growth (yoy %, RHS)




November 9, 2012 5

Investment arguments

Globally the thumb rule entails that for every rupee

invested in generation, an equivalent amount is to be invested in transmission and

distribution (T&D). However, India has spent only 50% on T&D of what has been

spent on generation in recent years, thus creating a huge opportunity for players in

the T&D space. PGCIL has envisaged a T&D capex of ` 1 lakh cr for the 12th plan,

55% of which is expected to be deployed in transmission and substation projects,

thus providing an array of opportunities to Jyoti, given its strong foothold in the

T&D segment.

Jyoti has been actively tapping the

overseas markets by entering into JVs in South Africa and the Gulf. In addition, the

company recently forayed into the US by setting up a transmission tower plant

(revenue potential of ~ ` 340cr annually - @100% capacity utilization). We believe

these ventures will benefit the company in the long run, thereby insulating it from

domestic headwinds.

Jyoti’s robust order book and recent focus to scale up its

overseas operation to insulate itself from domestic headwinds will benefit the

company in the medium to long term. The stock is currently trading at 3.7x our

FY2014E EPS. Given the attractive valuations,

Exhibit 9: Peer comparison

ABB* Sell 729 593 (18.7) 5.5 4.8 50.4 29.5 68.4 11.6 17.6

BHEL Neutral 232 - - 2.8 2.4 9.4 10.6 (13.2) 33.5 24.5

BGR Energy Neutral 266 - - 1.5 1.4 10.6 9.5 (5.3) 31.1 27.1

Crompton Greaves Buy 113 145 28.3 1.9 1.7 28.4 14.6 15.5 6.9 12.6

KEC International Accum 64 73 14.9 1.3 1.1 8.9 7.0 5.8 22.0 23.2

Thermax Neutral 594 - - 3.8 3.3 21.1 19.1 (4.1) 19.2 18.5

Source: Company, Angel Research;*Note: December year ending




November 9, 2012 6

Exhibit 10: One year forward PE Band


Company background

Jyoti is one of the leading EPC players in the transmission line and substation

segments with business presence across transmission line towers, substation and

rural electrification. The company offers a wide range of services in design,

engineering, tower testing, manufacturing, construction and project management.

In addition to its strong domestic presence, Jyoti is also exploring T&D capex

opportunities on the global front through recent overseas JVs and investments

(Jyoti America and Gulf Jyoti).

0

70

140

210

280

350

O c t - 0 6

J a n - 0

7

A p r - 0 7

J u l - 0 7

O c t - 0 7

J a n - 0

8

A p r - 0 8

J u l - 0 8

O c t - 0 8

J a n - 0

9

A p r - 0 9

J u l - 0 9

O c t - 0 9

J a n - 1

0

A p r - 1 0

J u l - 1 0

O c t - 1 0

J a n - 1

1

A p r - 1 1

J u l - 1 1

O c t - 1 1

J a n - 1

2

A p r - 1 2

J u l - 1 2

O c t - 1 2

( ` )

Share Price (`) 3x 7x 11x 15x




November 9, 2012 8

Balance sheet (Consolidated)

Equity Share Capital 16 16 16 16 16 16Preference Capital 0 0 0 0 0 0

Shareholders’ Funds 419 491 576 660 724 811

Minority Interest 0 0 0 1 1 1

Total Loans 313 369 477 918 813 813

Deferred Tax Liability 9 18 18 125 125 125

Gross Block 190 244 283 324 364 419

Less: Acc. Depreciation 55 69 87 100 127 158

Capital Work-in-Progress 4 2 8 169 249 199

Goodwill 0 0 0 0 0 0

Investments 17 17 17 22 17 17

Deferred Tax Asset 0 0 0 0 0 0

Cash 39 54 67 54 81 74

Loans & Advances 228 185 180 222 220 252

Inventories 153 247 231 295 269 280

Debtors 712 863 1,093 1,569 1,294 1,403

Others 0 0 0 60 0 0

Current liabilities 550 665 722 911 701 735

Mis. Exp. not written off 1 0 0 0 0 0

Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with

previous year numbers




November 9, 2012 9

Cash Flow statement (consolidated)

Depreciation 10 18 21 23 27 31(Inc)/Dec in Working Capital (70) (86) (152) (332) 153 (119)

Less: Other income (6) (6) (5) (8) (7) (9)

Direct taxes paid (49) (53) (56) (43) (36) (46)

(Inc.)/Dec.in Fixed Assets (80) (58) (50) (224) (120) (5)

(Inc.)/Dec. in Investments (7) 0 0 -5 5 0

Other income 6 6 5 8 7 9

Issue of Equity 0.1 0.1 0.0 0 0.0 0.0

Inc./(Dec.) in loans 88 56 108 441 (105) 0

Dividend Paid (Incl. Tax) (9) (10) (14) (10) (10) (10)

Others 7 10 2

Inc./(Dec.) in Cash 25 15 13 (13) 27 (6)






November 9, 2012 10

Key ratios

P/E (on FDEPS) 4.2 4.3 3.6 3.9 4.7 3.7P/CEPS 3.8 3.5 3.0 3.1 3.5 2.8

P/BV 0.9 0.7 0.6 0.5 0.5 0.4

Dividend yield (%) 2.1 2.3 3.4 2.3 2.3 2.3

EV/Sales 0.3 0.3 0.3 0.5 0.4 0.4

EV/EBITDA 3.0 2.9 2.9 4.1 3.7 3.4

EV / Total Assets 0.9 0.8 0.7 0.7 0.7 0.6

OB/Sales 2.0 1.9 1.9 1.6 1.6 0.0

EPS (Basic) 10.4 10.3 12.1 11.2 9.2 11.7

EPS (fully diluted) 10.4 10.3 12.1 11.2 9.2 11.7

Cash EPS 11.6 12.5 14.7 14.0 12.5 15.5

DPS 0.9 1.0 1.5 1.0 1.0 1.0

Book Value 51.3 59.8 70.1 80.3 88.2 98.7

EBIT margin 10.7 9.9 10.3 10.2 9.6 9.6

Tax retention ratio (%) 63.3 61.3 63.9 68.4 67.5 67.5

Asset turnover (x) 2.9 2.8 2.6 2.0 1.7 1.9

RoIC (Pre-tax) 31.5 27.7 27.0 20.6 16.7 18.0

RoIC (Post-tax) 19.9 17.0 17.3 14.1 11.3 12.1

Cost of Debt (Post Tax) 16.2 14.3 14.4 14.1 12.8 13.2

Leverage (x) 0.6 0.6 0.7 1.0 1.1 1.0

Operating ROE 22.4 18.7 19.2 14.0 9.5 11.1

RoCE (Pre-tax) 30.2 26.1 25.4 19.6 16.0 17.2

Angel RoIC (Pre-tax) 31.7 27.8 27.2 22.0 19.2 20.8

RoE 22.6 18.6 18.7 14.9 10.9 12.5

Asset Turnover (Gross Block) (X) 12.1 9.8 9.1 8.8 8.1 7.8

Inventory / Sales (days) 23 34 36 36 37 33

Receivables (days) 120 135 149 181 187 161

Payables (days) 91 111 113 117 110 89 WC cycle (ex-cash) (days) 101 101 107 137 151 137

Net debt to Equity 0.7 0.6 0.7 1.3 1.0 0.9

Net debt to EBITDA 1.3 1.4 1.5 2.9 2.5 2.3

Interest Coverage 2.9 2.6 2.6 1.9 1.6 1.8






November 9, 2012 11

Research Team Tel: 022 - 3935 7800 E-mail: [email protected] Website: www.angelbroking.com

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

risks of such an investment.

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .

Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in

the past.

Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in

connection with the use of this information.

Note: Please refer to the important ` Stock Holding Disclosure' report on the Angel website (Research Section). Also, pleaserefer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited andits affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement Jyoti Structures

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.

Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

jyoti structures 2qfy2013

Documents