Retail Research

Sector: Capital Goods-Power

28 October 2011
Results Update

Jyoti Structures Ltd.

Buy CMP: Rs 61
STOCK DATA BS E Code NSE Code Bloomberg Code 52 Week High / Low (Rs .) Face Value (Rs.) Shares Outstanding (Crore.) Market Cap. (Rs Crore.) Avg Yearly Volume 513250 JYOTIS TRUC JYS IN 147 / 58 2 8.23 501 64261

Target: Rs 74

Jyoti Structures Ltd. (JSL) is one of leading end to end turnkey solution providers in high voltage transmission line towers and substations. Key Highlights of the Q2FY12: n The company has declared it Q2FY12 earning which are inline with our estimates. The net sales during the quarter and H1FY12 clocked 16 and 15 percent to Rs632 and Rs1270 crore respectively. However, the PAT during the same period declined by 11 and 6 percent to Rs22 and Rs48 crore respectively. n The decline in PAT is mainly attributed to higher interest expenses as the same has clocked 50 and 43 percent to Rs31 and Rs58 crore during Q2FY12 and H1FY12 respectively.
n

n n n

The above sales comprise of 70 percent transmission, 11 percent substation and 19 percent Rural Electrifications. The exports and deemed exports is about 23 percent and rest from domestic operations. The EBITDA during Q2FY12 and H1FY12 grew 8 and 9 percent to Rs68 and Rs138 crore respectively whereas the EBITDA margins contracted by ~1 percentage point to 10.8 and 10.9 percent respectively due to higher erection and sub-contracting expenditure. The current order book as on September 2011 is stands at Rs4375 crore. The company started Q2FY12 with an order book of Rs 4470 crore. It has executed about Rs 645 crore and added new orders worth Rs 550 crore Out of above orders, nearly 70 percent is comprises of domestic and rest from export segment. Of above orders, the transmission line comprises of 60 percent whereas the substation and rural electrification has rests at 22 and 18 percent respectively. The order book for Gulf Jyoti and Jyoti Africa is stands at $200 and $220 million respectively. PGCIL comprises of ~35 percent, Maharashtra SEB is 18 percent, MPSEB 9 percent, Private Players 11 percent and rests is from other SEB's. The company has submitted the bid for nearly 1500 crore with PGCIL which is expected to be open. Apart from above, PGCIL is also expected to invite bid for ~5000 crore in next 2-3 months time. Apart from this nearly 6000 crore worth BOT orders are expected to be finalized indicating a good business visibility.

SHAREHOLDING PATTERN (%) Particulars Promoters FII Public & Others Sept. 2011 27.6 9.14 36.39 Jun. 2011 27.6 10.41 27.48 34.51 Mar. Dec. 2011 2010 27.6 10.72 28.19 33.48 27.6 11.0 29.9 31.5

Banks / MF/ Insurance 26.88

VALUATION RATIOS Particulars PE (x) P/BV (x) EV /EBITDA (x) EV /Sales (x) Mcap/Sales (x) ROE (%) ROCE (%) 2010A 2011A 5.9 1.0 3.6 0.4 0.2 17.2 24.7 5.0 0.9 3.4 0.4 0.2 17.3 23.5 2012E 5.3 0.8 3.3 0.4 0.2 14.4 22.1 2013E 4.3 0.7 2.8 0.3 0.2 15.5 23.1

Valuations: At current price of Rs61 the stock is trading at 5.3x and 4.3x of FY12E and FY13E earnings respectively. Though, Jyoti has order book which is nearly 2x of its FY11 sales, we are expecting muted growth for FY12 and FY13, however, with heavy price correction in stocks the valuation looks very attractive. We recommend a BUY on the stock with Price target of Rs74 by discounting FY13E EPS of Rs14.3 by 5.2x thus provides an upside potential of 22 percent.
FINANCIAL SUMMARY Year 2010 2011 2012 2013 A A E E Sales Rs (Cr) 2,129.8 2,399.6 2,385.6 2,465.7 T.Income Rs (Cr) 2,136.1 2,404.5 2,390.4 2,470.7 EB ITDA Rs (Cr) 228.7 267.9 269.6 303.3 PBT Rs (Cr) 137.6 156.2 147.5 183.4 PAT Rs (Cr) 84.3 99.8 94.4 117.4 EPS (Rs) 10.3 12.1 11.5 14.3 BV (Rs) 59.9 70.2 79.8 92.1

RELATIVE TO SENSEX
140 Jyoti Structures Ltd. Sensex

100

60

20 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11

RAJESH GUPTA - Research Analyst SBICAP Securities Limited, Corporate Office: 191, Maker Towers 'F', Cuffe Parade, Mumbai 400 005 Tel.: (Board) +91 22 30273300/01 Fax: (022) 30273420. For a list of our branches refer to our website: www.sbicapsec.com

Jyoti Structures Limited

Capital Goods-Power

Q2FY12 Result:
Particular Gross Sales Excise Duty Net Sales Other Operating Income Other Income Total Income Total Operating Expenditure Stock Adjustment As % of Sa les Material Cost As % of Sa les Employee Cost As % of Sa les Erection & Sub-contracting Expenses As % of Sa les Other Expenditure As % of Sa les EBDITA ( Excl OI) EBDITA ( Incl OI) In terest As % of Sa les PBDT Depreciation Profit before tax Provision for tax Current Tax (Net of MAT Credit) Fringe Benefit Tax Deferred Tax PAT before early year items extra ordinary items Net Profit (PAT) Operating Margins (%) Net Profit Margins (%) Tax Rate (%) Equity (Rs Cr) FV (Rs) EPS (Rs) Cash EPS (Rs) 22.1 0.0 22.1 10.8 3.5 33.7 16.4 2.0 2.7 3.4 24.8 0.0 24.8 11.6 4.6 33.6 16.4 2.0 3.0 3.7 Q2FY12 644.7 12.6 632.1 2.0 634.0 564.1 5.1 0.8 352.8 55.8 20.5 3.2 124.8 19.7 60.9 9.6 68.0 70.0 31.0 4.9 39.0 5.6 33.4 11.3 11.3 Q2FY11 561.4 19.0 542.3 0.0 0.2 542.6 479.2 3.1 0.6 320.8 59.2 16.0 3.0 94.7 17.5 44.5 8.2 63.1 63.4 20.7 3.8 42.7 5.3 37.4 12.5 12.5 (8.7) 5.5 (10.7) (10.3) (10.3) (10.9) (10.9) 48.3 0.0 48.3 10.9 3.8 33.3 16.4 2.0 5.9 7.2 7.8 10.4 49.9 37.0 31.7 27.8 10.0 % Chng 14.8 (33.8) 16.5 704.5 16.9 17.7 H1FY12 1295.1 25.3 1269.7 0.0 3.3 1273.0 1131.6 (12.7) -1.0 741.2 58.4 40.2 3.2 244.5 19.3 118.5 9.3 138.2 141.5 58.0 4.6 83.5 11.1 72.4 24.1 24.1

Figures in Rs. Crs. H1FY11 1140.5 33.9 1106.6 0.1 0.9 1107.5 979.6 -10.0 -0.9 658.2 59.5 33.3 3.0 206.5 18.7 91.6 8.3 127.0 127.9 40.6 3.7 87.3 9.8 77.5 26.3 26.3 (4.4) 12.7 (6.6) (8.3) (8.3) 51.2 0.0 51.2 11.5 4.6 33.9 16.4 2.0 6.2 7.4
Source: SBICAP Securities Research

% Chng 13.6 (25.3) 14.7 279.7 14.9 15.5 12.6 20.5 18.4 29.4 8.8 10.6 42.8

(5.7) (5.7)

2 28 October 2011

SBICAP Securities Limited

Jyoti Structures Limited

Capital Goods-Power

Name Alpesh Porwal Rajesh Gupta

Designation SVP & Head (Retail) Research Analyst

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28 October 2011 3