Jaihind Projects

“First I determine themes that will be played out over the next several years. Then I identify groups of stocks that reflect those themes.” – Ralph Wanger

Working on the above advice, we all will agree that the next big opportunity is in the Gas Sector. Early beneficiaries will surely be “pipe line laying” companies.

Jaihind Projects (JPL) is a leading player in this space and is scaling up very aggressively. I have been bullish on JPL for quite some time and feel that there is enough potential.

About Jaihind Projects (http://www.jpl.in/)

  • It is only listed dedicated player available in this space.
  • Company has been doing this work for major PSUs such as Gail, IOC, GSPL etc for several years. Gail, GSPL etc have ambitious targets for building pipeline network across India, JPL should surely gets its share in future orders.
  • The company has grown from just 50 Cr turnover in 2005 to 325 Cr turnover last year.

Going Ahead:

  • Company is expected to achieve a turnover of atleast 500 Cr+ this year and if they are able to maintain their historical operating margins at around 12%, the company has potential to achieve Net Profit of atleast 20-25 Cr.
  • Which will result into an EPS of say 20-25 on an expanded equity of close to 10 Cr.
  • At current market price of less than 100, the forward P/E is less than 5. Considering the things will go well, stock has potential to more than double in two years period.

Risks:

  • The company has been taking debt to expand so if there are delays, the company can be adversely affected.
  • The company has been diluting equity by issuing shares to promoters on preferential basis.
  • The company doesn’t pays dividend to conserve cash for growth.

Do work out the calculations and share the views.

  • sourav

    What about the fact that over 90% of promoter’s shares are pledged (check on bse)…that’s the main risk in my opinion

  • sourav

    What about the fact that over 90% of promoter’s shares are pledged (check on bse)…that’s the main risk in my opinion

  • Ayush

    Yes, Sourav, this is a risk.

    But leverage in-itself is not always bad. If the opportunity is right and cards are played out right, the rewards are exponential.

    Regards,

    • Vishalkejriwal26

      ayush,

      any update on this counter!!

      • Ayush

        Hi Vishal,

        We have taken exit from the stock post the Sept Qtr results. The co hasn’t grown in the first 9 months while loans and debtors have been growing. Hence the co is in a risky position.

        Had updated about the exit in the performance sheet – http://dalal-street.in/performance/

        Regards,

      • Vishalkejriwal26

        Thanks for Quick response , I am asking like whether one should buy at current level and if not than, what can be the trigger point for the stock to rise

        Regards,
        Vishal

  • Ayush

    Yes, Sourav, this is a risk.

    But leverage in-itself is not always bad. If the opportunity is right and cards are played out right, the rewards are exponential.

    Regards,

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