Jaihind Projects

Posted at August 2, 2009 written by Ayush

“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.