Sunil Singhania Added J Kumar Infra in Q1. Here's Why...

Rakesh Jhunjhunwala. Ashish Kacholia. Dolly Khanna. Some other names...

You must be wondering what these market gurus have been doing in the current volatile stock market environment.

Did they stay put with their positions when the stock market was falling or did they latch on to some good quality buys?

As companies file their June 2022 shareholding patterns, data revealed shows that market gurus have been busy as ever.

They seem to be making most of the market correction and loading up on fundamentally strong stocks.

Among the market gurus, one prominent name is Sunil Singhania.

Latest shareholding pattern of an infra stock - J Kumar Infra - revealed that Singhania added the stock to his kitty in the June 2022 quarter.

Find out more...

A word about Sunil Singhania and Abakkus Asset Manager LLP

Abakkus Asset Manager is an investment management company founded by Sunil Singhania, who was the CIO of Equity Investments at Reliance Mutual Funds.

Sunil Singhania has a track record of over two decades in equity markets and he played an important role in building Reliance-Nippon MF into one of India's largest asset management companies (AMCs).

Currently, Abakkus manages over Rs 50 bn of assets.

Why Did Sunil Singhania Buy into J Kumar Infra?

As of June 2022, Sunil Singhania owned Abakkus Growth fund held 2.65% stake in J Kumar Infra, or 2 million shares.

When the news came out in May 2022 that Singhania has added the stock, it sent the stock soaring 10% on the same day and some more in the following days.

We covered an editorial making sense as to why did Singhania buy this infra stock?

Here are some reasons we could guess...

#1 India's revival

Primarily, infra stocks received a boost with the Union budget unleashing a massive capital outlay for fiscal 2023.

The government plans to incur capital expenditure of Rs 7.5 tn in 2023 fiscal which is 24% more than the previous fiscal year. The outlay for financial assistance to states for capex has also been raised manifold.

So, one reason could be because of the growth prospects of the industry.

#2 Good order book combined with strong financials

The company continues to receive orders and has a good order book. In March 2022, the company bagged two major orders worth Rs 20.3 bn from Pune Municipal Corporation and Delhi Metro Rail Corporation.

The company is expecting orders inflow of Rs 50 bn in financial year 2022-23.

On the financials front, the company was back to posting increasing revenues and net profit.

Financial Snapshot

(Rs m, Standalone)	FY18	FY19	FY20	FY21	FY22
Net sales	20,507.2	27,870.9	29,705.4	25,708.4	35,272.1
Sales growth (%)	28%	36%	7%	-13%	37%
Operating profit	3,497.4	4,644.2	4,572.1	3,366.7	5,294.6
Operating profit margin (%)	17%	17%	15%	13%	15%
Net profit	1,365.5	1,770.7	1,835.8	639.2	2,058.8
Net profit margin (%)	7%	6%	6%	2%	6%
Total Debt	5,803.8	6,910.8	6,738.3	5,309.6	4,312.1
Debt to Equity (x)	0.38	0.41	0.37	0.28	0.21

Data Source: Ace Equity

The company has also maintained its debt levels and reduced debt consistently.

At a time when companies are struggling with higher input costs, J Kumar Infra has stood tall and executed timely contracts.

But the road ahead may be bumpy as rating agency CRISIL expects contraction in margins.

The rating agency is of the view that prices of steel, bitumen and cement, which are the key raw materials, will remain at elevated levels.

How the stock of J Kumar Infraprojects has performed recently

J Kumar Infraprojects share price is currently trading at Rs 298, down by 2.5% against its previous close of Rs 306.

It has a 52-week high quote of Rs 312 touched last week on 8 July while it has a 52-week low quote of Rs 149 touched in October last year.

On a YTD basis, shares of the company have gained 79%.

At the current price, the company trades at a price to earnings multiple of 11 times. The company is trading at a price to book value of 1.1.

The industry average PE multiple is 23 while price to book value is 2.6.

Peer Comparison

Have a look at the table below which compares the company with its peers.

Peer Group Comparison					(Rs in Millions)
Company Name	Ashoka Buildcon	H.G. Infra Engg.	J Kumar	KNR	Sterling and Wilson
Year End	202203(U)	202203(U)	202203(U)	202203(U)	202203(U)
Net Sales	45914.57	36151.95	35272	32725.92	34595.8
PBIDT	7013.39	5925.49	5294.55	7194.18	-1221.8
PAT	-3086.49	3387.6	2058.76	3817.95	-1675.2
ROCE %	-4.82	33.3	18.07	27.04	-8.66
ROE %	-11.44	24.83	9.87	17.03	-11.16
TTM Ratios	08-Jul-2022	08-Jul-2022	08-Jul-2022	08-Jul-2022	08-Jul-2022
Latest EPS(Rs)	-10.99	51.98	27.21	13.58	-8.83
TTM PE (x)	0	10.39	11.24	17.56	0
Price/BV(x)	0.79	2.58	1.11	2.99	3.87
Dividend Yield %	0	0.19	0.98	0.1	0
Latest Book Value (Rs)	96.13	209.35	275.77	79.72	79.14

Data Source: Ace Equity

Since you're interested in comparing companies, check out Equitymaster powerful compare company tool.

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