LoA from MMRDA helps J Kumar Infra recover from day low

The shares of J Kumar Infraprojects Ltd recovered from its intraday low after the company reported that it has received a letter of acceptance (LoA) from Mumbai Metro Rail Project (MMRDA). Its stock price touched an intraday high of Rs 85.20, which is six per cent higher from its previous closing price.

The company released a statement on the stock exchanges, which stated that it has received LoA from MMRDA for the construction of part design and elevated viaduct. The work is part of the balance work of package 1, line 7 elevated viaduct. This excludes station viaduct, architectural finishing and pre-engineered steel roof structure of station. As per the construction terminology, the said project extends from chainage Ch (-) 525.903m (Pier P1E) to Ch (+) 5,801.297m (Pier P 278) Andheri (East)- Dahisar (East) corridor of Mumbai Metro Rail Project.

The receipt of LoA at this juncture can give some hope to not just the company but also to the industry. The company has reported an order book of Rs 12,443 crore as of the end of third quarter of FY20, which translates nearly three times of its TTM revenue. Despite such strong order inflows, the stock is trading at an all-time low due to the fear of slow execution, owing to the nationwide lockdown. The stock is trading at market cap to sales ratio of 0.20 times. Other industry peers such as Dilip Buildcon are also trading at market cap, well below their annual sales.

At 11.30 am on Friday, the stock was trading at Rs 81.50, up by 1.5 per cent on BSE.