The Reserve Bank of India's (RBI) decision to cut rates twice this year will bring down the PAT margin of J Kumar Infraprojects MD Nalin Gupta told CNBC-TV18's Ekta Batra and Anuj Singhal in an interview.
The Reserve Bank of India's (RBI) decision to cut rates twice this year will bring down the PAT margin of J Kumar Infraprojects MD Nalin Gupta told CNBC-TV18's Ekta Batra and Anuj Singhal in an interview.
"In terms of margins which we make a profit after tax (PAT) margin of around 6.5 to 7 percent, it would be around 8.25 or something," he said.
Below is the transcript of the interview on CNBC-TV18.
Ekta: First wanted to start by asking you about this 50 basis points rate cut that has come in from the RBI. Can you tell us how life would become easier for you, for example how much debt are you servicing and how would maybe your interest costs now look?
A: The decrease in the interest rate which has been recently announced, there should be surely an improvement in the margins and would help in maintaining margins that the company has been making. We share a debt equity ratio of 0.7 so this is surely going to help the entire infra industry in terms of the borrowing rates and the margins should surely get better because of that.
Anuj: If you could quantify how much of your interest cost takeaway from your earnings before interest, tax, depreciation and amortization (EBITDA) in the final analysis on net profit and if rates are lower by 25-50 basis points, how much would it help?
A: Well, I cannot really quantify in terms of that because as a interest part of it, it wouldn't be a very big effect but yes in terms of margins which we make a profit after tax (PAT) margin of around 6.5 to 7 percent, it would be around 8.25 or something like that would be surely contributed to that.
Ekta: Give us a sense in terms of how your business is doing at this point in time, for example what would your order book look like and you have mentioned that you are looking at a top line of Rs1300-1400 crore for FY15, does that still stand?
A: Well, surely as we have already made a top line as of the ninth month ended as of now is Rs 950 crore and with the current order book of nearly around Rs 4,750 crore which includes the L1 position of around Rs 1,500 crore, we are sure to reach a top line of about Rs 1,400-1,500 crore for the fiscal year and as I mentioned the order book is around Rs 4,750 crore including the L1 position.
And the infrastructure industry—everybody would appreciate that infra is in the best of its time and with the government pumping in so much of money into the infrastructure segment thus we have a long way to go.
J Kumar Infra stock price
On March 04, 2015, at 14:15 hrs J Kumar Infraprojects was quoting at Rs 666.00, down Rs 3, or 0.45 percent. The 52-week high of the share was Rs 700.00 and the 52-week low was Rs 155.85.
The company's trailing 12-month (TTM) EPS was at Rs 30.52 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 21.82. The latest book value of the company is Rs 179.89 per share. At current value, the price-to-book value of the company is 3.70.
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