2QFY11 results. J Kumar's 2QFY11 net profit shot up 30% yoy on account of revenue growth of 34% yoy, which was owing to robust execution of flyover projects. OPM stood at 15.9% versus 15.7% yoy and 15.4% qoq. We maintain our estimates and Buy rating and raise our target price to Rs300 (earlier Rs257).

n       Order book. J Kumar's current order backlog stands at Rs14bn (2x FY10 sales). It has orders worth Rs4.1bn at the 'L1' stage, mainly from Mumbai, Gujarat and Delhi . The company has bid for Rs60bn worth of projects with various authorities across India . Also the company is pre-qualified for BOT road projects worth Rs13.4bn and expects to bag some orders in this space.

n       Superior OPM. OPM for the quarter stood at 15.9%, up 50bp yoy and 20bps qoq. This is better than the sector average (10%) due to: i) owned machinery and manpower, ii) strategy of not bidding for sub-contracts and iii) majority contracts covered under the raw material 'pass-through' clause. We believe it will sustain current margins over FY11-12 as well. J Kumar's net profit grew 30% yoy on the back of strong operating performance.

n       Valuation and risks. We raise our target price to Rs300 based on PE of 7.5x FY12e (from Rs257 based on 8.3x FY11e). The target multiple implies ~40% discount to our target multiple of mid-cap construction companies. At our target price, the stock would trade at EV/EBITDA of 4.5x. Risks: Delay in project execution; geographical concentration.