Medium term view – JMC Projects

JMC Projects is a construction and engineering major having expertise in varied segments such as roads, bridges, power, industrial construction and housing and commercial construction. A healthy order-book, tie-ups with bigger companies for better projects, repeat orders from clients, kick-off into build-own-operate projects are factors that boost the prospects of this company. Increased infrastructure spending by the Government will also benefit order inflows.

JMC undertakes construction contracts in a variety of segments. It constructs plants for industries such as automobiles, textiles, pharmaceuticals, and so on. Real-estate projects constitute commercial, office and residential
complexes, hospitals and hotels. Infrastructure contracts take the form of road projects, bridges, bus terminals besides contracts in the power segment.

After the big debacle of 2008 pared the prices of the stock by nearly 90%, it has been staging a gradual recovery. In the process, it has formed a nice rounding bottom pattern on the weekly charts. Thereafter, the prices have consolidated for some time, allowing profit taking by those that had bottom fished as well as letting earlier holders to bail out. In and thru this consolidation the stock has managed to maintain the price level rather steady which implies that the knowledgeable buyers in the counter are not the ones that are bailing out. After hitting 200 levels to complete the pattern as mentioned, the stock consolidated in a range until this month when fresh attempts to breakout from the range are visible. What is heartening also to note is the fact that the volumes have gone up nicely. So the prices are breaking out on higher volumes and if one looks at the oscillator charts also one finds encouraging signals of improving momentum readings.

Both these suggest that some fresh buying is entering the counter. Ability to hold on after completing the rounding pattern showed presence of a strong buyer. Now if the breakout sustains and prices move ahead, then the rounding pattern suggests a price level around 350 or so. Along the way, the stock may encounter some resistance around the 300
levels where the 50% retracement of the big decline of 2008 is placed. But if momentum is maintained at that stage then pattern targets appear to be achievable.

The company is part of the Kalpataru Power Transmission group and has recently wpm a National Highways Authority of India contract to four-lane an 83-km stretch between Rohtak and Bawal in Haryana . Comfortable financial position, good order book and strong management indicate this as a buy at current.

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Tags: Infrastructure, JMC Projects, Kalpataru Power

Category: Medium Term