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Executive Summary Ramky Infrastructure Limited (RIL), the flagship of Ramky Group, is an integrated infrastructure construction & development management company in India with strategic emphasis on the PPP approach. RIL is currently executing over 200 projects in various segments viz. Water and Waste Water, Buildings, Irrigation, Power Transmission and Distribution, Roads and Bridges, and Industrial Construction projects valued over Rs 16,500 crore, across 22 States and two Union Territories in India making it a diversified national player.
Concerns Highly working-capital-intensive operations leading to average capital structure Fragmentation in the infrastructure industry Higher dependence on government spending Intense competition in the construction business other than the water & waste-water segment Execution Capability for BOT road business being a new entrant. Slowdown in awarding of the projects.
Key Investment considerations Strong order book provides visibility over long term Diversification – Sectoral & geographical presence BOT assets to be cash remunerative Strong presence in Waste water Segment Increasing spend on Infrastructure projects
Investment Rationale Strong order book provides visibility over long term
The company’s order book stands at Rs. 1,19,150 mn ( 5.6x FY10 sales) which provides a cushion against the lethargic order inflow in near-term. An average execution period of 30 months for the company's orders also offers near-term earnings visibility. The company has recently bagged 14 projects worth Rs 702 crore. The major projects include: HDIL Mulund worth Rs 102.79 crore, Sewage Works, Allahabad worth Rs 98 crore, and Construction of Dam across the Markandeya River worth Rs 87.18 crore. Strong presence in Waste water Segment
Water and waste management and irrigation projects, where the company has a strong presence, offer superior margins and make up the bulk (nearly 41 per cent) of the company's order book. The company has completed 104 projects urban development schemes of the Government offer vast scope for orders in this segment. BOT assets to be cash remunerative Two of RMKY’s BOT road projects are operational and remaining three are under various stages of development. The company will need to infuse ~Rs 2.7bn as equity in these projects over FY11–FY13. Diversification – Sectoral & geographical presence Ramky evolved from a consultant to an EPC player and finally an Infrastructure player backed by its core competencies. Also the presence in varied six industrial sectors reduces the risk of dependency on any one sector and moderate geographical spread helps in revenue diversity. The company moved away from a focus on Andhra Pradesh recently secured a Rs 1,101-crore NHAI order with a Chinese company on a development basis in Jammu & Kashmir. It has also moved overseas, securing an order to construct an SEZ for Rs 380 crore in Gabon, West Africa. Valuation
Q3FY11 results showed an increase in revenue by 85.88% at Rs. 8356 mn and PAT 465 mn, a growth of 93.83% despite of the turbulence and sluggishness in the infrastructure sector. Going forward the synergies is expected to continue and the order book (5.6x FY10 Sales) gives a revenue visibility in the coming years. Also the company has embarked Rs. 1000 crore capex to be invested across business segments in next 3 years. We value the company at an EV/EBITDA multiple of 6x and recommend BUY on the counter with a price target of `366 with an investment horizon of 12-18 months.
Background
Ramky Infrastructure Limited (RIL) is the flagship company of the Ramky Group, one of the leading civil and infrastructure engineering companies in India. Established in 1994 and headquartered in Hyderabad with five zonal offices and three regional offices throughout India, the name of the company, when it was incorporated, was Ramky Engineers Private Limited and then got changed to Ramky Infrastructure Private Limited in the year 2003. RIL has been involved in water and waste water projects, transportation projects, irrigation projects, industrial projects and parks (including SEZs), power transmission and distribution projects, residential, commercial and retail property developments and a transport terminal development. RIL also has a panel of consultants who have proven their expertise in various fields of civil and infrastructure engineering. A highly advanced, optimized operations model ensures timely, efficient and cost-effective deliveries to clients. RIL has track record of executing projects with almost all major customers in public as well as private sectors in India. The large list of satisfied customers has resulted in repeated orders and several awards and appreciations to the organization. RIL has an annual turnover in excess of Rs. 1459 crore and carries a strong work force of 1500 qualified and dedicated manpower. Ramky Infra’s revenues have registered a CAGR of 30 per cent over the last 3 years (2006-07 to 2008-09), with operating margins at 9.9- 10.7 per cent.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Executive Summary Ramky Infrastructure Limited (RIL), the flagship of Ramky Group, is an integrated infrastructure construction & development management company in India with strategic emphasis on the PPP approach. RIL is currently executing over 200 projects in various segments viz. Water and Waste Water, Buildings, Irrigation, Power Transmission and Distribution, Roads and Bridges, and Industrial Construction projects valued over Rs 16,500 crore, across 22 States and two Union Territories in India making it a diversified national player.
Concerns Highly working-capital-intensive operations leading to average capital structure Fragmentation in the infrastructure industry Higher dependence on government spending Intense competition in the construction business other than the water & waste-water segment Execution Capability for BOT road business being a new entrant. Slowdown in awarding of the projects.
Key Investment considerations Strong order book provides visibility over long term Diversification – Sectoral & geographical presence BOT assets to be cash remunerative Strong presence in Waste water Segment Increasing spend on Infrastructure projects
Investment Rationale Strong order book provides visibility over long term
The company’s order book stands at Rs. 1,19,150 mn ( 5.6x FY10 sales) which provides a cushion against the lethargic order inflow in near-term. An average execution period of 30 months for the company's orders also offers near-term earnings visibility. The company has recently bagged 14 projects worth Rs 702 crore. The major projects include: HDIL Mulund worth Rs 102.79 crore, Sewage Works, Allahabad worth Rs 98 crore, and Construction of Dam across the Markandeya River worth Rs 87.18 crore. Strong presence in Waste water Segment
Water and waste management and irrigation projects, where the company has a strong presence, offer superior margins and make up the bulk (nearly 41 per cent) of the company's order book. The company has completed 104 projects urban development schemes of the Government offer vast scope for orders in this segment. BOT assets to be cash remunerative Two of RMKY’s BOT road projects are operational and remaining three are under various stages of development. The company will need to infuse ~Rs 2.7bn as equity in these projects over FY11–FY13. Diversification – Sectoral & geographical presence Ramky evolved from a consultant to an EPC player and finally an Infrastructure player backed by its core competencies. Also the presence in varied six industrial sectors reduces the risk of dependency on any one sector and moderate geographical spread helps in revenue diversity. The company moved away from a focus on Andhra Pradesh recently secured a Rs 1,101-crore NHAI order with a Chinese company on a development basis in Jammu & Kashmir. It has also moved overseas, securing an order to construct an SEZ for Rs 380 crore in Gabon, West Africa. Valuation
Q3FY11 results showed an increase in revenue by 85.88% at Rs. 8356 mn and PAT 465 mn, a growth of 93.83% despite of the turbulence and sluggishness in the infrastructure sector. Going forward the synergies is expected to continue and the order book (5.6x FY10 Sales) gives a revenue visibility in the coming years. Also the company has embarked Rs. 1000 crore capex to be invested across business segments in next 3 years. We value the company at an EV/EBITDA multiple of 6x and recommend BUY on the counter with a price target of `366 with an investment horizon of 12-18 months.
Background
Ramky Infrastructure Limited (RIL) is the flagship company of the Ramky Group, one of the leading civil and infrastructure engineering companies in India. Established in 1994 and headquartered in Hyderabad with five zonal offices and three regional offices throughout India, the name of the company, when it was incorporated, was Ramky Engineers Private Limited and then got changed to Ramky Infrastructure Private Limited in the year 2003. RIL has been involved in water and waste water projects, transportation projects, irrigation projects, industrial projects and parks (including SEZs), power transmission and distribution projects, residential, commercial and retail property developments and a transport terminal development. RIL also has a panel of consultants who have proven their expertise in various fields of civil and infrastructure engineering. A highly advanced, optimized operations model ensures timely, efficient and cost-effective deliveries to clients. RIL has track record of executing projects with almost all major customers in public as well as private sectors in India. The large list of satisfied customers has resulted in repeated orders and several awards and appreciations to the organization. RIL has an annual turnover in excess of Rs. 1459 crore and carries a strong work force of 1500 qualified and dedicated manpower. Ramky Infra’s revenues have registered a CAGR of 30 per cent over the last 3 years (2006-07 to 2008-09), with operating margins at 9.9- 10.7 per cent.
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