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Fund raising key for project subsidiaries
Phase I power project to be synchronized
Phase I power project of 300MW of the 1,920MW at Nellore, AP is likely to be
synchronized in a month’s time. MPL has arrangement with PTC for 100% of coal
supply from 70% earlier for phase I and for phase II, PTC will supply 50% of the coal
requirement (refer pg no. 2).
Rate revised upward to Rs1.45/unit
The conversion rate for PTC power contract has been increased to Rs1.45/unit for
Phase I and Rs1.50/unit for Phase II from earlier rate of Rs1.25/unit for phase I. This
is largely due to delay in plant completion and rationalization of cost (refer pg no.2).
Dilution on card; looking at Rs16-22bn for MTHL
Madhucon is looking for dilution in Madhucon Toll Highway (MTHL) & Simhapuri
Energy Pvt. Ltd. (SEL) and is actively scouting for private equity deals. The company’s
internal valuation for MTHL is ranging from Rs16-22bn and for SEL is Rs30bn (including
phase III).
L1 in Vijayawada-Machilipatnam road project
The company is L1 in Vijayawada-Machilipatnam project on DBFOT toll basis.
The project involves four laning 63km (258 lane km) of existing section on NH9
(refer pg no. 2).
Orderbook at Rs62.7bn; 3.7x FY11 revenue
Orderbook continues to be strong at Rs62.7bn (3.7x FY11 revenue), largely due to
internal orders of road and power. Excluding Andhra Pradesh irrigation project of
Rs13bn, book to bill ratio stands at 2.9x FY11 revenue (refer pg no. 3).
VALUATIONS & RECOMMENDATION
We revise our target price to Rs109 from earlier Rs141 due to a) increase in cost of
equity for BOT road and power phase I projects to bring it inline with the current
market risk, resultantly we have raised cost of equity to 15% from 13%. b) Earlier
we had valued mining project at one time equity investment i.e. Rs410mn (Rs5 per
share), now we wait till the logistical issue is resolved. c) The core EPC business
earnings have been revised downward by 4.1% and 16.7% for FY12E and FY13E
due to higher interest cost factored at 11.5%, now the total debt in MPL stands at
Rs7.5bn (1.1x D/E FY11) and is likely to increase to 1.3x by FY12 end. We maintain
our ‘BUY’ recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Fund raising key for project subsidiaries
Phase I power project to be synchronized
Phase I power project of 300MW of the 1,920MW at Nellore, AP is likely to be
synchronized in a month’s time. MPL has arrangement with PTC for 100% of coal
supply from 70% earlier for phase I and for phase II, PTC will supply 50% of the coal
requirement (refer pg no. 2).
Rate revised upward to Rs1.45/unit
The conversion rate for PTC power contract has been increased to Rs1.45/unit for
Phase I and Rs1.50/unit for Phase II from earlier rate of Rs1.25/unit for phase I. This
is largely due to delay in plant completion and rationalization of cost (refer pg no.2).
Dilution on card; looking at Rs16-22bn for MTHL
Madhucon is looking for dilution in Madhucon Toll Highway (MTHL) & Simhapuri
Energy Pvt. Ltd. (SEL) and is actively scouting for private equity deals. The company’s
internal valuation for MTHL is ranging from Rs16-22bn and for SEL is Rs30bn (including
phase III).
L1 in Vijayawada-Machilipatnam road project
The company is L1 in Vijayawada-Machilipatnam project on DBFOT toll basis.
The project involves four laning 63km (258 lane km) of existing section on NH9
(refer pg no. 2).
Orderbook at Rs62.7bn; 3.7x FY11 revenue
Orderbook continues to be strong at Rs62.7bn (3.7x FY11 revenue), largely due to
internal orders of road and power. Excluding Andhra Pradesh irrigation project of
Rs13bn, book to bill ratio stands at 2.9x FY11 revenue (refer pg no. 3).
VALUATIONS & RECOMMENDATION
We revise our target price to Rs109 from earlier Rs141 due to a) increase in cost of
equity for BOT road and power phase I projects to bring it inline with the current
market risk, resultantly we have raised cost of equity to 15% from 13%. b) Earlier
we had valued mining project at one time equity investment i.e. Rs410mn (Rs5 per
share), now we wait till the logistical issue is resolved. c) The core EPC business
earnings have been revised downward by 4.1% and 16.7% for FY12E and FY13E
due to higher interest cost factored at 11.5%, now the total debt in MPL stands at
Rs7.5bn (1.1x D/E FY11) and is likely to increase to 1.3x by FY12 end. We maintain
our ‘BUY’ recommendation.
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