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For 2QFY2012, Madhucon Projects (MPL) reported a better-than-expected
performance on account of higher revenue booking and positive surprise on
EBITDAM, despite a huge jump in interest cost. MPL’s order book, which is
witnessing good traction, stands tall at 3.8x FY2011 revenue, providing good
visibility for the next couple of years. However, we are revising our numbers for
FY2012 and FY2013 to factor in the higher interest outgo and working capital
stretch. Nevertheless, given the sharp price decline, we maintain our Buy
recommendation on the stock.
Numbers beat estimates despite a sharp spike in interest cost: For 2QFY2012,
MPL reported above-expectation top-line of `416.0cr, up 18.3% yoy, against our
expectation of `356.9cr. This was mainly on account of higher revenue booking
in its captive BOT projects in the power segment. Further, management has
guided for revenue of `2,000cr for the year (we have factored the same) for
FY2012. OPM for the quarter stood at 13.0% (9.7%), posting a whopping jump of
330bp yoy against our expectation of a 100bp jump. Management has guided
for higher OPM of 12.0–12.5% (earlier guidance of 11.0-12.0%) for the year as a
whole. On the earnings front, the company posted a 10.2% yoy decline to `6.0cr
against our expectation of a 52.4% decline despite a shocking increase (173.3%
yoy/53.8% qoq) in interest cost for the quarter to `31.8cr.
Outlook and valuation – Raising capital is the key catalyst: We believe key triggers
to watch out for MPL should be pick-up in execution in the development business
and raising money for the same. However, these plans would fructify somewhere
in FY2013 only and will be based on the market conditions prevailing then.
Hence, we believe until then the stock would be a sector performer and real value
would be created only on unlocking at the subsidiary level. We have valued MPL
on an SOTP basis to arrive at a revised target price of `88/share (`96/share) and
maintain our Buy rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Madhucon Projects (MPL) reported a better-than-expected
performance on account of higher revenue booking and positive surprise on
EBITDAM, despite a huge jump in interest cost. MPL’s order book, which is
witnessing good traction, stands tall at 3.8x FY2011 revenue, providing good
visibility for the next couple of years. However, we are revising our numbers for
FY2012 and FY2013 to factor in the higher interest outgo and working capital
stretch. Nevertheless, given the sharp price decline, we maintain our Buy
recommendation on the stock.
Numbers beat estimates despite a sharp spike in interest cost: For 2QFY2012,
MPL reported above-expectation top-line of `416.0cr, up 18.3% yoy, against our
expectation of `356.9cr. This was mainly on account of higher revenue booking
in its captive BOT projects in the power segment. Further, management has
guided for revenue of `2,000cr for the year (we have factored the same) for
FY2012. OPM for the quarter stood at 13.0% (9.7%), posting a whopping jump of
330bp yoy against our expectation of a 100bp jump. Management has guided
for higher OPM of 12.0–12.5% (earlier guidance of 11.0-12.0%) for the year as a
whole. On the earnings front, the company posted a 10.2% yoy decline to `6.0cr
against our expectation of a 52.4% decline despite a shocking increase (173.3%
yoy/53.8% qoq) in interest cost for the quarter to `31.8cr.
Outlook and valuation – Raising capital is the key catalyst: We believe key triggers
to watch out for MPL should be pick-up in execution in the development business
and raising money for the same. However, these plans would fructify somewhere
in FY2013 only and will be based on the market conditions prevailing then.
Hence, we believe until then the stock would be a sector performer and real value
would be created only on unlocking at the subsidiary level. We have valued MPL
on an SOTP basis to arrive at a revised target price of `88/share (`96/share) and
maintain our Buy rating on the stock.
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