Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MADHUCON PROJECTS LTD (MPL)
PRICE: RS.60 RECOMMENDATION: BUY
TARGET PRICE: RS.110 FY13E P/E: 9.0X
q Revenue growth of the company during Q2FY12 was better than our estimates
and stood at 18% YoY.
q Operating margins were better than our estimates due to higher execution
of power projects.
q Net profit was impacted by higher interest outgo as well as higher tax
rate.
q We thus tweak our FY12 estimates to factor in increased borrowings and
roll forward our valuations on FY13. We arrive at a revised price target of
Rs 110 (Rs 130 earlier) and continue to maintain BUY on the company
based on its valuations. Any delays seen in raising funds at the subsidiary
level may impact financial closure of its projects which may adversely
impact revenue growth.
Revenue growth led by improved execution
n Revenue growth of the company during Q2FY12 was better than our estimates
and stood at 18% YoY. Pending bills related to Chappra-Hajipur project for
Q1FY12 have been booked in the current quarter.
n Current order book of company stands at nearly Rs 67 bn diversified across road
segment, irrigation projects, power projects and building and mining segment.
n Construction work of Phase 1 of power project of 300 MW to be commissioned
through SPV, is complete and synchronization of units is going on. Unit 1 is likely
to commission by Dec, 2011 and unit 2 by Jan, 2012. Construction work on
Phase 2 for another 300 MW is under progress and targeted date of completion
is expected to be by Sep, 2012.
n Company has entered into an agreement with PTC where PTC would be supplying
the coal for the project and MPL would just charge the conversion charges of
Rs 1.45 per unit from unit 1 and Rs 1.5 per unit for Unit 2. 70% of the power
would be sold to PTC under this arrangement and for remaining power, it has
tied up Reliance. Similarly for Phase 2, arrangement of 50% power to PTC and
50% to Reliance is in place.
n MPL has 7 road BOT projects in its portfolio with four of them being operational
and one in the construction phase. Other two have achieved financial closure.
Toll collections from each of the operational projects are mentioned below -
l Madhucon Agra-Jaipur expressway - Toll collections are on a stable trend
and company is collecting toll of nearly Rs 10.2 lakh per day
l TN Expressway - Toll collections per day from TN expressway have improved
slightly and stood at nearly Rs 8 lakh per day
l Madurai - Tuticorin expressway - Toll collection is in the range of Rs 16-17
lakh per day and is expected to improve going forward.
l Trichy-Thanjavur expressway - Toll collection is in the range of Rs 6.5-7
lakh per day.
l Chhapra-Hazipur BOT project - Construction work has commenced on
Chhapra-Hazipur BOT project
l Barasasat-Krishnagar BOT project and Ranchi-Rargaon-Jamshedpur
DBFOT project - Financial closure for these projects is done at a D:E of
70:30. Debt is currently tied up at 12.25%.
n We maintain our revenue estimates and expect revenues to grow at a CAGR of
14.5% between FY11-FY13.
Operating margins better than our estimates
n Operating margins were better than our estimates due to higher execution of
power projects. Margins stood at 13% for Q2FY12 vs 9.7% during Q2FY11.
However, we believe that these margins may not remain sustainable due to construction
of low margin road projects also going forward.
n Hence we maintain our estimates and expect margins to remain near 11% for
FY12 and 10.5% for FY13.
Net profits impacted by higher interest outgo
n Net profit was impacted by higher interest outgo as well as higher tax rate.Profits
declined by 9% YoY.
n Overall borrowings of the company have also witnessed an increase to meet
higher working capital requirements, capex needs as well as funding for SPVs.
Higher borrowings coupled with higher interest rates have resulting in increasing
interest outgo.
n For meeting the funding requirements of its road BOT projects as well as power
project, company is looking out for private equity funding for both the divisions at
the SPV level. It expects to finalize this in next 10-15 days.
n We factor in higher borrowings to factor in higher working capital requirement
and loans and advances to SPVs and revise our net profit estimates downwards
Valuation and recommendation
n At current price of Rs 60, stock is trading at 10.3x and 9.0x P/E for FY12 and
FY13 respectively
n We thus tweak our FY12 estimates to factor in increased borrowings and roll
forward our valuations on FY13.
n We arrive at a revised price target of Rs 110 (Rs 130 earlier) and continue to
maintain BUY on the company based on its valuations.
n Any delays seen in raising funds at the subsidiary level may impact financial closure
of its projects which may adversely impact revenue growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MADHUCON PROJECTS LTD (MPL)
PRICE: RS.60 RECOMMENDATION: BUY
TARGET PRICE: RS.110 FY13E P/E: 9.0X
q Revenue growth of the company during Q2FY12 was better than our estimates
and stood at 18% YoY.
q Operating margins were better than our estimates due to higher execution
of power projects.
q Net profit was impacted by higher interest outgo as well as higher tax
rate.
q We thus tweak our FY12 estimates to factor in increased borrowings and
roll forward our valuations on FY13. We arrive at a revised price target of
Rs 110 (Rs 130 earlier) and continue to maintain BUY on the company
based on its valuations. Any delays seen in raising funds at the subsidiary
level may impact financial closure of its projects which may adversely
impact revenue growth.
Revenue growth led by improved execution
n Revenue growth of the company during Q2FY12 was better than our estimates
and stood at 18% YoY. Pending bills related to Chappra-Hajipur project for
Q1FY12 have been booked in the current quarter.
n Current order book of company stands at nearly Rs 67 bn diversified across road
segment, irrigation projects, power projects and building and mining segment.
n Construction work of Phase 1 of power project of 300 MW to be commissioned
through SPV, is complete and synchronization of units is going on. Unit 1 is likely
to commission by Dec, 2011 and unit 2 by Jan, 2012. Construction work on
Phase 2 for another 300 MW is under progress and targeted date of completion
is expected to be by Sep, 2012.
n Company has entered into an agreement with PTC where PTC would be supplying
the coal for the project and MPL would just charge the conversion charges of
Rs 1.45 per unit from unit 1 and Rs 1.5 per unit for Unit 2. 70% of the power
would be sold to PTC under this arrangement and for remaining power, it has
tied up Reliance. Similarly for Phase 2, arrangement of 50% power to PTC and
50% to Reliance is in place.
n MPL has 7 road BOT projects in its portfolio with four of them being operational
and one in the construction phase. Other two have achieved financial closure.
Toll collections from each of the operational projects are mentioned below -
l Madhucon Agra-Jaipur expressway - Toll collections are on a stable trend
and company is collecting toll of nearly Rs 10.2 lakh per day
l TN Expressway - Toll collections per day from TN expressway have improved
slightly and stood at nearly Rs 8 lakh per day
l Madurai - Tuticorin expressway - Toll collection is in the range of Rs 16-17
lakh per day and is expected to improve going forward.
l Trichy-Thanjavur expressway - Toll collection is in the range of Rs 6.5-7
lakh per day.
l Chhapra-Hazipur BOT project - Construction work has commenced on
Chhapra-Hazipur BOT project
l Barasasat-Krishnagar BOT project and Ranchi-Rargaon-Jamshedpur
DBFOT project - Financial closure for these projects is done at a D:E of
70:30. Debt is currently tied up at 12.25%.
n We maintain our revenue estimates and expect revenues to grow at a CAGR of
14.5% between FY11-FY13.
Operating margins better than our estimates
n Operating margins were better than our estimates due to higher execution of
power projects. Margins stood at 13% for Q2FY12 vs 9.7% during Q2FY11.
However, we believe that these margins may not remain sustainable due to construction
of low margin road projects also going forward.
n Hence we maintain our estimates and expect margins to remain near 11% for
FY12 and 10.5% for FY13.
Net profits impacted by higher interest outgo
n Net profit was impacted by higher interest outgo as well as higher tax rate.Profits
declined by 9% YoY.
n Overall borrowings of the company have also witnessed an increase to meet
higher working capital requirements, capex needs as well as funding for SPVs.
Higher borrowings coupled with higher interest rates have resulting in increasing
interest outgo.
n For meeting the funding requirements of its road BOT projects as well as power
project, company is looking out for private equity funding for both the divisions at
the SPV level. It expects to finalize this in next 10-15 days.
n We factor in higher borrowings to factor in higher working capital requirement
and loans and advances to SPVs and revise our net profit estimates downwards
Valuation and recommendation
n At current price of Rs 60, stock is trading at 10.3x and 9.0x P/E for FY12 and
FY13 respectively
n We thus tweak our FY12 estimates to factor in increased borrowings and roll
forward our valuations on FY13.
n We arrive at a revised price target of Rs 110 (Rs 130 earlier) and continue to
maintain BUY on the company based on its valuations.
n Any delays seen in raising funds at the subsidiary level may impact financial closure
of its projects which may adversely impact revenue growth.
No comments:
Post a Comment